“The inhabitant of London could order by telephone, sipping his morningtea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world.”
Substitute the words "by telephone" for "online" and you could be reading Friedman, Gladwell, Godin or any of the other ahistorical high priests of globalized high technology capitalism. Like the wealthy cheerleaders of Silicon Valley, this pre 1914 elite blithely ignored the realities of the real world outside their own little bubbles. Krugman quotes Keynes again on the way in which pre 1914 Davos man saw their little world as inevitable and timeless:
“(They) regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement ... The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion ... appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.”
2008 isn't 1914 -- or is it?
Krugman reminds us of Norman Angell, the author of the 1910 best-seller Great Illusion which argued that global technology had made war obsolete. The end of war? No. Four years later, came Sarajevo and the end of Angell's great illusion.
Today we have equally great illusions spread by equally short-sighted and parochial optimists. These sunny-side-uppers are promised the end of history, the end of scarcity, even -- courtesy of the increasingly buffoonish Chris Anderson -- the end of science. But, as Krugman argues, rising world food prices, colonial wars in Iraq and Georgia, the emergence of an inchoate multipolar international system, the rise of unashamedly authoritarian and nationalist superpowers, are all conspiring to undermine the convenient niceties of the international free trade system.
1914 represented the end of the end of. Krugman -- the closest thing we have to a contemporary Keynes -- is correct to compare the cataclysmic fragmentation of the free trade system at the turn of the 20th century with our early 21st century global crisis. We aren't on the road to Sarajevo yet. But to understand where we are going, we need to study the past rather than imagine the future (which, as Orwell's Winston Smith wrote, is unknowable).
So enough already about the iPhone and informational abundance and all the other great illusions of our techno-lustful age. Krugman is right. We all need to grow up now. The year isn't 1914, but it might be 1908. We've got about six years to save the global system. Where do we start?