Globalization, round one, ended in 1914:
What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot. But escape was possible, for any man of capacity or character at all exceeding the average, into the middle and upper classes, for whom life offered, at a low cost and with the least trouble, conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; 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, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality, could despatch his servant to the neighboring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and 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.
John Maynard Kenyes, The Economic Consequences of the Peace (1919)
(Quoted at the beginning of Deepak Lal’s new book, Reviving the Invisible Hand : The Case for Classical Liberalism in the Twenty-first Century . I mentioned Lal in this post.)
The Keynes quote is, of course, reminiscent of the famous opening paragraph of A.J.P. Taylor’s English History, 1914-1945:
Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country for ever without a passport or any sort of official permission. He could exchange his money for any other currency without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter, a foreigner could spend his life in this country without permit and without informing the police. Unlike the countries of the European continent, the state did not require its citizens to perform military service. An Englishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state who wished to do so. The Englishman paid taxes on a modest scale: nearly £200 million in 1913-14, or rather less than 8 per cent. of the national income. The state intervened to prevent the citizen from eating adulterated food or contracting certain infectious diseases. It imposed safety rules in factories, and prevented women, and adult males in some industries, from working excessive hours. The state saw to it that children received education up to the age of 13. Since 1 January 1909, it provided a meagre pension for the needy over the age of 70. Since 1911, it helped to insure certain classes of workers against sickness and unemployment. This tendency towards more state action was increasing. Expenditure on the social services had roughly doubled since the Liberals took office in 1905. Still, broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.
When I quoted this here, Helen corrected me noting that by 1914 “Even by [Taylor’s] own admission the state was interfering in ever more aspects of everybody’s life.” (BTW, see this good post about Taylor, from the Conservative History Blog.)
It is true that Taylor overstated the case, a type of exaggeration meant to make his larger point. Still, he was more right than not when comparing pre-1914 with post-1918. And he was right to make clear that the freedom to participate in international trade and travel was considered a seamless part of the general liberties enjoyed by all Englishmen.
Nonetheless, by 1889 F.W. Maitland, in his Constitutional History of England, was writing that the great change came with the Reform Bill of 1832, and that by his day, circa 1889, it was clear:
We are becomng a much governed nation, governed by all mannder of councils and boards and officers, central and local, high and low, exercising the powers which have been committed to them by statute.
Maitland was looking back to the then still living memory of true laissez faire, and the trends were clear. But if Taylor overstated the smallness of the State’s role before the war, he did not exaggerate the vast expansion it experienced during the war. Compared to 1889, 1919 was a very different world.
Similarly, Keynes was right about the extraordinary level of freedom to buy and sell, trade and travel, that existed prior to the 1914 outbreak of war. In many ways, we have never gotten back to that level of freedom.
World War I really was the moment when the wheels came off, when things really started going to Hell in a big way.
(I’ve been obsessing about World War I lately.)