Globalisation: gospel that is losing faith and followers all over the world

Globalisation under fire

It’s not just a populist backlash – many economists who once swore by free trade have changed their minds, too. How had they got it so wrong? Called “anti-globalisation” by the media, and the “alter-globalisation” or “global justice” movement by its participants, a counter-movement tried to draw attention to the devastating effect that free trade policies were having, especially in the developing world, where globalisation was supposed to be having its most beneficial effect.


SOURCE: The Guardian


Quick summary:

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  • Globalisation can take place in services, capital and ideas, making it a notoriously imprecise term; but what it meant most often was making it cheaper to trade across borders – something that seemed to many at the time to be an unquestionable good.
  • International systems – especially the Bretton Woods agreement and the General Agreement on Tariffs and Trade (GATT) and its subsequent avatar, the WTO – set the terms under which the new wave of globalisation would take place.
  • With some lonely exceptions – such as the former World Bank chief and Columbia University professor Joseph Stiglitz – the pursuit of freer trade became a consensus position for economists, commentators and the vast majority of mainstream politicians, to the point where the benefits of free trade seemed to command blind adherence.
  • It worked poorly in some places – India and Argentina, for example, where the trade barriers were too high, resulting in factories that cost more to set up than the value of the goods they produced – but remarkably well in others, such as east Asia, much of Latin America and parts of sub-Saharan Africa, where homegrown industries did spring up. Though many later economists and commentators would dismiss the achievements of this model, it theoretically fit Larry Summers’s recent rubric on globalisation: “the basic responsibility of government is to maximise the welfare of citizens, not to pursue some abstract concept of the global good.”
  • Called “anti-globalisation” by the media, and the “alter-globalisation” or “global justice” movement by its participants, a counter-movement tried to draw attention to the devastating effect that free trade policies were having, especially in the developing world, where globalisation was supposed to be having its most beneficial effect. This was a time when figures such as the New York Times columnist Thomas Friedman had given the topic a glitzy prominence by documenting his time among what he gratingly called “globalutionaries”: chatting amiably with the CEO of Monsanto one day, gawking at lingerie manufacturers in Sri Lanka the next.
  • Liberals, social democrats and moderate conservatives are on the same side in the great battles against religious fanatics, obscurantists, extreme environmentalists, fascists, Marxists and, of course, contemporary anti-globalisers,” wrote the Financial Times columnist and former World Bank economist Martin Wolf in his book Why Globalization Works.
  • If the critics of globalisation could be dismissed before because of their lack of economics training, or ignored because they were in distant countries, or kept out of sight by a wall of police, their sudden political ascendancy in the rich countries of the west cannot be so easily discounted today.
  • In an interview earlier this year, Wolf suggested that, though he remained convinced globalisation had not been the decisive factor in rising inequality, he had nonetheless not fully foreseen how “radical the implications” of worsening inequality “might be for the US, and therefore the world”.
  • “I really have found it very difficult to decide whether what we’re living through is a blip, or a fundamental and profound transformation of the world – at least as significant as that one brought about the first world war and the Russian revolution,” Wolf states. He cited his agreement with economists such as Summers that shifting away from the earlier emphasis on globalisation had now become a political priority; that to pursue still greater liberalisation was like showing “a red rag to a bull” in terms of what it might do to the already compromised political stability of the western world.
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