The Economist calls it Slowbalisation. The magazine has produced a deeply worrying piece. It suggests that the steam has gone out of globalisation. The new trend shifts focus to regional trade. It shows that globally eight of 12 indicators are in sharp decline. They include trade in goods, intermediate imports, multinational profits, FDI flows, stock of cross-border bank loans, share of countries catching up and S&P 500 sales abroad. Does it mean globalisation is slowly dying and slowbalisation is merely a euphemism for such a slow burnout? The Economist does not seem to think so. Citing examples from history it shows that the globalisation trends have wavered quite often. However, its current verdict is that we are in for a long period of slowdown and as pointed out earlier a shift to regional markets.
In regional markets, it predicts the emergence of three major regions — America, Europe and Asia. But here too it highlights three major challenges, namely the issue of political legitimacy along with unpopularity, the nature of finance which remains global (read in US dollars) and risk to individual economies like Taiwan that trade both with China and America. As if this was not enough, the piece also quotes Arvind Subramanian, a former economic adviser to the Indian government, who outlines four challenges to the emerging economies. They are failing globalisation, poor educational quality that may compromise the capacity to exploit digital revolution, and stress among agricultural industry owing to climate change. Worried much? So, what went wrong?
The Economist deals firmly in facts and usually does not indulge in too much speculation. But let us delve into the world of speculation where an honest answer might be found. And the readily available answer is that the world became too greedy. The US has remained the lifeblood of globalisation so far and the world constantly took from it. The criticism of China’s copycat industry is not new. Nor is its ability to attract investment from elsewhere through the appeal of its cheap labour. But China at best has been viewed as a frenemy of the West. What would you say about Europe which has enjoyed fruits of globalisation and security provided by the US taxpayers? Or for that matter India which has sought to export its own labour to America and the West under various pretenses. By The Economist’s own account if Indian IT skilled labour were to double in size replacing the workers in the West, 1.5 million people in the Western countries would be out of jobs. So, everyone was taking advantage of the US and paying only plaudits in return. That would explain why Donald Trump is so unpopular in the international economic circles.
Still not convinced of the greed? Seven out of eight indicators mentioned above started their plunge in 2008. Did anything else happen around the same time? Financial crisis. Cause? Greed. Wanna bet? Watch the award-winning movie The Big Short for a comprehensive explanation. The same greed which broke the financial system broke globalisation. So, is it the end? Not quite. You are confusing capitalism with communism. Communism is like a big juicy apple. When it rots, you must throw it away. Capitalism is like an onion. Not entirely appealing but mostly reliable. When one peel decays there is a good chance that the peels below are still intact. Since capitalism takes baser human instincts into account, not risking the entire enterprise on high minded and often wishful human virtues, it remains open to correction. What you are witnessing is a correction where the predatory are being weeded out. The main spirit of globalisation has not disappeared. Want proof? Four of above 12 indicators which have stayed strong are international air travel, international parcel volume, permanent migrants to the rich world and cross-border bandwidth. You can see this growth in view of strengthening service industry or you can use a more vivid theoretical paradigm.
If you are acquainted with the works emanating from the Frankfurt School, you must not be a stranger to the theory of communicative rationality by Jurgen Habermas. The beauty of the critical theory school is that it picks up where Marx starts failing. Despite being a great and prescient thinker, you have to agree Marx’s remedies are too extreme and with every passing day very impractical. Habermas however shifts the focus to the emancipatory effects of communication and language. When they talk, they have a better chance of arriving somewhere. The beauty of Habermas’ world is that it is so value neutral despite being aspirational. Propaganda, criminals, hate groups all are included. Why? Because nothing changes their status as human beings. It is through communication that you can resolve issues. So, the unfettered communication of ideas which you witness and which refuses to die out is the next step in the evolution of mankind. You can bemoan the slowing of globalisation or you can realise that it was an idea ahead of its time, not naturally evolved, imposed from without and that too without the necessary cultural spadework. As the global communication grows because of technology and social media we prepare for a better-informed globalisation that will eventually come. And this is where you have to appreciate the beautiful minds of the framers of the US constitution. By unapologetically protecting freedom of expression of all kind, the US constitution ensures that the governments and various parties spend time, energy and resources in perfecting their arguments rather than censorships. If this global discourse continues a better world will definitely evolve. As Dr Steven Pinker points out in his 2011 brilliant work The Better Angels of Our Nature: Why Violence Has Declined we may not realise it but the world is getting better. So, what if we are viewed as a post-truth society. Don’t let the exchange of ideas stop.
If anything the problem with The Economist piece is that it doesn’t go far enough. The real threat mankind faces is of the loss of jobs to automation. The fact we have been at it for a while and so far I have not read one plausible suggestion about what mankind will do when machines take all its jobs should worry you. More taxes will not solve this problem.
Published in The Express Tribune, February 9th, 2019.