In many ways, arguing that the double movement developed in both epochs raises as many questions as it answers. For it does not fully explain why there should have been a confluence of so many similar things at the same time in both periods. If technological revolution explains hyper-globalization and hyper-liberalism, what explains the explosion of innovation that produced those revolutions? And how exactly are these tied to the adoption of a new form of international exchange? To understand how the modern global order first emerged and then re-emerged, the next two chapters will examine the prelude to these two periods of hyper-globalization.
In fact, the rise of the liberal order in both eras materialized out of the ashes of major power conflict. From 1793 to 1815, Europe was under the constant threat of Napoleon’s annexation of Europe. Similarly, from 1914 to 1917, and again from 1934 to 1945, Europe was besieged by Germany’s expansionary designs. Both periods of interstate war involved all the powerful states of the day.1 At the end of both conflicts, the major powers came together to forge a new international order that they hoped would allow peace to endure; and so it did. As Kevin O’Rourke observes, “the wars of 1793–1815 were such a traumatic event that they produced a surprisingly durable peace settlement—resembling, from this point of view, the war of 1939–45.”2 The peace among the world’s industrializing nations required an unprecedented level of international cooperation. One consequence of this sustained peace was that it provided the space needed for innovation to flourish and international commerce to blossom.
The importance of the long-standing peace that followed the Napoleonic Wars was not lost on Polanyi. It was, in fact, his starting point. The initial puzzle Polanyi poses is: what held peace among these formerly belligerent powers for 100 years? This is a curious puzzle because the agreements hammered out from 1815 to 1817, referred to as the Concert of Europe, were rather flimsy. There were neither strong international organizations nor clear mechanisms that could hold different actors accountable. Polanyi notes that the Concert of Europe “amounted at the best to a loose federation.”3 For these reasons, Polanyi is highly skeptical that such insubstantial accords could actually have held the peace for one hundred years. As he explains,
International disequilibrium may occur for innumerable reasons—from a dynastic love affair to the silting of an estuary, from a theological controversy to a technological invention. The mere growth of wealth and population, or their decrease, is bound to set political forces in motion; and the external balance will invariably reflect the internal. . . . Once the imbalance has gathered momentum only force can set it right.4
He therefore concludes that the Concert of Europe might be regarded as an expression of a “revived peace interest”; but, as he colorfully retorts, interests “remain platonic unless they are translated into politics by the means of some social instrumentality.”5 It is here that Polanyi contends that there had to have been another force, something unique to the nineteenth century, that explains how peace among the rival powers was maintained. And that, he claims, was haute finance. Polanyi dismisses the relevance of the post-Napoleonic international order because he believes it does not account for why peace was maintained. But it might account for how finance became globalized in tandem with global trade.
The next two chapters will make the case that four critical outcomes from the postwar period in both epochs help explain the rise of global trade, finance capitalism, and with that hyper-liberalism. First, trade and industry were able to ramp up; second, a new center of finance and economic power emerged that could impose a liberal agenda; third, mounting pressures from trade forced the adoption of a new international monetary system; and fourth, these combined processes provoked a global economic crisis, which provided the political impetus to dismantle what remained of the earlier protective order. The combined effect of all of these outcomes was that capital became mobile, laissez-faire trade globalized, and the “liberal creed” internationally disseminated. All of this set the stage for the double movement in the latter part of both centuries. Chapter 12 will examine these changes in terms of the early nineteenth century, and Chapter 13 will look at the same processes in the mid-twentieth century.