Put to the sword: What now for Globalisation?

While some choose to vilify globalisation, others worship it. While Naomi Klein identifies globalisation and the brand of “disaster capitalism” it has propagated as the root of the financial crisis, others view it as the only solution to the world’s current problems. In this post, rather than analysing the merits or otherwise of globalisation, I am going to examine whether the current context favours the advance of globalisation or if, as the Princeton economist historian Harold James argues, it sounds its death knell.

Last November capital flows to emerging markets reached their lowest level since 1995, and the market for international bonds collapsed. Gideon Rachman, writing in the FT, declared that this year’s World Economic Forum at Davos was characterised by a thinly veiled trend towards “de-globalisation”. British jobs for British workers. Buy American. Lend French. The reality seems to lend credence to this belief. The economist ran a cover with “the return of economic nationalism” emblazoned across the cover of one of its February issues. The success of this ‘return’ will be dictated by the outcome of the impending battle between nationalist and populist cries for increased protection and the affirmation of the reality that the hermetic sealing of any economy would not only be massively expensive but also ultimately Sisyphean.

This statement about de-globalisation holds if you believe that it is primarily about trade flows and international investment. However, globalisation can also be defined in a broader manner, in the words of the British political scientist David Held it is the “widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life”. In this sense, the economic crisis will not reduce the ability of people around the world to communicate. The internet is not about to collapse, nor the vast networks of fibre-optic cables which support it. Religion is likely to benefit from the downturn as people seek solace in the spiritual. Criminality and terrorism will continue to develop increasingly global networks, while charities will be called in to pick up the pieces.

Those who equate globalisation to Americanisation will witness what Kushmore Mahbuabni terms as “the irresistible shift of power to the east”. However, globalisation has always been a vehicle for the spread of several cultures, and this shows no sign of abating. Although the internal hierarchy of the cultures it disseminates may now evolve.

Recent events have also highlighted the weaknesses of another interpretation of globalisation. Susan Strange and others who declared the “Retreat of the state” have been faced with a return to prominence of power politics. While traditional geopolitical calculations were never truly supplanted by non-state actors and economic considerations the recent nationalistic posturing of states such as Russia and Venezuela has underlined their importance. Nationalist sentiment might be inflamed by the crisis, but these nation’s means to act on this sentiment are being severely impaired by the continuing depression in the price of oil and natural gas- their major revenue source.

The outlook for globalisation is highly dependent on the manner in which you define the process. If you view it as an economic entity then de-globalisation is a reality. However, if you interpret it as David Held does then globalisation, in its complex entirety, will continue shape the world and the challenges we face.

Whichever interpretation of globalisation you choose one fundamental reality remains, the world is ill equipped to deal with many of the problems which it has raised or exacerbated. The recent uncertainty surrounding the future of the EU and continued question marks over the efficacy and the equity of other, among others, the UN and the IMF confirms this. For Moises Naim , editor of Foreign Policy, “the gap between the need for effective collective action at the global level and the ability of the international community to satisfy that need is the most dangerous deficit facing humanity.”

The need for a move towards global governance is intensifying. Yet no matter what the outlook for globalisation is, our ability and willingness to realise the changes necessary for such governance are, and will remain, severely lacking.