Globalization: “then” and “now”

The interplay of continuity with change makes historical parallels imperfect. Nevertheless, by highlighting both the similarities and the differences, they may help us understand better complex processes in contemporary history. The process of economic globalization through the expansion of business and commerce, which is proceeding now at a spectacular pace, resembles in many ways a similar process that was underway when the Gold Standard was at its height (approximately 1890–1913). Of the three main economic aspects of globalization usually discussed, namely, expansion in international trade, investment, and finance, at least in the first two aspects globalization “then” under the Gold Standard is comparable with what is going on “now.”

Since World War II, international trade has grown rapidly, from a meager 6 percent of world gross domestic product to over 15 percent by the early 1990s; the countries of the OECD (Organization for Economic Cooperation and Development) exported 17 percent of their aggregate GDP in 1992. And yet, these numbers are not unprecedented. In the year 1900, the 16 most industrialized countries exported 18 percent of their GDP, a figure that rose to 21 percent in 1913. Roughly speaking, industrialized countries export one out of every 5 dollars of output they produce today, as they did just before the outbreak of World War I (Maddison 1989).

Although these aggregative pictures of international trade remain comparable, the details are different between “then” and “now” in two interesting respects.