Book Reviews

Globalization's losers

Jeffry A. Frieden

Global Capitalism Its Fall and Rise in the Twentieth Century

W.W. Norton, New York, 2006, 448 pp., $29.95 (cloth).

Jeffry Frieden has written a lucid and fast-flowing account of what is now almost the standard orthodoxy about globalization over the past hundred years. He describes a movement, resembling the letter U, in which substantial integration in labor, goods, and capital markets occurred in the late 19th century and was subsequently reversed as a result of the Great War and the Great Depression. After the Second World War, globalization slowly began to revive but has picked up more quickly since the 1970s, bringing a rapid diffusion of technological innovation and substantial improvement in well-being.

As a political scientist, Frieden is also profoundly interested in the politics of globalization. In any process of change, there are winners and losers, and the sustainability of the system depends-in his eyes-on how the losers are handled. Before the First World War, the losers were the old landed elites of Europe and perhaps workers, who had to bear the costs of adjustment under the monetary regime of the gold standard.

Frieden, like Karl Polanyi, sees gold standard adjustment as difficult or even impossible in an environment of political responsibility or democratization. The interwar years thus saw both a collapse of democracy and an attempt to restore the gold standard. In the years immediately after 1945, however, Frieden said that democracy was rescued in many states (primarily in Western Europe, he means) by their adoption of Keynesian-inspired welfare policies. Such policies were viable in a national setting but became less so as the costs of adjustment rose with the real wave of globalization that occurred after the 1970s.

Frieden ends with a survey not only of the failures of globalization-especially for very poor states that remain outside the framework of open goods, labor, and capital markets-but also of the increasing challenges to the world posed by globalization that emanate from rich countries whose citizens believe that trade and immigration have adversely affected their income. Frieden's story of the political response to globalization is a tour de force. His surveys of the explanations offered by such theorists as Eli Heckscher, Bertil Ohlin, Wolfgang Stolper, and Paul Samuelson for the effects of trade on incomes are easy to understand.

But Frieden's account raises puzzles that are never really solved. At some points, he seems to adopt a quite rigid form of economic determinism, although the effects of economic structures on political outcomes sometimes run in different directions: he insists on page 196 that, in the 1920s and 1930s, "every debtor country went the way of fascist or nationalist autarky; every creditor country remained democratic and committed to international economic integration." It is easier to see this mechanism, in which populist hostility to an externally imposed debt burden turned voters and politicians away from internationalism, than it is to follow the logic of the claim that, in other circumstances, debt crises promoted democracy (for example, in the Latin American crunches of the 1980s). In that case, the logic that links debt to democratization is not fully spelled out. But in each case, economics pushes politics.

At other moments, however, Frieden gives a great deal of...