The end of globalisation?

13 Decemeber 2016

Jeremy Green - Lecturer in International Political Economy, University of Cambridge, SPERI Honorary Research Fellow

Proclamations of the ‘death’ of globalisation are premature

Globalisation is in critical condition. It may even be ‘dead’. This is the emerging consensus among many commentators.

Economically, the claim is based on the observed decline in global trade growth and cross-border investment flows since the financial crisis. Politically, the argument is grounded in the plethora of stalled trade deals, from TTIP to the TTP, via CETA.  And in the recent popular revolts of Anglo-American electorates that brought about Brexit and the election of Donald Trump.  The populist xenophobia discernible (to different degrees and in different forms) within the Anglo-American political shocks is said to pose a major challenge to the ascendant liberal cosmopolitanism of the globalisation age.

How credible is the argument that globalisation has come to an end?

It is well established that global trade and investment flows have decreased, free trade deals have stalled and protectionist language has proliferated. The re-emergence of a more assertive and nationalist xenophobic racism in Anglo-America suggests an important change of ideological tenor within the heartland of post-war globalisation.  Brexit threatens the European Union, the exemplar of the regional integration and supranationalism that accompanied globalisation.

But talk of the end of globalisation is premature. To show why it is useful to make a conceptual distinction: between globalisation as a process, and globalisation as a condition.

As a process of deepening and widening of societal interconnection, through flows of trade, capital, and labour, it does indeed appear that globalisation has hit a road block.  Not for the first time, protectionist language, rising nationalism and stagnant growth appear to suggest that the unfolding of globalising processes has slowed.

Yet as a condition, globalisation remains just as prescient as ever.  Not even the most ardent nationalist or protectionist could feasibly disentangle a major capitalist state from the web of globalised interdependencies.  At least not without imposing enormous short-term costs upon their society.

Not least because economic globalisation has already gone so far, transforming the structural basis of capitalism through massively increased global trade and capital flows that bind states into a complex, and highly unequal, international division of labour. Multinational Corporations account for the majority of world trade and have become a core feature of economies throughout the world.  Cultural globalisation is no less advanced.  Global technological infrastructure allows real time communication on an unprecedented scale and disseminates common cultural forms throughout the world.

So, even if we concede that the process of globalisation has slowed, that does not necessarily lead us to the conclusion that it is dead, or that we are approaching ‘de-globalisation’.  Globalisation has a long and storied history, one beset by radical interruptions, reversals and recalibrations.

Indeed, the discourse(s) of globalisation, stretching as far back as the emergence of the first wave of capitalist globalisation from the mid-nineteenth century, have never aligned completely with its practice. Globalisation has always been a messy, uneven, contested and complex phenomenon.  Radically opposed ideas and practices have frequently coexisted within the broader context of gradually increasing global interdependence.

One way to appreciate this is to examine the historical development of globalisation’s principal ideological form: liberal political economy.

The classical liberalism associated with nineteenth century globalisation, with its emphasis upon free trade, the international division of labour, the minimal state and the gold standard system of fixed exchange rates, was only ever an ideal expressed in the pages of liberal treatise. In practice, Britain, the supposed paragon of liberal globalisation, relied upon a simultaneous combination of free trade, protectionism, and the colonial subordination of captive markets such as India.  Nor was the gold standard a liberal system of automatic monetary adjustment.  It relied upon sustained intervention by the Bank of England and other central banks, both at home and abroad, to operate effectively.

During the inter-war years, liberalism was subordinated to an ascendant economic nationalism and, under fascism, autarkic development. But the tendency towards greater state intervention, protectionism, and national management of the economy was not a bolt from the blue.  It was always an important, although more restrained, feature of the ‘classical’ liberal age.  This was an age of national state formation, and nationalist ideology, as much as of liberal globalisation.

After the interruption of fascism and world war, liberalism, and globalisation, resurfaced but now under the auspices of American leadership. This new phase of ‘embedded liberalism’, enshrined at Bretton Woods, combined the international openness of classical liberalism with a commitment to insulate domestic societies from the full force of international economic pressures.  This was a compromise struck to balance the desire for international trade and economic growth with the preservation of welfare provision and full employment.

But once again, the ‘embedded liberalism’ that reigned after WW2 was not what it first appeared to be. Financial capital soon escaped the shackles of restraint imposed at Bretton Woods, ‘disembedding’ from national controls.  Central banks in Britain and the United States never fully accepted the premises of Keynesian interventionism.  In trade, liberalisation only ever went so far.  There were disputes, fears of resurgent protectionism, and disagreements over the proper values of currencies.

This brings us to the most recent ‘neoliberal’ form of globalising development. In the neoliberal phase of the last 40 years, the domestic welfarist restraints of embedded liberalism were cast off.  Public service provision was rolled back, labour unions were decimated, free trade was deepened through the World Trade Organisation, and the imposition of structural adjustment programmes (SAPs) on the developing world globalised market reach.  Global capital flows grew rapidly as restrictive regulations were liberalised.

Of course, all of these processes did occur. But they did not correspond to the ‘pure’ form that neoliberal ideology prescribed.  The role of the state remains a prominent feature both within the developed and developing world today.  The implementation of neoliberal reforms to undo social democratic structures has been highly uneven and incomplete.  Major organisations like the EU have retained important protectionist commitments (think of the Common Agricultural Policy) despite their endorsement of free trade rhetoric and policy.  And in finance, as the crisis demonstrated, public balance sheets continue to backstop private banks.

The common theme that underpins the incompleteness, contradictions and complexity of all of these historical phases of globalisation is simple: sovereignty and the state.

However far globalisation goes, it has a tendency to prompt reassertions of sovereignty to redirect it towards popular or elite imperatives. Whether these reassertions of sovereignty emanate from authoritarian or democratic regimes the dynamic is the same.  Globalisation always faces roadblocks and reversals, interruptions and the contradictory coexistence of alternative modes and principles of social organisation.  Globalisation has always existed and continues, crucially, to exist within a system of national sovereign states.

This is what we are most likely witnessing now. Not the end of globalisation, but its recalibration and redefinition under the pressure of resurgent forms of national sovereignty.

This is not to downplay the significance of these transformations. The emergence of a toxic ‘national liberalism’, one that allies a continued commitment to the condition of globalisation (within a qualified redressal of the processes), with an increasingly racist, exclusionary and xenophobic discourse, is an unwelcome and dangerous development.  It has been spawned of the excesses brought about by the social alienation, spatialised inequality, intensified global competition and hollowing out of popular sovereignty inaugurated by the constitutionalised and disciplinary economic liberalism of previous decades.  It threatens, most immediately, the existence of socially liberal values, the respect for other human beings and the commitment to uphold the discursive integrity of democratic rights and freedoms.

Emergent national liberalism largely retains a commitment to free trade and free capital flows. Where it differs is in its increasingly racist and xenophobic approach to controlling another key feature of globalisation: migratory flows.  National liberalism, in both Britain and the US, seeks to restore and appease national sovereignty through targeting migrants as a deviant strand of contemporary globalisation requiring the reassertion of sovereign control.

This while, within Britain, reasserting conviction in free trade, and, within America, supporting financial deregulation for Wall Street. Globalisation’s emerging, toxic national liberalism, is no less complex or contradictory than its previous forms.  Xenophobia and other forms of prejudice were always there, but they have now assumed a more prominent role.

Where does all of this leave us? Globalisation is not going anywhere.  It continues to be marked, intellectually, by mutations in the form of liberal political economy that emanate from the key states driving the globalisation project.  It is this liberal political economy that needs to be challenged intellectually.

Global solidarity is the surest antidote to the degenerative consequences of globalisation’s latest liberalism. Economic liberalism, not social liberalism, should be challenged. This challenge should be from a progressive direction.  One that positively and democratically politicises international trade and finance in order to channel popular discontent into multilateral means of tackling national and global inequality, alongside environmental degradation.

Challenging the long history of economic liberalism and building a transformed vision of globalisation on these values should be a rallying project for political economy in a dangerous age.

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