Globalisation is Alive and Well … and Kicking
| DOI | http://doi.org/10.1111/1758-5899.12742 |
| Date | 01 November 2019 |
| Author | Edward Price |
| Published date | 01 November 2019 |
Globalisation is Alive and Well ... and Kicking
Edward Price
New York University (NYU)
Abstract
Reports of the death of globalisation have been greatly exaggerated. Instead, so successful has the project been that the
power of those who designed it, economic policymakers, has been reduced. Deep market integration will thus continue for
some time, producing further uneven distributions of capital, unemployment, growth and political equilibria.
Reports of the death of globalisation have been greatly
exaggerated. Some believe international trade tensions,
flaws in the global currency system and popular politics will
rapidly de-globalise the world economy. Instead, for some
time yet, deep and ongoing integration is more likely to
produce further uneven distributions of capital, unemploy-
ment, growth and political equilibria.
To account for this situation is a deep and subtle shift in
post-war international economic policy.
Ruminating in rubble
After the Second World War, economic policy makers made
some simple observations. Among the developed nations,
domestic mass unemployment and disjunctions of essential
commerce had promoted conflict (The World Trade Organi-
sation (WTO) ; Wolf, 2014). The devil, it seemed, had found
work for idle capital stock to do. The post-1944 international
economic policy framework was thus designed to increase
trade, boost economic growth, reduce unemployment
(Skidelsky, 1996) and bind countries together. It was suc-
cessful. Since 1945, there has been no general war.
Today, however, the means of globalisation have shifted.
We still pursue growth, yet policy makers no longer avoid
structural unemployment as a matter of faith. Nor does
increasing trade, by itself, necessarily reduce the strains
between countries.
Doomed to success
Globalisation means encouraging global markets. So suc-
cessful has this project been that the power of those who
designed it, economic policy makers, has been reduced. This
is an irony.
Today’s reduced policy potency is obvious. The most
famous example is the impossible trinity of macroeconomics.
This states domestic economic policy can control only two of
the following three: exchange rates, capital flows or monetary
policy. This and similar realities have encouraged the popular-
ity of supply-side economic theory. Since the 1960s, economic
policy makers have slowly, and unevenly, drifted away from a
philosophy of counter-cyclical policy intervention. The partial
exception is the immediate response to financial crises, but
the lasting response to those, too, is of course structural.
Instead, policy makers have outsourced global economic
growth to global market forces. Internationally and at home,
they have focused on the structures, not cycles, of economies.
Upward economic growth, and global peace, have nonethe-
less broadly remained.
Unemployment and the unpopular
Now, however, some large developed countries are chal-
lenging the post-war axiom that maximising trade and glo-
bal integration are unquestionable benefits (Fidler, 2017).
Populism is described as a political mood emerging from
the tensions and breakdowns of globalisation. This is wrong:
populism is a sign of its ongoing function. A better way of
describing the phenomenon, then, is as the development
and deepening of politically significant linkages in the inter-
national labour market. This political entanglement between
national labour markets is only possible with global integra-
tion. In fact, individual national labour markets are now, col-
lectively, behaving more like a single national labour
market. The problem for populists is a contradiction. They
wish to reduce the power of global political fora, the only
places in which the international distribution of unemploy-
ment might fruitfully be discussed. Nor will fiscal policy nec-
essarily help: spending today might worsen populism-
fuelling debt crises tomorrow.
Trade tensions
Trade distributes losses (unemployment) and gains (aggre-
gate growth). This was known to those who negotiated the
post-war trade order in the 1940s. The British delegation at
the General Agreement on Tariffs and Trade (GATT) talks, for
example, wanted a slower move to free trade than did the
American. The UK assumed any swift move to the most-
favoured-nation (MFN) system would harm the then-pro-
tected Commonwealth economy.
There is no obvious answer, short a global fiscal mecha-
nism that can redistribute surplus and mobile financial capi-
tal in country A to idle and immobile physical capital in
©2019 University of Durham and John Wiley & Sons, Ltd. Global Policy (2019) 10:4 doi: 10.1111/1758-5899.12742
Global Policy Volume 10 . Issue 4 . November 2019
726
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