Gorée is a small island off the coast of Dakar, Senegal. Enjoying an exquisitely grilled filet de saint pierre in one of the harbour restaurants as the sun sets, it is easy to imagine the place as a summer resort for the West African rich and famous. But below its serene exterior lies a dark history.

On 27 June 2013 one of the descendants of the people who suffered under this dark history recounted her visit.

Born 1910, the son of a prosperous New York lawyer, Charles P. Kindleberger grew up in the Roaring Twenties, eventually finding his way to economics at Columbia University starting in 1933. Curiosity about the world, not so much desire to make it better, was his driving motivation.

Bretton Woods had envisaged a world without capital flows, neither short-term nor long-term, but market practitioners had other ideas, rebuilding markets first domestically and then internationally in a process Kindleberger understood as a kind of natural Darwinian evolution. Policymakers viewed these developments with increasing alarm, and economists such as Robert Triffin built careers stoking those fears. The result was economic policy first attempting to hold back natural evolution, and then ultimately abdicating responsibility in Nixon’s 1971 devaluation of the dollar, a decision Kindleberger would call the Crime of 1971.

In 1532 a motley band of 168 Spanish soldiers arrived on the outskirts of Cajamarca, the capital of the mighty Incan empire in present-day Peru. Already on his third expedition to the New World, Francisco Pizarro had one aim: to find gold and claim it for the Spanish king. He first sent his trusted captain, Hernando de Soto, to meet with the In can emperor – Atahualpa – and invite him to a meeting. De Soto rode out on his horse. It was the first time Atahualpa had ever seen such an animal. Impressed with his strange visitor, he agreed to meet Pizarro the next day.

Pizarro, however, had different plans. He prepared an ambush and, when Atahualpa arrived with 6,000 unarmed men, he attacked with 106 soldiers on foot and 62 on horses. The Incas were completely caught off guard; about 2,000 Inca died in the volleys of gunfire that ensued.

It rained on the first day of December in 1838. This was a day to remember. Across the Cape Colony the yoke of forced labour had been lifted from the almost 40,000 inhabitants who had formerly been classified as slaves. They were now free.

It had been a long road to freedom. When the Dutch first settled the Cape in the mid-seventeenth century the Atlantic slave trade was expanding. As we discussed in Chapter 11, hundreds of thousands of Africans were being shipped across the Atlantic by Portuguese, British, French and Dutch traders and sold to settlers in the New World. Because of the profitability of the trade, the rivalry between these slave-trading nations was intense. It would be this rivalry that would bring the first shipment of Angolan slaves to the Cape.

On Christmas Day in the year 800 CE, Charlemagne, the king of the Franks and the Lombards, and father of at least eighteen children, was crowned ‘Emperor of the Romans’ by Pope Leo III at Old St Peter’s Basilica in Rome. Charlemagne thereby united most of Western Europe under his rule, a vast area home to between 10 and 20 million people.1 Almost all of these people lived in the countryside.

The reason for this was that, after the fall of the Roman Empire in the fifth century CE, Western Europe was characterised by conflict, population decline and de-urbanisation (the movement of people from the cities to rural areas). The Romans, of course, were known for their prosperous cities. A visitor to Rome today can still see the impressive ancient architecture of the Palatine Hill, the Forum, the Colosseum, and the Pantheon.

Because of continuing capital controls in the core countries during the immediate postwar period, the action in international monetary economics was initially mainly in the periphery, where the new IMF played a leading role. As the market system recovered, academic economics began to take an interest, with Robert Mundell (among others) working to extend the economists’ preferred macroeconomic modelling framework (the so-called IS–LM), to include the balance of payments. In time, the logical endpoint of these academic efforts was revival of the empirically discredited specie-flow model by Harry Johnson and others. Kindleberger’s practitioner wisdom resisted all these academic developments as distraction from real world financial developments.

Throughout human history, societies have had to solve three economic problems. The first is to ensure that enough goods are produced. The second is that enough of the right goods are produced. The third is that these things are distributed fairly to everyone. The first two are problems of production and the third is a problem of distribution.

How did societies in the distant past solve the problems of production and distribution? John Hicks, in A Theory of Economic History, proposes three ways humans have done so. The first is through custom (sometimes also known as tradition). Imagine a San hunter-gatherer or Nguni farmer: the decision about what to produce and how to distribute that production was almost entirely determined by beliefs or customs that had been handed down from generation to generation. Tasks and occupations, titles and hierarchies were inherited.

On the east coast of Tanzania, south of Dar es Salaam, lies the tiny island of Kilwa Kisiwani. From the thirteenth to the fifteenth centuries the port city of Kilwa was the centre of trade for the entire Swahili coast, integrated in a trading network that stretched as far as Arabia, India and even China. The inhabitants of this beautiful city were ethnically mixed – including Persians, Arabs and Bantu-speaking Africans – and, over time, they developed a distinctive East African culture and language – Swahili, which literally means ‘coast dwellers’. This cultural influence stretched all along the East African coast, from Inhambane and Sofala in the south (modern-day Mozambique) to Mombasa and Malindi (Kenya) and Mogadishu (Somalia) in the north.

The trade network along the East African coast had ancient roots. Some Chinese records suggest trade connections between Africans and Chinese as far back as the Han dynasty in China (206 BCE–220 CE). But much of our evidence come from archaeologists who have excavated and analysed glass beads in East Africa

October 1887 a veterinarian in Belfast was tinkering with his son’s bicycle. Its metal wheels made the cycle slow, so to fix this, John Dunlop took some rubber that he used in his veterinary practice; he added the inflated tube of sheet rubber to a wooden wheel and rolled both the wooden and metal wheels across his yard in a game to see which could roll furthest. The inflated wooden wheel continued on long after the metal wheel had stopped rolling. The pneumatic tyre was born.

Dunlop’s timing was impeccable. Two years earlier the Rover had first appeared on the market. In contrast to the penny-farthing, the Rover was a rear-wheel-drive, chain-driven ‘safety bicycle’ with two similar-sized wheels. It is the bicycle design still most common today. The two inventions – the new bicycle and the inflatable rubber tyre – transformed the bicycle industry.

On 9 August 1945 the United States dropped an atomic bomb on Nagasaki, a port city of Japan. Sumiteru Taniguchi was sixteen at the time, delivering post about a mile from ground zero. The force of the explosion threw him from his bicycle, melting his cotton shirt and searing the skin off his back and one arm. But Taniguchi survived, one of the fortunate few who did. Many thousands in Nagasaki and Hiroshima, the first city to be bombed, were not as fortunate. Japan surrendered six days later, thereby ending the Second World War.

Just like Taniguchi, who would become a lifelong advocate for the prohibition of nuclear weapons, Japan was left badly scarred after the war. But to understand the extent of the devastation, it helps to briefly discuss what came before the Second World War.

One of my favourite memories is taking a road trip with friends to watch four games of the FIFA World Cup in 2010. We started in Cape Town, drove to Johannesburg to watch David Villas score two goals for Spain against Honduras, and on the way back stopped in Bloemfontein to watch South Africa’s Bafana Bafana beat a hapless France. The World Cup was a moment that brought South Africans together as only sport can do. Indeed, as Nelson Mandela said, sport ‘has the power to unite people in a way that little else does’. I experienced it very vividly that day in the City of Roses.

Throughout the road trip, though, I was thinking of a question that a visiting geography professor – whose name I, sadly, forget – had asked at a University of Cape Town seminar only a few months earlier: How do you win a World Cup?

Iceland is a country of rugged beauty, volcanic mountains, countless waterfalls and, well, ice. Its inhabitants are even more exotic; 54 per cent of Icelanders, for example, believe in elves – or say it’s possible that they exist. Travelling through the desolate landscape, one can easily imagine how such beliefs emerge: Iceland is a country with fewer than 400,000 residents. To put that in perspective, almost double the number of people live in the 33 square kilometres of Macau than in the 100,000 square kilometres of Iceland.

Iceland might seem like a strange place to start a story about the largest global financial crisis since the Great Depression. But Iceland exemplifies both the worst and best of the crisis. The story begins several years before 2008, when Iceland’s bank managers saw an opportunity: they could attract the savings of Europeans, mostly residents of England and the Netherlands, by offering interest rates higher than those of the banks of those countries.

After one year, Henry Clay Frick quit the university he was attending and, with two cousins and a friend, founded the Frick Coke Company. The plan was simple. Using a beehive oven, they would turn coal into coke fuel. Coke is an important ingredient in making steel.

Henry’s father had been a farmer and an unsuccessful businessman in Pennsylvania, and Henry vowed that his life would be different. Soon after establishing the Frick Coke Company, however, disaster struck – and it seemed that Henry would follow in his father’s footsteps. A financial crisis in 1873 had reduced the price of coke to 90 cents per ton and Henry’s business partners wanted out. But Henry chose to stay on, wrote a letter to an old family friend, Andrew Mellon, and received a loan of $10,000. For him, depressions were times of expansion; with his new loan he bought out his partners and acquired several coal mines from timid competitors at very low prices.

As the end of his MIT career approached, Kindleberger took on the challenge of explaining the catastrophic world depression that had been the context of his own intellectual formation. As against current Keynesian and monetarist orthodoxy, he wrote in defense of the conventional wisdom of his youth which, in his view, provided not only a viable explanation of events but even more a viable methodology for doing economics more generally. Comparative economic history would henceforth be his evangelical mission, explicitly so in his first postretirement book Manias, Panics, and Crashes, which became a best-seller.