deglobalisation and its impacts
TRANSCRIPT
Globalization • Increasing world integration of capital, production and
markets, driven by the logic of corporate profitability
•Profit above equity, justice, environment, community and nation?
Deglobalisation: “globalization retreating” The process of diminishing interdependence and integration between nations: Trade declines, governments create tariffs and other protectionist measures, investment lessens, cultural & personal links between countries shrink or are even attacked.Though it seems difficult to believe, there have been long periods of history when trade and investment between countries did decline – e.g. 1914-1950s In contrast to the periods 1850–1914 and 1950s–2007, when it was globalization that increased.
Why deglobalization?•Weakness of international governance structures? •A general trend of reducing trust between people, between
people and leaders, and between people and institutions?• The impact of the crisis?• Increasing environmental threats, & economic and social
inequalities?
Measuring Globalisation/ Deglobalisation
The four main economic flows:• Goods and services, e.g. exports plus imports as a proportion of
national income, or per head of population.• Labour/people, e.g., net migration rates; inward or outward migration
flows, weighted by population (and resultant remittances in per cent of GDP)• Capital, e.g. inward or outward direct investment as a proportion of
national income or per head of population• Technology.
Other measures of (de) globalization:
•Average tariffs•Border restrictions on labour•Restrictions on foreign direct investment, and/or •Restrictions on outward direct investment.
Deglobalisation starts:•United States of America, where the Bush and Obama
administration instituted the Buy American Provision* of the American Recovery and Reinvestment Act of 2009 as part of a massive stimulus package, which was designed to favour American-made goods over traded goods (*any public building or public works project funded by the new stimulus package would use only iron, steel and other manufactured goods produced in the United States)•But don’t blame the USA alone!
Deglobalisation (continued)• The EU provided new subsidies to protect its own agricultural sectors• Most governments paid lip service to a globally coordinated response for
addressing the current economic crisis, but each of them put in place separate stimulus programs for their own national markets• Export-oriented growth stalled – and that had been the driver of economic
growth for many economies• The Doha Round of trade negotiations under the World Trade Organization
was completed under the usual slogan of advancing trade liberalization as a means of countering the global downturn• But will we really return to a world dependent on free-spending American
consumers, when so many there are bankrupt, unemployed & on low wages?
Status today:Policymakers generally continue to: - emphasise free trade, - give primacy to private enterprise,
and - think of a minimal role for the state.
What about the critics of market fundamentalism?
Establishment critics, such as Joseph Stiglitz and Paul Krugman, are involved in endless debates over merely:
- how large stimulus programs should be, - whether or not the state should be interventionist, - whether, once companies and banks have been “stabilized”, they
should be returned to the private sector.
Others, such as Stiglitz, continue to promote the economic benefits of globalization, considering the “collateral damage to society” as merely sad but incidental and inevitable.
Risks of deglobalization:•Slower long-term growth•Greater gap between poorer and richer countries•More protectionism/ less cooperation, and• Increased risk of international conflict.
Bretton Woods vs Today• The benefits of the Bretton Woods institutions were meant to extend
beyond prevention of Great Depressions, to preventing Great Wars!• De-globalisation influences Foreign Direct Investment, lending,
development aid, migration, etc., also threatens the institutions that underpin the liberal peace• We need strict adherence to procedures, in WTO and other multilateral
organisations, that aim at increasing global stability, by punishing those who violate the principles on which freedoms are based (but China?)• Free trade, for example, cannot be an end in itself - it can only be justified if
it is a means to a more human life for most of the world.
So, in the present crisis, does the world trade system offer adequate protection to small and medium-sized
countries?• Is it a first line of defence against increasing bilateralism, protectionism and
power politics?• Does it provide a good institutional and economic background against
which trade and investment can grow, and conflicts be resolved?
Deglobalization: The double whammy of the current oil price
shock• Benefitting net importers of energy, but also, • Harming exporters, especially those overly reliant on hydrocarbons.
• Will the geopolitical impact be a diminution of US interest in the Middle East?• Will that lead to China and India, among other energy importers,
being tempted to take a more proactive role in Asia? • What if China, for example, begins to throw its weight beyond its
“backyard” (and what is that?)
Has globalization been discredited by the current global downturn?
•The worst economic situation since the Great Depression 70 years ago.•Global poverty and inequality increasing, while most poor countries experience little or no economic growth •Deglobalization has become “the transmission belt (not of prosperity but instead) of economic crisis and collapse”
What can be done• Use trade quotas and tariffs to protect local economies from destruction
by corporate commodities subsidized by artificially low taxes, prices, and currencies• Substitute reliance on exports, by reliance on vibrant communities/
national markets, through equitable income and land redistribution which produces local financial resources for investment• Use subsidies, tariffs, and trade to influence whether and when to
introduce robots and other advanced manufacturing/ industrial technologies • De-emphasise growth, emphasize improvement in the quality of life• Encourage development and diffusion of environmentally-friendly
technology.
What can be done (Continued)• Increase the scope of democratic (as against government or
technocratic) decision-making to cover all vital questions – e.g. which industries to develop/ phase out, what proportion of the government budget to devote to which sector…. • Institutionalize the monitoring and supervision of the private sector and
the state by civil society • Enable the development of a mixed economy, excluding transnational
corporations, but including community cooperatives, private enterprises, and state enterprises• Replace centralized global institutions like the IMF and the World Bank
which emphasize free trade and capital mobility, with regional financial institutions built on principles of cooperation.
Why move beyond narrow economic efficiency?
• Why should the key criterion be the reduction of unit cost? What about the cost of the resulting social and ecological destabilization?• Why should we have a system that produces a nightmare even for
accountants?• Why should economics not strengthen social solidarity by
subordinating the operations of the market to the values of equity, justice, and community? • Instead of having society driven by the economy, could de-globalization
re-embed the economy in society?
Concluding questions• Are "one size fits all" models, like neoliberalism or centralized
bureaucratic socialism, always dysfunctional and destabilizing? • Should we rather expect and encourage redundancy and diversity in
economics, as there is in nature?
