How could globalization end?
According to the Financial Times, geopolitics is the main threat to globalization. Here because
How could globalization end? Some seem to imagine a relatively peaceful "decoupling" of economies so closely linked until recently. But the rupture of economic ties is likely to be the result and cause of growing global discord. If so, globalization is likely to end more destructively. The Financial Times writes.
Humanity, alas, has already done so in the past. Since the industrial revolution in the early 19th century, we have had two periods of increasing cross-border economic integration and one reverse. The first period of globalization preceded 1914. The second began in the late 1940s, but has accelerated and expanded since the late 1970s, with the integration of more and more economies. In between there was a long period of deglobalization, delimited by the two world wars and deepened by the Depression and the protectionism that accompanied and aggravated it. Finally, since the financial crisis of 2007-09, globalization has neither deepened nor reversed.
This story certainly does not suggest that a period of deglobalization can be happy. On the contrary, the period 1914-45 was marked by the collapse of the political and economic order, both domestic and global. The Bolshevik Revolution of 1917, itself a consequence of the First World War, launched communism into the world. According to some estimates, communism has killed around 100 million people, even more than the two world wars.
This period of chaos and calamity has had some positive outcomes: it has made European empires unsustainable, it has given birth to modern welfare states, and it has made human beings a little more aware of their common destiny. However, on the whole, it was a time of catastrophe.
A controversial question is how and to what extent peace is linked to globalization. As John Plender recently argued, trade does not necessarily guarantee peace. The start of the First World War in a relatively lively period of trade proves this. Rather, causality goes in the opposite direction, from peace to trade. In an era of cooperation between great powers, trade tends to grow. In an age of mutual suspicion, especially open conflict, trade collapses, as we now see between Russia and the West.
English liberal Norman Angell is sometimes referred to as a naïve supporter of the idea that trade would bring peace. Yet, in The Great Illusion, written shortly before World War I, he argued that countries would get nothing of value from war. Subsequent experience fully confirmed this thesis: the main participants in the war all lost. Likewise, ordinary Russians will not benefit from the conquest of Ukraine or the ordinary Chinese from the conquest of Taiwan. But this truth did not preclude the conflict. Under the guidance of psychopaths and the influence of nationalism and other dangerous ideologies, we are capable of grotesque follies and horrific crimes.
One possible answer is that this time nothing like what happened during the "great deglobalization" of the twentieth century can happen. At worst, the outcome could be a bit like the Cold War. However, this is an overly optimistic statement. It is very likely that the consequences of a breakdown in relations between great powers are even worse in our time than they were then.
One obvious reason is that our capacity for mutual annihilation is far greater by an order of magnitude today. A disturbing recent study from Rutgers University argues that a large-scale nuclear war between the United States and Russia, especially considering the likelihood of a "nuclear winter," could kill over 5 billion people. Is it unimaginable? Alas, no.
Another reason the outcome may be even worse this time around is that we depend on a high level of enlightened cooperation to support a habitable planet. This is especially true of China and the United States, which together generate more than 40% of global CO₂ emissions. Climate is a collective action challenge par excellence. A break in cooperative relations risks ending any possibility of avoiding an ongoing climate change process.
We must therefore fall back on the hope that today's and increasingly deep global divisions can be contained, as they were, in principle, during the Cold War. A rejoinder to this hope is that there were some moments of tension during the Cold War. The second is that the Soviet economy was not integrated into the world economy, while China and the West are both competing and integrated with each other and with the rest of the world. There is no painless way to decouple these economic ties. It is crazy to imagine that it exists. The effort seems destined to create conflicts.
Indeed, the recently announced controls on US exports of semiconductors and associated technologies to China seem like a decisive step. Of course, this is far more threatening to Beijing than anything Donald Trump did. The goal is clearly to slow down China's economic development. It is an act of economic warfare. One can agree. But it will have huge geopolitical consequences.
Deglobalization is very unlikely to be the result of carefully calibrated and intelligent decoupling. We humans don't work like that. One could pretend that deglobalization has to do with reducing inequalities. This is also nonsense: the most open economies are often relatively equal.
It is the conflicts of power that threaten globalization the most. By seeking to increase their security, the great powers make their rivals more insecure, creating a vicious spiral of mistrust. We are already very far in this spiral. This reality will affect the fate of the world economy. We are not headed towards benevolent localism, but towards a negative sum rivalry. Our world may not survive a virulent attack of this disease.
(Extract from the foreign press review by eprcomunicazione )
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-potrebbe-finire-la-globalizzazione/ on Sun, 13 Nov 2022 07:01:31 +0000.