The Lies of Globalization

For those of us who have been decrying the method of globalization for years, watching its mainstream media cheerleaders come to realize that, huh, maybe there are problems here does provide a certain perverse enjoyment.

When the world’s business and political leaders gathered in 2018 at the annual economic forum in Davos, the mood was jubilant. Growth in every major country was on an upswing. The global economy, declared Christine Lagarde, then the managing director of the International Monetary Fund, “is in a very sweet spot.”

Five years later, the outlook has decidedly soured.

“Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the World Bank warned in a recent analysis. “The result could be a lost decade in the making — not just for some countries or regions as has occurred in the past — but for the whole world.”

A lot has happened between then and now: A global pandemic hit; war erupted in Europe; tensions between the United States and China boiled. And inflation, thought to be safely stored away with disco album collections, returned with a vengeance.

But as the dust has settled, it has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.

Are you saying that economists and promoters of capitalism might be pushing ideology over facts? Huh, wow, who could have guessed that!

The economic conventions that policymakers had relied on since the Berlin Wall fell more than 30 years ago — the unfailing superiority of open markets, liberalized trade and maximum efficiency — look to be running off the rails.

During the Covid-19 pandemic, the ceaseless drive to integrate the global economy and reduce costs left health care workers without face masks and medical gloves, carmakers without semiconductors, sawmills without lumber and sneaker buyers without Nikes.

Yeah, wow, it’s almost as maximizing quarterly profits left the entire global economic system on the verge of a complete breakdown. But think of the profits off just-in-time manufacturing and shipping. That’s going to look so good on that quarterly report, the only legitimate way we should plan an economy!

A big part of the problem is that this all sprinted forward in the aftermath of the fall of the Soviet Union, when capitalists believed they had “won” and thus any kind of checks on rapid globalization were seen as loserville stuff.

Today’s sense of unease is a stark contrast with the heady triumphalism that followed the collapse of the Soviet Union in December 1991. It was a period when a theorist could declare that the fall of communism marked “the end of history” — that liberal democratic ideas not only vanquished rivals, but represented “the end point of mankind’s ideological evolution.”

Yeah, see, Fukuymama is an idiot. His argument was nonsense at the time. But you think Tom Friedman let that get in the way? Ha ha, no way.

Associated economic theories about the ineluctable rise of worldwide free market capitalism took on a similar sheen of invincibility and inevitability. Open markets, hands-off government and the relentless pursuit of efficiency would offer the best route to prosperity.

It was believed that a new world where goods, money and information crisscrossed the globe would essentially sweep away the old order of Cold War conflicts and undemocratic regimes.

LOL. That’s what this kind of ideological projection deserved then and it deserves it now.

I could go on with the article, but let me just make a couple of points.

First, policies developed for the entire world at 30,000 feet are bound to fail. This is the capitalist version of high modernism, where people were turned into numbers and could be discussed in the aggregate without ever asking anyone what they actually wanted. If communist ideas of collectivization were a failure (and they absolutely were) so is the idea that we can move pieces around the globe like a board game and create “prosperity” without considering any of the other impacts this would cause.

Among those impacts are the rise of nationalism, discomfiting cultural shifts and the resentments they cause, immigration, workers being told their lives are worthless and they need to do something else and then not being provided a path to do those things, capital mobility and the closure of global factories and their move somewhere else if the workers unionize (you can close that newly unionized Honduran textile factory and reopen it 20 miles away in El Salvador in about a month), the creation of international legal systems that workers or everyday people can’t access, etc.

You can look at GDP or whatever and make one statement that makes all of this look like a giant success. But then you look at the ways in which everyday people are actually responding to these changes–which the rise of Trump definitely is part of–and it’s a lot less comfortable. Nationalism and racism are on the rise as growing rapid immigration and destabilization makes everyone nervous about their future. Nothing about globalization required democracy. In fact, democracy is not what our international global elite wants. Remember when Friedman made a big deal about how nations that had McDonald’s had not fought a war with each other? Christ. China and Vietnam have not democratized one iota due to the rise of global capitalism. They just became capitalist dictatorships. Large numbers of Americans increasingly want their own dictatorship to stop all the yucky things they don’t like, which is a phenomenon that is of course not entirely about globalization and its discontents but is in part. And that’s not because of “economic anxiety” per se as people on the left tried to over-explain in 2016 and then liberals stupidly dismissed entirely in 2017, but because of how economic dislocations take away the institutions that were fighting against this racism in the working class (unions) and gave power to feeding the worst parts of Americans’ ideas. Europe has seen this only slightly mitigated due to its more robust social welfare system, but the rise of Brexit in the UK and Le Pen in France, not to mention what has happened in Hungary and Poland, demonstrates that the U.S. is far from alone in how the new world has empowered the worst forces in our lives.

This stuff gets really complicated. For example, even in our discussions of the U.S., we tend to use too broad generalizations when discussing the role of trade and globalization. We say it was bad for Ohio and Michigan but really good for Oregon and Washington for example. But in truth, that’s still too broad. If you look in the Northwest there is no question that the new Pacific-facing economies have been good for state tax coffers. The rise of these big new corporations of the 21st century in the region has totally transformed it. But if you are a working class person 30 miles from Portland or Seattle, it’s been a total disaster. The trees now had more value standing than being harvested. What were you now going to do? The answer was not much, which probably meant weed and meth. The rage against change and elites was not just about D.C. or China or whatever. It was about Seattle and Portland itself. This is a big part of how you end with the rise of right-wing extremism in rural America.

None of this is to say that globalization is “bad.” It is neither good nor bad. It is about how it is created, planned, and implemented. And this current system was created by global policy makers at Davos and Aspen who handwaved away any critiques of what was happening, who ignored how this might displace working class people from the farmers of Guatemala to the autoworkers of Detroit, and who brought a rah-rah capitalist victory ideology to the entire world after 1991. But hey, it’s OK if Bangladesh has different safety standards than American companies, even if it kills 1,138 workers, amirite? I still appreciate that Yglesias expressed that garbage in response to me being outraged over mass death. What’s a little mass death when you have an ideology to promote!

All of the problems we see today in the global economy were completely predictable. Perhaps not this level of climate change, which really is something we’ve only had the tools to take seriously in the last 20 years or so. That creates such a huge problem that it’s a bit unfair to blame it on apostles of globalization. But the rest of it? Yes.