Skidelsky

"There's been an unmoral willingness to sacrifice millions of people on the altar of abstract theory and corporate greed," said Lord Robert Skidelsky of the University of Warwick in his first lecture as an A.D. White Professor-at-Large April 18.

Before the 2008 financial crisis, Skidelsky said, many economists based their analyses on theoretical models in which unregulated markets resulted in the most productivity. But according to Skidelsky, relying on these models to guide real-life economic decisions can have a disastrous effect on international policy.

"In the Chicago school view of the world, large economic collapses are impossible," he said.

The notion that the market system will remain stable only if untouched by the government, he said, "has had a huge influence on politics," particularly on the forces of globalization. However, according to Skidelsky, this idea relies too much on a "wholly benign" view of market transactions.

"What happens to international politics if the welfare guarantee of the international division of labor is canceled?" he asked.

As a point of comparison, Skidelsky turned to the Great Depression of the 1930s. Like the 2008 financial crisis, it put much of the world in an economic breakdown that set the stage for World War II.

"It is the enduring character of international politics, despite the huge variety of political systems, that something systemic causes them to repeat the same behavior patterns," he said.

To have a functional international economy, he said, it is necessary to maintain order. He cited economic historian Charles Kindleberger's idea that "for the world economy to be stabilized, there has to be one stabilizer," although Skidelsky said that he believed reliance on a single superpower to be too extreme.

Without a surrogate sovereign, Skidelsky argued, there will be a fragmentation of power and descent into international anarchy. "The system depends on the structure at the top of the system," he said. "This explains why the Great Depression was so severe and prolonged -- because the British could no longer and the Americans were not ready to provide the necessary public goods for economic stability."

Today, Skidelsky said, there are many signs that trade is not fully stabilized -- such as currency being used as a policy weapon, controls on movement of capital and new migration restrictions -- that are reminiscent of the 1930s.

In addition to these policy problems, Skidelsky said, the current economic crisis has encouraged growth in nationalistic sentiment as the Great Depression did in the 1930s.

"Europe has seen the entry of a lot of extreme right-wing parties in the last few years touting anti-immigrant and Islamophobic ideologies," he said. Similarly, in the United States in 2010, the governor of Arizona signed the nation's "toughest bill" on illegal immigration.

"We're in the middle of a process whose end is not yet in sight," Skidelsky said. "The world system has certainly not collapsed as happened in the 1930s." But whether the globalized economy can achieve sustainable recovery, he said, is yet unknown.

"There either has to be a quantum leap in the ability of the great powers to implement cooperative solutions, or the globalized economy will start to fragment."

Skidelsky's talk was part of the Mario Einaudi Center for International Studies' Foreign Policy Distinguished Speaker Series.

Elisabeth Rosen '12 is a writer intern for the Cornell Chronicle.