Harvard university press 14.95 (252pp) 13.45 (free p&p) from the Independent Bookshop: 08430 600 030

The Creation and Destruction of Value: The Globalization Cycle, By Harold James

We are still too close to the financial meltdown of 2008/9 to be able to see it with much perspective. It is harder still to make much of an assessment of its long-term economic consequences, for the world has yet to emerge securely from recession. But we can begin to fit what has happened into some kind of historical template and that history surely gives us the most helpful way of understanding what might happen in the future.

History has already shaped the policy response to the recession. An international banking crisis that was, by general agreement, the most serious since the early 1930s demanded more effective policies than the world managed to muster that time round. The spectre of the 1930s depression has hung over politicians, treasury officials and central bankers alike.

Unsurprisingly there have been a host of books about the banking crisis and its consequences. But they have mostly had a "whodunnit?" tone to them, seeking to explain what happened and apportion the blame, rather than giving us some feeling for how the world economy might dig itself out of the crisis and how effectively it might develop in the years to come. So Harold James new book deserves a special welcome for giving us a framework to try to do this, for he is an historian rather than an economist. He is Professor of History and International Affairs at Princeton University and so sees what is happening in its historical and global context. He also has a profound interest in the great economic story of our times: globalisation. One of his previous books had the provocative title The End of Globalization and that is reprised in his opening chapter here.

However, anyone expecting his new book to explain why this current crisis will end the burst of globalisation will be disappointed. His argument is more subtle and more interesting. The crisis may have that effect and there are certainly political forces at work that are damaging international economic co-operation. But such an outcome is by no means inevitable.

First, he looks back at what might seem to be the closest parallel to today, the events of 1929-1931. The issue then was that a US financial market plunge was allowed to lead to a global banking crisis and a subsequent economic catastrophe. His explanation of that particular sequence is quite encouraging in the perspective it gives us now. It is quite extraordinary how policy-makers managed to make a series of sequential mistakes in their responses, from failing to rescue banks, through introducing trade controls to keeping their currencies locked to gold. Not only did they manage to get things wrong but they did so in just about the worst possible order. They may have made errors this time and Professor James is critical of the failure to find a way of rescuing Lehman Brothers. Put simply, the string of subsequent support measures cost far more than they would have done had there not been the systemic breakdown that followed Lehman's failure. But eventually, and at great cost, this financial breakdown seems to have been contained, whereas in the 1930s it was not. This message comes through clearly from Professor James' description of the sequence of events in New York the weekend the effort to save Lehman failed, and the global reverberations from that event. We know pretty much what happened but it is useful to have it pulled together in a single narrative. Where he adds most value is in his effort to put the crisis into its international political context, asking some tough questions on the way. Is the US, through its lax fiscal and monetary policies, facing global decline akin to that of Hapsburg Spain? To what extent has the European Union been weakened by the rise of economic nationalism, as large member countries seek to protect their own workers, and push redundancies onto smaller ones? Might the Chinese, having seen the weaknesses of Western market capitalism, pull back from engagement with the world economy?

Professor James' key point here is well made: "All the arguments from economic logic speak for continued globalization, but in sharp downturns, such arguments are often trumped by a political logic that looks for conflicts and competitive advantages."

So what will happen? As he points out, financial crises are often a catalyst for turning the globalisation cycle. They lead to a profound questioning of our values. Trust has evaporated. So the world economy is vulnerable and there are no quick fixes. There are things that can be done, such as the simplification of banking. There are measures that can increase confidence. But most of all the various players in the world economy, consumers, businesses, governments, banks and so on, need to rebuild trust. But that cannot be done quickly, as Professor James acknowledges.

"That is why, when globalization is broken, it is not easy to put together again. We will look for communities of virtue but we will not find them at once. And the globalization cycle will resume, but not immediately."

Arts and Entertainment
Rhino Doodle by Jim Carter (Downton Abbey)

TV
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film

film
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
film
Arts and Entertainment
Comedian 'Weird Al' Yankovic

Is the comedy album making a comeback?

comedy
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Sue Perkins and Mel Giedroyc, centre, are up for Best Female TV Comic for their presenting quips on The Great British Bake Off

TV
Arts and Entertainment
Martin Freeman as Lester Nygaard in the TV adaptation of 'Fargo'

TV
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules

film
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'

film
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>

film
Arts and Entertainment

theatre
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book

books
Arts and Entertainment
Panic! In The Disco's Brendon Urie performs on stage

music
Arts and Entertainment

film
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game

film
Arts and Entertainment

TV
Arts and Entertainment
Radio 4's Today programme host Evan Davis has been announced as the new face of Newsnight

TV
Arts and Entertainment
Pharrell Williams performing on the Main Stage at the Wireless Festival in Finsbury Park, north London

music
Arts and Entertainment
Carrie Mathison returns to the field in the fourth season of Showtime's Homeland

TV
Arts and Entertainment
Crowds soak up the atmosphere at Latitude Festival

music
Arts and Entertainment
Meyne Wyatt and Caren Pistorus arrive for the AACTA Aawrds in Sydney, Australia

TV
Arts and Entertainment
Rick Astley's original music video for 'Never Gonna Give You Up' has been removed from YouTube

music
Arts and Entertainment
Quentin Blake's 'Artists on the beach'

Artists unveils new exhibition inspired by Hastings beach

art
Arts and Entertainment
MusicFans were left disappointed after technical issues
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform