Is Globalization Dead?
Abstract
Brexit, ‘America First’, and China’s resurgence are often presented as ‘crisis moments’ which invoke a morbid commentary on the demise of globalization, whilst ignoring the pathologies of rising inequality, stagnating poverty, and the shifting co-ordinates of geopolitical influence (Babic, 2020:775-777). This article will explore how these events represent a reprisal of historical patterns, revealing the fluidity of globalization and how the course of globalization pivots on political strategies, ambitions, traditions, and interventions, rather than being guided by an external mechanism which, as Giddens once stated, has “come from nowhere to be almost everywhere”(Hay & Watson, 1999:3). I will put forward the view that globalization should not be seen as a natural or technological imperative but as a political construction. The emerging processes of de-globalization from the Right and re-globalization from the East are not causes of change but are the consequences of counter-currents within the modern era of globalization, processes set in motion by political logic. Uncoupled from the neoliberal macroeconomic orthodoxy, I will conclude that different globalisations are available.
Is globalisation dead?
Held and McGrewposited that the scope of ‘globalization’ should cover “the widening, deepening and speeding up of worldwide interconnectedness in all aspects of social life” (1999: 7). Hence, globalization is often conflated with the desirable forces of internationalization; the acceleration in global travel, communications, and the diffusion of technology, or with the universalization of norms, experiences, and practices of cosmopolitan life, belief systems which transcend the spatial contours of social geography. Such supra-territorial interconnectedness has been a feature of human history for centuries, and as such, this definition requires a minimum of intellectual and political explanation (Scholte, 2007:1474). The transformationalist position attempts to offer a description of globalization as both a process (with an ambiguous destination) and an explanation for that process, presenting an analytical dead end. Thus, Rosenberg argues that globalization cannot be moribund as it doesn’t exist(2005:12).
In his 2005 conference speech, Tony Blair reified globalization as a force of nature: “I hear people say we have to stop and debate globalization. You might as well debate whether autumn should follow summer.”[1]Hay and Watson reject this idea: “Globalisation has increasingly come to be seen as a non-negotiable external economic constraint, circumscribing the parameters of both political possibility and political choice” (2004:289). Surely a phenomenon with such vast, inevitable, and exogenous characteristics, as Blair infers, could not be terminated by political projects? Unless that is, we view ‘globalization’ as having political propulsion.
By re-attaching responsibility for contemporary globalization to the political-economic doctrine of neoliberalism, we are better equipped to examine its economic preconditions and social consequences and find an explanation as to why modern globalization has crescendoed into a decline of U.S. hegemony and a rise in nationalism.
America and Britain’s experiments in deglobalization, and China’s re-emergence as an economic power, have their roots in the collapse of the Bretton Woods system in 1971. The post-war settlement rested on the U.S. dollar as the international currency and a commitment to free trade but provided space for state-managed economic development through protectionist import substitution policies, enabling the reconstruction of world markets. As countries gained industrial traction through U.S. financial support, American competitiveness declined to lead the U.S. to unilaterally decouple the dollar from gold, resulting in floating exchange rates and speculative financial flows to hedge against currency fluctuations. This made trade and investment riskier and required a new policy context of privatization, deregulation, and liberalization. The political project which followed, often described as Thatcherism or Reaganomics, further rolled-back state planning to unleash the hyper-mobility of capital, it rejected protectionism, re-distributive fiscal policy, and commitments to full employment. Therefore, globalization did not arrive from nowhere “it was the product of the transition from neo-Keynesian to neo-liberal capitalism” (Kiely: 2005:93-95).
In this sense, today’s globalization is very different from the rise of ‘compensatory’ globalization 1945-1970, or the 30-year crisis of 1914-1945, or even the previous ‘golden era of free trade’ of 1860-1914 based on the Cobden-Chevalier treaty, gold standard and social-liberal state intervention (Keohane & Nye, 2000:107, Krasner, 1976:8, Wolf, 2004:123). Although in different ways these versions of globalization led to a convergence of belief systems, none of them were self-creating or self-legitimizing (Rodrik: 2011:25), they were all knowingly mandated globalisations. Now as then, shifting geopolitical realities do not mean that globalization is dead, it could have been done differently and maybe different again in the future.
De-globalization from the Right
The neo-nationalist impulses underpinning America First and Brexit have historical and empirical validity. In 1713, defending the Treaty of Utrecht, Viscount Bolingbroke wrote:
Our nation inhabits an island and is one of the principal nations of Europe, but to maintain this rank we must take advantage of this situation […] we must always remember that we are not part of the continent, but must never forget that we are neighbors to it. (Simms, 2016:18).
For hundreds of years, this mindset has shaped Britain’s foreign policy, it has witnessed the rise and fall of multiple globalizing European projects, from the Holy Roman Empire to the European Union. Similarly, President Trump’s isolationist rhetoric is a rehearsal of ‘traditional’ U.S. foreign policy of non-entanglement and non-intervention. American leadership in global governance since 1945 has been the exception, not the rule. In 1793, President George Washington declared:
The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible […] to steer clear of any permanent alliances with the foreign world. (Kupchan, 2020:5).
De-globalisation may be characterized as rising protectionism, falling capital flows, and stemming the flow of economic migration. The shift towards these policies in the U.K. and U.S. signals a backfiring of the neoliberal project. Forced into a situation of comparative advantage, many under-developed countries fell back on commodities and cheap human capital, therefore sliding into economic exploitation as political leaders in developed countries offshored manufacturing to cheaper labor markets in China and Asia. This process has destroyed jobs, dislocated communities and led to an emptying of Western industrial capacity, including in critical industries such as pharmaceuticals, a vulnerability exposed by the coronavirus pandemic[2]. Joseph Stiglitz describes how ‘the rules of globalization’ planted in a political moment, led to these outcomes:
Until the mid-1970’s [American] workers’ productivity and compensation moved together, after that productivity continued to grow slowly, whilst compensation came to a virtual standstill. It wasn’t that overnight the technology of the economy changed […] the rules of the game changed. The response is straightforward: rewriting the rules again. (2002:85-86)
Hostility to free trade, suspicion of international commitments, and re-shoring of American jobs formed the basis of Trump’s 2016 presidential campaign. Stokes (2018:133) asserts that “[Trump’s] advocacy of an economic nationalism threatens to reverse globalization”. This statement assumes that globalization is developmental and one-directional, it ignores the dynamic nature of political economies and dismisses alternatives for addressing the real damage inflicted by the continued trajectory of neoliberal globalization.
Britain’s modern globalization story has led it to a point where it is arguably ‘undeveloped’. A recent UN report provides stark reading for the world’s fifth-largest economy:
14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the [international] poverty line, and 1.5 million are destitute, unable to afford basic essentials … various sources predict child poverty rates to climb as high as 40%. For [almost half of] children to be poor in the twenty-first century Britain is not just a disgrace, but a social calamity and economic disaster rolled into one (Alston, 2018).
There is little doubt that growing inequality and poverty sparked protectionist impulses which energized much of the Brexit vote from a marginalized, dispossessed working-class (Becker et al: 2017). America First and Brexit may be nationalistic responses, but there is little evidence to suggest that the primacy of the nation-state and globalism cannot co-exist. Indeed, the conservative case for Brexit argued that “European bureaucratization is not as modernizing as real globalization” and the project is, therefore “an attempt to expand and extend globalization in opposition to the regionalist and protectionist European Union. Seen in this way, Brexit is not part of the populist anti-globalization trends that exist in much of Europe and the developing world” (Kiely, 2020:94-98). What follows can still be rooted in liberal notions of openness and freedom with the possibility to imagine a post-neoliberal ideological settlement. Furthermore, neither Brexit nor America First neglect the reality of how nations accumulate economic power and global influence: through self-help, self-assertive, state-directed industrial strategy, as the success of the China model demonstrates.
Re-globalization from the East
China’s rise to become a hegemonic challenger and the world’s second-largest economy through an export-oriented model has been facilitated by neoliberal globalization. Its economic reforms and embrace of Western markets began with the political will of the Deng Xiaoping administration in 1978, ending China’s ‘anti-globalization century. Arguably, the co-ordinates of economic globalization are now shifting eastward, with China providing a connecting link between the advanced consumer markets of the U.S. and Europe and the emerging economies of Asia and Africa (Friedberg, 2018:31). From ‘being globalized’ through its interdependence with Western markets and deep U.S. financial integration, China is now attempting to forge post-American globalization; “a new phase of globalization in which it helps to mold the relationships and rules at the core of the global economy” (Dyer et al. 2011).
The primary vehicles for China’s re-globalization strategy include the Belt and Road Initiative, widely understood to be a counter-hegemonic ‘grand strategy’ aiming to create a new Sino-centric order in the Indo-pacific, shaped for decades by an American presence, or even across the entire world; and China’s emerging institutional statecraft, not just its ‘authority-seeking’ within the World Trade Organisation and other multilateral organizations but more importantly, its centrality in building the New Development Bank and the Asian Infrastructure Investment Bank. China is seeking different globalization by working around or undermining the existing multilateral rules and institutions, contesting the terms of international order just as previous rising powers have historically done (Ikenberry& Lim, 2017: 4-7).
Although China maintains a vested interest in the global capitalist model, its own ascendency has been shaped not by received neoliberal theory but by state-directed planning which is closer to the Bretton Woods vision. The apparatus of its ‘state-capitalism’ model consists of state-owned enterprises, technocratic governance of critical industries, and state-backed credit to facilitate exports. In this regard, China offers an alternative development model, with “Asian economies taking lessons from China’s state-capitalist experiments to foster a new multi-polar world of capitalism ‘Asian style” (Khanna, 2019:158-159).
Shifting globalization
The themes in this paper lead to the following conclusions: the pillars of neoliberal globalization remain intact -the dollar system and open trade. Throughout the COVID-19 crisis, America has provided hegemonic monetary and currency leadership as ‘banker to the world’(if not moral leadership) whereas China’s rise has been based on protracting access to cheap labor through the suppression of wages, rights, and domestic consumption (Norlöff, 2020:1302). China remains dependent on overseas exports and does not present an absolute or ideological alternative to American power.
However, the Chinese/Asian ascendency has challenged the neoliberal intellectual orthodoxy of international institutionalism and questioned a rules-based system anchored in an expiring repertoire of Atlanticist ideals. Regional institutions, stewarded by rising Asian/Southern powers will emerge that advance and protect a broader mosaic of priorities in support of a multipolar, multicivilizational, truly global world order. The success of each pole of power will still depend on the level of globalization and policy coordination between them. So much will depend on the ability to resist zero-sum geopolitical rivalry and channel “divergent historical experiences and values into a common order” (Kissinger, 2015:10).
This evidence suggests that significant changes to globalization are in train, specifically a retreat from hyper-globalization to ‘global facing’ nation-states withdrawing from international arrangements, a transition accelerated by the current re-drawing of supply chains. This could lead back to better forms of social safeguards, protectionism, national industrial strategies, (which will need to be reconciled with a global trade-balancing framework) delimiting the ambitions of centralized global governance, and re-legitimizing the power and centrality of the nation-state, what Dani Rodrik calls a ‘sane globalization’ (2011:251-280). This is not the end of global interconnectedness, just as the 30-year crisis led world leaders to a new era of pragmatic and protective internationalism, then as now, another new era of globalization is being politically mandated into existence.
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[1]Guardian, 27.09.05
[2]Economist,10.10.20
