The world that the Rothschilds mastered and knew was giving way by
1914. The financing of the Great War had shifted westward: the City
had lost out to New York, and the Rothschilds had never managed to
crack the American market. "That blasted country", as the Rothschilds
called the United States, was in the main terra incognita to them. It
had its own peculiar business culture, rambunctious and
decentralized. It lacked a national bank, akin to the Bank of England
or the Banque de France, with which the Rothschilds could build a
working relationship (Andrew Jackson had seen to the destruction of
the Bank of the United States). The world over, family banking was
being outflanked by joint stock companies. The cohesiveness of
transnational elite culture, which was the mainstay of the
Rothschilds, was eroding by the day. The fourth and fifth generations
of the Rothschilds could not master these deep changes in world
finance and politics. The "guns of August", and the brutal history
that followed, were one long obituary, a grim farewell to that age.

EVERY AGE, every great edifice, begets its own nemesis, and in the end is undone by the very forces it unleashes. The received wisdom is that the first age of capital was undone by the onset of a global war. But in truth, as the more careful economic historians tell us, protectionism, illiberalism and regulation predated the outbreak of war. Liberalism and declining tariffs were being reined in long before 1914. By the end of the 1870s, protectionism had reared its head. What "convergence" took place in the Atlantic economy after 1870, we are told by the economists Kevin O'Rourke and Jeffrey Williamson in their methodical and careful work, Globalization and History, was less a function of trade liberalization and declining tariff rates than of the decline in transportation costs and of the overall yields of technological advance. Outside such strongholds of free trade like England and Denmark, economic liberalism had run into the very resistance its success had stirred up. Tariff rates were going up and prot ectionism was ascendant throughout the Atlantic economies.

Our own times offer no built-in resistance to the historical process of liberal success and illiberal backlash. There is no iron law that decrees the triumph of the market. Since 1989, economic liberalization has had the upper hand ideologically. American-style globalization--minimum government expenditures, fiscal discipline, free trade, mobility of shares and capital--has had behind it the success of the American model and the power of the American imperium. American triumphalism has played out against a background of retrenchment in Europe and Japan, and against a wider sense that the regulatory state has had its day and has lost.

But this kind of triumph is by its very nature short-lived. It must continue to rely on the success of the American example, and on the willingness of Pax Americana to shore up the global trading system and to keep it going. Economic ideas are fickle. No victory in that domain is irreversible, or beyond the power of contingency and performance. It is patently obvious that a good deal of globalization's and liberalization's success has derived from the long and remarkable bull run of the American economy. But as the issue of valuation has arisen once again in the American economy, and as the NASDAQ has lost roughly half of its value from its heights in March 2000, the triumphalism has begun to recede, and the faith in markets has given way to a subdued anxiety of reckoning.

A decade ago, economic liberalization was measured against the wreckage of socialism and the failure of the import substitution model in the ruined landscapes of the Third World. Its supremacy was therefore easy to see. It is by a different light that the model will be judged today: the light of its own performance and imperfections. And the battle between those who stress the continuity of the present with the past and those who stress the novelty of this world will be settled as all such great duels are settled--material history will prevail, the scribes and the chroniclers will follow.

At some point in the future, some muckrakers, a few historians with patience, an Ida Tarbell or two and a Ferguson or a Strouse will rummage through our time. They will know better than we can know now how this political economy played out. They will pick over the legacies of our titans, and they will hold up to the light of scrutiny the sort of things our pundits said about our time and its illusions. If the history of ideas is any guide, the chroniclers of the future will be reading their world into ours as well.

Coda: On December 22, 2000, J.P. Morgan (the bank) voted itself out of existence. It was sold to Chase Manhattan for $31.8 billion. The Financial Times reported that the balloting, which took place at the company's old headquarters on 23 Wall Street, had happened "coolly, quickly, and with hardly a hint of sentiment." A Wall Street eccentric, a shareholder by the name of Evelyn Davis, gave the occasion a touch of flair. She turned up dressed in black--Chanel black, she said--because she was in mourning. "It was left to the mourning Ms. Davis to predict that--rather than rolling over in his grave--the bank's founder, J. Pierpont Morgan, would rise from the dead to lay a curse on the merger", the dispatch from the Financial Times read. We do not know if Evelyn Davis was right; what is easy to ascertain is that the old-fashioned capitalism of Morgan had endured and stood the test of time, created value and profits for its shareholders. What will survive of today's edifice, of those countless companies "built to flip", to use the language of the New Economy, remains to be seen.

At a time when the tech fortunes in the United States lost $3.3 trillion over the course of six months in the year 2000, the cold gaze of Morgan, and the unsentimentality of his successful peers, could have been salvation and corrective in the wild ride that the capital markets have taken of late. From what is known of Morgan and Carnegie, it should be easy to guess what they would have thought of the entrepreneurs pitching to them the wild schemes of e-commerce--the e-tailers of groceries and airline tickets, "one-on-one auction sites", the "content providers", and the whole lot. It should be easy to imagine them seeing through the fakeness of an economic paradigm that disconnects price from earnings, that declares itself done with the very notion of profit itself as the yardstick of value.

Fouad Ajami is Majid Khadduri Professor and Director of Middle East Studies at the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University. He is author of The Dream Palace of the Arabs: A Generation's Odyssey (Pantheon Books, 1998).