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August 3, 2008
David Warsh, Proprietor


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On the Significance of Geneva

It’s August. Is anyone surprised that trade talks in Geneva collapsed last week, just in time for a proper vacation, after which the world trade community will have a couple of months to tidy up its collective desktop in anticipation of the US election in November?

 

As the Financial Times put it, “Like Wimbledon fortnight but without the aesthetic or entertainment value, the annual breakdown of the Doha round of trade talks is becoming a summer ritual.  For three successive years, dark warnings of now-or-never and one-last-chance have ended in a fruitless ministerial meeting.  It is time to be brave, swallow hard and accept that the Doha round in its present form has failed.”

  

Indeed. The negotiation, the first initiative in multi-lateral trade liberalization to have failed since World War II, didn’t even really begin in Doha, Qatar, in November 2001.  It was supposed to start in Seattle, in 1999.  That’s when virulent street demonstrations, themselves a token of the globalization they protested, disrupted the meetings and ushered in a period of international turbulence that hasn’t subsided yet. Nor did the round collapse because protectionists gained the upper hand. The case for trade is well established.

 

What’s going on in the world of international trade?  Forget about year-to-year bulletins.  Even ten-year swatches of time don’t tell you very much if you imagine that the world might have come to a turning point. To think genuinely august thoughts about what might come next in global trade, step back and ponder events on a grand scale.  A couple of recent books come in handy here. Either would make a nice vacation companion, depending on your mood.

  

Power and Plenty: Trade, War and the Global Economy in the Second Millennium, by Ronald Findlay, of Columbia University, and Kevin O’Rourke, of Trinity College, Dublin, is the result of a collaboration between a political economist and a historical economist. A Splendid Exchange:  How Trade Shaped the World, by William Bernstein, provides the movie version of the story.

 

Bernstein, neurologist, PhD chemist, financial guru, money manager, policy wonk and general all-rounder, is a topic for another day. You can get the flavor of the man and his latest book from his well-attended website, Efficient Frontier.

 

It is Power and Plenty that has captured my attention. I have not read every word yet, but it seems to me the best book of its sort since David Landes’ Wealth and Poverty of Nations, nearly twenty years ago.  It is an item of durable value, 600 elegantly written pages containing some beautiful maps.

 

Findlay, a prominent trade specialist, and O’Rourke, president-elect of the European Historical Economics Society, are at the top of their respective fields, top of their generations, as well. Findlay graduated from Rangoon University in 1954 and gained his MIT PhD in 1960; O’Rourke earned his Harvard PhD in 1989. Economic historians have done a great deal of work in the last fifty years, and nearly all of it is here, sorted through and set forth with clarity.

 

I am not, on a summer morning, going to summarize a thousand years of international trade, except to say the authors organize their account around what they say are the three great events of the last thousand years: the Black Death of the fourteenth century; the “discovery” and incorporation of the New World into the Old starting in the sixteenth century; and the Industrial Revolution, beginning in the nineteenth century. Nor should you spend much more of your time here.  If you want read the book, read it.

 

I will say that the dustjacket, with its painting of a naval battle between French and English men-of-war, conveys the book’s takeaway message. The authors write, “The greatest expansions of world trade have tended to come, not from the bloodless tântonnement of some fictional Walrasian auctioneer but from the barrel of a Maxim gun, the edge of a scimitar, or the ferocity of nomadic horsemen.”

  

Thus successive epochs in global trade have, for the most part, been demarcated by the outbreaks of major wars or imperial expansions: Pax Mongolica, Pax Manchurica, Pax Mughalica, Pax Britannica, Pax Americana. “Each era can be seen as one in which trade is conducted within a geopolitical framework established by the previous  major war or conflict, that is in turn altered by the outbreak of the next war, setting the stage for the next epoch, and so on.  It is natural to suspect that the accumulating economic and geopolitical tensions unleashed in the course of each period of peace, prosperity and trade culminate in successive rounds of conflict, so that wars, rather than being exogenous or external shocks to the world system, have been inherent in its very nature as it has evolved over the past millennium.”

 

That’s very far from the concerns for farmers’ shares that scuttled the talks in at World Trade Organization headquarters in Geneva last week. Nobody will go to war over India’s attempt to protect itself from cheap agricultural exports from Brazil.  What, then, are the accumulating tensions that engage the attention of Professors Findlay and O’Rourke?   It’s central Asia and the Caucasus that interest them, and the various routes from their petroleum riches to Western Europe and the Indian Ocean. Zbigniew Brzezinski calls the area that stretches from Armenia to Afghanistan “the global Balkans.”

 

Do you think that the Russians have tied up Western Europe with their pipelines of natural gas? There is another route to alternative energy supplies, through Turkey to Azerbaijan. “The reader will recall…,” the authors write, “that one of Timur’s strategic objectives was to divert trade from the northern Silk Road controlled by the overlords of Russia, the Golden Horde, to the southern one running through Bukhara and Samarkand, which are both in what is now Uzbekistan.” 

 

That’s the kind of thing that makes Power and Plenty such fun to read.  For in the end, a book about trade is a book about geography – about how the human-built world grew up around straits, harbors, rivers, roads, and natural resources. Writers less well-grounded in the interdependence between trade and politics would have been astonished to find the twenty-first century dawn with the United States embroiled in a two wars along the route that Alexander the Great took to India 2300 years before, but not Findlay and O’Rourke. The US occupation of Iraq in 2003 inflicted a “devastating blow” to American prestige and its claims of moral leadership, they say. It may yet turn out that common threats emanating from the Eurasian heartland will force Japan and Western Europe to make common cause with their US ally once again.

 

The moral of Power and Plenty is that, instead of worrying about the collapse of the Doha Round, friends of trade should be thinking hard about what comes next. The fifty years of the Cold War otherwise had little to recommend it, but at least it imposed a collective discipline on the two major blocs and their client states. In a world of many different blocs, it appears that Pax Americana will be replaced by some new set of stabilizing rules.  But what will they be?

 

That is what makes the next election so interesting.  There seems to be widespread agreement that, in the first years of the new century, the leadership of the United States lost its way and behaved in uncharacteristic ways. The essence of the departure, however, is in much dispute.

 

I don’t mean the decision to invade Iraq. That falls somewhere along a continuum that runs from Woodrow Wilson’s decision to intervene in Europe during World War I through Harry Truman’s decision to go to war in Korea in the summer of 1950 to Lyndon Johnson’s deceptive escalation of the war in Vietnam. Reasonable people can disagree.

 

I mean the assault on the principle that there exist basic human rights that must be observed and protected, even in time of war.

 

Jane Mayer is the former Wall Street Journal reporter who, in thirteen articles in the New Yorker since 2001, has documented the most important details of the behind-the-scenes  American response to the 9/11 attacks. In her new book, The Dark Side: The Inside Story of How the War on Terror Turned into a War on American Ideals, she concludes by comparing the Bush administration’s panic to President Roosevelt’s internment of Japanese-Americans during World War II.

 

To me, that similitude seems too charitable. From Mayer’s account, it appears clear that US leaders in the office of the Vice President and the Justice Department engaged in a fundamental repudiation of the rules for the treatment of non-combatants and prisoners of war hammered out in treaty negotiations over 150 years and collectively known as the Geneva Conventions.

 

On the strength of reporting by Mayer and others, there is good reason to suspect that that these officials committed what a dispassionate jury would recognize as a series of serious crimes under American law in the years after 2001 – in Iraq, in the “dark prisons” in Europe, in the detention center in Guantanamo Bay, Cuba.

 

I don’t know whether or not it is necessary that these officials be prosecuted. Probably not:  these matters are incredibly devisive. But if the US is to regain its traditional leadership in human rights – meaning if it is once again to become the world leader in trade policy, among many other things – its leaders, including both John McCain and Barack Obama, sooner or later must acknowledge this grim, incontrovertible truth.

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