Global Capitalism in the Twenty First Century

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Global Capitalism
Its Fall and Rise of the Twentieth Century
By Jeffry A. Frieden

A Review and Analysis

Business and Government Interface

October 2nd, 2006

Introduction

Many economists, business and political leaders believe the era of globalization has arrived and that we have little capacity to reverse it and it is here to stay. If you take a walk through history with Jeffry A. Frieden's new book, Global Capitalism: Its Fall and Rise in the Twentieth Century, you will observe the author's attempt to draw comparisons to the economic and political policies of today and the decades leading up to the crash of 1914.

Frieden, suggests the, "Global economy and culture form a nearly seamless web in which the national boundaries are increasingly irrelevant to trade, investment, finance and other economic activity."

Frieden sites numerous examples, including the mass migration of people from rural to urban communities in search of jobs, the continued reliance and integration of international trade and commerce reaching unprecedented levels and his belief that major industrialized and emerging economies of the world are becoming more open than ever before.

Frieden describes this movement like the letter U. in which we saw significant integration of labour, goods, and capital markets occurred in the late 19th century and was subsequently reversed as a result of the Great War and the Great Depression.

Frieden suggests that, ‘"Globalization is a choice, not a fact. It is a result of policy decisions and the politics that shape them." Throughout this book Frieden provides us with his insights into history, many of which rarely get any airtime in the boardrooms of multinational corporations, yet merit consideration.

His chief motive is to take the reader for a walk down memory lane starting with the turn of the last century when global capitalism was triumphant, examine the crash of 1914 and subsequent economic crisis that followed into the cold war era and our migration back to global integration at the end of the same century. He makes many arguments that reflect on lessons learned from the past, which reflect our current day situation.

This paper will provide an analysis of specific themes Frieden explores in his book and provide some reflection of whether his recommended course of action meet with the realities of the 21st Century.

Is global capitalism a frail system that is destined to fail in the 21st century? The purpose of this report is to examine whether similar conditions exist today that reflect the summer of 1914 when global capital markets collapsed. Frieden argues that globalization will fail only if the growth stops or slows significantly, which hasn't happened yet. I think the bigger question that follows this is, if global capitalism is to survive and grow what conditions need to be in place to ensure we avoid a repeat performance? This includes close examination of how technology, capital and labour need to work collectively. It also requires us to look at how government policy and intervention on our economic and political systems either support or weaken the sustainability of global capitalism. Frieden makes the argument that despite the imperfections of the current system of global capitalism, it is still the best of the worst. The Gold Standard Era

Frieden's account of the rise and fall of the gold standard era was exceptional. In particular, he highlighted the glory years from pre-1914 and post-World War II. He suggested that the Bretton Woods agreements attempted to give national economies some control over short-term capital flows. They attempted to show that modern societies could commit to strong social policies, while still holding true to the belief in global capitalism and economic integration. Prior to 1914, monetary and fiscal policies did not exist. The gold standard was used by many investors to protect against inflation. "Britain provided...
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