Will Brehm  1:00
Jamie Martin, welcome to FreshEd.

Jamie Martin  1:01
Thanks so much for having me.

Will Brehm  1:02
How would you describe the global economy before World War One as a starting point here?

Jamie Martin  1:08
Yeah. So, in the years before the outbreak of the First World War, the world economy had undergone quite a vibrant period of integration. You see the total volume of trade growing exponentially, you see the emergence of various technological innovations that make long distance exchange easier than ever before. And historians and social scientists have really come to refer to the period from around 1870 to 1914 as a so-called first wave of globalization, as a period of globalization that, in many ways, looks similar to the period of globalization of our own lifetimes, of the kind of late 20th century.

Will Brehm  1:51
So, that would mean that there were people moving across international borders, and potentially people living in other countries, and financial flows happening across borders and communication and cultural exchanges taking place as well?

Jamie Martin  2:04
Absolutely all of it. A period of enormous global migration, of capital flows at unprecedented levels. The level of foreign investment being made at this time was staggering. As I mentioned, a period of growing trade, of growing communication, right? Kind of intercultural exchange, and so on and so forth. I think it’s also important to note: this is a period of empire, right? That this is a period in which European empire is growing in size and in power. And these two phenomena are interlinked, right? The kind of principal infrastructures of global exchange at this time are dominated by a handful of empires led by the British empire. So, kind of globalization and expansion of empire during this period of time really kind of go hand in hand.

Will Brehm  2:47
And so, your book is called The Meddlers and it really looks at this issue of sort of foreign influence within domestic policies and how that might compromise notions of sovereignty. So, during this period, to what extent was there foreign meddling in domestic policies?

Jamie Martin  3:03
Yeah. So, the period of the kind of, pre-First World War era of the early 20th century and late 19th century, is a period of time in which many formerly sovereign and formerly independent states nonetheless saw their autonomy chipped away at by powerful actors, by powerful foreign empires, and financial institutions, and so on, and so forth. So, you see many countries in Latin America, for example, in North Africa and the Middle East, in Asia, and Southeast Asia really face a situation where their formal sovereignty is not actually translating into kind of protection from coercion. And so, take the example of somewhere like China, which over the 19th century, kind of lost more and more control over domestic economic spaces, right? The Chinese state loses the ability to set its own tariff levels. Chinese resources have increasingly come into the hands of foreign firms. Sources of Chinese public revenue are hypothecated to the servicing of its foreign debt, and so on and so forth. And China is perhaps the most well-known example of this but it’s certainly not the only state that over this period of time, kind of increasingly, despite never losing its formal independence, kind of increasingly comes under the thumb of powerful external actors.

Will Brehm  3:35
Can we dig into this case of China a bit more because it’s quite interesting? You know, The Meddlers in this case, is not simply another nation state or only another nation state but it’s also potentially as you’re saying, businesses, foreign bondholders. So, how did that work in the case of China? Who were these foreign bondholders? What companies were holding power over the Chinese government?

Jamie Martin  4:45
Yeah. I mean, a variety of financial institutions. I mean, HSBC, right, the bank that we know today, for example, becomes an extraordinarily powerful actor within China by the turn of the 20th century. And other places around the world, we see banks like JP Morgan, for example, that continue to exist today, exercising these almost quasi-state functions. I mean, effectively coming to exercise control, or a high degree of influence over public policy, sources of public revenue, and so on and so forth in a variety of places around the world.

Will Brehm  5:22
And then World War One happened. And so, what happens in terms of sort of controls over global exchange and all of these issues of globalization? What happens when World War One starts, when this previous era that you’re talking about begins to come to an end?

Jamie Martin  5:37
Yeah. So, the outbreak of the First World War is an enormous shock to this world economy. I mean, there’s a reason why people describe this wave of globalization as kind of beginning in the 1870’s and ending in 1914, right? Now, there’s been some pushback to thinking about the outbreak of the war as kind of bringing globalization to an end. Nonetheless, I think it’s indisputable that the outbreak of the war is an enormous crisis for the world economy. You see the creation of these wartime blockades where global exchange is effectively being weaponized. You see the suspension of the gold standard, which before the war provided a kind of financial linchpin to the world economy. So, you see the world kind of being split up into these blocs, these kind of warring economic blocs to a certain extent. And after the end of the First World War, there’s this kind of concerted effort to reconstruct the world economy as it had existed before the First World War. To try to return to something approximating the kind of liberal globalism that had existed before the First World War. On the other hand, one thing that you see happening during the First World War is that the logistical complexities of this extraordinarily large, costly, and resource-intensive war actually lead to the creation of the first real powerful intergovernmental economic institution. So, it’s almost a kind of a paradoxical thing at work here. While this world economy is undergoing this extraordinary crisis, nonetheless, you see, at the same time, the elaboration of these kinds of first, muscular international economic institutions that are used by the Allied powers -the Allied and Associated powers, Britain, France, Italy, and the United States- to coordinate their war effort against the central powers. And these kind of provide a model for postwar experiments in liberal internationalist efforts to govern the world economy.

Will Brehm  7:39
You said they started sort of during the war. And then they continued on. So, how did it look in the beginning of the war? What were these institutions during the war?

Jamie Martin  7:46
Yeah. So, over the course of the war, as I mentioned, the Allied powers -and then as the United States kind of joins the Allies in 1917- create effectively these intergovernmental institutions in order to control the global exchange of resources among them. Energy resources like coal, food stuffs, like wheat, raw materials, like nitrates that are crucial for the manufacture of explosives, and a whole host of other goods. They also created an institution to coordinate the allocation of ships. So, essentially, to kind of come up with a way of efficiently sharing ships between the major Allied powers in order to transport these goods from all corners of the earth. Of course, the Germans during the war, as is very well known, develop this incredibly lethal program of submarine warfare targeting allied ships. And in response, the Allies develop this kind of quite extraordinary system for effectively internationally, essentially, managing shipping. And as I mentioned, these all provide a kind of a rough and ready model that at the end of the war, many look to as they begin to dream up these projects for bringing international control to this world economy that is clearly in need of reconstruction. And some clearly in need of being kind of brought back together again, as it were. Now, the most ambitious version of these blueprints are opposed by the United States and the British but nonetheless, many of the personnel and bureaucrats who had played central roles in managing this wartime international system -effectively an international system of economic planning- many of these bureaucrats then after the war, come to play important roles in institutions like the League of Nations, which in many ways directly inherits this kind of wartime system of economic governance.

Will Brehm  9:44
And so how did -since the League of Nations is of course, the ultimate and perhaps many people point to the first major international organization trying to manage world affairs, let’s say both politically and economically- how did it go about trying to stabilize the global economy after the war?

Jamie Martin  10:03
So, the League of Nations, as you mentioned, really does develop the first kind of peacetime intergovernmental economic institutions. And it tries to deal with a variety of different challenges, some with a greater success than others. One thing that it does quite effectively is that it is able to collect data and sponsor economic research and try to encourage member states to harmonize technical regulations relevant to questions about international commerce. And this is a kind of an international cooperation that’s deeply rooted in traditions of technocratic internationalism from the 19th century. And the point shouldn’t be exaggerated but it’s seen as being kind of less politically controversial than other economic questions. Certainly, less controversial than questions about trade. So, the League does try to get involved in encouraging its member states to lower their tariffs, to kind of collectively return to some kind of conditions of freer trade, but it has a lot less success in this realm. Trade is very politically explosive in so many of its member states. And in fact, the League is designed at the Paris Peace Conference in 1919, in ways that consciously hamstring its ability to deal with questions of trade. Third area that it gets involved with, and this is something that I focus most on in my book, is in the realm of finance. And here, the League actually does in a rather kind of improvisational way, the League managed to develop extraordinary powers of financial governance. And what it does in a handful of its member states is that it oversees these financial bailout loans, effectively, during the 1920’s that are made conditional on national programs of austerity, kind of a return to sound monetary practices, central bank independence. So, it kind of developed something that looks very, very similar to an IMF conditional loan of much later.

Will Brehm  12:06
Wow! I mean, it’s quite amazing to think that League of Nations was involved in some of these conditional loan agreements in terms of finance. And in which countries were they targeting these loans to at that time?

Jamie Martin  12:18
Yeah. So, at this time, in the aftermath of the First World War, there’s a very clear sense that this kind of highly interventionist, financial governance was only going to be applied to certain kinds of states. So, the first places where these conditional loans are made are really kind of only two, or at least in their kind of most robust form only to the losers of the First World War. So, the former central powers: Austria and Hungary, for example. Then, similar kind of programs are developed for other states that while they may not have been on the side of the central powers, nonetheless, had long already faced restrictions on their sovereignty. So, for example, somewhere like Greece, which had long had these kinds of systems of discipline applied over it by institutions representing its foreign creditors. Here, it was relatively easy for the League of Nations to do something similar. Whereas it never developed similar powers in somewhere like France, or the United Kingdom, for example.

Will Brehm  13:22
So, in other words, when we get back to the point about sovereignty and autonomy, and foreign meddling, even back in the League of Nations period, meddling was happening for states that were seen as less powerful globally? Those who were powerful would not have the same type of foreign meddling by an institution like the League of Nations?

Jamie Martin  13:45
Yeah, exactly. I mean, this is true and kind of both a practical and almost a formal sense, right? You know, if you’re very powerful, you just simply wouldn’t agree to these onerous terms if that was the price of getting involved with this foreign assistance. On the other hand, there’s this formal sense or at least an assumption among legal experts and people who are powerful diplomatic practitioners that formal sovereign equality just isn’t a reality. It doesn’t apply. Some states simply by dint of how “developed” they are, or by their histories, some states are just going to be more sovereign than others. That this is a kind of inherent condition in the international system. It’s a feature, not a bug.

Will Brehm  14:27
The other interesting thing in your book that you point out in this period, in terms of which states are being sort of meddled in, is the sort of exclusion, to some extent, of the colonial states. So, those that are actively being colonized by say, the British Empire. They were not receiving loans from the League of Nations and being meddled in in that extent. So, how do you make sense of that sort of disparity because presumably, some of these colonies are also at the less powerful end of the spectrum here.

Jamie Martin  15:00
Yeah. So, it’s a very important distinction. It had long been a kind of an assumption of, let’s say, of Imperial governance, that the colonies of an empire were to be protected from the reach of other empires, right? So, if you kind of claimed this territory as your own, then you were going to protect its resources, or its ports, or its strategic location, or whatever it was, from other rival empires from getting involved. Of course, the colony itself was not to be autonomous from alien rule, it was just that the metropole that exerted this power over the colony was to try to keep other empires from getting in as well.

Will Brehm  15:41
And you mentioned just previously that issues of development came into this as well. So, it wasn’t only about financial loans and conditions on those loans and demanding austerity, but there was also an element at this time of international development. Can you tell me how the League of Nations was involved in international development?

Jamie Martin  16:01
Yeah. So, I think we tend to think of the origins of international development, as we know it, as mostly a post-1945 phenomenon. Something that’s closely tied to US foreign policy during the Cold War that kind of originates in the Truman administration. Other people have also looked to kind of precursors to this and new practices of French and British colonial governance, particularly from the interwar period. But what I look at in the book is how international institutions, like the League, first begin to experiment with development. Now, I think it’s important to note that the League never develops this kind of coherence, or kind of universal set of practices of development that would later characterize the work of something like the World Bank. Nonetheless, in a kind of an ad hoc, and again improvisational way, the League does experiment with what I see as these kinds of originary projects. So, one that I focus on a lot in the book takes place in Greece in the 1920s. So, the context for this is that Greece fights this short and disastrous war with Turkey in the aftermath of the First World War. And in the wake of the war, over a million Greek Orthodox refugees leave Turkey, come to Greece and the Greek state suddenly faces this enormous challenge of essentially incorporating this huge new population of Greek citizens into what’s seen as, kind o channeling this major foreign loan to Greece to help with the settlement of these refugees.
Now, it’s important to note that this is not seen at the time as a humanitarian project or as a project of relief. It’s described explicitly as a project of development because what the money is to be spent on is not food or medicine, or these kinds of things that are seen as “unproductive.” Instead, all the money has to be spent on infrastructural development, on agricultural modernization, on small-scale manufacturing. All on things that are seen to enhance the productivity of this population so that they themselves can pay off the loan over time. And what happens is that as the League oversees this loan, it becomes deeply involved in a whole set of questions about the economic livelihoods of this new population. Questions about land, about livestock, about rent and evictions, about taxation. All these kinds of very quite intimate questions of political economy, and distribution, and kind of the economic lives of these people. Suddenly, this foreign-run commissioner is becoming, in some sense, the final arbiter of these questions. So, you know, it’s this odd, it’s this anomalous project, but it’s a project that sees the League getting almost, to its own officials, uncomfortably involved in the intimate details of Greek domestic economic life.

Will Brehm  18:58
From the League’s perspective, did it work? Did the international development work? Did it lower the risk to make sure the loan could get repaid in that sort of banker’s logic?

Jamie Martin  19:08
Yeah. I mean, to a certain extent, it’s described by League officials involved as a success. I mean, the money is spent, roads are built, farms are developed, houses are constructed. and so on and so forth. But if you look at the conversations of the League officials that are involved with it, up to the very end, they realize that the ambition of the project has kind of -they’ve set themselves up for disappointment. That there’s almost no way in which they can effectively guarantee the repayment of this loan. The degree of interventionist control that this would require becomes untenable.

Will Brehm  19:49
And what about in Greece itself? I mean, how did the domestic politics react to such foreign meddling?

Jamie Martin  19:57
On the one hand, obviously, this was a project of development that was welcomed by many Greek political elites, and so on and so forth. At the same time, and the kind of presence of this foreign run commission within Greek domestic arenas kind of fit into these complex political disputes on the ground during this period and provided a kind of a common target for what we might call populist figures. So, for example, this kind of self-styled Mussolini figure comes to power in 1925, Theodoros Pangalos, in a coup, and one way that he attempts to kind of drum up popular support for himself is by constantly blaming the foreigners and the kind of the presence of this foreign-run commission in Greek affairs. While at the same time he tries to avoid doing anything that will actually jeopardize Greece’s credit, right? Because the idea is, if you actually destroy this commission, suddenly Greece’s international lenders are going to say, “You’re not getting any more loans”. So, it’s a story that I think would become very common in later contexts, right? You have these figures, that, on the one hand, kind of reach out to international institutions for financial assistance, then, as this kind of interventionist program of assistance evolves, they blame the international institution, while at the same time never kind of crossing the line into actually jeopardizing this program of assistance.

Will Brehm  21:32
It’s such a fascinating story of this sort of interwar period and then the League of Nations moment, where this global economic governance is being constructed. And, you know, it’s not done with some master plan in mind, as you’ve sort of pointed out. They don’t know what they’re doing, and they’re just sort of building it at will. And it’s ad hoc and experimental. And so, I just wonder, to what extent can we look at that history and see some of the lessons learned reflected in the more contemporary institutions that we know of, like the World Bank or the IMF?

Jamie Martin  22:06
Yeah. So, I think there was this question that I really wrestle with in the book. You know, this question is, as this new internationalist project is emerging, these efforts to govern the world economy, it faces this really, really difficult political challenge. How do you get sovereign states to allow an international institution, or to allow institutions of international cooperation, to get involved in these profoundly sensitive and controversial questions of domestic political economy, these domestic distributional struggles? I mean, the whole issue about governing the world economy is that it’s going to look quite different from other internationalist projects like preventing a war. You know, it’s hard to imagine an effective system of global economic governance that doesn’t involve an institution weighing in on these questions about tariffs, about taxation, or monetary policy, whatever it is. And I think we’re still dealing with that problem today, almost that same exact question. How do you effectively have institutions like the International Monetary Fund and the World Bank perform the functions that they were designed to perform? You know, the IMF, kind of providing this financial safety net, providing bailout loans to countries experiencing extreme financial duress? How do you have this kind of internationalist project successful while at the same time, these institutions have, over time, acquired this quite poor reputation of being meddlers themselves, right? Of saying, you know, “If you want the loan you have to lay off 100,000 civil servants, if you want the loan you have to cut subsidies to fuel on public transport. At the same time, jeopardize your own legitimacy with voting publics”. It’s an enormously fraught political issue. And I mean, we’re facing right now, the possibility of a new wave of global defaults. So many countries around the world right now are experiencing extreme debt distress. And obviously, the IMF is the kind of institution that’s ready to step in, potentially, and kind of lead these programs of rescue, essentially. But over the last 25-30 years, so many countries around the world have opted to turn away from the IMF, because agreeing to the terms of an IMF loan is seen as being very, very, very painful. As effectively giving up control over your own domestic political economy. So, I think the question is more alive today really than ever.

Will Brehm  24:29
The other thing that really strikes me when I read your book was that some of the logic that we hear today about these sorts of loan conditions and technical assistance and international development is all very much technocratic. It’s sort of not political, and that’s sort of how it’s presented. And of course, we instantly see that it’s -and as you’re saying- it’s deeply political. And that has been from these interwar periods all the way to today, as you’ve shown. I guess the question that I have is: to what extent did the people who worked in, say the League of Nations etc., actually believe that it was simply a technocratic issue? Or did they see it was sort of a guise to use to hide the really deep political questions that they knew existed?

Jamie Martin  25:16
Yeah. I mean, I think it depends on who you ask, right? I mean, certainly, at the time, the League of Nations Financial Committee, for example, which is one of these kinds of wings of the League that deals with financial questions. You know, the way that its work is described officially and in public is as nonpolitical. It’s technical work. It’s supposed to avoid questions about party conflict, or kind of parliamentary goings on and so on and so forth. But many of the people in the Financial Committee, when you read what they’re talking about behind closed doors, is they’re saying, “We got to tread carefully because the questions that we’re dealing with are of the utmost political significance”. You know, how does the state tax its citizens? You know, what does the state choose to subsidize? You know, it’s almost impossible to imagine something being more politically fraught on the domestic level than questions like that, right? And I think, exactly as you put it, the same is true today. In a certain economic or theoretical sense, of course, it might make sense to say, “Look, you’re only going to get this loan if you commit to this program of austerity that will guarantee repayment of the loan, that will get your financial house in order, and that will prevent the kind of questions of “moral hazard” that come from lending”. But saying that that is a kind of just a simple kind of economic decision is unbelievable to the extreme, right? The idea that you would ask a government to cut subsidies to fuel and say, that’s an economic decision and not a political one, it’s impossible to believe. And I guess what I’m saying is that for those kinds of honest people who were kind of developing this kind of power at the very beginning, they would admit it, you know, and they understood that what they were doing was risky, and that the chances of success for it were actually quite low, given how explosive it was politically.

Will Brehm  26:59
I’m also so amazed at how the interests of financiers have really been at the heart of a lot of these institutions. And it often goes unsaid in a way, right? Like so, reading the news about Sri Lanka today and the government collapsing because of an uproar but knowing that that country is in massive debt. And interestingly, if you read like the New York Times, the emphasis is typically on debt to China. But in fact, you know, a majority of debt of the Sri Lankan state is actually owned by Western bankers. And it just blows my mind that the bankers sort of get away with it in a way. And then reading your book, you realize that that’s sort of been the case for a very long time.

Jamie Martin  27:43
Yeah. I mean, if you look, you know, there is a recent piece that was making the rounds about just how much debt of African states right now is on to private lenders in the West, not to China. I mean, I think we have this idea that kind of fits into contemporary discourses about, “Sino Western competition” that says, “Well, look, China’s a kind of an irresponsible lender. Now it’s getting a taste of its own medicine as these states default on its loans”. But if you actually look at their matter, it’s much more complex than this. And I think one of the other things that often goes unsaid is that one of the reasons that so many states around the world have turned to China as a lender, and one of the reasons why China has become the largest bi-lateral lender in the world, is because China kind of made it a habit of not attaching the same conditions to its loans as the IMF. And somewhere like Sri Lanka tried to evade IMF loans by turning to China because it didn’t want to kind of have to take this bitter medicine of IMF-demanded austerity. Now, it’s turning to the IMF, you know, now that it’s in a lot of trouble as it were. But this is kind of an important political context for why China has, kind of, assumed its power of lending that it wields today is because it’s designed itself and kind of advertised itself as an alternative to IMF conditionality.

Will Brehm  29:03
So, by way of conclusion, I want to actually bring up one recent critique of your book that was just published in Foreign Affairs by Branko Milanovic, who basically -he says many different things in the review, but one of them and I think his main point is this notion that the assumption that there’s some how some sort of sovereignty that actually really does exist, and that there’s like this golden age of sovereignty that existed before all of this foreign meddling happened. How would you respond? Is he sort of misreading the insights of your book or does he have a valid critique?

Jamie Martin  29:36
Well, I think that one of the things that my book is really trying to argue is that sovereign equality has kind of always been a myth, right? Some countries simply have been more sovereign than others. And this is, as I said, you know, a feature not a bug of the international system for centuries. In many ways, kind of taking this argument to an extreme, you’d say sovereignty is a red herring, right? Don’t just go around the world looking for states that formally legally possess sovereignty. And that’s why I speak a lot in the book about autonomy, right? The ability of a state to kind of act with some freedom on the international stage, to not constantly be under the thumb of its foreign creditors, for example, or powerful foreign empires. And so no, I don’t believe that there was ever any golden age of sovereignty, quite the opposite. I mean, in many ways, the whole book is about how we have to get away from believing that there ever was this golden age and instead to acknowledge in this kind of clear-eyed way that sovereign equality has always been a myth. But these kind of struggles for autonomy are real, and in certain cases, they might be something that we should continue to take very seriously.

Will Brehm  30:46
Jamie Martin, thank you so much for joining FreshEd. Really a pleasure to talk today.

Jamie Martin  30:50
Thanks for having me.

Want to help translate this show? Please contact info@freshedpodcast.com

Related Guest Publications/Projects

The Meddlers: Sovereignty, Empire, and the Birth of Global Economic Governance

Globalizing the History of the First World War: Economic Approaches

The Global Crisis of Commodity Glut during the Second World War

The Colonial Origins of the Greek Bailout

Recommended Resources

Globalization in historical perspective

An Economic History of China: From Antiquity to the Nineteenth Century

China and the Global Economy since 1840

Sovereignty at the Paris Peace Conference of 1919

The League of Nations and the Foreshadowing of the International Monetary Fund

Sovereignty, Economy, and the Mandate System of the League of Nations

The Greek Economic Crisis as Trope

IMF: Shining a light on debt

World Bank Debt Report 2022

The Myth of “Debt-trap Diplomacy” and Realities of Chinese Development Finance

Who Lends to Africa and How?

Debt Analysis of Sri Lanka: Factors and Finances

Are “New Donors” Challenging World Bank Conditionality?

The Global Economic Order and the Myth of Sovereignty –  Branko’s Critique of The Meddlers

Have any useful resources related to this show? Please send them to info@freshedpodcast.com