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.
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1 The crisis of globalization
Globalization then and now
2 Globalization’s four liberalisms
Separating politics and economics
3 Why we are not in the 1930s
The problems of the inter-war economy
This time is different
Back to the 1970s?
4 Neoliberalism unravelling
Global fault lines
The populist challenge
Recovering a progressive (inter)nationalism
5 Planning for the Anthropocene
Towards a green developmental state
6 Global futures
End User License Agreement
Table of Contents
Copyright © Jeremy Green 2019
The right of Jeremy Green to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2019 by Polity Press
Polity Press65 Bridge StreetCambridge CB2 1UR, UK
101 Station LandingSuite 300Medford, MA 02155, USA
All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication DataNames: Green, Jeremy, 1985- author.Title: Is globalization over? / Jeremy Green.Other titles: Is globalisation over?Description: Medford, MA : Polity Press,  | Includes bibliographical references.Identifiers: LCCN 2019014887 (print) | LCCN 2019017628 (ebook) | ISBN 9781509535460 (Epub) | ISBN 9781509535446 (hardback) | ISBN 9781509535453 (pbk.)Subjects: LCSH: International economic relations. | International economic integration. | Neoliberalism.Classification: LCC HF1359 (ebook) | LCC HF1359 .G7244 2019 (print) | DDC 337--dc23LC record available at https://lccn.loc.gov/2019014887
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I have built up a number of debts of gratitude during the writing of this book. George Owers at Polity has provided consistent encouragement and engagement with the project. His editorial input was rigorous and honest, and forced me to sharpen or expand the arguments at several points in the book. I must also thank the reviewers of the book and everyone involved in the project at Polity for their time, effort and support. At Jesus College, Duncan Kelly has provided a constant source of intellectual curiosity and encouragement. And teaching my students at Jesus and Cambridge more broadly has been stimulating and inspiring. My family have offered their support and encouragement too. Finally, I have to express my deepest thanks to Solène. We met while I was writing this book. Since then, the inspiration, determination and warmth that you bring have only deepened my commitment to wrestle with the problems that are the subject of this book.
I began writing this book in the summer of 2018. It was an unusual summer in England. The English football team performed well in a major tournament. Weeks of endless sunshine sapped the grass of its colour. An unbreaking wave of heat slowed the normal pace of life. Shops across London sold out of fans as the high temperatures became unbearable. The weather was a daily challenge to my writing rhythms. But more than this, the extreme conditions offered a constant reminder of the deep changes going on in the world. The changing climate, more unstable, unpredictable, and extreme in its patterns than before, mirrored the sense of a political and economic world in flux.
All around us, the old certainties, from the comforting inconsistency of English summers to the onwards march of a more integrated world economy and the global ascendancy of liberal democracy, have seemed to give way over the past decade. The Global Financial Crisis of 2007/8 marked a turning point in the world economy. It signalled the end of a triumphant period of Western expansionism and shook confidence in the globalization project. Ten years after that crisis began, the political consequences are only now coming more fully into vision. From the rise of Donald Trump to Brexit and the deepening trade war between China and the US, global politics after the crisis looks and feels very different. And underlying all of these changes we can hear the quickening, deepening drumbeat of climate crisis. It is a sound that still seems all too inaudible to many of the world’s political leaders. But it is one that we will have to heed much more sharply if we are to salvage a positive future for our species on this planet. How we deal with the crisis of the world economy will be central to our prospects for tackling climate change. We can no longer credibly think about these two dominant problems of our age in anything other than the deepest of unions.
This book is my attempt to make sense of these changing times – to try to gain a stronger foothold on a terrain that is shifting rapidly beneath our feet. While this has proved a cathartic effort in some respects, offering greater clarity where once there was only ambiguity, it has proved to be unsettling in others. It has forced me to look unflinchingly at the precariousness of our global condition. In writing this book my hope has been that it might offer the reader a clearer guide to understanding our times. I have aimed to do this by unearthing a deeper history of the ebbs and flows of the globalisation project, to show how the ideas and institutions that have guided it have developed, and to indicate how we might hope to change them for the better in the future. Knowing how to interpret the political and economic world of today is a matter of importance not only for specialists – it is vital for everyone. In an age when our faith in democracy has been shaken and ominous political forces are rising to the fore, a proper sense of the fault lines and pressure points within the global economy can help us apply our collective energies more effectively to push for a better future.
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 range of products that find their way to us through a vast web of complex supply-chains that criss-cross the globe.13 And our globalized condition also manifests itself in the ease with which we can travel around the world through a vast network of flights and airports that fuel a massive global tourism industry. These features of contemporary globalization are more intimately connected to our personal lives and the organization of our societies than ever before.
Modern globalization has occurred in two major waves. The first from 1870 to 1914, and the second from 1945 to today. These waves mark out the two broad epochs within which the modern industrialized world economy has been characterized by consistent growth in flows of trade, capital, and people across borders. The first wave was ended by the disruption caused by the First World War. After failed attempts to restore an open and interconnected international economy during the 1920s, and the disastrous turn to rival projects of national economic autarky during the 1930s, globalization was gradually relaunched under the auspices of American international leadership after the Second World War.
Beyond these two broad waves of globalization, though, we can also identify more discrete eras linked to the rise and fall of different liberal doctrines of political economy. These doctrines have provided the roadmaps for globalization. They have been used to justify changes in the rules, priorities, and institutions that govern the international economy. The transition between these ruling doctrines of liberal economic ideas has frequently occurred in the wake of international economic crises, from the Great Depression of the 1930s, through the international economic turmoil of the 1970s, to the 2007/8 Global Financial Crisis. These crises have taken different forms and had different effects. But on each occasion they have eroded popular support for globalization, undermined international economic stability, and opened spaces for alternative ways of thinking about how best to govern economies, both domestically and internationally.
Much like today’s world economy the first wave of globalization, which spanned the belle époque from 1870 to 1914, was also characterized by increased levels of international trade, growth in cross-border capital flows, and the mass movement of populations. It was underpinned by technological innovations like the telegraph and the steam ship, which shrank the world by making it easier to travel and communicate over large distances. Describing this highly interconnected pre-First-World-War international economy, John Maynard Keynes famously noted that:
the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages … He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or formality, could dispatch his servant to the neighbouring office of a bank for such supply of the precious metals as might seem convenient.14
Keynes’ statement has often been taken as evidence that this earlier period of globalization was comparable to today. But Keynes prefaced this description by recognizing that the fruits of globalization primarily applied to ‘any man of capacity or character at all exceeding the average’. This was a narrow vision of nineteenth-century globalization written from the perspective of affluent male metropolitan London elites. The sort of people that would have the resources to dispatch their ‘servant’ on errands.
Although still clearly uneven in its effects, with some benefiting much more than others, today’s globalization is much more universal and enveloping in its reach than ever before. Since 1945, and especially since the end of the Cold War, the world has moved towards a much deeper form of international economic connectivity. The condition of globalization has much deeper and broader roots now than it did then. This means, as we shall see in Chapter 3, that comparisons to the breakdown of the first wave of modern globalization are inaccurate.
In today’s economy, stocks and shares can be traded online from the comfort of a rural home, or on the move via an app on a smartphone. Many more people participate in and depend upon global financial markets than they did during the first wave of globalization, whether it be through individual investments or participation in vast collective pension funds. And, geographically, it is not just top-rank global cities like London that are the networked hubs of the world economy. Many other cities have joined the ranks of a much wider and denser ‘world city network’, stretching from Los Angeles, via Chicago and Toronto, to New York, and on to London and Paris, via Berlin and Moscow, to Sydney, Shanghai, and Tokyo.15 Airports connect even second and thirdtier cities within individual countries to many different parts of the globe.
Travelling abroad no longer requires the dispatch of servants to attain precious metals. We can exchange paper currency at the airport, use an internationally accepted bank card in a foreign cash machine, or make electronic payments without any recourse to currency at all. And our habits of consumption and ways of life are much more intimately globalized than they were before. It would not be uncommon for an individual in the United Kingdom today to awake in a Swedish-designed bed, put on clothing made in Bangladesh or Indonesia, drink morning coffee produced in Colombia and purchased from an American-owned company, read the international news on a phone produced by workers in China using materials from the Congo, within a supply-chain coordinated by an American corporation, before driving to work in a German or Japanese-designed car produced in Britain.
To say that globalization processes have stalled or partially reversed is not, then, to say that the globalized condition will simply unravel. This is the basic conflation that those heralding deglobalization have made. They have confused the slowing and partial reversal of globalization processes with a wider unravelling of the globalized condition. It is this confused position that this book seeks to redress. The globalized condition has been built up over decades of previous economic integration. It is written into the fabric of modern political and economic institutions, international organizations, business strategies, and ways of life. The depth of the globalized condition, by hugely increasing the penalties associated with renouncing interdependence and transforming our experiences of everyday life, acts as an important force for continuity. It gives contemporary globalization much greater staying power than the first wave of globalization that ended with the catastrophe of two world wars.
The pervasiveness of the contemporary globalized condition should not, though, be a cause for complacency. Make no mistake about it – globalization is in crisis. And the bad news is that with more and more of our way of life now configured around the background assumptions of a highly globalized economy, the disruption caused by a complete breakdown of globalization would be more devastating than ever before. It would force us to fundamentally reconfigure our political and economic systems, our cultural coordinates, in a way that would have the possibility of generating significant conflict.
Confidence in the continued momentum of global economic integration has been deeply shaken over the last decade. In 2017, the influential international journal Foreign Affairs asked a number of experts to answer the question, ‘Will Economic Globalization End?’16 Such a question would have appeared almost unthinkable a decade earlier. Politics within the West and in many developing countries had become about how to manage the effects of economic globalization and harness its benefits. But the trajectory of the process itself felt secure. It was almost unquestionable. That sentiment was embodied by Margaret Thatcher’s famous slogan that, ‘there is no alternative’ to international free-market capitalism.
So what accounts for this sudden turnaround in the fortunes of globalization? The current crisis of globalization is, in part, a legacy of the 2007/8 Global Financial Crisis. The crisis first broke out in August 2007 when the French bank, BNP Paribas, announced that its operations were paralysed by a liquidity crisis in which the inter-bank lending at the heart of the global financial system was freezing up. A run on the British bank Northern Rock in September 2007, by depositors fearing the loss of their savings, marked a deepening of the crisis and triggered a global collapse of confidence in the financial system.17 Inter-bank lending markets froze during the ‘credit crunch’ that followed. The collapse of the major US investment bank, Lehman Brothers, in September 2008 led to intensified global panic. The US and UK governments were forced to step in with huge bailout packages and the nationalization or mergers of their ailing banks.
What began as a financial crisis soon morphed into a wider recession in the West and a slowing of growth globally. Trade volumes collapsed in the immediate aftermath of the crisis and capital flows dropped sharply too. In the Eurozone economies, the credit crunch and the recession that followed provoked a broader sovereign debt crisis from 2010, bringing economic ruin to Greece and pitting debtor and creditor nations against one another in the toxic austerity politics that followed. The crisis led to the longest and deepest recession that the advanced Western economies had faced since the Second World War.18 Wages stagnated and living standards plateaued or decreased in the decade of slower growth that has followed.
The financial crisis lifted the lid on a series of deep and long-standing problems within the Western political economies and superimposed new problems upon them. In doing so it transformed the political landscape in those countries. These were the countries that had been the driving force of the globalization project. That project had relied upon a stable domestic political consensus in favour of economic openness, freer markets, and a rules-based international trading system. In the decade since the financial crisis, that consensus has begun to unravel under the strains of contemporary economic, social, and cultural transformation within these countries. Internationally, Western economies can no longer be so sure of their continuing political and economic dominance in the face of rapid economic catch-up by the emerging markets of Asia and Africa. Slow economic growth, deepening inequality, and austerity have weakened social solidarity and revealed more starkly the polarized fortunes of different social groups and classes under contemporary globalization. Increased levels of migration, themselves partly linked to the uneven effects of globalization, have generated nativist resentment and populist politics from the host populations.
The events of 2007/8 also illuminated the gradual, longer-term transformations that had been underway within the accelerated globalization that set in after the Cold War. Most notably, the crisis revealed the magnitude of China’s rise to pre-eminence and the shift of economic and political power from West to East.19 This new period of post-crisis politics has proved threatening to the very foundations of globalization. It has
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