Globalization in Two Eras: The Resilience of the European Economy in a Multipolar World

Recovering from recession, Europe faces a unique challenge.  Europe recovered from the caesura of World War II under the umbrella of U.S. hegemony; it regained a role in the world economy under the aegis of international institutions created following the War. In the second decade of the 21^st century, Europe is faced with a dramatically new situation: in place of U.S. hegemony, an unstable multipolar world; in place of economic globalization protected by international institutions, stagnation and questioning of the very viability of international institutions. 

In order to understand this challenge it is crucial to grasp its deep roots.   The origins of globalization go back, not to the international institutions founded after 1945, but to the late nineteenth century.  This first era of globalization shipwrecked against a new multipolar international system that emerged during the early twentieth century. Yet this first era of globalization still provides a blueprint for Europe today. The builders of the post-1945 international architecture sought to revive the foreign investment, free trade, and monetary stability of the pre-1914 era, but to do so through institutions, not informal rules.   

Contrasting the world of the early twentieth century with that created after 1945 reveals the unique role of alliances among states, the distinctive importance of political leadership, and the enduring problems of monetary policy, migration, and diplomatic stability.  By comparing how globalization  shaped Europe’s fate in the early twentieth century with how it shapes it today, we can see more clearly the continuing effect of the past as well as the dramatically new aspects of the current challenge.