Is Globalization Over?

Jeremy Green

• Publisher: Polity
• Year: 2019
• ISBN:
  9781509535460
• Edition: 1
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

Looming trade wars and rising nationalism have stirred troubling memories of the 1930s. Will history repeat itself? Do we face the chaotic breakdown of the global economic system in the face of stagnation, protectionism and political tumult? Jeremy Green argues that, although we face grave problems, globalization is not about to end. Setting today's challenges within a longer historical context, he demonstrates that the global economy is more interconnected than ever before and the costs of undoing it high enough to make a complete breakdown unlikely. Popular analogies between the 1930s and today are misleading. But the governing liberal ideology of globalisation is changing. It is mutating into a hard-edged nationalism that defends free markets while reasserting sovereignty and strengthening borders. This 'national liberalism' threatens a much more dangerous disintegration, fuelled by inequality and ecological crisis, unless we radically rethink the international status quo. This brilliantly original account of the discontents of globalization is a must-read both for concerned citizens and students of global political economy.

1
The crisis of globalization

The collapse of the Berlin Wall on 9 November 1989 heralded the beginning of a new era for the global economy. The political disintegration of the Soviet Union that followed symbolized the defeat of socialist alternatives to market capitalism. New spaces opened for the untrammelled expansion of globalizing markets previously confined by Cold War divisions.¹ The post-Second World War contest between American capitalism and Soviet communism had split the world economy into rival geographical spheres of influence shaped by competing visions of political economy. As the Cold War ended, the former Soviet economies were subjected to the ‘shock therapy’ of rapid pro-market reforms and sudden exposure to the competitive forces of global capitalism. The age of globalization had arrived. Western liberals triumphantly pronounced the victory of free-market capitalism and its political handmaiden – liberal democracy.²

Globalization became the new buzzword of the social sciences, with vigorous discussion about its meaning, origins, and effects. Some saw the onset of globalization as an epochal shift towards a ‘borderless world’.³ Traditional boundaries between nation states would dissolve under the pressure of an increasingly technologically sophisticated and networked form of global economic integration, bringing the possibility of enhanced prosperity to the world. Others were more circumspect, suggesting that the globalization debate was an intellectual variant of the Emperor’s new clothes – we had been here before, with an international economy in the late nineteenth century that was equally, perhaps even more, interconnected and cosmopolitan than that of the 1990s.⁴ For radical critics of globalization, this new era represented the aggressive extension of capitalism into untapped frontiers. Exploitative economic practices were now intensified in pursuit of profit and an ascendant transnational capitalist class was empowered at the expense of workers.⁵ These critics viewed globalization as a sharply polarized story of winners and losers.

This book does not replay the well-worn contest between rival interpretations of globalization. Instead, it offers a way of thinking about globalization tailored to rapidly changing times. You do not have to search far or hard today to hear talk about the end of globalization. The term ‘deglobalization’ has begun to enter the popular lexicon.⁶ If globalization was the zeitgeist of the 1990s, then it is its antonym, deglobalization, that captures the troubled spirit of today. But how can we make sense of whether globalization really is over? This book explores the contemporary crisis of the world economy. It does so by adopting a longer view of globalization – thinking about its past, present, and future.

To do this the book makes a simple but important distinction – between globalization as a process and a condition. As a process globalization involves the widening, deepening, acceleration, and intensification of cross-border flows of goods, capital, people, and ideas. Over time, the cumulative effects of these globalization processes, through increasing the volume, intensity, breadth, and depth of flows that connect different countries, transform the very background circumstances, institutions, networks, and norms within which modern capitalism exists. Globalization becomes increasingly ‘sticky’ as these processes bring about a more pervasive globalized condition – a context of increased economic and political interconnection and interdependence. The globalized condition is a context that transforms the way we think about and organize our political, economic, and cultural ways of life. Our assumptions about what is possible, about what we can eat or wear, how we can travel, or what sort of employment we can find, are remoulded by the gradual deepening of the globalized condition.

The processes that propel globalization and the condition that they gradually bring about are tightly interlinked. Globalizing processes are the drivers of the globalized condition. Without the former, the latter cannot exist. Once a certain degree of globalization is reached, though, reversing the processes that drive globalization becomes more difficult. Over time, the deepening of the globalized condition raises the costs and increases the obstacles to curbing the processes at the heart of globalization. The more pervasive reach of the globalized condition, the way it structures and moulds our lives, makes undoing globalization harder. It makes the behaviours, interests, and habits of thought of more and more people, businesses, states, and other organizations increasingly dependent on a globalized economy. These two faces of globalization are not identical, and a partial or even substantial decline in the continued development of globalization processes will still leave us living within a deeply globalized way of life. This is not least because the economic processes at the heart of globalization – in terms of increased international trade, investment, and labour flows between countries – also leave a deep cultural imprint that changes the way that we interpret our world and reshapes our expectations of what everyday life looks like.

Contemporary globalization has deep historical roots. It has experienced previous periods of crisis and even reversal. But an important distinguishing feature of this current crisis of globalization is that it is occurring within a much more pervasive globalized condition than ever experienced before. That buys globalization time. But it also raises the costs of a potential collapse of globalization should it occur, and it has carried in its wake environmental degradation that gravely threatens the future of humanity as a species.

As a process of deepening and widening of societal interconnection, through flows of trade, capital, and labour, it does indeed appear that globalization has stalled. It has perhaps even reversed. World trade as a share of world gross domestic product (GDP), which tracks the value of trade as a percentage of the overall economic output of the world economy, fell from around 61 per cent in 2008 to 52 per cent in 2009. By 2016, it was still some five per cent lower than its pre-crisis peak.⁷ During the gradual economic recovery after the crisis, between 2012 and 2014, annual global trade growth averaged 3.4 per cent annually. That is less than half of the pre-crisis growth rate of around seven per cent per year. Looking at global net foreign direct investment (FDI) inflows, a measure for assessing flows of longer-term investment across borders, the story of decline is similar. Those flows peaked at just over five per cent of world GDP in 2008, before falling dramatically to just over two per cent in 2009. By 2016, they were still only three per cent of world GDP.⁸

Added to these declining trade and capital flows, the wider politics of free trade look more unstable than they have done for decades. Stalled free trade deals, from the Transatlantic Trade and Investment Partnership (TTIP), to the EU–Canada Comprehensive Economic and Trade Agreement (CETA), and the Trans-Pacific Partnership (TPP), signal a major roadblock in the journey towards trade liberalization. Donald Trump has embarked on a nascent trade war with China, raising tariffs on all $500 billions of Chinese imports coming into the United States.⁹ And the movement of people around the world is likely to become more difficult as Western politics takes on a more sharply anti-immigrant tenor in response to the populist tide sweeping through the West.

Yet, as a condition, a way of life shaped by a high level of political–economic interdependence and integration, globalization remains just as enveloping and entrenched as ever. Returning to the example of trade, the figure for world trade as a share of world GDP was 24 per cent in 1960. That was a period in which the booming post-war international economy had already reached a higher level of globalization than the early years after the Second World War. Returning to that greatly diminished figure would require that the value of world trade as a percentage of world GDP collapse much further, to less than half its current level. A decline of that magnitude would entail the complete reorganization of the global economy.

In surveying the trade policy response to the financial crisis, the World Trade Organization (WTO) found that tariff and non-tariff barriers to free trade did increase, as domestic producers looked for government support against foreign competition during the recession. But the multilateral trade rules put in place by the WTO over previous decades continued to act as a ‘bulwark’ against the outbreak of wholesale protectionism in the immediate aftermath of the financial crisis.¹⁰ This prevented a recurrence of the dramatic shift to protectionism witnessed during the Great Depression of the 1930s. The singular trade power of the United States still threatens the world with a more strident turn to protectionism, but contemporary trade disputes are occurring within a much more rules-based trade order governed by international organizations like the WTO. By 2008, the WTO had 153 member-countries and accounted for almost 100 per cent of international trade.¹¹ Even with US support for the WTO in doubt under the leadership of President Trump, there is still major support for the current international trade system from within economic superpowers like the European Union (EU) and China.

Similarly, if we look again at the measure of net global FDI inflows, the current level of three per cent of world GDP is still six times the value for 1970, when net global FDI inflows were just 0.5 per cent of world GDP. To get back to a genuinely deglobalized world, then, would involve nothing less than a complete transformation of contemporary corporate strategy and global production processes, disrupting complex global supply-chains at huge economic and political cost. That is not impossible, but it would be a very tough project to achieve without leading to a collapse of domestic political support for whichever leader tried to advance that kind of policy agenda. If it were to occur in a sudden, disorderly, and beggar-thy-neighbour context it would likely have catastrophic consequences for the global economy.

How did we come to live in such an interconnected world economy? The globalized condition is a consequence of decades of cumulative globalization processes that gradually connected the world economy, transforming the way that our political institutions and economic models operate. It is also a product of technological innovations, from modern transportation to the internet, that have shrunk space by compressing the time it takes to travel from one country to another and enabled us to communicate in real time all over the world. It has been built into the very fabric of contemporary capitalism. It is embedded within our cultures and habits of consumption. It is represented by the clothes that we wear, produced in South Asian countries such as Bangladesh within the supply-chains of huge Multinational Corporations like Nike. It is embodied by the iPhones that have become so integral to individual identity and communication and which are assembled in China, drawing on components made across a vast range of countries, including Japan, South Korea, Taiwan, Singapore, Switzerland, and the Netherlands.¹² The iPhone is just one example of the huge...

Table of contents

• Cover
• Front Matter
• Preface
• 1 The crisis of globalization
• 2 Globalization’s four liberalisms
• 3 Why we are not in the 1930s
• 4 Neoliberalism unravelling
• 5 Planning for the Anthropocene
• 6 Global futures
• Index
• End User License Agreement