Globalisation’s uncertain future

Globalisation was to be the commercial motor of an increasingly borderless post-Cold War world. In Goodbye Globalisation: The Return of a Divided World, Elizabeth Braw provides an account of what she sees as the unravelling of globalisation. In her telling, it is a salutary tale of western economic and geopolitical naivety and Chinese unscrupulousness. 

With the end of the Soviet Union and the “fall” of the communist ideology which underpinned it, a new global order beckoned; or so it was thought. Western banks and businesses were poised to grasp opportunities offered by financial deregulation, new communication technologies and shifting international politics. Those opportunities seemed ripe for the picking: politics and economic performance globally would be reshaped not by old-style ideologies and nationalisms but by new-style industries and trade. 

However, thirty years on, the Soviet empire is striving to resuscitate itself, state communism is alive and kicking strongly in China, nativist politics are on the rise – not least in India – and the global order is threatened more by military power relationships than by the promise of commercial ones.

Back in the 1990s western political and business elites expected Adam Smith’s invisible hand to work its magic internationally and cast the world anew to their advantage. That at least was the theory. For western “realists” and idealists alike a meld of free-booting international finance, manufacturing investment and enhanced trade offered the prospect of a win-win outcome across the globe. Globalisation was embraced as a transformative phenomenon that was going to be good for everyone. What could possibly go wrong? 

In a quiet aside Braw admits that she has written a one-sided account. Hers is the story of globalisation from a largely western and disillusioned perspective. The forty individual voices or interviewees she calls as witnesses to the past three decades are a varied but limited group. The majority are drawn from the US, Germany, the UK, Sweden (Braw is herself Swedish) and the Baltic states. Prominent among them are bankers who were keen to finance unconstrained investments overseas; ambitious employees of leading western manufacturers (such as Ericsson and VW) seeking new markets and economically efficient manufacturing locations and link-ups in wider Asia – especially China – and Latin America; and newly-minted young entrepreneurs from countries freed from the grip of the Soviet Union. Braw uses her witnesses cleverly to put human faces to a dramatic global shift that can too easily be lost behind shafts of statistical data.

But what is missing from Braw’s account is how the countries of the wider or non-western world saw the globalisation process and the risks and opportunities it posed for them. Many saw assertive and expanding western commercial reach as a novel form of imperialism with them as potential victims. It is not coincidental that countries of the Global South sought to re-order themselves. New groupings formed, most significantly Brazil, Russia, India, South Africa and China together known as BRICs. 

Partly protective economically, partly assertive politically, such groupings were works-in-progress. They were – and remain – far from unified in their views or goals but they represented a challenge to the established paramountcy of the US and its European allies. Furthermore, they were not ready to support a world order shaped and institutionalised by victorious powers after the Second World War. Globalisation didn’t “flatten” the world. Assertive nationalisms stirred most obviously and instrumentally in China and India. Western-style liberal democracy failed to take over the world as some had anticipated. Nor did all the old ideologies retire defeated and distinctly unliberal ones began to take shape even in parts of the western world. Soviet Communism had thrown in the towel but China certainly hadn’t and India started to generate its own Hindu-nationalist ideology and common to them all were authoritarian styles of government. 

What Braw shows well is how doing business across freshly accessible markets too often sidelined sensible analysis and good judgment on key issues, not least due protection of intellectual property rights. Large western companies were frequently not as savvy as they had thought they were and ignored their better instincts, allowing themselves to be robbed by copycat techniques, not least in China. But Braw is too inclined to assign dominant blame to an unscrupulous China whilst underestimating the shortsightedness or worse of representatives of western companies intent, above all, on short-term financial gain. 

Meanwhile back in the countries where the expanding western companies were headquartered, a different story gradually took shape. Braw’s witnesses to this are principally politicians and trade unionists who saw the effects back home in Europe and the US. The flip-side of globalisation’s commercial expansion story is the impact of new markets and new link-ups and manufacturing locations on those left behind in the likes of Detroit or Birmingham with hollowed-out workplaces and impoverished local communities. The seeds of resentment and populism in the western world were forming quickly as traditional industries and jobs were transplanted to cheaper locations overseas. Insufficient opportunities emerged to replace them. Assertive agendas in China and India and elsewhere were gradually encountering increasingly defensive political agendas in the US and Europe. And to complicate globalisation’s evolution and impact at home as well as in the wider world, conflicts still festered in the Middle East whilst others broke into full-scale war as in Ukraine and threatened to do so in Taiwan.  

Both parts of the title of Elizabeth Braw’s book are revealing and arguably misleading. Despite what she says we aren’t seeing an end to globalisation but rather a disquieting uncertainty as to its future evolution. The western countries initially intent on securing commercial advantage from new communication and related technologies married to liberated financial flows, have begun to face a kind of reverse globalisation in which the eastern part of the globe is pushing its own agenda which in turn may cost the western world dearly. 

Nor are we seeing the “return of a divided world” because globalisation never made such divisions go away anyway. In practice, globalisation has not unified the world and divisions haven’t disappeared. It was naive to expect otherwise. New or reconfigured political alliances and economic relationships and dependencies are in development, and nimble and thoughtful footwork will be needed if a western world increasingly disenchanted by globalisation is to continue to engage successfully both economically and politically. There is though no going back, even if we wanted to do so. 

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