Globalization — defined as the free movement of goods, services, capital, people, ideas and information, which is supported by the values of neoliberal institutions — is under threat by the forces of virulent nationalism, xenophobia and protectionism. These forces are prevalent everywhere — in Europe, North America, Asia, Latin America and Africa. As countries erect new political and economic barriers to globalization, we may well witness the onset of a new “Dark Age” marked by a deeper kind of cultural, economic and political deterioration — a 21st Century equivalent to the saeculum obscurum that Italian scholar Francesco Petrarca observed in post-Roman, early medieval Europe.
The early warning signs are already here. The U.K.’s vote to leave Europe is a clear demonstration that the European Union (EU), which has provided unprecedented prosperity and political stability to Europe after the great wars of the last century, is in danger of disintegrating. Brexit was a rejection of nanny state regulations by a Brussels bureaucracy that has become bloated and lost its essential purpose, plus fears about lax control of migrants and Middle East refugees to the EU. Worries about the lack of sovereignty and/or democracy also resonated with British voters.
Although the exact terms of Britain’s departure have yet to be negotiated — and some Europeans, such as German Chancellor Angela Merkel, have already hinted that some kind of “associate status” for Britain may be in the cards — Europe’s future now hangs in the balance. Brussels is also deeply unpopular with voters in France and other European countries. France’s right wing leader, Marine Le Pen, is a champion of a Frexit. Deep-rooted structural fiscal imbalances continue to plague the stability of the Eurozone. Italy’s banks are teetering and Grexit is still a real risk if Greece doesn’t get its fiscal house in order.
Another manifestation of discontent with globalization is the rampant anti-free trade, anti-immigration rhetoric of the American presidential election campaign, which is igniting a political firestorm whose flames may be difficult to quash after the election is over. The recently-concluded Trans-Pacific Partnership (TPP) free-trade agreement with Asia will almost certainly be a casualty regardless of who gets elected. Both presidential candidates, Republican Donald Trump and Democrat Hillary Clinton, oppose it. Even the longstanding North American Free Trade Agreement (NAFTA) could fall victim to populist protectionist impulses. Both presidential candidates have expressed deep misgivings about NAFTA and Trump has said he would tear the agreement up (though any attempt to do so would also require congressional approval).
The surge of refugees into Europe from Syria and Iraq was prompted by the feckless U.S. “light footprint” response to ISIS. Only the Russians and the Iranians have a clear strategy and the will to pursue it. The West has neither. NATO’s backflip on Afghanistan to keep troop levels stable is just another example of “too little, too late” and is unlikely to succeed.
Europeans and Americans now want to erect barriers to curb the flow of migrants and refugees across their borders. The most fanciful is Trump’s proposal to build a wall across the entire southern U.S. border with Mexico. Europe, which has been deluged with millions of refugees from the conflicts in Syria, Iraq and North Africa, is now forcing many of them back. Passport and border patrols are also being reintroduced in many of the Schengen countries on a temporary basis. Much of the support behind Brexit was driven by the desire not just to stem the flow of refugees from Calais, but also the hundreds of thousands of Poles who have moved to the U.K. in search of rosier employment prospects and now fill jobs that many Britons can’t or won’t do.
The anti-globalization narrative is also central to the extremist appeals of groups such as the Islamic State and the nationalist messages of propaganda and hate of autocratic leaders in countries such as Russia and Iran. They have successfully used the Internet and other media to propagate their message beyond their borders to incite violence and conflict.
In the emerging-market BRIC countries, which were the direct beneficiaries of globalization when commodity prices were buoyant and there was strong global demand for their exports, globalization is wrongly blamed for a wide litany of economic and other ills that are rooted in deficiencies in local governance and endemic corruption. Brazil, for example, used the resource boom to line the pockets of politicians, subsidize consumers and support inefficient state-owned enterprise. There are clear parallels between Brazil and Russia, where oligarchical elites rule the economy.
Some countries, such as China, are also pursuing policies that could lead to a fragmentation of the Internet. China’s President Xi Jinping has championed that “cyber sovereignty” and an Internet governance model suggests countries have the right to choose how they develop and regulate their internet. By censoring or blocking content and restricting the flow of information, countries not only compromise free speech and human rights, they also compromise a powerful instrument for communication and the dissemination of knowledge, ideas and information.
It is important to separate the real deficiencies of globalization from populist rhetoric and the dangerous half-truths propagated by demagogues and dictators alike.
The reality is that globalization has produced many benefits. Extreme poverty in the world has been reduced. Without globalization, 400 million Chinese would still be living in abject poverty. Life expectancies worldwide have increased with rising living standards and access to modern medicine. Infant mortality rates have also dropped. More and more people are able to travel as a result of rising incomes and standards of living. Almost half the world in now online and another billion will soon follow. The Internet is now not just an instrument for social communication, but also a critical vehicle for commerce, innovation and the exchange of knowledge, accounting for $6.3 trillion U.S., or eight per cent of global GDP, in both direct value and productivity gains as of 2014.
In the 1990s, globalization helped emerging countries become more competitive. Financial deregulation benefited many, allowing major new infusions of capital and credit to stimulate growth and development. Although globalization has contributed to the spread of disease and pandemics because of the ease with which people can travel across borders, globalized governance systems have also permitted a much more rapid response to pinpoint the origins of diseases and quell their spread, as in the case of Ebola and SARS.
But it is also undeniable that globalization has created social instability and a new class of winners and losers. On the losing side of globalization are blue-collar and middle-class workers who have lost their jobs to low-wage countries — what some refer to as the “Ricardian disadvantage.” (David Ricardo was the economist who invented the theory of comparative advantage to explain why countries trade with each other.) Increasingly though, labour market dislocation is also being driven by new technologies, such as Uber’s application, which have had more of a displacement effect than reduced trade barriers.
A succession of major economic crises has accentuated these divisions. The
financial crisis of 2008-09 and subsequent bailout of Wall Street was widely seen as having rewarded bankers and investors for their profligate ways at a time when many people were losing their homes and jobs. Political and business elites in North America and Europe are widely seen as being out of touch and self-serving.
That same sentiment extends to political institutions, which lack transparency and accountability. As former British prime minister Margaret Thatcher exclaimed many years ago, “I want my money back!” because she was not convinced that the EU was spending the hard-earned monies of British taxpayers wisely.
The other reason anti-globalization populism is on the rise is because there is a political leadership vacuum, especially in western democracies. Globalization has few champions in either the business or political communities. When Donald Trump rails against the evils of the TPP or NAFTA, the business community has generally chosen to remain silent. Clinton, who should know better from her many years in office, is also kowtowing to the voices of protectionism. It is not clear what she actually believes or what she would do to promote trade, investment and economic growth if she wins the White House. We can only hope that German Chancellor Merkel, who is Europe’s only real leader, perhaps aided by British Conservative Prime Minister Theresa May, whom some see as the new Thatcher, will fill the vacuum. Alas, the United States is headed into a big ditch of class warfare and presidential-congressional deadlock regardless of who wins, with racial issues becoming more incendiary by the day.
A coherent, collective strategic vision about the future and how to address the yawning governance and accountability gap between elites is desperately needed. The former director general of the World Trade Organization, Pascal Lamy, said it well when he urged delegates at the 2016 annual meeting of the Cercle des économistes in Aix-en-Provence to start thinking about a more benevolent model of globalization. Practically speaking, though, such a model must compensate losers, cushion the impact of rapid technological change, allow those who have been adversely affected to adjust and integrate into new economic realities and put citizens at the heart of innovations in governance where there is a focus on both individual and collective responsibility at every level. Such a model must also extend to the private sector where employers, employees and shareholders share responsibility and take joint ownership of their future.
However, it will take more than empty rhetoric and lofty-sounding promises to realize this vision. Ironically, reactionary forces on the left and right are offering a similar vision to stop change. Alas, they are winning the hearts of voters who want to look through the rearview mirror. Real forward-looking leadership is not about papering over the cracks and throwing a bit of money here and there. It is about developing a set of policies that are consistent with neoliberal values and that do not try to stop change, but rather adjust to it. Because nobody has the answers, it will also take frank dialogue to figure out what kinds of social and economic policies are required to adjust to new realities.
Lamy is, of course, correct. For the past decade and even longer, western countries, in particular, have been far too focused on the short term and the narcissism of small differences among themselves as they jockey for advantage. We need ambitious strategies that look ahead, defend the interests of the west vis-à-vis the real enemies of globalization, such as ISIS or demagogues such as Vladimir Putin, and which promote a common, inclusive vision that rallies the public and restores confidence in an open global economy where commerce and the free flow of ideas and knowledge flourish.
Fen Hampson is a Distinguished Fellow and Director of the Global Security & Politics Program at CIGI. He is Chancellor’s Professor at Carleton University.