Today is May 1, the International Day of Labour. It seems appropriate, therefore, to devote this column to the triumph of global capitalism. For if there is one social principle on which all economists, historians and politicians must now surely agree, it is that capitalism has done more than any other human construct to benefit working people around the world.

Even if there were room for argument about the benefits of free trade and free markets to workers in advanced industrial countries — and there really cannot be, if we compare what has happened to ordinary people’s lives in Western and Eastern Europe, not to mention in North and South Korea, during the 50 years since the Second World War — the principle that global capitalism is the most benign and successful of all human creations would be firmly established by the social progress in China since its integration into the global economy.

Apart from the coincidence that today happens to be May Day, I have two reasons for eulogising global capitalism in such extravagant terms.

First, the world economic cycle appears to be at a point of inflection. With the war in Iraq successfully concluded, with oil prices falling and with interest rates at record lows, economic growth is likely to pick up strongly in the months ahead. If this happens, the world economy could soon find itself enjoying a long period of sustained expansion similar to the 1990s. This would set the scene for a golden age of global capitalism and intensified globalisation. If a recovery does not happen soon, however, financial markets will probably plunge into another crisis, dragging the world economy into a long period of stagnation.

Secondly, I have just returned from Paris, where I chaired the opening panel at the annual OECD forum on the prospects for growth, development and prosperity around the world. I was struck more forcibly than ever by how high the stakes have become at this cyclical turning point. If the world economy cannot quickly pull itself out of stagnation, the entire global system of free trade, free capital markets and free movement of people will be at risk.

It is perhaps because the stakes are so high today that investors and businessmen have become so sensitive to every possible threat to world economic growth — terrorism, war, stock market instability and, most recently, even the spread of an obscure disease. But this hypersensitivity to bad news also suggests that the world economic cycle is probably about to turn. It is a typical feature of cyclical troughs that relatively minor risks are exaggerated out of all proportion.

The Sars outbreak was a perfect example. The Iraq war had just ended without unleashing the widely expected disasters, but here was another potential trigger for economic and financial Armageddon. It was as if investors and businessmen were in the mood to panic and any excuse would do.

But the Sars outbreak was not just any old pretext for financial panic. Sars shared another characteristic with the previous panics about terrorism, the “war between civilisations” and the dot-com crash. All these phenomena were linked clearly to globalisation. They seemed to be caused by the way that capitalism was drawing the world together, often against the wishes of the peoples and countries involved. And globalisation was the means of disseminating these evils, as well as their cause.

Like terrorists, the Sars germs had turned symbols of globalisation — mass travel and jet aircraft — into sinister weapons. As in the dot-com crash and the clash between the West and Islam, the effects of the Sars virus seemed to be vastly magnified by instant electronic communications that penetrated every corner of the world.

Sars was therefore the perfect successor to the previous panics, not just for investors with apocalyptic dispositions. but even more for anti-globalisation campaigners. This movement was initially stunned into silence by September 11, but has been gradually emboldened by events. Terrorism and the clash of civilisations seemed to prove that globalisation was sowing the seeds of its own destruction. Sars showed this could be happening in the biological, as well as the social, sphere.

No wonder, then, that the antiglobalisation movement (including its many sympathisers in the media) were so excited by the Sars outbreak. But what will happen when the world economy and the financial markets shake off their irrational fear of Sars?

Assuming that businessmen and investors start to focus again on the economic fundamentals, instead of being distracted by such peripheral events as the war on terrorism and Sars, the world economy and financial markets should be ready for a robust recovery, at least outside continental Europe, where the mismanagement of the euro project will continue to take its toll. If this happens, the tide of political scepticism about capitalism, free trade and globalisation will also turn.

As I listened to the politicians, international officials and “civil society” pressure groups represented in Paris, it struck me that, while opposition to the global capitalist system is widespread, nobody has anything remotely resembling a constructive alternative to propose.

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