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Globalization goes into reverse

Back in October 2008 I suggested that globalization ‘has lost impetus and may even have passed its zenith’. Now, in the aftermath of Brexit and the inauguration of a protectionist American president, even the capitalist press talks about ‘de-globalization’. Some pundits (e.g.: Simon Nixon in The Wall Street Journal, 5 Oct 2016; Pierpaolo Barbieri in Foreign Affairs, 13 Nov 2016) still refer merely to a threat or possibility of de-globalization, but others acknowledge that ‘de-globalization is already in full swing’ (Amotz Asa-El in MarketWatch, 31 Aug 2016).   

De-globalization, like globalization, is a multidimensional process. In the economic sphere it means abandoning the goal of unified world markets in goods, services, labor and capital and tightening controls over transnational migration and international trade and investment. In the political sphere it means reasserting national sovereignty and weakening or even abolishing supranational institutions. These two aspects are closely connected. In particular, international agreements to unify markets at the global level (GATT) and in specific world regions (NAFTA, the Trans-Pacific Partnership, etc.) have established shadowy committees of legal experts with the power to thwart attempts by national and subnational governments to regulate economic activity in the interests, say, of public health. Within a few days of assuming office Trump had withdrawn the United States from the TPP and announced that henceforth the US will rely on bilateral rather than multilateral trade agreements.

Is globalization inevitable?

For a long time many analysts viewed globalization as an ‘objective’ reality that had to be accepted as inevitable and irreversible. Some still do. In a recent article Pankaj Ghemawat presents an informative critique of this view (‘Even in a digital world, globalization is not inevitable’, The Harvard Business Review, 1 Feb 2017). He argues that advocates of the ‘inevitability’ thesis exaggerate the impact of technological developments in transportation infrastructure (high-speed transnational rail links, the containerization of freight) and in IT and telecommunications (enabling speculators to conduct near-instantaneous financial transactions). He acknowledges that these developments facilitate globalization, but is ‘unconvinced that [they] are sufficient, given everything else that is going on in the world, to drive globalization forward’.

Governments have retained the capacity to exert a measure of control over globalizing technologies. This is exemplified by the case of Singapore, which managed at least partly to thwart the speculators and insulate itself from the Asian financial crisis of 2008 by imposing controls over exchange rates and capital flows. It was able to defy the ‘Washington consensus’ in this way thanks to reforms instituted after the previous financial crisis in 1998.  

The ‘inevitability’ thesis has also functioned as a mystification, helping to deter people with misgivings about globalization from actively opposing it. In the final analysis, globalization and de-globalization depend on policies adopted individually or jointly by governments.  

Constraints on globalization

It might be if not impossible then at least extremely difficult to reverse globalization if the process had reached a more advanced stage, with firmly established institutions of supranational governance. Embryonic institutions of this sort do exist in the bureaucracies of intergovernmental agencies like the UN, the WTO, the IMF and – at a regional level – the European Commission. However, these bureaucracies have always been susceptible to pressure from the governments that set them up and maintain them. Another constraint on globalization has been the determination of some states – actual and potential members of the Shanghai Cooperation Organization like Russia, China and Iran – to preserve full national sovereignty. We have never come anywhere close to a completely globalized world.

Many corporations operate in several countries, but that does not make them free-floating entities without a long-term attachment to any specific state. On the contrary, each corporation has a ‘home state’ where its headquarters is based. That is why General Motors is identified as an American corporation, Mitsubishi as Japanese, Volkswagen as German, Gazprom as Russian and so on. (A few corporations have two home states – for example, the Anglo-Dutch Royal Dutch Shell.)

It is often said that a corporation has no loyalty to the ‘national interest’ of its home state. No doubt that is true, and there is nothing new about it. But it is not the crucial point. The corporation does not exist to serve the state; rather, the state exists to serve the corporation. The state is loyal to ‘its’ corporations: it is always prepared to intervene on behalf of their interests abroad when asked to do so. That is a continuing material basis for strategic competition and even military conflicts between states.

Impetus behind de-globalization

The main impetus behind de-globalization appears to be political rather than economic. In particular, politicians like Trump exploit the discontent of many workers with certain effects of the free (or freer) movement of capital and labor, such as the loss of jobs when factories are relocated to countries where labor is cheaper, wage competition with migrants and disorienting changes in the cultural environment as a result of rapid large-scale migration. Local capitalist interests are also threatened by globalization, but this factor seems to have less impact.   

Assessing de-globalization

Commentators worry that de-globalization will heighten the risk of war, both conventional and nuclear. They point out that the last era of de-globalization encompassed the two world wars and the unstable period between them. But there have also been quite a few wars during the recent seventy-year era of globalization, with escalation to the nuclear level a real danger at various times. This is not to deny that in principle globalization could, if taken far enough, eliminate the material basis of war. However, it has never come anywhere near this point.

Moreover, the division of the world into pro- and anti-globalization states has itself become a major source of tension. In the context of the US presidential election and the confrontation between NATO and Russia, it was the arch-priestess of globalization – Hillary Clinton – who beat the battle drums, while Trump, the de-globalizer, warned of the danger of nuclear war and called for improved relations.

De-globalization may weaken the global awareness that we as a species have achieved, uneven and fragile as it may be – that is, awareness of humanity as a whole and of the earth as its single home planet. This is a serious concern for anyone who aspires to world socialism, ecological rehabilitation and human survival.

But capitalist globalization also does little to foster real global awareness. It has proven itself quite compatible with narrow nationalism and religious bigotry: globalizm for the elites, nationalism and bigotry to divert and divide the masses. For example, the big Indian capitalists have highly globalized business operations but they all gladly backed Narendra Modi of the Hindu nationalist Bharatiya Janata Party for president (even those of them who are not Hindu but Parsee).

The popular backlash against globalization does have one positive aspect. It expresses a protest against the undemocratic character of supranational institutions – for example, the ‘democratic deficit’ in the European Union and the secrecy and unaccountability of the committees that oversee international economic relations. The socialism to which we aspire is democratic as well as global. Perhaps de-globalization will create an opening for a new democratic globalizm.   

The Socialist Standard, No. 1353, May 2017

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