TWENTIETH-CENTURY POLITICAL strongECONOMYstrong A BRIEF HISTORY OF GLOBAL.pdfVIP

OXFORD REVIEW OF ECONOMIC POLICY, VOL. 15, NO. 4 TWENTIETH-CENTURY POLITICAL ECONOMY: A BRIEF HISTORY OF GLOBAL CAPITALISM JEFFREY D. SACHS Harvard University Modern capitalism emerged in the early nineteenth century in western Europe and the European offshoots of the Americas and Oceania. Recognizing the unparalleled dynamism of the new socio-economic system, Marx and Engels predicted in 1848 that capitalism would spread to the entire world. By the end of the twentieth century, that prediction was confirmed: capitalism had indeed become global, but only after a tortuous and violent course of institutional change in many parts of the world. This paper provides a brief account of the emergence of global capitalism, and discusses some of the reasons why the diffusion of capitalism has been so conflictual and violently contested. I. INTRODUCTION restoring central planning or comprehensive state ownership. The governments of the world have When communism collapsed in Eastern Europe in embraced Adam Smith as never before, at least on 1989, the running quip was that socialism was simply the rhetorical level. the longest road from capitalism to capitalism. The socialist detour, which carried along roughly one- It is not just the post-communist economies that are third of humanity as of the mid-1980s, has nearly going through deep institutional change at the cen- vanished by the end of the twentieth century, the tury’s end. Virtually the entire developing world has result of de-communization in Eastern Europe, the been abandoning key assumptions of state-led de- collapse of the Soviet Union in 1991, and China’s velopment adopted in the wake of national inde- adoption of market reforms after 1978 (even if pendence by state-builders such as Nasser, Sukarno, un