The best books to understand the politics that shaped eighty years of international economic order and disorder

Reading this book in graduate school was revelatory. It was mostly ignored upon publication. But in the subsequent eighty years Hirschman’s insights have become part of the bedrock of my field of international political economy.

The key idea is that countries seeking to enhance and expand their power can use “liberal” commercial strategies to induce economic and political dependency in smaller, weaker partners. It’s dangerous, in other words, to simply assume that more extensive trade and investment flows between countries will engender a more stable, peaceful international system.

Uncontrolled trade can aggravate tensions and facilitate international disorder. Hirschman arrives at a bold idea: surrendering national authority to follow global rules and institutions is the only way to counteract the harmful effects of massive power and wealth inequalities in world politics.

This book is about the planners who set about devising the rules and institutions of the post-WWII international economic order.

The conventional story is that institutions like the IMF and World Bank were mainly creations of American and British policymakers, and the rules enshrined in those institutions reflect narrowly Anglo-American ideas and interests. But Helleiner’s amazing historical research reveals that officials from countries in the so-called “periphery” of the world economy (like China, India, and Brazil) had much more influence in these negotiations than we realized.

Their courageous efforts ensured that some of their developmental ideas (aimed at reducing the massive global wealth and power imbalances) were, in fact, incorporated into the international rules that shaped the postwar economic order. The politics of economic ideas come to life in this book. 

I was in my first year of college when I witnessed (via news reports) the “Battle of Seattle,” where anti-globalization protestors shut down a negotiating round of the World Trade Organization.

Watching the news from Seattle made me want to study the politics of the international economy. Seattle seems to have had a similarly big impact on Slobodian since it pops up in the introductory and concluding chapters of Globalists.

Slobodian’s book tells the story of how a group of dissident economists and lawyers, mainly centered in Geneva, rewrote the postwar international rules to legally “encase” market-based transactions. This effort, which included the creation of the WTO in 1995, made markets more seamlessly globalized. But it also put the increasingly powerful market forces beyond democratic mechanisms of regulation and control, spurring backlash. 

Pistor’s book explains how global finance grew so large, powerful, and unstable. The short answer: elite lawyers did it.

Pistor argues that they did it by creatively devising legal instruments that could turn both tangible (land, for example) and intangible things (like intellectual property) into capital. When lawyers were able to make legal instruments enforceable around the world, capital could become truly global. Why did they do this? Simple: “minting” capital through creative lawyering is extraordinarily lucrative.

Before reading this book, I knew that elite contract lawyers were very well compensated, but I didn’t understand what they were doing and didn’t think of them as key players shaping the international economic order. Pistor’s book informed and corrected my thinking. 

The name of the professor who assigned my first book recommendation in a graduate seminar: Jonathan Kirshner. Clearly, he’s had a big impact on my thinking.

In this book, Kirshner masterfully explains the ramifications of ungoverned (and crisis-prone) global finance. The 2008 financial crisis delegitimated American claims to responsible stewardship of the international economy, amplified the attractiveness of the model offered by a rising China, and eroded American material power.

In the book Kirshner did not anticipate the election of Trump or the outbreak of COVID-19 (who could have?) but the events of the last decade have, if anything, made Kirshner’s elucidation of the risks associated with a weakened U.S. at the helm of an unstable international economic order even more relevant.