AUTHOR: Harold James
TITLE: The Making of a Mess
SOURCE: Foreign Affairs 88 no1 162-8 Ja/F 2009
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Fixing Global Finance, BY MARTIN WOLF. Johns Hopkins University Press, 2008,230 pp.
The current financial crisis poses a fundamental challenge to globalization and to its many
analysts. All are now considering what the recent meltdown means-the euphoric globalizers, few
of whom are left; the tragic globalizers, who see the benefits of interdependence but worry about
a great crash ahead; the managerial globalizers, who would like a better way of controlling the
process; the critical globalizers, who are pushing for radical reform; and, of course, the
antiglobalizers. Which global institutions might manage the international economy, and how?
they all wonder. European leaders, for example, have called for a new Bretton Woods
Conference to reconsider the architecture of the international financial and trading systems.
What kind of crisis is this, and what are its likely implications? Some crises are cathartic and
push policymakers to take corrective measures; others, like the Great Depression, are radically
destructive. Over recent decades, there have been blowouts at the financial center and storms at
the periphery. After the meltdown in Latin America in the 1980s came a decade of stock-market
and housing booms in the United States that eventually went bust. The Asian financial crisis of
1997-98 was also followed by a run on U.S. assets, causing a bubble (and the dot-com boom)
that then burst. Is the latest financial collapse a first step on the road to a profound backlash
against globalization? A decade ago, after the Asian financial crisis, Washington and various
international financial institutions held up the U.S. system as a model to Asian governments.
Today, it is Asia, especially China, that may be entitled, to give Americans a lecture.
Martin Wolf, the Financial Times chief economics commentator, has been a persistently
insightful analyst. He has not forecast that financial globalization will necessarily end in disaster,
but he has warned of its dangers and tried to address its shortfalls. Most recently, he has done so
in Fixing Global Finance, an extremely helpful guide to the origins of today's problems and to
The book was completed before the financial turmoil hit this past fall but was released in its
midst, and in some respects this awkward timing makes for peculiar reading. Wolf seems to have
been offering an eloquent defense of financial globalization even as it was being execrated -- not
only by the usual church leaders and moralists, the French president, and the German finance
minister but also by the candidates in the U.S. presidential election, who were calling for less