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A book published in 1919 on “The Economic Consequences of the Peace†isn’t the obvious starting place for understanding the economic consequences of the current war in Ukraine. But it’s worth taking a little time to read John Maynard Keynes’s famous description of the leisurely life of an upper-middle-class Londoner in 1913 — just before the Great War changed everything:
The inhabitant of London [in 1913] could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages.
Keynes then describes how this Londoner could speculate on the markets and travel wherever he wanted without a passport or the bother of changing currency (the gold standard meant that his money was good everywhere). And then the famous economist delivers his coup de grace by going inside the privileged Londoner’s head:
[The Londoner] regarded this state of affairs as normal, certain and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalisation of which was nearly complete in practice.
Keynes’s cosmopolitan Briton, completely unaware that the first great age of globalisation was about to be shot to pieces at the Somme, is the urban equivalent of the cavorting toffs in “Gosford Park,†Robert Altman’s movie about a weekend in a grand country house just before the outbreak of war. One of us possesses a photograph of the Bullingdon, Oxford’s poshest dining club, in 1913: The future rulers of the world stare out at us with frozen arrogance. Within a year most of them were in the trenches.
Foppish aristocrats weren’t the only ones who were complacent. Intellectuals agreed. Norman Angell’s “The Great Illusion,†the Edwardian bestseller published in 1909, argued that war was impossible given the interconnectedness of the world. The great businesses of Europe and the US operated on the same assumption. The first great age of globalization, which started in the 1860s and was underpinned by British power and coordinated by British statecraft, had left the commercial classes free to make money — businesspeople then faced far fewer barriers than their modern equivalents when it came to moving money, goods or people around the world.
It’s easy to mock the shortsightedness of the West’s ruling class in 1913 — for not seeing how the rise of Germany and the complex web of alliances between the Great Powers could turn an assassination in Sarajevo into a global conflict. Clio, the muse of history, is always wise after the event, but future generations could well ask the same question about us: How could they not know?
And yet, at the beginning of 2022, many of us shared the assumptions of Keynes’s Londoner. We ordered exotic goods in the confident expectation that Amazon would deliver them to our doors the next day. We invested in emerging-market stocks, purchased Bitcoin, and chatted with people on the other side of the world via Zoom. Many of us dismissed Covid-19 as a temporary suspension of our global lifestyle. Vladimir Putin’s “projects and politics of militarism†seemed like diversions in the loonier regions of the Twittersphere.
—Bloomberg