The economic history of Europe since 1870 can be divided into three phases. The first, which lasted until the First World War, was an age of globalization, and of European economic and political dominance worldwide. The Industrial Revolution, which was covered in Volume 1, led to the introduction of new steam-based technologies such as the steamship and railroad, which dramatically lowered transport costs, while the telegraph speeded the transmission of information. The Industrial Revolution also produced a dramatically asymmetric world, in which industrial output became increasingly concentrated in Europe and its overseas offshoots. Europe used the military power which flowed from this fact to dominate Asia and Africa politically, either through overt imperialism or in more indirect ways. The net result was a dramatic economic integration of Europe with itself and the rest of the world, despite trade policies which occasionally attempted to shield European farmers from overseas competition.

The promises which the Industrial Revolution had held out to ordinary workers were increasingly being realized across Europe during this period. According to the figures in Chapter 2, growth averaged a little over 2 percent per annum between 1870 and 1913. Real wages grew, and ordinary people lived longer, healthier and better-educated lives. While the period was certainly marked by business cycle fluctuations, governments on average found that the constraints imposed upon them by the gold standard were not excessively onerous.