Globalisation? It’s capitalism, stupid!

From the post-2008 economic crisis to the current COVID-19 Crisis, globalisation is under fire. For a long time thought to be an unquestioned course of things, it is now blamed for the geographical imbalances, the social injustices and environmental damage it has created. Under the buzzword of ‘deglobalisation’, the idea has emerged that the answer lies in winding back globalisation. But is that a viable solution? Our authors argue that the question rather is which form of globalisation the debate is about – and that another type of globalisation could be the future. 

Matthew Bishop and Tony Payne, from the University of Sheffield analyse, in their case for Progressive Reglobalisation‘ two distinctive currents of the idea of ‘deglobalisation’: a regressive, isolationist one, championed of course by the likes of US President Donald Trump (‘Make America great again‘ – at the cost of everybody else), and a progressive one, advocated for by many on the left.

While the authors do see (and largely share) a sincerely held view on this part of the left that many social and economic problems are caused by globalisation as we know it, they strongly contest the resulting fatal embrace of nationalism and the idea that a retreat behind domestic borders – even if it is for progressive ends, as social justice and the building of a ‘green state’ can be the answer.

 Rather Bishop and Payne argue that globalisation is here to stay – and that consequently, Progressives can only loose by leaving the debate to the Trumps, Farages and Putins. « Until now, globalisation has been decidedly ‘neoliberal’ in character, but this is only because the social and political forces that favoured and constructed it wanted it that way. As such, it could in theory have been done differently.« 

The former Director-General of the World Trade Organisation, Pascal Lamy too leaves no doubt that globalisation under the conditions of today’s version of capitalism exacerbates its well-known flaws: instability, social injustice and environmental degradation. But he also points to the fact that globalisation has worked, with huge benefits in poverty reduction and many winners, in a totally unprecedented proportion in human history, notably in Asia. However, « there have been more losers and they have lost relatively more than was expected. »

For the author, the political backlash – with Trump, Brexit and the rise of populism – can be explained by the failure of welfare systems to « properly cushion the increasing social violence of globalisation for the weakest« .

 Deglobalisation however, given the existing degree of interdependence, it would be an extremely costly solution – which leads to an apparent paradox: « globalisation is efficient and painful – deglobalisation would be inefficient and painful« . For Lamy it’s about putting the debate in the right context, and to begin « with focusing on the right problem, which is not globalisation but capitalism (…).Reforming capitalism remains priority number one. It is urgent« .

An attack on the belief in the efficiency of free-trade globalisation as utterly disconnected from real live is the starting point of Heikki Patomäki from Helsinki university. Neither the micro-reasoning of many economic theories, nor the widespread hypothesis of efficient financial markets with their implicit or explicit claims of individual rationality stand the test reality, skipping complex real-world effects of financialisation and boom-and-bust cycles for example.

In the wake of tendencies toward under-consumption and overproduction, unemployment and precarious employment, stagnating prices, social problems and political reactions, the questo for solution has given way to a rising popularity of Modern Monetary Theory (MMT), which maintains that a state can never run out of money if it is in debt in its own currency – but which also seems to point to deglobalisation as a solution. « The radical idea is that each state can go alone and adopt rational full-employment policies at home. »

However, Patomäki argues, « The problem is that MMT neither guarantees any sort of progressive policies nor resolves the dilemmas and contradictions of the world economy. » At the same time, MMT shows that money creation can potentially be organised on other levels than the state – and even globally. Even though evident political obstacles stand in the way of a transformation toward a cosmopolitan direction, a rational direction to world history points that way. « Our sustainable future lies in alter-globalisation, global solidarity, and better common institutions. »