However, history also tells us that politics matters for globalisation in a far more fundamental way. The new steam technologies of the Industrial Revolution would never have had the effect that they did if they had not operated within the context of a stable geopolitical system within which the Royal Navy guaranteed the freedom of the seas for all; within which wars between the major European powers were relatively rare; and within which those same European powers used their military superiority to impose more or less open trade on most of Africa and Asia. With the outbreak of World War I, that geopolitical system was destroyed, and 19th century globalisation with it, despite the fact that technological progress continued unabated during the interwar period. And while in the rich countries of Western Europe and North America the post-1945 period saw a gradual reconstruction of open trading conditions, deglobalisation characterised much of the rest of the world until the 1980s thanks to the spread of communism and decolonisation, which themselves had their roots in the century's two world wars, and the intervening economic debacle.
Economists have typically shied away from considering such matters, regarding wars as 'exogenous' shocks to the system, or as departures from normality.3 The importance of war and peace for the international economic system is so evident, however, that it is now reflected in the title of a book which we have recently published on the history of international trade over the very long run.4 The ‘Power and Plenty’ of the book's title refers of course to the mutual dependence of trade and warfare during the Mercantilist era, when the links between commerce and violence were particularly explicit and clear. But great expansions of world trade were linked to conquest even earlier. The pax Britannica and pax Americana which provided the geopolitical stability underlying the globalisations of the 19th and late 20th centuries have their counterpart in the pax Mongolica of the 13th and 14th centuries, which produced an impressive integration of the Eurasian economy. The Muslim conquests, which unified a vast region stretching from India to the Atlantic, provide an earlier example, while the Iberian conquests of the 16th century provide an even more spectacular later one.
-Lessons from the history of trade and war