“Globalisation Needs Course Correction”- Obama In Athens; It’s Back To The Drawing-Board For Globalisation
Ranil Wickremesinghe is right to say growth in Lanka depends on international linkages. Local investors are effete; overseas ones have to be enticed. Western capital is risk averse and investors shy due to the prolonged low key depression, aggravated by Brexit, Trump and ascendance of the far-right in France, Holland, Denmark and Austria. Therefore trade and investment cooperation with China and India assume importance. We must not let self-serving professionals or skilled labour alarmed by competition stop ECTA. Likewise we must evolve a win-win strategy with China for an investment zone in Hambantota incorporating the harbour and that wacko flights-to-nowhere airport.
Let’s begin with a recap of the 40 year story from neoliberal times (mid-1970s). Globalisation was the poster child of imperialism; free trade, open markets, capital movement, curbing wages and worker’s rights (pseudonym ‘labour market reforms’), eliminating tax on multinationals and removing currency restrictions. For decades this was the IMF, Washington and Whitehall chorus, the refrain of learned economists, some of them Nobel Prize winners now strangely deaf and dumb, and of course our very own JR and his mouthpieces. Then what on earth went wrong? Unexpectedly millions in the West were left out and left behind; globalisation did not work in the Appalachian coal mines, Detroit, industrialised regions of France and in the north of England. The sorcerer’s apprentice, capitalist globalisation, turned on its master, Globalisation per se, and devoured it? Brexit, Trump and the rise of the European far-right manifests this wrath, but none has the foggiest notion how to stop the slide.
Globalisation has gone sour; not news for the left which raged against it from day-one. (It committed to internationalism long ago; but more on that later). Neoliberal globalisation is interleaved with capitalism hence it has been a target of unremitting assault by the Left. What is the difference between ‘actually existing globalisation’ (AEG) and the Left’s cherished world without borders, nations as anachronisms and workers of the world unite? Why has a universalist vision of previous centuries flared up as class-struggle now? Why has globalisation become a political question? Simple, AEG is a process in the service of capital and profit. It lets transnational corporations disentangle from national constraints on wages, welfare, national labour regulations and trade union influence. It shapes not only the economy but also politics; it transforms society itself.
This was the story for decades but after the calamitous financial crisis and recession of 2008-09 and the subsequent prolonged low key depression (I call it a Wobble-U shape) the shoe moved to the other foot, nemesis came with a vengeance. Insecurity now is a phenomenon of Europe and the USA and to compound matters it is no longer just economics but also a startling political menace – racial intolerance. Obama laments “globalisation needs course correction”; Angela Merkel softens her election losing hard stand on border controls; strange words from unexpected quarters.
The political ramifications are far reaching. Take two scenarios (actually it will be a mix). If Trump is tamed by his GOP handlers and abandons his hare-brained promises there will be uproar in his feral following. If he does not, he will be declared unfit to lead the ‘free world’ – code for global capitalism. In the latter case I have a hunch leadership will be transferred into the trustworthy hands of Angela Merkel. Thereafter the ruling classes of America and Europe can breathe a sigh of relief. What was Obama up to in Germany last week – taking an Alpine holiday! Oh no; options must have been discussed and persuading Merkel to stand for a fourth term I am sure was high on the closed-door agenda. If the overbearing dominance of a Trump madhouse eases into a more pluripotent world with three power centres (US, Europe and China) it would be an opening for smaller nations. Ranil will find at hand a helpful table on which to play asking-hitting (booruwa), raise investments and promote Lanka’s exports if he plays a smart hand.
This account of the recalibration of the global pecking order is not farfetched if you read respected gurus of the establishment. I cannot devote space to quoting many so will make do with one, Martin Wolf Chief Financial Editor of the Financial Times. I abridge and quote
“Will there be another huge financial crisis? So it is with banks. They are designed to fall. So fall they surely will. A recent book explores this reality. What makes attention justified is that its author was at the heart of the monetary establishment before and during the crisis; Mervyn King, former governor of the Bank of England”.
This was written on 3 June before Brexit and perhaps can be read as exaggerated to persuade voters not to leave the European Union. Ok then, what does Wolf say now (15 November)?
“Donald Trump has won the presidency, the US has, as a result, chosen as its next president a man whose inexperience, character, temperament and knowledge make him unsuited for this office. The consequences will be many; the economic ones important. He may reverse globalisation, destabilise the financial system, weaken US public finances and threaten trust in the dollar. US-led globalisation is already fragile. Trump seems likely to push it into the coffin”.
Wolf is an outspoken advance guard in his apprehensions about “free world” leadership. Trump’s version of America’s place in the world is to kill TPP (Trans-Pacific Partnership) and open the road for consolidation of the China-led Regional Comprehensive Economic Partnership; the Transatlantic Partnership was “unborn tomorrow dead yesterday”; NAFTA with Mexico and Canada will survive, damaged. Imposing tariffs on China and Mexico are contrary to WTO rules; the ensuing trade wars will not restrain US companies from investing overseas, nor bring jobs and investment to the America. The misery of Trump’s following will not be assuaged. In short, his threats if translated into action will kill AEG without help from detractors of globalisation.
Wolf and his ilk cry wolf but offer no way out. The way out is to shrink the obscene wealth and income gap everywhere and to curb the vast transfer of value from global labour to elites and multinationals. The crumbs falling from the table to the yokels below in America have evaporated; so Trumpets bellow and all manner of Exiters march to the global door. However shrinking inequality or crafting a fairer world-order are not what Wolves, Trumpets or for that matter Clintons, cherish.
Last week I said Trump’s bogus-Keynesian (loose fiscal policy and irresponsible monetary antics) infrastructure building impetuosity (Mussolini populism) will come in conflict with entrenched philosophy Republicans are committed to with near religious zeal. His policies lead to inflation (at last) and an erosion of the dollar encouraging search for a new global currency order. That is if Trump is allowed to have his way, but more likely he will not; Washington will cut in and tame him. If that is how the wind blows Trump and the GOP will face the music of an outraged gullible electorate.
What I am taking pains to say is not about Trump, America or its economy. It is that globalisation as we have known it for decades (AEG) is nearing the end of its shelf-life, one way or the other. A deep recession and economic dislocation in advanced capitalist economies will be painful for others as well, but small countries, if nibble and quick witted, can benefit by taking advantage of these fissures. Do people who make these decisions ever read my crap? Not likely.
Internationalism for the people
What is called globalisation these days and better known as internationalism in previous times is no stranger. I will close with two passages (heavily edited for length and style) from what is surely the best known of all the world’s political pamphlets.
“We are reproached with desiring to abolish countries and nationalities. Working men have no country! National differences and antagonisms between people are daily vanishing due to freedom of commerce, the world market, uniformity in the mode of production and corresponding conditions of life.”
“Exploitation of the world-market (has) given a cosmopolitan character to production and consumption in every country. To the chagrin of reactionaries it has drawn from under the feet of industry the national ground on which it stood. Old established industries have been destroyed, dislodged by new ones that no longer work indigenous materials but materials drawn from the remotest zones, whose products are consumed in every quarter of the globe. In place of national seclusion and self-sufficiency we have universal interdependence of nations. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become impossible. In a word, the bourgeoisie creates a world after its own image”.
So be it. The next phase for mankind’s progress is not the illusory world of Walls and barriers but a world where “we shall have an association in which the free development of each is the condition for the free development of all”.