CHAPTER EIGHT: Pax Britannica, Pax Americana, and Globalization Today
Study
Globalization, or the economic interdependence of states, has evolved through three distinct phases. Globalization 1.0 was the age of colonialism and mercantilism. Globalization 2.0 occurred under the Pax Britannica and was the driving force for the proliferation of new institutions. Globalization 3.0 is associated with American hegemony and the proliferation of information technology.
The realists argue that the distribution of power determines patterns and levels of globalization. For example, America's rebound from the economic doldrums of the 1970s and its subsequent victory over the Soviet Union propelled it to hegemonic status. This preeminence paved the way for new technology and open markets, which has created a Pax Americana in the tradition of the nineteenth-century Pax Britannica. The liberal perspective points to changing domestic institutions driven by the agricultural and industrial revolutions as well as the proliferation of international institutions and the information revolution as the driving force behind globalization. Identity perspectives, finally, look at the victory of economic liberalism over Marxism and aggressive Keynesianism. This shift in ideas led to the pursuit of market-oriented policies that created a conducive environment for the information revolution and globalization.
Study Questions
- According to hegemonic stability theory, what role does the hegemon play in the world economy?
- What were the Bretton Woods institutions? Why were they created?
- What are the differences between Keynesian economics and the Chicago School? How did these ideas impact economic development in the twentieth century?