There appear to be many misconceptions about globalization. To begin with, there is an unchallenged belief that we currently are at a historical extreme of free international trade and investment, and that further movement toward freer markets will push us into uncharted waters with unknown consequences. Politicians, reporters, and the demonstrators who are currently in Miami protesting the Americas free trade negotiations all appear to assume this, and focus their attention on whether they are for or against it, and what to do about it.

A review of history shows that we are neither at an extreme nor are we anywhere close to uncharted waters. International trade and investment today is still far more restrained by national governments than it was a century ago, or even four centuries ago. The moves toward increasingly free international trade and investment that we have been experiencing for the last twenty years, is actually an incomplete recovery from the sharp reversal the world experienced in the first half of the 20th century.

The first stock corporations of note in 17th century France, England, and Holland were all organized exclusively for the purpose of investing in foreign countries and developing trade with those countries and territories. The United States industrial revolution was almost entirely financed with this type of foreign capital - the US would simply not be what it is today, or have developed as rapidly as it did, if foreign investment and trade had been restrained by European governments. In 1913, Great Britain exported capital equivalent to an astonishing 7% of its GNP. In the years of 1910 through 1913, 71% of all capital raised on the London stock exchange (the largest stock exchange at the time) was for foreign corporations. No developed nation has even come close to matching these numbers since.

Continuously from 1609 (the year the Dutch East India Company was founded) until 1914, globalization was strongly evident as a long-term trend toward ever freer and more vigorous international trade and investment. It all ended with the onset of World War I. "It came upon us like a thunderbolt from a clear sky", recalled one London stock exchange member. Within a matter of only a few years, nationalist governments in all of the major nations of the world had heavily interceded in both trade and investments, bringing both to a near halt, never to fully recover. In fact, on the European continent, they simply closed the stock exchanges altogether to prevent capital from flowing out of their countries and into "enemy" hands. The Bank of England froze all transactions with foreign nationals. The New York market re-opened late in 1914 with relatively few constraints and, without any European competition, quickly assumed it's current day role as the primary stock exchange in the world. Nonetheless, the governments of all of the developed countries around the world seized control of their means of production as well as their means of finance in order to build their military machines and fund their wars.

Since the end of the two World Wars, the world has been slowly recovering from its lurch into extreme nationalism. Slowly the restrictions and barriers to trade and investment have been watered down. But even after more than a half century, international trade and investment are still not as free from government intervention as they were in the three centuries before the World Wars.

The opposite of globalization is nationalism. In the first half of the 20th century, extreme nationalism ended in a nightmare of slaughter and destruction unprecedented in human history. On the European continent, where most of the slaughter and destruction took place, the leaders learned their lesson and spent the second half of the century carefully stripping away the power of their own nation-states in favor of free trade and the free movement of capital and labor between them. In 1998, they even removed the power of their own nations to issue currency, thus freeing the new "single currency" from the threat of manipulation for national political purposes. The result is that for the first time in over a millennium, war between the major euro-block countries of France, Germany, Italy, Spain and England is so unlikely that it is unthinkable.

It's nationalism that we should fear, not globalization.