CAPITALISING ON CHANGE IN A GLOBALISING WORLD

Wolfgang Michalski has been a Professor of Economics at Hamburg University and was a long-time Director of OECD in the Futures Unit. He is also an Ambassador of the Free and Hanseatic City of Hamburg, where he was born and brought up. In addition, he is a colleague in the International Futures Forum with whom I have been associated since 2001. This wide-ranging and extraordinarily informative book draws on the author's very broad experience and extensive reading and, as the subtitle suggests, with a view from the city of Hamburg, with its 1,000 year history of innovation and resilience in continuing to play a key role in the global economy. The book is very clearly laid out, with beautiful photographs illustrating various historical epochs in the history of Hamburg. There are six main sections covering the history of globalisation to the present day with perceptive comments on potential future trends.

Even though the term globalisation may be a recent one, Wolfgang makes it very clear that the process has been going on for much longer and has involved historic shifts in economic power over the centuries, with the centre of financial activity in the Middle Ages on moving from Venice to Antwerp to Amsterdam to London and to New York. Of course, at an earlier period, affairs were centred on Athens then Rome. He sees the principal historic motives for the globalisation process as conquest, the effort to become rich, missionary activity and sheer curiosity and thirst for adventure. The role of cities is especially important and relative naval power was a key factor in relation to the development of trade. Even in the first chapter, Wolfgang remarks that economic and social adaptability are central to continuing prosperity.

Five of the chapters are devoted to Hamburg itself. The first deals with its development as a major Hanseatic city, and the port remains important throughout. At this early stage, Hamburg was the European beer capital at a time when beer was considered almost a staple food accounting for around 8% of daily diet in terms of calories. Already in the 14th century, there were over 453 brewhouses, with 70% of beer being exported representing 30% of Hamburg's exports. Sugar became important in the 18th century, as it became clear that it was better to refine the product in Europe. In the 19th century, the port became even more important as the Industrial Revolution and international trade continued to develop. By the early 1900s, it was one of the richest cities in Europe, which made the impact of the First World War all the more serious. The Germans also thought, mistakenly, that the war would be a short one. The sea blockade had an enormous impact, with the throughput of goods dropping from 25.5 million tonnes in 1913 to 1.3 million tonnes in 1915, resulting in huge unemployment among dockworkers. The city also lost 35,000 men in the war. Hamburg suffered during the 1930s from the decline in trade, and was devastated by 128 air raids between 1940 and 1942. The impact on ordinary people can be seen from the fact that 62% of homes were either destroyed or rendered uninhabitable, resulting in nearly 1,000,000 people being homeless. The final chapter on Hamburg situates the metropolitan region as a vibrant economic centre in northern Europe with clusters of activity in port and logistics, aviation, media and IT, healthy economy, life sciences, medical technology and renewable energy. Wolfgang sees the future of the city as bright, both in economic and cultural terms.

The broader narrative proceeds through history with many colonial rivalries arising between different European powers. I was particularly interested to read about the maritime history of Holland and its dominance of trade routes. Trade was the beginning of an interconnected world, but it was also responsible for the huge forced migration of slaves to the New World. The figures for Portugal to Brazil alone are quite staggering: 100,000 in the 16th century, 600,000 in the 17th century, 1.3 million during the 18th century (mining) and 1.6 million from the coffee boom in the 19th century. The first recognisable credit crises with international dimensions occurred in 1763, 1772/73 and between 1781 1783. Much more serious was the first global financial crisis of 1857, then the better-known ones of 1929 and 2008 - the last three all originated in New York. It is interesting to reflect that the extent of globalisation at the end of the 19th century was arguably greater than that 100 years later, partly due to de-globalisation process of the interwar years (p. 179).

There is a detailed chapter on the post-war period up to 2008, covering the main economic and political issues around the world, including the impact of the first oil crisis and the end of the Bretton Woods international financial arrangements. Wolfgang also gives a very good analysis of the impact of the Internet as well as the sub-prime crisis in the USA representing the bursting of the latest speculative bubble. However, the derivatives bubble is still in the system and has yet to burst; nor have governments moved to limit the risks of this kind of activity. In the US, at least, there are close ties between the financial sector and the Treasury Department.

The last two chapters consider the move from US hegemony towards a multipolar power structure and the future of global governance. The main players are the US, China, the European Union, India and Japan. Wolfgang points out that the European Union is an economic giant on the one hand, but has little geopolitical clout on the other. Throughout the book, he considers alternative scenarios and their implications for the countries involved. His reflections on the future of global governance envisage three potential scenarios: managed globalisation with its conflict between efficiency and legitimacy, muddling through, highlighting the difficulties of performing global governing institutions, and the temptation of large powers to impose their own interests. He is very aware that the increasing degree of global interdependence makes the future different from the past, then there is the growing influence of NGOs where much pioneering work is being carried out. This includes the International Features Forum, where a central concern is how best to act in an uncertain world in terms of developing resilience, flexibility and the capacity to innovate. It is a moot point whether these capacities will in fact enable sufficiently radical reform of global institutions without an intervening crisis. Nor is it the responsibility of particular countries to put the global interest first, whether politically or environmentally (it would have been interesting to have more analysis of the potentially disruptive economic effects of environmental disruption, as discussed by the Stern Review). Overall, this impressive book gives the reader a comprehensive analysis of the history of globalisation, enabling us better to understand where we are now and where we might collectively go in the future, given sufficient vision and political will.