I finished reading my latest book. Harold James’ book, Seven Crashes, is a history of financial crises that have shaped globalization. The book examines seven turning points in financial history, from the depression of the 1840s through the Great Depression of the 1930s to the Covid-19 crisis. James shows how some crises prompted by a lack of supply, like the oil shortages of the 1970s, lead to greater globalization as markets expand and producers innovate to increase supply. In contrast, other crises, such as the Great Depression, led to a smaller, less prosperous world.
The surge of interconnectedness in the nineteenth century started as a response to a shock: the harvest failures, famines, and then financial and business collapse of the mid-1840s.
Harold James — Seven Crashes
The author explores the question of why some shocks foster globalization, while others seem to reverse globalization. He states that the course of globalization was interrupted by two serious, very negative, demand crises, in each case brought about and amplified by financial turbulence: the Great Depression of 1929 to 1933, and the Great Recession after the 2007–2008 financial crisis. In a nod to the notion that it takes catastrophe to move society forward — see thoughts on catalysts — James describes two major episodes covered by the book, the 1840s and the 1970s supply problems. Each prompted a transportation revolution. In a very important lesson from history, he points out that the railroad and the container ship were not completely novel. The uncertainty and the political disruption pushed, or eliminated barriers to, a much wider implementation that would transform the supply problem by radically reducing transport costs. Pushing or eliminating barriers — when forced.
History reminds us that we are a stubborn species: one that is deeply resistant to making profound changes in our behavior and habits, even when it is clear that we need to do so. But it also reveals that when change is forced upon us, we are astonishingly versatile.
JAMES SUZMAN — WORK: A DEEP HISTORY, FROM STONE AGE TO THE AGE OF ROBOTS
Through the annals of history, financial crashes were catalysts during times of crisis. The authors of the Fourth Turning describe this phenomenon through their exhaustive look at seven centuries of history. Given the questions surrounding globalization’s future, looking for signals from the past is instructive — and this book is loaded with them. I’ve added it to my Library.
The eminent economic historian Harold James presents a new perspective on financial crises, dividing them into “good” crises, which ultimately expand markets and globalization, and “bad” crises, which result in a smaller, less prosperous world. Examining seven turning points in financial history-from the depression of the 1840s through the Great Depression of the 1930s to the Covid-19 crisis-James shows how crashes prompted by a lack of supply, like the oil shortages of the 1970s, lead to greater globalization as markets expand and producers innovate to increase supply. By contrast, crises triggered by a lack of demand-such as the Global Financial Crisis of 2007–2008-result in less globalization as markets contract, austerity measures are imposed, and skepticism of government grows.
By considering not only the times but also the observers who shaped our understanding of each crisis-from Karl Marx to John Maynard Keynes to Larry Summers-James shows how the uneven course of globalization has led to new economic thinking, and how understanding this history can help us better prepare for the future.