1 - Globalisation Readings PDF

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The World is Round – John Gray, 2006 A reaction to Thomas Friedman’s ‘The World is Flat’ 

Friedman, like Marx believes that globalisation is only compatible with one economic system He’s one of the most powerful contemporary neoliberals (who are big believers in the free market)  Firedman identifies as a Technological Determinist (believes technology develops a society’s social structure and cultural values) – similar to Marxism  Spread of capitalism over past 200 years has gone alongside war and revolution o Friedman overlooks this o Two notions conflated – belief we are living in a period of rapid/continuous technological growth (true) + belief that this is leading to a single worldwide economic system (ideological assertion) – Marx and Friedman elide the two  Freidman’s phases of globalisation 1. 1492-1800: countries opened up trade with the New World, driven by military expansion 2. 1800-2000: global integration driven by multinationals, steam engines, railways 3. 2000-present: individuals are the driving force  Technology is the key aspect in each phase – globalisation is a by-product; deviates from standard view of contemporary economists who see globalisation as the result of policies of deregulation What we are witnessing today is only the most recent phase of industrialisation o The uses of petroleum and electricity changed human life more than any IT; they still did not end war and bring about an era of peace Globalisation occurs through any economic system – occurred in dirigiste regimed Asia (Japan in the Meiji era/militarist era, post ww1 in korea and Taiwan), during Lenin in Russia, continued after the liberal economic order fell post WW1 o No systematic connection between the free market and globalisation o The utopian world that friedman is looking for don’t exist Friedman acknowledges an “unflat’ world, whereby people don’t have access to advanced technolgoies, but he doesn’t connect the growth of this world to the advancement of globalisation o Gloablisation helps some people and makes some worse off though o He sees the falling of the berlin wall as a flattening event and Russia have most benefited from the new flat world  Soviet collapse has been good obviously, but now Russia has rising levels of absolute poverty and large increases in inequality – economic shock therapy administered on western advice was the cause of this  

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Globalisation isn’t new – Marx and Engels expressed it in 1848 in The Communist Manifesto stating they saw the emergence of a global market, a consumption that disregarded national and cultural boundaries o They welcomed this to enable humanity to overcome the divisions of the past

Price decontrol has wiped out small family savings, market deconcentration of wealth due to limiting the benefits of privitisation to a small number of insiders  Different policies could have changed/prevented this  Caused a backlash against the west and a political aftershock Neoliberals view Nationalism as a cultural backwardness that slows the process of globalisation, yet the economic boom in US/UK took place against a background of a strong sense of nationality o Nationalism fuelled the rapid growth of capitalism in 19th/20th century – doing same in 

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China/India now (they see it as an opportunity to increase prosperity and challenge Western hegemony)  As china and india become great powers, they are demanding recognition of their cultures and values – international institutions will have to be reshaped to reflect the legitimacy of a variety of economic/political models, which will shift the global balance of power After 911, friedman says he lost sight of globalisation as he spent much time in the arab world – but it was actually the forces of identity that shape it instead o He says the nation-state is the biggest source of friction in global markets, but nationalist resistance is actually more prominent in advanced countries (france, Holland, us, uk) than emerging economies Rising nationalism is a part of the process of globalisation, alongside intensifying geopolitical rivalries o Industrialisation is setting off a scramble for natural resources – large countries are attempting to secure energy supplies

Globalisation’s Last Gasp – Barry Eichengreen, 2016 

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World trade growth would be slowing down even if trump wasn’t in office o Its growth fell flat in the first quarter of 2016 and it fell by nearly 1% in the second quarter o With worldwide production of goods/services rising by more than 3%, the trade to GDP ratio has been falling compared to its previous steady upward march before o The mavens of globalisation claim this reflects the resurgence of protectionism in opposition to the TPP and TTIP Slower trade growth is as a result of slower gdp growth – not vice versa o Refects china’s economic deceleration – until 2011, they were growing at double digit rates; now they have slowed by a third – their catch up phase is over and so global trade has slowed Global supply chains – an engine of world trade o Trade benefited from falling transport costs – but efficiency in shopping won’t continue to improve faster than efficiency in production of goods Slow trade is a symptom of slow economic growth (secular stagnation) caused by depressed investment

Stubborn National Politics Drag Down the Global Economy – Gordon Brown, 2013 

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Shortage of demand for change has developed because o The IMF announced at the end of 2012 that the adverse impact of fiscal consolidation employment and demand has been greater than expected o Effectiveness of quantitative easing has started to wane Austerity in one country reduces demand in the next and vice versa o Countries trying to fix only their own national economies causes a cul-de-sac of nativism and protectionism o Economics have gone global, but politics have remained local o Today for the first time in decades, no single economy can drive the global economy forward on its own (America could do this a decade ago) o We have our own version of a global prisoners dilemma – we need global coordination – no global economy can succeed on their own but they don’t trust anyone else  They tried to do this in 2009 with the G20 and the IMF, but by 2010 they had already gone back to fiscal consolidation o People are so focused on domestic policies now that politicians are at a disadvantage if they propose global initiatives

Putting geopolitics back at the trade table – Lamy, 2013 

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Economic growth can help to ease tensions within societies o When standards of living are rising for a majority of citizens, it fosters a greater tolerance of diversity, fairness and democracy – absence of growth fosters conflict over how wealth is distributed (Benjamin Friedman – Harvard political economist) Economic anxiety and distributional conflict o When there is a weak economy, voters are fearful that gains in another economy will come at their expense; emerging economies have responded in kind as they are wary of losing their developmental gains o As a result, multilateral policies have almost come to a halt o

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Trade o o o

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Age of optimism that reigned between collapse of soviet union and fall of leman brothers has given way to a zero sum world (FT columnist, Gideon Rachman) even though the world has never been more interdependent in terms of economic stability, food security, climate security etc WTO-OECD research has shown that export performance is dependent on a nations openness to imports of goods/services Trade binds nations together in ties of mutual interest and dependence – this dates back to the Enlightenment and is no less relevant today Conflicts are about more than economics, but relations are quite different in a vibrant trading relationship than a hazardous one eg israel and Palestine – increasing economic separation has decreased prospect of peace Civil conflicts can have global consequences eg in the Sahel Growth reduces risk of civil war, decline in GDP increases it

A New Multilateralism for the 21st Century – Lagarde, 2014

Global interconnectedness 

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By 1914 the world was mostly at peace for the past few decades, however there was also tension between nations and inequalities o These imbalances toppled over – nationalist thinking led to destruction and two world wars occurred 1944 – a group of 44 nations met which ultimately gave birth of the united nations, the world bank and the imf Today o Global interconnectedness, world trade grown, integrated supply chains, financial links between countries have grown, communication revolution o This can lead to good things, but also bad – the financial crisis started with the mortgage markets of suburban America Power is not shifting from a few to a handful to a myriad – from west to east, north to south o moving towards a world that is more integrated – economically, financially and technologically – but more fragmented in terms of power, influence and decision making

Economic sustainability 

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Demographic shifts o Over next 3 decades, the world will get larger and older – by 2020 there will be more people over 65 than under 5 o Young populations in Africa and south asia will increase, while Europe, china and japan will age o Young population allows for innovation and creativity but we need to generate enough jobs for them – need a huge focus on education, and think about the effects of technology on employment o In aging countries, the older generation will be reliant on state pensions o Migration from young to aging countries can help, but also can lead to nationalism Environmental degradation o Greatest challenge of our era o Growing pressure points around water, food and energy – by 2030 almost 50% of the world will live in regions of high water shortage o By 2030s almost 40% of the land used in sub-saharan Africa to grow maize won’t be able to support the crop Income inequality o Richest 85 people in the world own the same amount as the bottom half of the population o Need to make taxation more progressive, improving access to health and education o Gender  If woman participated in the labour force to the same extent as men, the boost to per capita incomes could be 27% in the middle east/north Africa, 23% in south asia, 17% in latin America, 15% in east asia, 14% in Europe and central asia

Multilateralism  

Need to commit to international cooperation to overcome these problems Hard (UN, IMF, WTO) and soft (G20, networks of NGOs) cooperation – must work together...