Harold James, The End of Globalization: Lessons from the Great Depression (Cambridge, MA: Harvard University Press, 2001), 288 pp., $39.95.

Roger M. Kubarych, Stress Testing the System: Simulating the Global Consequences of the Next Financial Crisis (New York: Council on Foreign Relations Press, 2001), 187 pp., $15.

Kevin O'Rourke and Jeffrey Williamson, Globalization and History (Cambridge, MA: MIT Press, 1999), 355 pp., $27.95.

The rewards for reducing uncertainty in an uncertain world are so
large that the demand for political and economic forecasts never
ends. Yet demand far outruns supply. We seem unable to predict the
really big system breaks like the fall of Soviet communism or the
Asian crisis, or at any rate to do so persuasively enough for society
to prepare for them. How might we do better?

The answer depends to some extent on understanding the context in
which forecasting takes place. The main process affecting
international affairs has for some time now been the increased
integration of global economic activity--"globalization" in the
common parlance. That being so, do earlier manifestations of economic
integration provide clues about the probable future of the current
phenomenon? The sometimes violent backlash against trade and
financial liberalization that we have witnessed since the final years
of the 1990s gives the question a pertinence that seemed absent
during the previous couple of heady decades when multinational
enterprises rode high and trade barriers so conveniently fell before
them. The upsurge of resistance makes it urgent to seek for
indications as to whether phases of globalization are fated to be
slowed, brought to a standstill, or even thrown into reverse.

Perspectives from history and concepts from economics thus seem
likely to be helpful, and where we should look to find both these
approaches brought into play is in economic history. Much of the
unwillingness to apply economic reasoning in general history and the
analysis of international affairs seems to stem from an aversion not
only to many of its conclusions but even to its assumptions--that is
to say, from an all-too-human reluctance to accept the fact that
every course of action, including inaction, comes with a cost
attached. Economic history is free from that weakness. Admittedly,
some of its formal techniques suffer diminishing returns when applied
to topics on the fringe, notably the interaction between economics
and politics. Disagreeable though this may be to the harsh reasoners
among economists, broader humanistic judgment comes into its own when
dealing with such themes. As Clive Crook says in an admirable survey
of globalization in The Economist, few economists nowadays learn
enough history. This tends to offset their undoubted strengths as
problem solvers, because it disarms them regarding just what is and
is not novel. Alvin Toffler put the point nicely: "We now have
students so ignorant of the past that they see nothing unusual about
the present."

A long view from economic history offers the counteracting benefit of
perspective, a point that seems trite until we consider how
misleading the lack of it may be. In one of the books discussed here,
O'Rourke and Williamson rightly criticize the journalistic tendency
to project the recent past into the indefinite future. They observe
that this habit has--since September 11 we should say had--engendered
the popular view that globalization is unstoppable. Recent protests
and violent happenings mean that such an opinion is in serious doubt;
indeed, as these authors demonstrate, it should always have been
disputed. Before journalism threw itself into confusion over the
current anti-globalization campaign, not to mention terrorism,
O'Rourke and Williamson had already concluded that globalization is
not unchallengeable. They were drawing on their study of the first
globalization boom of 1870-1913 and how it was brought to an end.
They saw that there would be a backlash this time, too.

Luckily, then, some modern writers are literate in economic history,
and they have much to teach us. The work of a general historian,
Harold James' The End of Globalization, stands out because the author
has really done his economics homework. James appeals to the economic
history of globalization in order to place the present and the future
in the longer context of international economic integration. He
delves as far back as the unease inspired by the Reformation and the
great age of discovery in the 16th century, but concentrates on the
breakdown of international order during the 1930s. An adventurous
volume by Roger Kubarych, Stress Testing the System, which simulates
a contemporary financial shock, counterpoints history's usefulness
almost as sharply by rehearsing earlier attempts at building
scenarios that failed because they did not explore past experience
deeply enough. A third, slightly older, but magisterial work is
O'Rourke and Williamson's Globalization and History, which, as noted,
turns the searchlight of econometrics on the 1870-1913 period.

Competition, Agriculture and Migration

Even earlier cases of economic integration than that of 1870-1913 may
teach us something, despite the fact that they concerned only Europe.
Although such episodes were not "global" by definition, nor in the
strictest sense even international (because they partly predate the
rise of the nation-state), they are still capable of illuminating the
merits and discontents of integration. Oliver Volckart, for example,
traces the effects of competition among multiple political units as
early as the centuries between 1000 and 1800. He notes that because
Europe's political units were then so small and packed close
together, hard-pressed individuals could move fairly readily from one
to the next, either to escape oppression or to find a better life.
They took their money with them. The availability of "exit" as an
option induced rulers to compete for the mobile factors of labor and
capital by offering more attractive constitutions, laws and customs.
Princes offered commercial privileges at bargain prices to attract
particular groups to settle and pay them taxes in the future.

Competition was evident along these lines during the Middle Ages, but
between the 14th and 18th centuries rulers concentrated on protecting
the holders of privileges they had already sold. New entrants, or at
any rate free entrants, to business were discouraged. By the early
modern period, the maze of restrictive privileges was tending to
smother additional market growth. Joel Mokyr tells us that this also
impeded further technological advances of the types that had taken
place during the phase of high medieval openness. Then, in the 18th
century, the rulers of mainland Europe perceived what was happening
in Britain and once more reversed their policies. They grasped that
skilled immigrants and more foreign investment would establish new
enterprises and generate higher taxes, and began to re-open their
economies to fresh talent and capital. Pre- and early-modern economic
history therefore makes the association between openness and growth
as apparent as it is today, and warns that growth is always
vulnerable to cumulative erosion by special interests.

Markets were internationalized more fully during the late 19th
century than during any previous period and, perhaps surprisingly,
the process went further in some directions than during the late 20th
century. Recent globalization has focused on commodity trade and
flows of financial capital more prominently than it has involved
movements of people. During the 19th century, however, the bias was
rather different; relative to the size of population, international
migration was at a high point. Wage earners felt threatened in
high-income countries such as the United States and Australia, to
which migrants flocked. At the same time, land-owning and cereal
farming in Europe were undermined by cheap grain from the New World.
The protectionist reaction came quickly. O'Rourke and Williamson do
not attribute the onset of protection to the effects of the World
War, nor date it to the depression years of the 1930s. They point out
that as far as labor migration and agriculture were concerned, free
movement and free trade were being curbed well before 1900. Societies
find it agonizingly hard to adjust to openness. That is why,
historically speaking, it is fair to say that the long liberal era
after World War II has been more of an anomaly than the many periods
of relative closure.

Enthusiastic globalizers loudly, and reasonably, trumpet the gains from economic integration, particularly the gains of the post-Cold War period. They have had a bull run. Yet substantial advance has not been
secured in every respect, notably in these two areas of agriculture
and labor mobility. Triumphalists feel that agricultural protection
will have to fall eventually because the budgetary cost of warding
off imports and transferring revenue to farmers is so enormous. In
any case, they incline to the opinion that farming does not much
matter because it is a shrinking sector in developed economies.

But "eventually" is a long haul; actual existing history, so to
speak, takes place in the lag periods. It is therefore a mistake to
underestimate the perverse hold of farming on the psyche of countries
that are generally frightened of external competition, of which the
outstanding example is France. Only public acquiescence within the
developed countries could permit such vast transfers to continue. The
catch is this: the importance of agriculture to poorer countries is
such that if they continue to be excluded from Western food markets,
they can return the compliment by blocking negotiations to liberalize
trade in goods and services in ways that were not possible during the
free-for-all 19th century. An impasse therefore threatens within the
world trading system before we even start to take account of external
threats or protest campaigns.

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.

The Taliban Scenario

The reach of Western information is more nearly global than either
capital movements or commodity trade. Technologies and markets that
broadcast images and news are capable of causing disturbances in
three ways. First, the Hollywood effect raises unrealizable
aspirations for living at the level of a fairy-tale United States,
where the modal citizen appears to be represented by a film star in
southern California. Second, American movie producers seem
unaware--given the box office appeal of their products, why should
they worry?--that the merest flecks of background in their films may
prove inflammatory in more rigid and patriarchal societies. (I refer
to the ordinary dress and everyday status of American women.) Third,
we are now reaping what we have sown: the electronic transmission of
information and misinformation runs both ways, providing ample
exposure for the opinions of, say, Al-Qaeda. And their messages are
intended to promote negative globalization.

Some of the present troubles accordingly arise from the fact that the
world's political and economic markets are out of kilter. As far as
the mass of the population in the less developed world is concerned,
a disequilibrium consists in the way that information flows have
heightened economic expectations far ahead of the ability of trade
and investment to satisfy them. The poor are both titillated and
frustrated. They therefore listen to the anti-globalization,
anti-Western, and counter-capitalist ("counter-cap") messages put out
by the disgruntled or opportunistic intellectuals among them. These
intellectuals are men (here we can safely say men) whose status would
be most threatened by competition from outside ideas. Some have gone
so far as to forbid students in Muslim madrassas across South Asia
access to newspapers and television. Where
intellectuals-turned-fundamentalists have the grain of coherent
ideologies to work with, their potential threat to the world system
is greatest.

I do not claim that the West could have countered these effects
easily and, although they have led to palpable envy around the world,
they have not always provoked violent anti-Americanism. Nor is the
contemporary revulsion against Westernization the first there has
ever been. A similar element was present in the early rise of Indian
nationalism. E-mails are not indispensable; mass action did not await
their invention. Printing presses, railways, telegraphs, and postal
systems were sufficient. Nor would official attempts to "explain" the
American way of life have been particularly effective; such things
must sound to poor peasants in distant lands like recipes for pie in
the sky. Nevertheless, some intellectuals in the non-Western world
might have been receptive to argument, as were those in the defeated
countries after 1945.

Efforts to argue the abstract case for Western styles of economics
and politics need not prove futile in the longer run either. It is
worth considering an analogy with the way scientific revolutions
occur, at least according to Thomas Kuhn, which is to say not by
changing the minds of established authorities but by converting the
next generation. A new Colombo Plan would help. As it is, Western
academics seem fixated on the motes in the eyes of their own
political systems, while the hubris of private-sector globalization
seems to have blinded politicians to the value of generous and
far-sighted public actions. Closing the overseas libraries of the
United States Information Service, for example, has surely been an
unfortunate act of cheese-paring.

As we quickly learned, the perpetrators of the atrocity in New York
and Washington were not from within. They were external individuals
who make up what Gerard Baker, an American columnist of London's
Financial Times, calls "the ultimate anti-globalization movement." No
one knows precisely what the ordinary inhabitants may be thinking in
the countries from which this movement is recruited. Revealed
preference suggests that many of them have responded to the Hollywood
effect and display no objection to rich-country ways. Some are even
desperate enough to put to sea in leaky boats in the hope of landing
on a Western shore.

The powerful and influential, on the other hand, resist globalization
on any number of grounds, summarized as distaste at the "imposition"
of Western, or so-called American, culture. Their unease is largely
cultural, its bêtes noire the supposed materialism and individualism
of the West. The charge of materialism actually confuses material
wealth with a fixation on objects. As an American friend who had
worked in the Sudan once remarked to me, "we are not the
materialists, goods come easy to us." But no one in the West would
wish to escape the charge of individualism, and individual choice is
a clear threat to hierarchies. Beneath all the various cultural
overburdens, the aged patricians in less-developed societies who rage
against these things are rent-seekers, striving to maintain
privileges associated with existing forms of social organization. (I
will not call the folkways "traditional" since they are adulterated
by plenty of borrowed technology.) Undoubtedly, most of the
individuals involved are so conditioned by their upbringing as not to
recognize the element of selfishness in trying to deny their
brothers, and especially their sisters, a taste of the modern world.

It is fashionable to see resentment against the West in terms that
amount to a stage theory of economic history. Economies that have
failed to climb aboard the bandwagon of growth fester away in corners
of the world while the rest of us proceed ahead. Every so often the
losers erupt in ways that hitherto have seemed little more dangerous
to the West than an occasional spent meteor clanging into the desert.
In any case, as the saying once went, we have the Maxim gun and they
have not. There is a smack of the "end of history" thesis about the
underlying assumption of unidirectional change. In its bald form, the
thesis is economistic.

In this vein, individuals are assumed to seek happiness in material
form. Once they attain something approximating their goal, they, or
their children, will move up to a new stage, looking for services as
well as goods, and for services that embody freedoms--independent
judiciaries, an end to corruption, a press that does not suppress too
much at the behest of the powerful, maybe even pluralistic
government. We know that this happened in Europe, and we can see it
happening in East Asia. We can interpret part of the struggle within
Iran in approximately the same way. Where the tendencies have still
not emerged, we tend to rescue the thesis by saying that momentum has
stalled not through choice but via the machinations of old elites.
Hence we portrayed the backlash in Afghanistan as a pathological
response to national economic failure, whereby those in power stir up
their people to opt out.

Opinion in the developed world assuredly believes that the
fundamentalist challenge to the West is driven by the inability of
alien leaderships to cope with modernity. Yet if it is economic
humiliation that bothers the fundamentalists, resentment should
direct itself against East Asia, not the West. While other regions
fell behind, East Asia pulled itself up by its bootstraps. If anyone
has lost face they have lost it to the spectacular economic growth of
Japan, the little dragons, and now China. The West was rich from the
start. Since fundamentalists attack America and not Asia, it follows
that the animus must have more complicated roots than simple economic
humiliation.

Undoubtedly, the economistic interpretation of global change is
acceptable in a broad sense. It is borne out by the history of the
developed countries--unless one wants to imagine that the quest for
freedoms and introduction of liberal laws has been independent of the
emergence of a bourgeoisie. Yet as soon as this is said, the
limitations of the theory are evident. Again: history takes place in
the lags where motion outruns inertia. Economistic models and "swell
of the ocean" theories must always assume that the outcome is
written. So it may be in broad outline, but the pace and details of
the story are made up as we go along. Economic history is not so
deterministic, at least not in fine grain.

At the very least, the growth process may be delayed or distorted
(involving attempts to pick and choose among borrowings, with the
emphasis on information technology and military hardware). This seems
to be the case now, given the reactive hardening of attitudes and the
narrowing of Quranic teaching among the current young generations in
the Islamic world. Anything approaching outright war on a regional
scale or even a series of big terrorist strikes could still close
down a large share of world trade. In that sense external backlash
retains the power to disrupt globalization. Prevailing unidirectional
theories do not adequately prepare us for this.

The Seattle Syndrome

Further rapid liberalization of global trade had become doubtful even
before September 11, 2001. Most governments are compromised by favors
owed to special interests. Western leaders respond snappily to polls
in shopping malls. Businessmen are at least as short-termist and even
more reactive. They have not gone out of their way to proclaim why
the anti-capitalist and anti-globalist lobbies have added two and two
together and got five, besides failing to face down the shock troops
of the protest movement. Few business people write books and,
ironically, the most publicized exception, George Soros, has come out
against global capitalism. With political and business leaders like
these, economist authors may well feel they are tacking into the
wind. They may be reduced to hoping that Keynes was right--meaning
that educated opinion will capture the minds of later generations.

Before September 11, anti-globalization was almost entirely an
intra-Western affair. Until then, Kissinger seemed to be right that
the United States lacked external enemies strong enough to be a
threat. My first thought on hearing of the assault on the World Trade
Center was indeed that the anti-globalization front had finally
kicked over the traces. After all, the attack had done the
protesters' work for them. In the weeks that followed there were job
losses, reduced international movements of people, huge costs to
Western economies, shrinking international business activity--all
outcomes that they had been working for, together with the knock-on
of increased morbidity and mortality in the less-developed world that
they scarcely acknowledged would soon be the accompaniment.

Much Seattle-style protest seems to be a lifestyle choice, feeding on an array of anxieties, real and pretended. Protest gives a purpose to life, protest is fun, protest is sexy, and protest can be made to pay. Some companies appear to be paying Danegeld to bodies openly devoted to undermining international business. The Unilever Corporation is reported to have been funneling millions of dollars to anti-globalization groups. This money passes via a new subsidiary, Ben & Jerry's, to bodies such as Global Exchange, which campaigns to shut down the World Bank and WTO, and the Ruckus Society, which largely did shut down the Seattle WTO meeting. Ironically, some of the money went to a group called United for a Fair Economy, which campaigns against excessive pay for CEOs--though not very effectively as far as Unilever is concerned, since the firm's co-chairman was paid about $1.8 million in 2000. Executives of Unilever have previously advocated trade liberalization, and knew full well, when they took that company o ver, that Ben & Jerry's would support anti-globalization causes. Yet they seemed to think that it was worth buying even though, for unexplained reasons, they felt unable to place restrictions on its behavior.

Nor is this all: Public money has gone for similar purposes. The European Union lavishes taxpayers' money on counter-cap groups. UK National Lottery money has gone to the World Development Movement, a critic of corporate globalism. With a protest gravy train like this, "activists" are plainly onto a good thing.

Joseph Schumpeter once feared that capitalism's success would undermine the work ethic. The counter-cap assault gets its backing today from an ever-changing brew of discontents among the very middle class that is the beneficiary of business endeavor. Some of the individual objections to globalization may have merit but many positions are frivolous ("capitalism should be nicer"), others are mindless ("don't trade, blockade"), and still others are clearly wicked (web sites directing that the cobblestones of Gothenberg could be pried up and used as missiles). No operable and consistent policy alternative is offered; protest strikes out blindly. Less than three weeks after September 11, anti-globalization demonstrators in London had switched to protesting against government plans to involve the private sector in the provision of Britain's health and education services. The Green Party co-sponsored the rally. Two female "activists" danced topless. Seven others were arrested on suspicion of conspiring to commit vio lent crimes.

The counter-cap movement is held together by the suspicion of markets, a strong collectivist instinct, and a belief in protest as a form of moral uplift (signaled, no doubt, by topless dancing). The demands of such a movement cannot possibly be appeased. The movement is Stakhanovite: when one goal is reached, the target indicator shifts upwards, as in some Soviet factory. What, then, drives all this? Lurking beneath the kaleidoscopic variety of causes seems to be a rise in expectations capable of outstripping even the rise in wealth and leisure achieved in Western society, indeed made possible by this very achievement. Fuel is heaped on the flames by readily-aroused hostility to any increase in competition in the workplace.

The constant mutation of protest betrays its negative and opportunistic sides. More sober protesters might take counsel were not so many of them adamant in their beliefs that the global environment is going to hell in a handcart and that world trade is inherently a bad thing--the latter opinion being firmly held by people who, to judge from those I have asked, have never heard of David Ricardo, let alone read him. One sign of widespread bad faith is the misrepresentation of the WTO as a dictatorial form of world government rather than a very limited world association in which legitimate governments are represented.

Some governments, too, are plainly guilty of opportunism over the issue of globalization. Lionel Jospin wants France to speak for anti-globalization. He backs a Tobin tax (a levy on cross-border capital movements) contrary to the advice of his finance minister, Laurent Fabius. Professor Tobin himself does not think that imposing such a tax would be a good idea in present circumstances: his aim was to stabilize exchange rates, not generate funds for the next fashionable development project. Fabius counters Jospin by proposing a tax on arms sales and he has upped the ante. To Fabius, it is not France but Europe that is uniquely placed to lead the discussion of globalization--a discussion whose statist results he announces in advance as the taking of action to regulate the global economy and protect the environment. He takes the view that Europe's unique capacity to achieve this arises from its experience of regional integration and its balanced institutional framework. Yet this "balanced framework" includes the Common Agricultural Policy, which blocks the marketing of farm crops from poor countries at a cost to them of an estimated $75 billion per year! Next, Gerhard Schroder leapfrogs over to claim that Germany and France should lead the debate. We now face not only state-sponsored anti-globalism, but a bidding war over who is to head it.

Can Backlash Really Prevail?

THE TREND of counter-cap opinion and even some government opinion would lead to damaging or even reversing trade flows. Most "activists" want more regulation and more national sovereignty, while in the same breath demanding that the West intervene, in a virtually neo-colonialist way, to force economic development on poorer nations, at the expense of their sovereignty. To Harold James their hopes seem forlorn. In his concluding chapter he remarks that, absent coherent ideology and without examples of countries successfully de-linked from world trade, big government and nationalism are discredited shells. Cuba and North Korea certainly seem to bear that Out. James's view is a rational one. The question is, will rationality prevail?

James takes the position that international organizations are stronger than they were between the wars. As his subtitle, "Lessons from the Great Depression", suggests, the interwar period serves as his principal economic and intellectual baseline. However, his faith in the strength of modern international organizations sits a little uneasily alongside his vision of a world system too complex to plan and held together by spontaneous coordination. It sits awkwardly, too, with his account of the scant means of enforcement available to world bodies.

Central to his argument is the belief that the "Washington consensus" on economic liberalization differs fundamentally from the inter-war "Geneva consensus." The world of the League of Nations was built on treaties; the modern world is built, he says, on "sustained reflection about appropriate policies." Thus, in deciding that globalization probably will not be reversed, he relies heavily on "intellectual conversion" to free trade. Maybe good ideas can drive out bad after all and Gresham's Law be overturned, though the recurrent history of trade protection scarcely guarantees this, and James himself admits that free market parties do badly in the polls. The question therefore becomes this: Can the world rely on the intellectual commitment of politicians in the face of outside threats , internal protest, and the ever-present clamor for protection by sectional interests? The diffuse interests of the whole of society are always hard to defend in the teeth of lobbying by more tightly-focused groups; Mancur Olson long ago drew our attention to that.

Liberalization has undoubtedly been assisted by the fact that policy positions in many countries are held by individuals trained in Western economics departments, and who therefore do understand Ricardo's theorem, comparative advantage and the benefits of trade. Their positions, however, tend to be advisory rather than legislative. As for the ultimate resilience of academe, it is a frail reed. Recall the passage in Peter Drucker's autobiography about the first Nazi-led faculty meeting at Frankfurt, the most liberal of German universities. After hearing his Jewish colleagues dismissed without salary and forbidden to enter university precincts, the leading liberal got up and asked: "Will there be more money for research in physiology?" An extreme case of human fear, frailty and greed? Fear, frailty and greed, yes; but such behavior may not prove altogether exceptional in the face of violent anti-globalization protest and well-funded conniving.

By pressing ahead with the WTO ministerial talks at Doha this past autumn, even in the face of the September 11 attacks, world leaders have certainly shown that James is right, up to a point, to have spotted an intellectual conversion to free trade. But will those leaders always remain among the converted, and if they do, will they succeed in advancing international economic integration in the face of opposition on so many fronts? The happy smile of Franz Fischler, the EU agricultural commissioner, when he returned from Doha bodes ill. "The final form of the declaration was aimed", reported the Financial Times on November 16 last, "primarily at pacifying Europe's powerful farming lobby."

Just as nations have interests more than they have friends, so governments have lobbies more than they have principles. From a purely abstract standpoint James may be right. I hope so. But if the intellectual commitment of the political classes is all that lies between us and de-globalization, we are by no means completely out of the wood. Economic history suggests that more than good intentions may be needed to preserve globalization from the countervailing forces it provokes.

Eric Jones is a professorial fellow at Melbourne Business School in Australia and a professor at the Graduate Centre of International Business at Reading University in the UK.