9 - Internationalcapital movements and the global order

Summary

This chapter distinguishes the varieties of cross-border capital movements in the two modern eras or waves of globalization, from the mid-nineteenth century to World War I, and then from the 1970s to 2007, as well as the capital market and financial developments that contributed to the catastrophic unraveling of globalization in the intervening period. The twentieth century, viewed through the current account, shows a U-shaped development, with more capital flowing at the beginning and end of the century, and substantially less in the middle. In the 1860s and 1870s, as the world moved to a general adoption of the gold standard, there were even discussions about the creation of a world currency. In 1944 and 1945, the Allied makers of the postwar order wanted to draw lessons from the disasters of the interwar period. The Bretton Woods scheme depended on a worldwide agreement on the control of capital movements, which was presented as a "permanent feature" of the postwar system.