Senior FT trade writer Alan Beattie on the forces behind the surge and collapse of globalisation, from the Roman and Mongol empires to Donald Trump and Covid-19.
Globalization it’s reasonable to say is in trouble even before the kovat 19 pandemic the great surge in cross-border movements of goods services in capital that started in the 1990s was having to surmount greater and greater obstacles first came the world financial crisis in 2008 then came donald trump starting tire force in multiple directions try to drive china
Out of tech supply chains and wanting everything made in america and now comes the corona virus a disease itself spread by cross-border travel which is closing down large swathe of the world economy was the international trade to collapse and leading to calls from politicians to bring production back home we’ll all this really be enough to put globalization into
Long-term reverse you’ve had episodes before which felt something like this we’ve had times in history where a whole new trading area developed often they were backed by an empire or by new technologies those systems eventually degraded or collapsed but it took quite a lot sometimes evolving disease and even war so war to destroy them so to understand what happened
In the past and get some pointers for the future let’s first talk about the ancient romans the romans imposed a rule across much of europe and around the mediterranean they traded mainly in grain linen wine pottery even then their trade extended indirectly as far east as china in silk now rome wasn’t mainly a commercial trading empire more a system of military
Occupation but their most impressive achievement was constructing a supply system of grain cheap roman citizens fed the bread in bread and circuses much of the grain was grown in the nile valley and shipped across the mediterranean this was so efficient that by some estimates ancient rome due to more than a million people that’s the same that london achieved eighteen
Centuries later like many empires though rome overstretched it was attacked by germanic tribes the vandals and the visigoths and it collapsed europe splintered into a mass of unstable kingdoms who weren’t always keen on trading peacefully with their neighbors it wasn’t until more than 700 years later in the 13th century that another empire rose to pick up where the
Romans had left off the mongols step toward genghis khan who brought the vast empire together now we think of the mongols his warlike his structure tights and true mongol culture was top-down and militaristic at the same time they created enough peace and order for long-distance trade to flourish once more historians called the era packs mongol occur they established
The land route from asia as far as china to arabia and via ships on towards europe it was named after its most famous products the silk road but they also traded in jewels and precious metals and ceramics and also in knowledge of medicine and science but like the romans the mongols empire was too rigid to last very long it split into rival kingdoms it was also
Savagely weakened ironically by a side-effect of the silk road as the trade caravans and armies went west they carried with them fleas which brought pee banach plague the black death the cova denine teen pandemic of today has already been hugely destructive the black death was an absolute catastrophe populations in europe and the middle east were devastated perhaps
A third or a half of all people died and with that implosion came the end of packs mongol occur and a darker age for global trading meanwhile china which until then had been a huge sea trading power turned in on itself it’s bureaucrats who distrusted trade who’s more powerful than its merchants who profited from it in the 15th and 16th century china disbanded its
Navy and cut its traders off and foreign commerce after the mongol empire died in the 14th century new trade routes eventually appeared but these didn’t grow into a unified trading system this fed across whole continents european empires established trading routes with the americas africa and asia the trade was generally limited to specialist goods like spices and
Cotton textiles it was based largely on imperial monopolies and exploitation including the slave trade backed by military force and the limited technologies sailing ship communication by hand delivered message counting fad it was the 19th century when things really came together new technologies may transport faster and cheaper railways and steamships support the
Wheat of the american prairies cheaply to the baker’s of europe the telegraph met london could chat with new yorkers the first transatlantic cable was laid in the 1850s manufactured goods like iron steel and glass flooded across the oceans as did capital to build us railroads and cities and migrant workers to seek greater opportunities currencies were linked to
Gold by the gold standard keeping prices predictable the first golden age of trade from the 1880s until 1914 as it became known wasn’t just a secure trade routes enforced by military power it was globalization it was a closest to a single market that until then the world had ever got the system took quite a lots of destroying but that happened for the first world
War whose destructiveness of course was reinforced by another devastating global pandemic the so called spanish flu of 1918 and then the great depression soviet russia and other countries turned toward dictatorship and self-sufficiency even democracies led by the u.s. retreated behind tariff barriers the gold standard collapsed the first golden age was over after
The second world war two big democracies and abhorrest he started to dismantle some of these barriers but the next big wave of globalization didn’t take off until the 1990s soviet communism collapsed china opened up to international trade digitization and the internet revolutionized global supply chains financial markets were liberalized asia we took its former
Place as one of the great centers of business and trade china started to rebuild the silk road to the west the great surge of goods services capital and a new phenomenon digital data started moving around the world everything from electronics to software to artificial intelligence then came the world financial crisis of 2008 after it came populism and suspicion
Of globalization and then came donald trump and his trade was and his trying to drive chinese companies out of global supply chains out of the technology sector out of 5g mobile networks and ultimately out of america and now comes kovat 19 coming on top of trump the pandemic was the last thing the global trading system needed trump could be on his way out of the
White house by the end of the year the effects of the virus and of possible resurgence ease and future pandemics will continue as well as it’s direct effects in limiting travel trade and growth koba 19 will give support to any politician not just trump who wanted things made at home however inefficient and expensive rather than bought and sold aboard governments are
Obviously focusing on cobe there’s a health crisis their immediate aim being to save lives yet from the point of view of the trading system and the world’s future resilience to shocks their sponsors have not been impressive they’ve slammed on export restrictions on medical kit driving crises upwards and damaging trust in open commerce the us and china have increased
Their ettore own conflict it will be hard for those two superpowers to sit down to the negotiating table and talk about reducing trade tensions after this but obvious that this may seem we need to keep things in a bit of historical perspective here donald trump isn’t as bad as the physical and the vandals he’s not as bad as the great depression we haven’t had a
Major war between the big powers and terrible though kovat 19 is it’s unlikely to match the black death that cut down huge suede’s of the populations of europe and the middle east and helped to destroy the mongol empire there are technological and economic forces that will resist the disintegration of international commerce digitisation that spreads supply chains
And data movements around the world won’t be dissin vented chinese companies as well as american and european operate all over the world assuming a big assumption of course that the pandemic subsides it’s quite possible that this was the moment that the 30 year era of globalization stalled even took quite a big hit but did not collapse of course there are other
Actual and potential sources of disruption climate change for one particularly if it causes a backlash against trade cyber warfare between the big powers perhaps but are we on the verge of another collapse of a global trading regime probably not yet
Transcribed from video
The rise and fall of global trade: the Romans to Covid-19 | FT Trade Secrets By Financial Times
