It is no secret that I have spent a large chunk of my life writing about the economist John Maynard Keynes. In 1973, a few months after my son Edward was born, he got a postcard from my mother-in-law. She clearly believed in encouraging early habits of reading. It was of Gwen Raverat’s famous watercolour of Keynes as a young man. “This is a gentleman whom you and Mummy and Daddy will soon grow to hate v. enormously I expect. He looks a bit furtive to me.” My son Edward is now 30.
A spectre is haunting the world: that of weapons of mass destruction (WMD). This is the collective name for nuclear, chemical, and biological weapons. The United States and Britain said they attacked Iraq to prevent Saddam Hussein from using or developing them. Even more terrifying is the thought that they may be acquired by terrorist groups, who could use them to blackmail powerful countries or destroy large parts of the world. This is the nightmare scenario against which the US doctrine of preventive war is largely aimed.
The Breaking of Nations: order and chaos in the 21st century
by Robert Cooper
Atlantic Books, 180pp, £14.99
International relations may or may not be in a mess; the theory of international relations certainly is. The old theory was that the world consists of “states” which exist in an “international anarchy”. It was an “anarchy” because there was no world government. But there was, nevertheless, a principle of order, or rather two: empire and the balance of power. These coexisted in uneasy juxtaposition. By the end of the 19th century, the balance of power in Europe had become a world balance as the United States and Japan took their place as “great powers” alongside the empires of the main European states. After 1945, there was a bipolar “balance” between two “imperial systems” headed by the US and the Soviet Union. At any rate, this was the theory, though the facts never quite fitted it. Then the Soviet pole collapsed, and conceptual confusion reigned.
Today’s EU-Russia summit in Rome will certainly broach the subject of the arrest and imprisonment of Mikhail Khodorkovsky. President Putin will say that the law is taking its course, that he cannot interfere. EU leaders will not believe him, but will probably be too polite to say so. The arrest of Yukos’ chairman and the freezing of his assets has already been universally criticised abroad. The Times leader of 31 October wrote: ‘A whiff of Stalinism is now polluting the Moscow air’. The Financial Times editorial of same day talked of the ‘abuse of state power’.
The Roaring Nineties: seeds of destruction
Joseph Stiglitz, Allen Lane, 389pp, £18.99
This book is the story of the forces that drove the American economy to frenzy in the 1990s and collapse in 2000. It is much better than Professor Stiglitz’s last offering, Globalization and Its Discontents (2002), which was largely a rant against the IMF and the World Bank. Diatribe is not absent from this book. But it is much more solidly rooted in his own path-breaking work on the economics of risk and information, for which he won a Nobel prize in 2001. Stiglitz is not an elegant, nor even a punchy writer. But when he relates the politics of the 1990s to the economics he knows well, the discussion becomes exciting.
The global oil situation is particularly interesting at the moment. At around $30 a barrel, oil prices are remaining high even though a soft global economy means that world demand is low. The previously fashionable view that the American seizure of Iraqi oil resources would break OPEC and send the price of oil plummeting has turned out to be nonsense. Even with improved security, it will take five years to get Iraq oil fully on stream. With the American economy now recovering strongly, the price of oil should stay high, or even rise further, in the foreseeable future.
In today’s global economy prudential barriers have largely replaced legislative barriers to the free movement of capital. Private agencies award countries credit ratings which are designed to inform often ignorant capitalists about the degree of risk attached to investing in a particular country.