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Three globalizations, not two: rethinking the history and economics of trade and globalization

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  • Thomas I. Palley

    (Independent Economist, Washington, DC, USA)

Abstract

The conventional wisdom is that there have been two globalizations in the modern era. The first began around 1870 and ended in 1914. The second began in 1945 and is still under way. This paper challenges that view and argues that there have been three globalizations, not two. The first half of the paper provides empirical evidence for the three-globalizations hypothesis. The second half discusses its analytical implications. The Victorian first globalization and the Keynesian-era second globalization were driven by gains from trade, and those gains increased industrialized country real wages. The neoliberal third globalization has been driven by industrial reorganization motivated by distributional conflict. Trade theory does not explain the third globalization; capital’s share has increased at the expense of labor’s; and there can be no presumption of mutually beneficial country gains from the third globalization.

Suggested Citation

  • Thomas I. Palley, 2018. "Three globalizations, not two: rethinking the history and economics of trade and globalization," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 15(2), pages 174-192, September.
    • Handle: RePEc:elg:ejeepi:v:15:y:2018:i:2:p174-192
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    Cited by:

    1. Giorgio Canarella & Luis A. Gil-Alana & Rangan Gupta & Stephen M. Miller, 2022. "Globalization, long memory, and real interest rate convergence: a historical perspective," Empirical Economics, Springer, vol. 63(5), pages 2331-2355, November.
    2. Woodgate, Ryan, 2021. "Multinational corporations and commercialised states: Can state aid serve as the basis for an FDI-driven growth strategy?," IPE Working Papers 161/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Alexandra Bykova & Leon Podkaminer & Oliver Reiter & Robert Stehrer, 2019. "Monthly Report No. 5/2019," wiiw Monthly Reports 2019-05, The Vienna Institute for International Economic Studies, wiiw.
    4. Albertina Dias, 2019. "Perspectives on the New Silk Road and World Dynamics," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 7(3), pages 15-21.
    5. Mark Setterfield, 2025. "The COVID pandemic and its aftermath: missed opportunities for avoiding a future of Authoritarian Neoliberalism," Working Papers 2510, New School for Social Research, Department of Economics.
    6. Soldatos Gerasimos T., 2018. "Property Rights on Credit and State Control of Money: The Irrelevance of the Origin of Money," The Economists' Voice, De Gruyter, vol. 15(1), pages 1-5, December.
    7. Ganguly, Arpan & Spinola, Danilo, 2024. "Growth and distribution regimes under global value chains: Diversification, integration, and uneven development," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 634-649.
    8. Giorgos Gouzoulis, 2021. "Finance, Discipline and the Labour Share in the Long‐Run: France (1911–2010) and Sweden (1891–2000)," British Journal of Industrial Relations, London School of Economics, vol. 59(2), pages 568-594, June.

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    Keywords

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    JEL classification:

    • F00 - International Economics - - General - - - General
    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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