Seven Crashes

A leading economic historian presents a new history of financial crises, showing how some led to greater globalization while others kept nations apart

In this book, leading economic historian Harold James presents a new history of the past two hundred years of globalization and its turning points. Examining seven economic crises that occurred during this time-in the late 1840s, the simultaneous stock market shocks of 1873, the First World War years, the Great Depression era, the 1970s, the Global Financial Crisis of 2007-2008, and most recently the Covid-19 crisis-he shows how some of these ultimately pushed markets in the direction of more cross-border integration of labor, goods, and capital markets while others prompted substantial deglobalization.

James identifies two types of crises. Those prompted by shortages-such as the events of the First World War and the oil shocks of the 1970s-have led to greater globalization, as markets expand and producers innovate to increase supply. By contrast, demand-driven crises, such as those that caused the Great Depression and the Global Financial Crisis of 2007-2008, generally lead international trade to contract, resulting in less globalization-along with widespread skepticism of governments that accompanies these incidents.

The book also makes its case by examining the key observers whose writings shaped our understanding of each crisis: Karl Marx in 1848; Stanley Jevons, Leon Walras, and Carl Menger in the 1870s; German Treasury Secretary Karl Helfferich in the First World War; John Maynard Keynes in the Great Depression; Milton Friedman and Friedrich Hayek in the 1970s; Ben Bernanke in 2008; and Larry Summers and Raj Chetty in 2020.