Economic history tells us many lessons. One particular lesson of contemporary relevance is that the internationalization of economies should not be taken for granted. It should not be viewed as a perpetuum mobile; a force that is impossible stop. The current crisis – and the responses to it – has triggered fears of a replay of the 1930s when tit-for-tat protectionism and economic nationalism followed hard on the heels of a financial crash. The world economy then experienced a giant process of deglobalisation that took almost 40 years to unwind.
The current crisis has been far from as severe as the crisis in the 1930s. Nor have crisis measures been ostensibly protectionist. Many protectionist measures have been introduced (still counting), but they have been far from as drastic as the spiraling tariffs of the 1930s. This is comforting knowledge, and it testifies to the disciplining effects on protectionist sentiments offered by WTO agreements. However, it might be less comforting than we are led to believe by most modern accounts of the crisis and globalization. To understand what is currently happening in the global economy we might have to release ourselves from traditional concepts of the integration of markets. In the past centuries, markets have been integrated through trade and cross-border movement of production factors. For most of the time, it has been a process of internationalization: one country after another have linked up with the global economy as it has become a destination for production and the origin of inputs and products for final consumption at home. In such an internationalized economy, trade barriers have damaged flows across borders and imposed costs on producers and consumers.