With respect to labor, triumphalists argue that it matters little if
people cannot move freely about the world. Simply permitting their
countries to trade will enable them to raise their rate of economic
growth. But historical and modern experience both show that
individuals are reluctant to sit through this slow, cold process:
they will head for lands that have actually demonstrated their
ability to prosper. That is why today, in countries where private
businesses are willing to hire, half of the immigrants are illegals.
The pull of businesses wishing to fill jobs conflicts with the push
of governments trying to appease domestic labor unions and xenophobic
citizens. At the moment, official controls are tightening precisely
when the aging of populations in the developed world is reducing
domestic labor supplies. This can only rile turbulent young
populations elsewhere in the world and, given the strength of demand,
ensure that people smuggling will continue to be rewarded.
"Globalization" at the margins will therefore continue by stealth,
but the prospects for extensive new legal migration are not good.
Agriculture is, if anything, an even greater sticking point.

Simulating the Future

Writing about world affairs means giving hostages to fortune. At
least this puts one in good company. Henry Kissinger had just
finished proclaiming in Frankfurt that the United States lacked
serious enemies and had not been attacked on its own soil since Pearl
Harbor when a news editor broke in to announce the strike on the
World Trade Center. A few months earlier, the organizers of the
Financial Vulnerability Project of the Council on Foreign Relations
(CFR)--the simulation of a financial shock that is the subject of
Roger Kubarych's Stress Testing the System--had rejected the idea of
any scenario involving the bin Laden organization, the sources of its
funding, or "fictional intelligence reports of plans for future
terrorist assaults on U.S. facilities." They rested on the assumption
that "government agencies likely were already considering
contingencies involving bin Laden."

Puncturing "past futures" is always easy. The Financial Vulnerability
simulation was not strictly intended to predict; it was concerned
with the consequences of a major shock rather than the actual shape
of the shock. Scenarios have more open-ended purposes than
forecasting, "fuzzier" purposes, if you like, comparable to the
grandmotherly musings of economic history. Nevertheless, actively and
explicitly dismissing the scenario that really was to take place was
unfortunate. There is no getting away from the fact that the
simulation missed the true shock for reasons which suggest that some
lessons of the past have not been learned. This generation is not the
first to play war games. As Kubarych reports, Admiral Chester Nimitz
stated that the war with Japan was "gamed" so often, by so many
groups, that nothing came as a surprise, "absolutely nothing, except
the Kamikaze tactics toward the end of the war." The error in 2001
was the same one of mirror-imaging, of assuming that non-Westerners
would behave like Westerners. No one except the politically incorrect
would have admitted to thinking otherwise.

For all that, the CFR simulation exercise was an ingenious idea in a
financial sector normally given to heavily-quantified (and repeatedly
wrong) predictions. The CFR exercise is interesting less for its
conclusions--necessarily transient, the more so in view of the impact
of September 11--than because it may persuade other observers to
contemplate open-ended scenario planning. The U.S. Army seemingly
agreed when it hired Hollywood scriptwriters to imagine fresh
terrorist scenarios right after that fateful day. This
non-quantitative, apparently fanciful method is perhaps the only way
to get decision-makers, who, until now, have inclined to be
condescending about such approaches, to consider the whole range of
influences on the global economy. They have tended to believe there
is a sharp, identifiable difference between what they "need to know"
as opposed to a broader range of "soft" variables and complex
interactions that fall under a merely "nice to know" heading best
left to people in ivory towers. How wrong they were.

The CFR simulation, tragically abetted by September 11, may help to
change their minds. It was genuinely ahead of the game. Only its real
importance, therefore, leads me to go on picking on some of its weak
points. Participants were drawn from the financially great and good,
and they were Americans. They were going to think like Americans and
anticipate a future of prosperous internationalism whatever the
occasional upset. No future of theirs would ever include a re-run of
the medievalism to which Islamic terrorism would like to take us
back. The organizers did dream up "a large number of fascinating,
highly imaginative plot twists", but neglected to pursue them because
they "feared that simulation participants would have . . . ridiculed
them or dropped everything else to dig into them." The claim made for
scenarios is that eliciting imaginative possibilities is one of their
special virtues. But this benefit was foregone here. Too few
resources were expended on preparing the scenarios and too little
time ("a whole Saturday") allotted. Moreover, financial crises are
seldom single shocks. They are not just Brutus murdering Caesar, but
full-fledged Greek tragedies with horribly ordained multiple
role-playing. Simulating a slither into the depths rather than a
dramatic plunge would have been more compelling. It would definitely
have been truer to the simulations that economic history has already
run for us.

Will Globalization Backfire?

Harold James distinguishes three ways in which globalization may be
reversed or reverse itself. The first is the one favored by the
perpetual opponents of capitalism: Intrinsic contradictions in the
capital markets will make them blow up. Capital markets will exsolve,
so to speak, giving off bubbles that burst with a bang. At its worst,
a bursting like this in the Great Depression forced the world economy
down to a low equilibrium where exchanges tended to retreat behind
national frontiers. The institutional apparatus to support it was,
however, rebuilt after 1945, and what has been done once can be done
again, if necessary. In principle, rescuing the system should be
easier now that there are precedents for so doing. Politicians may
actually be more willing to reconstitute international organizations
than to face down opposition in their own countries. A failure of
nerve in the face of predictions of the self-liquidation of
international capitalism would be worse than unnecessary; it would
amount to a death-wish.

Otherwise, second, if everything does go wrong, the international
economy may dissolve. One route to such dissolution would be via
institutional failure, the inability of the system's presiding
institutions to manage its crises successfully. James devotes most of
his labor to this problem of the interwar years, producing a learned
and (for a technical subject) enviably readable history. Although he
formally leaves open whether globalization will survive this time,
his arguments all tend toward optimism. Yet the somewhat uncertain
management of institutions like the World Bank and IMF does not
warrant complacency. In keeping the world financial system afloat on
September 11, the hero of the hour was Roger Ferguson, Alan
Greenspan's deputy, who stayed when the Federal Reserve building was
mostly evacuated, issued a statement saying that the Federal Reserve
system was still operating, and provided $80 billion of liquidity
during the day. It is all too easy to imagine other circumstances,
less professional and brave people, and an alternative response.

This leaves James' third issue: the backlash against globalization.
The prospect became a significant one about 1997, when opposition
within the developed countries began to approach a crescendo and to
coalesce across their borders. We may label this auto-immune disease
the Seattle syndrome. It was trumped by the atrocities of September
11, which we may term the Taliban scenario. The two species of
opposition may reinforce one another, but it is convenient to deal
with them separately.

The New Opposition

We thus need to step outside the reviewing procedure at this point in
order to consider two broad streams of threat to globalization. No
book written before September 11 could be expected to take into
account the specifics of the world after that date. None does, though
James explicitly deals with the issue of whether the modern phase of
globalization might be reversed, while O'Rourke and Williamson are
persuaded that, as they find in the past, counteracting resistance is
always likely to build up. The difference between past and present
experience is, however, as significant as the similarity. That
difference lies, in large measure, in the extra-political and
extra-legal nature of modern anti-globalization protests. This is
true if we look at threats from within or those from without, at
Seattle or the Taliban (or as we may now say, Al-Qaeda).

Hitherto there was simply no confluence of violent, middle-class
internal opposition to globalization in rich countries of the type
signaled by the Seattle riots. Ironically, the most impressive
organization in the history of international trade was in favor of
free trade, not against it. This was the Anti-Corn Law League that
campaigned against agricultural protection in 19th-century Britain.
As a grassroots organization the League was stupendous; it sent out
one million pieces of propaganda from its Manchester office during a
single week in February 1843. The Seattle protestors' use of the
Internet was scarcely more dramatic, the difference of course being
that the League was "for" free trade and modern protestors are
against it in an astonishingly reactionary fashion. As for
anti-globalization from the outside, so to speak, there was not in
the past any systematic, lawless trans-global opposition of the kind
offered by the Taliban-cum-Al-Qaeda training camps and actions. The
conclusion we should draw from all this is that history may take us
some way toward understanding globalization and its discontents, but
it cannot take us the whole way. Hence, as I say, we must step a
little outside the books under consideration in order to map the
shape of modern anti-globalization protests.

Essay Types: Book Review