Product Description

Harold James examines the vulnerability and fragility of processes of globalization, both historically and in the present. This book applies lessons from past breakdowns of globalization—above all in the Great Depression—to show how financial crises provoke backlashes against global integration: against the mobility of capital or goods, but also against flows of migration. By a parallel examination of the financial panics of 1929 and 1931 as well as that of 2008, he shows how banking and monetary collapses suddenly and radically alter the rules of engagement for every other type of economic activity. Increased calls for state action in countercyclical fiscal policy bring demands for trade protection. In the open economy of the twenty-first century, such calls are only viable in very large states—probably only in the United States and China. By contrast, in smaller countries demand trickles out of the national container, creating jobs in other countries. The international community is thus paralyzed, and international institutions are challenged by conflicts of interest. The book shows the looming psychological and material consequences of an interconnected world for people and the institutions they create. (20090905)

Product Details

• Amazon Sales Rank: #6165 in Books
• Published on: 2009-09-30
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 336 pages

Features

• ISBN13: 9780674035843
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.
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From Publishers Weekly
Among the casualties of the recession will be the once unstoppable juggernaut of globalization itself, argues this scattershot treatise. Historian James (The End of Globalization) compares the current economic crisis to the Great Depression to suggest a cyclical dynamic in which advances in global integration are superseded by retrenchments toward economic nationalism and autarky. What links these cataclysms, he contends, is the crumbling of values in many senses. As banks' balance sheets grow murky, unemployment soars, currencies fluctuate and economies seesaw between inflation and deflation, the cultural values that depend on confidence in the global economy—trust, openness, tolerance—also waver. The result—in the 1930s and now, he fears—is a swing toward tariffs and trade wars, anti-immigrant backlashes and perhaps authoritarian government. James buttresses his thesis with statistics and graphs and detailed, blow-by-blow chronicles of stock market panics and bank runs past and present, but none of this ever gels into a systematic account of the various crises he investigates or a rigorous model of cyclicality in economic globalization. Instead, he's written an elegy for an expansive form of liberal capitalism that's now been done in by its financial excesses. (Sept.)
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Review
No one is better qualified than Harold James to explore the similarities and differences between recent events and the early 1930s. A model of lucid exposition, The Creation and Destruction of Value confirms that if you want to understand our current predicament, history is a much better guide than economics.
--Niall Ferguson, Harvard University, author of The Ascent of Money (20091106)

A masterly account. James commands his subject like no other. The lessons of 1931 for today's world are compelling. Like Humpty Dumpty, globalization is broken, and it will take time to put it together again.
--David Marsh, author of The Euro: The Politics of the New Global Currency (20091202)

The reflections of Harold James, an economic historian at Princeton University and a long-time student of what makes globalization happen, would be of interest even in times more tranquil than these. But at a moment when the march of global integration has been stalled by a financial crisis unparalleled since the 1930s, Mr. James is a particularly fitting guide...At a time when economists are accused of having forgotten history, yet few historians can explain the world of bank bail-outs and the turmoil they cause, Mr. James has a rare gift for being able to marshal an impressive knowledge of economic and financial history in order to highlight previously unrecognized connections with the past. (The Economist )

Illustrates both the benefits and the limitations of economic history...James draws fascinating parallels between the globalization cycles of the past century.

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...Anyone expecting his new book to explain why this current crisis will end the burst of globalization will be disappointed. His argument is more subtle and more interesting...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.
--Hamish McRae (The Independent )

From the current vantage point--rising stock prices amid a weak economic recovery and double-digit unemployment--it is too soon to know whether the current crisis will be remembered as a financial shock that failed to throw off the trajectory of globalization, or if it marks the start of a more fundamental re-ordering. James modestly and appropriately avoids trying to answer that question. But he asks all the right ones, offering a brilliant tour through the Great Depression and the current crisis.
--Edward Alden (Forbes.com )

About the Author
Harold James is Professor of History and International Affairs at Princeton University.

Customer Reviews

YES. Highly speculative International financial capital flows (globalization) can lead to catastrophe
The author is a historian.He presents a very good analysis of the impact that highly speculative international capital flows can have on the world economy.Such highly speculative behavior can only occur if the world's private banking industry decides to deliberately ignore and evade their own standard creditworthiness criteria used to evaluate to which borrowers they will extend loans/lines of credit .The watering down of these standards is the direct result of the world's banking industries accepting a nonsense " theory ",called the Efficient Market Hypothesis (EMH).This theory was created by Milton Friedman , Eugene Fama,Robert Lucas,Jr.,F Kydland,Edward Prescott,and many other neoclassical economists, who were desperately trying to find a way to avoid coming to grips with a very fundamental point made by J M Keynes ,F Knight,D Ellsberg,B. Mandelbrot and N.N. Taleb.This point can be illustrated by using either the uncertainty versus risk differentiation of Keynes,Knight,and Ellsberg,which was that decision making under uncertainty/ignorance/ambiguity is of a fundamentally different and much more dangerous character than decision making under risk ,or the equally powerful " wild risk " versus " mild risk " distinction of Mandelbrot and Taleb.The EMH states that the " wild " risk of the Cauchy distribution is a mathematical and statistical impossibility that can be simply ignored.This pseudo theory is still being actively taught as the only scientific approach in every university and college course in finance,financial economics,monetary theory and macroeconomics in the world.

The EMH simply claims ,without a shred of empirical,historical,or statistical support,that there is no difference between uncertainty and risk or wild risk and mild risk , where wild risk is represented by the Cauchy distribution,and mild risk is represented by the normal (log normal)distribution.The result is that the EMH claims that (a) the time series data in financial markets can be represented by a normal probability distribution,(b)financial bubbles are an impossibility,and (c)all such risks can be effectively managed by banker VAR (Value at Risk) models.The VAR models are just a different name for the EMH .The same holds for the capital asset pricing model( CAPM),the BLACK-SCHOLES put and options pricing equation,adaptive ecpectations ,rational expectations, real business cycle theory,Subjective Expected Utility (SEU)theory,etc.The author discusses this in his last chapter from pp.240 through 280.However,he is somewhat vague in his general presentation.He does not discuss the issue of how the world's banking industry ,over the last 35 years,has essentially eliminated the application of basic creditworthiness standards and substituted ,instead ,the EMH in a sufficiently rigorous manner.

THe EMH is the foundation for the claim that increased,highly speculative , international financial flows ,resulting from globalization,can be safely managed by the private banking industry in lieu of the standard safety first approach based on firm creditworthiness standards.The author is somewhat vague in explaining this in his last chapter.

I have some basic criticisms.First ,there is only a brief discussion of Keynes.Keynes understood better than anyone else the major role that financial speculation had played in the total breakdown of the globalization process of the 1920's.This has repeated itself again in the 1980's -2000's .Second ,there is no discussion of Ellsberg,Mandelbrot,or Taleb.This may be due to the fact that the author is a historian and does not feel that the technical issue needs to be completely addressed.Doing so could have improved the book.

I recommend buying the book for readers who want a good ,general overview of how financial globalization can quickly result in catastrophic financial market failure in the same way that a tsunami can quickly destroy anything in its path.

Outstanding review of past and current Globalization history
It was a very provocative reading.
Mr James has done a very good job to present the current globalization and the 2008 economic crisis within a historic perspective.
The References listed at the end of the book is by itself a very good compilation of documents related to these topics.

The globalization cycle will start again, but it will not start up immediately
"The Creation and Destruction of Value" is on the ROROTOKO list of cutting-edge intellectual nonfiction. Professor James's book interview ran here as cover feature on November 9, 2009.