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the complete review - economics / history

The Creation and Destruction
of Value

by
Harold James

general information | review summaries | our review | links | about the author

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Our Assessment:

B : solid look at modern financial crises and their impact on globalization

See our review for fuller assessment.

  From the Reviews:

• "At a time when economists are accused of having forgotten history, yet few historians can explain the world of bank bail-outs and the turmoil they cause, Mr James has a rare gift for being able to marshal an impressive knowledge of economic and financial history in order to highlight previously unrecognised connections with the past. (...) The West’s values (re-examined or otherwise) will not by themselves determine the nature of the world that emerges. That the debate about values at the core of Mr James’s otherwise wide-ranging book is essentially a Western one thus remains one of its ultimate frustrations." - The Economist
  
  
• "James is also skeptical, perhaps overly so, of the ability of governments now to avoid the mistakes of their 1930s counterparts and work cooperatively to chart a path out of the crisis. He exaggerates the relatively modest degree of trade protectionism and anti-immigrant sentiment that has surfaced. He also underplays the accomplishments of the G20 nations in beginning, however tentatively, to address economic imbalances and financial regulatory weaknesses that contributed to the crisis. But he is unquestionably right that the scope of such cooperation is likely to be limited, perhaps too limited for the task at hand." - Edward Alden, Forbes
  
  
• "Where he adds most value is in his effort to put the crisis into its international political context, asking some tough questions on the way." - Hamish McRae, The Independent

Please note that these ratings solely represent the complete review's biased interpretation and subjective opinion of the actual reviews and do not claim to accurately reflect or represent the views of the reviewers. Similarly the illustrative quotes chosen here are merely those the complete review subjectively believes represent the tenor and judgment of the review as a whole. We acknowledge (and remind and warn you) that they may, in fact, be entirely unrepresentative of the actual reviews by any other measure.

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The complete review's Review:

       In The Creation and Destruction of Value Harold James tries to show that globalization is not nearly as firmly entrenched as was commonly believed at the beginning of this century, and that, indeed, it is very vulnerable in times of financial crises. He focusses on the Great Depression and the current (ongoing from 2008) crises -- and begins by differentiating between what happened in 1929 and 1931. James points out that the stock market crash of 1929 remains a historical puzzle and is an (extreme) example of "the irrationality of financial markets" -- but was also not the cause of the Great Depression -- while 1931 was a much more fundamental and far-reaching "crisis of confidence in capitalism" itself (but also one that can be much more readily understood and explained).
       The historical overview of what happened at these two junctures -- and the reactions and ripple effects -- are eerily reminiscent of recent events, and James (who, after all, teaches history, not economics) does a nice job of presenting an overview of these. Sobering, too, are the comparisons to more distant times, as he suggests:

The ease with which the United States and other big countries can finance their deficits bears a resemblance to the most famous case of long, drawn-out imperial decline, that of Habsburg Spain. The equivalent of the inflows of funds to all the advanced countries in the last decades of the twentieth century was the story of New World silver, which initially appeared as a source of immense strategic power.

Economic and political power tend to go hand in hand in a world that is insecure and at the same time places a high value on security and growth. Such concentrations of power can be self-sustaining when they attract not only capital resources, but also the human resources (primarily through skilled immigration) that allow exceptional productivity growth to continue. When and if they close themselves off to sources of innovation -- as Golden Age Spain did -- the process of relative decline becomes much faster. Since the isolationist impulse is a major strand in the American political tradition, it is impossible to close off this possibility; in fact, its likelihood increases as the economic and financial situation deteriorates.

     The question of achieving monetary stability and stability of values has been a permanent, and in reality unsolved, obsession.

- M.A.Orthofer, 10 May 2010

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Links:

• Harvard University Press publicity page

• EH.NET
• Finance & Development
• Forbes
• The Independent
• Seeking Alpha

• Faculty page

• See Index of books dealing with Business and Economics

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About the Author:

       Harold James was born in 1956. He teaches at Princeton University.

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© 2010 the complete review

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