Of course there’s a globalisation backlash. It
has failed billions of people
Larry
Elliott
The era of open markets and open borders is over, its
demise hastened by the climate crisis, populism and now coronavirus
Thu 13 Feb
2020 07.00 GMTLast modified on Thu 13 Feb 2020 19.38 GMT
Over the
past 30 years China has become the world’s factory. For the past few weeks, the
production line has been shut down by plant closures deemed necessary to halt
the spread of coronavirus. Beijing fears there will be both short- and
long-term damage from the outbreak. The country is on course for its first
quarter of negative growth in decades, while earlier this week China’s
ambassador to the World Trade Organization (WTO) called on other countries not
to use coronavirus as an excuse to put up trade barriers.
The fact
that Zhang Xiangchen felt the need to make this appeal speaks volumes. China
suspects there will be backdoor protectionism – and it is almost certainly
right, because for years countries around the world have needed little
encouragement to resort to protectionism. What’s more, the restrictions are not
just on the movement of goods. Earlier this month, the US treasury announced
curbs on foreign investment to protect critical technology, data and
infrastructure from foreign sabotage. Donald Trump’s plans for a wall along the
US border with Mexico are emblematic of a toughening up of controls on
migration. An era of open markets and open borders – where trade and
transnational capital flows rose rapidly as a share of global output – has run
its course. The instruments of deglobalisation are being weaponised.
Companies are
realising that lengthy global supply chains have costs as well as benefits.
Coronavirus has brought that home with a vengeance
Today,
governments are less interested in breaking down barriers and more concerned
about safeguarding jobs, preventing intellectual property theft and the risk of
cybercrime. Companies are realising that lengthy global supply chains designed
to take advantage of low wages in the developing world have costs as well as
benefits. Coronavirus has brought that home with a vengeance, and is likely to
further encourage the repatriation of production that was offshored in the
1990s and 2000s.
Deglobalisation
has happened before, notably between 1914 and 1945. It is happening now as a
result of geopolitics, economic torpor, rising inequality, the failure to
develop new political structures to manage globalisation, and the response to
new threats.
Every wave
of globalisation has required a champion, a hegemonic power confident enough to
spread the gospel of free trade and open markets. That role fell to Britain in
the late 19th century and the US in the second half of the 20th century.
But
America’s self-confidence has been punctured by the rise of China as a
strategic threat, and the power struggle between the world’s two biggest
economies is heating up. Stock markets were jubilant when Washington and
Beijing signed a trade deal but – rather like the Molotov-Ribbentrop pact of
August 1939 – it is merely a truce of convenience. If Trump wins re-election in
November, hostilities will resume.
Countries
also get defensive when times are tough, as they have been ever since the
financial crisis of 2008. The most recent wave of openness occurred in the
decade after the collapse of communism, culminating in China becoming a member
of the WTO in 2001. This was a time when growth was strong, partly due to a globalisation
feedback loop in which cheaper imports pushed down inflation rates and allowed
central banks in the west to keep interest rates low and asset prices high.
‘Taking
back control is proving to be a compelling rallying cry for the populists of
the right such as Trump and the populists of the left such as Bernie Sanders.’
Sanders campaigns during the New Hampshire primary. Photograph: Timothy A
Clary/AFP/Getty Images
But the
financial crisis exposed the weaknesses of a system that was able to operate
globally without adequate controls and effective supervision. The resulting
slump was deep and the recovery has been long, painful and incomplete.
Inevitably, countries have become more cautious.
That trend
has been amplified because globalisation’s fruits have been enjoyed primarily –
though not exclusively – by owners of capital and the better off. Consumers
have gained from lower prices, but inequality has risen in every part of the
world. In democracies, there is a limit to how long people will put up with the
rich getting richer while their living standards are stagnating or barely
growing.
The hope –
always somewhat sketchy – was that an international polity would be developed
to match the internationalisation of economics. If capital could organise on a
global level, the argument went, then democratic mechanisms could and would be
developed too. This simply has not happened.
The one
multilateral institution created in the past three decades to manage
globalisation – the WTO – is in a parlous state. The WTO has two main
functions: as a forum where comprehensive trade deals are negotiated, and to
provide a court where trade disputes between countries can be settled. It is
currently doing neither.
The failure
to develop a transnational political response to globalisation has meant voters
have demanded a response at a level where they have a voice: the nation state.
Taking back control is proving to be a compelling rallying cry for the
populists of the right such as Trump and the populists of the left such as
Bernie Sanders. Neither man has much time for the WTO.
Global
heating looks certain to add to the deglobalisation pressure. The existential
threat posed by the climate emergency is forcing governments, businesses and
consumers to ask some questions about the way the global economy works. Is it
sensible to ship car parts backwards and forwards across national borders or
invest in fossil fuel companies? Is it sustainable to fly in fruit and veg from
the other side of the world rather than grow it locally? Most fundamentally of
all, are there more important things than economic growth?
Globalisation
was sold as a way of boosting prosperity for all by making markets bigger and
more efficient. For a while the model worked, but when it blew up and caused
extensive collateral damage, a backlash was inevitable. Deglobalisation is the
result.
• Larry
Elliott is the Guardian’s economics editor
Sem comentários:
Enviar um comentário