28 March 2022
Six Faces of Globalization
Who wins, Who Loses, and Why it Matters
Anthea Roberts and Nicolas Lamp
2021, Harvard University Press, 391 pages,
Reviewer: William A Allen, NIESR
Globalisation was the main economic event of the second half of the twentieth century. It happened as a result of free trade policies, which were adopted after the second world war at the insistence of the United States in reaction to the self-evidently destructive protectionism of the 1920s and 1930s. The process of globalisation in trade came to an end about the time of the financial crisis. Before then, for many years, world trade had grown faster than world production. In the period 1980 – 2006, the average growth difference was 2.6% a year: output grew on average at 3.4% and trade at 6.0%. Since 2006, the difference has disappeared: average output growth has fallen a bit to 3.0% but trade growth has fallen much more, to 2.8% (source: IMF). This change took place well before the Trump tariffs, and the reasons for it are not clear. In another economic sense, however, globalisation has continued: foreign direct investment has gone on increasing as a percentage of world gross product since the financial crisis (source: OECD).
‘Six faces of globalization’ is, however, about the politics of globalisation, not globalisation itself. It surveys globalisation from the viewpoint of narratives, in other words, the viewpoints of groups of people affected by it – or, at least, some of them. The selected narratives are the ‘establishment’ narrative, which stresses the benefits of free trade; the ‘left-wing populist’ narrative, which stresses income and wealth inequality; the ‘right-wing populist’ narrative, which stresses the loss of dignity and self-worth of those left behind by globalisation; the ‘corporate power’ narrative, which complains about the growing power of multinational corporations; the ‘geo-economic’ narrative, which stresses the danger of free trade with China; and the ‘global threats’ narrative, which stresses climate change and the need for international co-operation.
The result is a rather bewildering list of discontents and a large number of quotations from the protagonists in the resulting debates. The reader will look in vain for analysis of the substance of the discontents. By the time one gets to page 280, one can only think ‘oh what a mess we’re in’. The sense of hopelessness is only reinforced by the thought that one of the main sources of discontent, in Europe and elsewhere, namely immigration, is barely mentioned.
Of course, the book is about politics, and politics is about discontents. But a little more analysis would not come amiss. Theory and, more important, experience indicate that trade fosters economic growth and prosperity. The complaints of the ‘left wing populist’ narrative about income and wealth distribution are complaints about distribution within individual countries. They ignore the fact that, at the global level, the distribution of income has become far less unequal over the past half century as previously poor countries, above all China, have become richer, and hundreds of millions of people whose ancestors had known nothing but poverty have found themselves well-fed and well-housed. Preventing globalisation would have kept them poor, and perhaps would have prevented greater inequality within richer countries. How could globalisation have been prevented? What geo-political effects would preventing it have had? How could it have been regarded as a noble ambition by the governments and people of rich countries? Why is ‘levelling up’ a good idea at the national level but not at the global level?
The book does a good job in describing the political effects of globalisation in the west, though I think it underestimates or misses some of them. For example, its treatment of the gilets jaunes in France (‘white lower middle class’) doesn’t do them justice: the issue is the effect of climate change policies on the sustainability of living in poor rural areas where the air is fresh and the only available means of transport use fossil fuels. It doesn’t say much about migration, which is among the most delicate of political issues. The global stock of migrants has steadily increased, from 153 million (2.9% of world population) in 1990, to 272 million (3.5%) in 2019 (source: UN). The issue is likely to become more salient, for demographic reasons. The discontents to which the book draws attention are mainly North American and European. There are a few Asian opinions, which are much more positive about globalisation, but the book says very little about the politics of the east, which are potentially crucial. It does point out that the rich countries that are now agitating for climate-friendly policies got rich by polluting the atmosphere, but doesn’t explore, for example, how the Chinese public feels about air pollution. Nor does it suggest that Asian countries might play a leading role in managing climate change.
There are some issues, like the growing power of China, about which governments have to make binary decisions. China, through its trade surpluses, has provided the rest of the world with vast quantities of goods in exchange for a massive stock of paper assets. Many of the assets are liquid securities issued by the U.S. Treasury and federal agencies. Their nature is grotesquely ill-suited to China’s needs. China is an ageing society – a legacy of the one-child policy – and will need income streams in the future to support its large elderly population in years to come. It needs some liquid assets, but nothing like as many as it has. It needs real income-earning external assets, such as direct investment, for internal reasons. However, its attempts to exchange the liquid assets it has for real assets in the United States and elsewhere have been rebuffed. This partly explains the Belt and Road Initiative. Meanwhile, China has added to its military capacity, is oppressing many of its citizens, and has well-known designs on democratic Taiwan. Is China still a trade and investment partner, in whose prosperity the rest of the world has a benevolent interest, or a potential enemy? If it’s a potential enemy, what’s changed to make it so, and what’s the best way of dealing with it? Is it to restrict China’s access to western technology, in the questionable belief that it won’t be able to keep pace; or to keep close to its technology, so as to have a better chance of knowing what it’s up to?
The final chapter of the book comes as a considerable relief, since it suggests some possible ways forward. Using the analogy of the hedgehog, which knows one thing very well, and the fox, which knows a lot of things, it suggests that the world will need a lot of foxiness. And it suggests that it is necessary to be able to see things from different points of view at the same time. Single-issue politics, as represented by many of the people quoted in the book, can do harm. This sounds a lot like parliamentary democracy, and is all very sensible.
‘Six faces of globalization’ is a valuable contribution to current myriad debates about geopolitics in the wake of a turbulent fifteen years of financial crisis, rising concern about climate change, growing nationalism and the coronavirus pandemic. The authors are to be congratulated on identifying some useful ideas about how practical answers might be sought.