NEW YORK (TheStreet) -- Capital markets are going to continue to expand and encompass more of the world. How can this be done as efficiently and effectively as possible?

Over the past fifty years, the size and impact of international capital flows has surprised, and in some cases, overwhelmed everything else that has gone on in the world economy.

When the June 1944 Bretton Woods conference attempted to design the post-World War II international monetary system, one of the basic assumptions was that countries would impose controls on the international flow of capital so that, along with fixed exchange rates, individual countries could conduct their own monetary and fiscal policies aimed at achieving their own sovereign goals and objectives.

In the 1960s, this assumption was breaking down. Government programs after the war, like the Marshall Plan, and other initiatives resulted in greater flows of money between countries. And, as countries began cooperating more and more with one another, trade began to increase, financial institutions expanded internationally, and the world started opening up to freer capital flows.

By the early 1970s, the Bretton Woods system could no longer function, and with the United States breaking with the fixed-exchange rate system on August 15, 1971, international flows of capital took off. A recent series of articles in The Economist magazine discuss how the system expanded over the next forty years and the effects this expansion has had on world trade and finance.

But how will the world deal with the changing (and increasingly interconnected) international economy and the increased capital flows that will accompany it in the next 40 years? 

One way to consider this problem is to look to how information technology has played a role in the continued expansion of global capital flows. (Without advances in information technology, international financial markets would not have developed in the way that they did. And evolving technology and how society uses it will have an outsized effect on the world of finance in the years to come.)

One can look back at the 1960s and see what new information technology tools brought to the financial world. For example, computers and databases on stock market information that became available to the research community at that time allowed economists, and others, to develop the whole efficient markets theory and the CAP-M model that was connected to modern portfolio theory.  

Information technology allowed economists to begin "slicing and dicing" cash flows in any way possible in order to fit the need of potential investors. Financial engineering became the cutting edge of the industry as "quants," often physicists and mathematicians, increasingly found a niche in the business community. This movement was also aided by government efforts, worldwide, to stimulate economies through credit inflation, as rising prices of goods and assets encouraged risk-taking, and risk-taking produced more incentives to create financial innovation. This effort to find an edge in markets became the vehicle that drove the industry along and this drive continues to this day

Growing world trade and enlarging global financial markets encouraged the development of financial engineering, which in turn, re-enforced the growing world trade and enlarging financial markets.

Hence, here we are in 2015 with a world financial system that could not have been imagined in the 1960s.

We have not seen the end of the impact that growing and improving world financial markets will have (The Economist articles mentioned above capture this feeling perfectly). For one, as The Economist describes, world financial markets dominate world trade figures. A country cannot just play in world trade without being heavily involved in world finance. 

And, if this is the case, China, and others, like the Eurozone and India and Brazil, are going to have to become a full part of this international scene. 

The events of this summer have shown the world that China is not there yet. Given the excessive fear that the Chinese have of instability, their first response to market movements is to exert a control that is inconsistent with open, transparent markets. But, the Chinese are not going to be able to escape the instability that exists within the global financial markets, an instability that participants have learned to live with and deal with over the past forty years.  

That information grows and spreads is the ultimate point that needs to be made concerning the massive effect that the global financial system and the free flow of capital will have on the world.  

If this is the way history works, then countries need to get on board and join the evolution. Even today, in the twenty-first century, some, like ISIS, are just not able to accept modernity and the spread of information and violently fight the inevitable. The sensible approach is to figure out how we can work together to take advantage of the world the growth of information brings.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.