Deconstructing deglobalisation

PRINCETON – US President Donald Trump and his advisers’ fierce rhetoric on trade and immigration has led some to wonder if our current era of globalization is now at risk. If it is, an even more pertinent question is whether the end will be accompanied by violence. Stock markets have become increasingly jittery, owing to recollections of past moments when international economic integration was thrown into reverse. New trade wars or military conflicts could conceivably unravel the complex commercial interrelationships that have delivered prosperity since World War II. In previous episodes of deglobalisation, catastrophic events such as World War I or the financial crash of 1929 disrupted the flows of commerce, finance, and people that had previously linked countries together. One result of these crises was that nationality and citizenship became the key components of political and social life. The same pattern of reversal and disintegration can be found earlier in history: the end of the Roman Empire and the disintegration of China’s Eastern Han Dynasty, to name just two. Some historians even regard the American and French Revolutions as deglobalising events. American revolutionaries rejected foreign rule and trade, and French revolutionaries sundered the Bourbon dynasty’s European alliances. In both cases, the revolutionaries asserted new rules of citizenship. It would seem that modern political society is predisposed toward deglobalisation. Historically, this tendency has been triggered when the emotional balance of a society changes. Social turmoil often gives rise to new leaders whose governing mentality leads to rash, short-sighted, inconsistent, and otherwise bad decisions. When poor decision-making in one country adversely affects other countries, it can then trigger a vicious circle of retaliation and escalation. Over the last century, three related emotions, in particular, have fueled backlashes against globalization: fear, suspicion, and anomie. Generally, widespread fear of financial losses, or of dangers posed by other countries, reflect a society’s deeper anxiety about a constantly changing world. In the 1980s, the financial analyst James Montier created a “fear and greed” index, in which market sentiment is driven entirely by the interplay of greed and fear of loss. Montier’s central insight was that the potential for fear increases alongside the level of greed on display. Fear is thus the historically determined wages of greed, just as death, in Christian theology, is the wages of sin. It is worth remembering that the twentieth century’s major military conflicts were all preceded by financial crises, which themselves were preceded by periods of wild exuberance. The crash of 1907 preceded World War I; and the 1929 crash, the 1931 European banking crisis, and the Great Depression preceded WWII. The second emotion that drives deglobalisation, suspicion, can create a trap. As Elvis Presley famously put it: “We can’t go on together / With suspicious minds / And we can’t build our dreams / On suspicious minds.” During the period of reckoning after a financial crisis, those who have come out on top are also often believed to be the culprits. In some cases, the public directs its ire at another country; in other cases, it targets ethnic minorities or social groups such as financial elites. In the first half of the twentieth century, Jews were the most frequently targeted group, whereas in the 1997 Asian financial crisis, Chinese traders in the Philippines, Malaysia, and Indonesia were singled out. Suspicions can also be heightened by security concerns. Before WWI, many Londoners worried that German restaurant waiters were spies, as a few doubtless were. And today, many Europeans have fears about refugees and radicalization in Islamic communities that are disproportionate to the actual threat. Fear and suspicion thrive when the processes of globalization erode core values, sources of meaning (such as traditional occupations), and ways of life. In advanced industrial countries, the backlash against migration and trade is often framed as a matter of either “saving” jobs or compensating globalization’s “losers.” But in both cases, the response ignores the fact that there are no new decent jobs to provide sources of meaning and identity. This has been a problem at least since mass industrialization began to accelerate in the nineteenth century. Fyodor Dostoyevsky opened his classic 1862 account of prison life, The House of the Dead, with a paean to the importance of work – even for those in Siberian penal colonies. Ordinary activities like creating an object or even cleaning a room can confer a sense of self-worth, he observed. But the pointless toil assigned to prisoners – such as digging and then refilling holes – did the opposite: it was meant to destroy their dignity and annihilate their sense of self. History shows that tackling the emotional roots of deglobalisation will require an enormous feat of social imagination. The task before us is nothing less than to reestablish a universal sense of human dignity and purpose. Financial flows today are smaller than before the 2008 financial crisis; and, since 2014, international trade has grown at a slower rate than production for the first time since WWII. Despite efforts such as China’s “Belt and Road” initiative, which aims to unite Eurasia through infrastructure and investment, it is conceivable that the world has reached “peak finance” and “peak trade, and possibly “peak globalization.” Still, there is one major area of international connectivity that shows no sign of declining: the exchange of information. Global data flows will continue to increase, constituting a growing share of economic value. But can digital globalization also create new sources of meaning? Experimental artists and social-media experts would say that it can. But if the new interconnectivity has the paradoxical effect of making people feel more isolated and adrift, those people will pick old imagined certainties over globalization any day. Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation. A specialist on German economic history and on globalization, he is a co-author of the new book ‘The Euro and The Battle of Ideas’, and the author of ‘The Creation and Destruction of Value: The Globalization Cycle’, ‘Krupp: A History of the Legendary German Firm’, and ‘Making the European Monetary Union’. Copyright: Project Syndicate.

Opinions

Deconstructing deglobalisation