Two men I respect have written articles about the dangers inherent in the current globalization. Niall Ferguson has written in the current Foreign Affairs and Peter Drucker has done the same in the current National Interest.
Both point to the similarities in
geometric growth in global trade at the end of the 19th
century and again at the end of the 20th century. Both
point out that this stunning development ended with WWI and could end
I respect both men and would never be
the pollyanna who says it can't happen again. I would say it can't
happen for the same reasons as before. It would have to come from a
source we have not recognized.
There are a number of lessons that we
learned in the 20th century that have increased global
economic stability. We got rid of the gold standard which served as a
propagator of depressions, inflations and deflations. Japan had a
severe recession for the decade of the 1990s and it didn't propagate.
The U.S. recession of 2001 and the EU recession of 2002 were not
transmitted to other countries.
We have learned to disentangle central banks from government economic policy. This has been a powerful buffer. The monetary shocks of Mexico, Thailand and Indonesia were not propagated to their trading partners.
Trade barriers are a tiny fraction of the levels even two decades ago, and orders of magnitude less than four decades ago. The WTO continues to mediate effectively in this domain.
I don't see 2014 having parallels to 1914. I suspect that both Ferguson and Drucker, being Europeans at heart, are like most Europeans ... sentimental about the old days before 1914 and they are afraid to lose so much again.