In the past, globalisation seemed to be the magic bullet of universal wellbeing, wealth for all and the end to sufferings of all sorts.
Meanwhile illusions have withered:
- The Doha Round failed.
- The US President-Elect plans to stop NAFTA and TPP, possibly also TTIP.
- The UK voted to leave the EU.
- CETA will probably not be ratified by the European national parliaments.
200 years ago there was a first attempt of globalisation which, however, collapsed in the Great Depression. The current wave began after WWII. Alas, it appears to have reached its peak.
As Michael A. Witt of INSEAD stated in his article of 22 November 2016, there are two forces at work in the rise and fall of globalisation. One is innovation, the other is politics.
Globalisation profits from faster communication through the internet and cheaper transportation through larger ships. Technology may thus enhance further globalisation.
As far as politics are concerned, politics determine whether this potential can be brought to bear.
Liberalism vs. Realism
Political science has developed a range of theories to account for these political decisions. Two arguably most dominant approaches should be focused on: liberalism and realism.
Liberalism as theory allows for very illiberal outcomes. Globalisation will survive as long as political actors (voters, associations, firms in favour of globalisation) retain more power than those opposing it. To that end, a majority of actors needs to be convinced that they are on the winning side of globalisation.
Alas, not all gain equally. Many actually lose. Loosers see globalisation as a tool to benefit elites at their expense. In Great Britain this pushed the Brexit vote. In the US it helped Trump gain the 2016 presidential election.
The political debate has clearly shifted against globalisation. A remedy is supposed to be the so called „embedded liberalism“ (John Ruggie) , means enabling globalisation but limit its adverse effect through social security systems and retraining efforts.
But as Ruggie pointed out, such embedding of the economy in society may not be possible if markets are completely free, since investors would seek to avoid economies trying to implement costly social and labour policies. For this recipe to work, it may be necessary to put a limit on the freedom of markets – not to destroy them, but to save them.
Realism on the other hand claims that waves of globalisation reflect the rise and fall of global hegemons. In the 19th century it was the UK. After the Great Depression the US took over.
If realism is correct in postulating that a hegemon is necessary for globalisation to happen, the outlook is gloomy. The US are a hegemon in decline with regard to other nations. China is actually challenging the US world order.
Under realism three scenarios are possible. First, a new hegemon takes over from the US with globalisation surviving. Second, a new hegemon takes over but transforms the system to its own gusto. Third, no new hegemon pops up but different parts of the world develop their own regional hegemons with different rules for economic and social life, resulting in restricted exchange between those regions
The third scenario seems to be the most likely. China will not be strong enough to replace the US, and the US will no longer be potent enough to stop China from becoming the hegemon in their region. President-Elect Trump’s plans would enhance this development.
Globalisation will most likely be doomed. Read the original article here.