A Brief History of the Global Economy: 1908–2026
Technological revolutions have shaped the global economy—and continue to do so
Welcome to the second edition of Drift Signal’s 2026 season!
So much is happening in the global economy right now that it can feel almost impossible to keep up. Every week brings new insights, striking analyses, and ideas from some of the sharpest writers and thinkers in economics, finance, and technology. As I myself struggle to absorb all of these perspectives, I realised that for this edition, I needed to step back and offer a broader synthesis.
The essay below is my attempt to do just that: a brief history of the global economy from 1908 to 2026, tracing the successive technological revolutions, the institutions that emerged around them, and the forces now shaping the transition into the next era. It draws on the insights of others but also actively builds on many threads of my own work over the past ten years. Concepts and frameworks I’ve developed in earlier editions and essays are woven throughout, providing continuity while connecting them to what I see as the next inflection point—the emerging age of electrification.
Think of this edition as both a reference and a narrative: a way to make sense of the overdriven, saturated global economy we inhabit today, while also tracing the structural patterns that will determine who leads, who adapts, and who falls behind in the coming technological revolution.
1/ America establishes industrial leadership through mass production
Carlota Perez describes long periods of economic transformation as “great surges of development” triggered by specific technological revolutions. In her framework, a technological revolution introduces a cluster of new technologies organised around a pervasive, low-cost input. This, in turn, gives rise to a new techno-economic paradigm—a shared logic that reshapes how goods and services are produced, firms are organised, and capital is allocated. When this paradigm eventually aligns with an appropriate socio-institutional framework, it can support a sustained surge of growth.
In her landmark book Technological Revolutions and Financial Capital, Carlota identifies the fourth technological revolution—fuelled by oil—as beginning in 1908 with the introduction of the Ford Model T. In her view, this moment marked the transition to the age of oil, automobiles, and mass production. It displaced the earlier paradigm centred on electricity, steel, and heavy engineering, replacing it with Ford’s assembly line and standardised parts, often referred to as the American system of manufacturing.
By combining scientific management with interchangeable components, American firms achieved unprecedented returns to scale. Productivity gains became self-reinforcing: larger assembly lines lowered unit costs while expanding the consumer market, setting in motion the economic and institutional dynamics that would define the twentieth century.
America also pioneered the socio-institutional framework that transformed the new techno-economic paradigm into a sustained surge of growth. During the New Deal, the US developed the regulatory and social structures necessary to manage this new capacity. Henry Ford’s famous, early decision to pay workers five dollars a day reflected an emerging logic: employees had to be consumers as well. From 1933 onward, the US government under Democrat Franklin D. Roosevelt established institutions such as Social Security, unemployment benefits, and the Wagner Act of 1935, along with other New Deal measures. These reforms eventually played a key role in creating a radically new American middle class by providing steady income and labour protections.
This virtuous circle of high wages and mass consumption created the modern way of life and finally stabilised the economy, starting in America. Cheap petroleum was central to this process: it powered the factories that drove industrial production whilst fuelling the automobiles, heating, and energy needs that made mass consumption possible. Cities such as Detroit grew into major industrial hubs, linking energy, production, and everyday life in ways that reinforced economic expansion.
A few years later, World War II converted this manufacturing might into decisive military supremacy. As the “Arsenal of Democracy,” American factories pivoted to produce 300,000 aircraft and millions of vehicles, dwarfing the output of the Axis powers. By 1944, the US held 70% of the world’s gold reserves and, unlike European countries, possessed an intact, high-capacity industrial base. This dominance allowed the US to dictate the terms of the post-war order, shifting global trade toward American supply chains and establishing the dollar as the primary medium of international exchange.
2/ America then designs a new international economic order
The Bretton Woods Conference of 1944 sought to prevent a return to the chaotic currency devaluations and protectionism of the 1930s.
Led by figures such as Harry Dexter White, the US used its industrial and financial leverage to establish the dollar as the anchor of the global economy. Under this system, the dollar was pegged to gold at $35 per ounce, while other currencies maintained fixed exchange rates against the dollar. This framework eliminated exchange rate uncertainty, providing the stability necessary for international trade and long-term investment to flourish. The creation of the International Monetary Fund and the World Bank provided the institutional oversight required to manage this new monetary hierarchy.
This vision was executed by a group of architects often called the “Wise Men” (after a book by Walter Isaacson and Evan Thomas)—political and financial figures such as W. Averell Harriman, Dean Acheson, and John McCloy—who under Harry Truman and his successors blended diplomatic strategy with economic pragmatism. Through the Marshall Plan, the US injected $13 billion into Western Europe to rebuild war-torn infrastructure and stabilise foreign markets.
This aid was more than a transfer of wealth: it also required Western European nations, including Germany, to adopt American-style market systems and use dollars for procurement. By making aid conditional on regional cooperation and on Europeans coming together in what would eventually become the EU, the US integrated a fragmented Europe into an “Allied Scale” (a concept coined by Rush Doshi), capable of supporting the Western security apparatus and coordinated trade policies.
These interventions established the liberal international economic system that would dominate the post-war era, with the US acting as the ultimate provider of liquidity and security. By opening its domestic markets to exports from Western European countries and Japan, the US fostered a global environment of interdependence.
Ultimately, the alignment of fixed exchange rates, American oversight, and reconstructed trade partners created the ideal conditions for what Carlota calls the “synergy phase” of the fourth technological surge, in which financial capital, institutions, and production aligned to allow new technologies to diffuse widely. These foundations ensured that the ensuing decades were defined by strong growth and the expansion of the middle class across the Western alliance.
3/ Industrial expansion fuels a global golden age
With the post-war monetary and trade framework in place, the techno-economic paradigm of oil, automobiles and mass production expanded at full scale across the Western economies.
During this ‘Golden Age,’ or the Trente Glorieuses (as they’re known in France), growth was strong enough to double living standards within a single generation. Productivity and real wages rose together, driven by large, hierarchical firms organised around scale, stability, and long investment horizons. These corporations followed a “cathedral” model, combining vertically integrated production with institutionalised innovation in vast research laboratories such as Bell Labs. Governments reinforced this expansion by building the energy, transport, and communications networks required to sustain industrial scale.
The economic logic of the period rested on a virtuous circle of mass production and mass consumption. To keep assembly lines running smoothly, firms entered a long-term compact with labour, offering high wages and job security in return for loyalty and discipline. This arrangement produced the “Great Compression,” when income inequality fell to its lowest level of the twentieth century. Middle-class growth spread across Western economies, supported by collective bargaining, social insurance, and a financial system oriented toward household stability through mortgages and limited instalment credit for cars and appliances.
As this model diffused, prosperity extended beyond the US. Western Europe and Japan adopted the American industrial system, adapting it to local conditions. Japan, in particular, combined state-directed capital with powerful trading houses to rebuild around heavy industry and electronics, achieving annual growth rates close to 9%.
Although multinational firms largely operated as “multi-domestic” entities, replicating production and management across national markets, they started establishing the trade links and capital flows that would later sustain a more volatile phase of global integration.
4/ The Nixon Shock accelerates the rise of global value chains
In August 1971, President Richard Nixon unilaterally suspended the convertibility of the US dollar into gold, effectively dismantling the Bretton Woods system. Faced with rising costs from the Vietnam War and expanding domestic social programmes, Nixon nonetheless chose not to devalue the dollar. Instead, by suspending its convertibility into gold, he effectively unpegged the global economy from any hard asset. The shift transformed the international monetary order from a gold-backed system into a fiat regime underpinned by American economic and military power.