The virtues and downfalls of globalization

(Global inequality and more 3.0; Peščanik.net, translated by Đ. Tomić)

If we had to compose the most concise possible definition of neoliberal globalization based on how it was perceived by Western elites over a period of about forty years, from the early 80s to the 20s, we could say that it was driven by two ideas: cosmopolitanism and competition.

Cosmopolitanism is a neoliberal idea from the time of Walter Lippmann's Colloquium in Paris in the 30s and the early stages of the Mont Pelerin Society, as beautifully described in Quinn Slobodian's book The Globalists: The End of Empire and the Birth of Neoliberalism. Cosmopolitanism implies that, analytically speaking, every individual on the globe is equally important and equally capable of economic advancement, if he is provided with optimal economic conditions, such as the inviolability of private property, freedom of trade, low taxes and “acceptable law enforcement”. In the immortal words of Adam Smith, almost nothing more is needed to awaken in people the desire inherent in all of us to “better our own lives” and for the world to reach unprecedented levels of prosperity. Cosmopolitanism and internationalism are political ideas on which the neoliberal world is built in which national governments are expected to retreat to the margins and give individuals the freedom to pursue their own interests. This is, ideally, a world of small or almost invisible state administration. In neoliberal language, “empire”, that is, flags, anthems, languages ​​and other signs of national belonging, should be left to politicians (and voters, if they want to vote), so that the real world of “dominion” can survive as a world of free movement of goods, capital, technologies and even people.

For cosmopolitanism to produce global wealth and prosperity, competition is necessary. Not only must people be allowed to compete with (or against) each other, regardless of national boundaries, but they must also be encouraged to compete by displaying all the goods that could be theirs, with the social approval that follows if they win the competition.

Competition has driven global growth: from 1980 to 2020-21, average global GDP per capita more than doubled, from $7.700 (in 2005 international or PPP dollars) at the time of the fall of the Berlin Wall to almost $17.000 at the start of the Covid pandemic. That’s an average global annual growth rate of 2,1% per capita. (This has happened despite the world population growing from 4,4 billion in 1980 to 8 billion today.) More than doubling per capita income combined with a nearly doubling of the world’s population means that in the era of neoliberal globalization, the total amount of goods and services produced in the world has quadrupled.

But this “anonymized” growth rate, achieved largely thanks to the high growth rates of Asian countries, and especially China, was of no use to neoliberals in the rich countries on the domestic policy front. Domestically, the global growth rate of 2,5 percent turned out to be less important than the fact that in the United States and most rich Western countries, the real growth rate (adjusted for inflation) for the majority of the population was about 1 percent per year, while the incomes of the rich grew two to three times faster. Moreover, (…) the neoliberal period (beginning with President Ronald Reagan) was very favorable to the rich, not only in that their incomes grew faster than those of the middle class and the poor, but also because it led to a general slowdown in growth compared with the previous period. In fact, at every point in the income distribution in the United States except at the very top, growth in the neoliberal era was weaker than during the previous decade and a half.

The world seemed, for a time at least, to have become one, divided not by nation-state boundaries, race, or gender, but by differences in ability, skill, and labor. The never-realized ideal of neoliberal globalization is a world without borders, filled with competitive individuals, their ambitions further stimulated by the ability to communicate with any part of the world and discover what potential competitors are up to and how to thwart them.

These two characteristics - cosmopolitanism and competition - attractive in themselves, led to the collapse of neoliberal globalization.

Cosmopolitanism broke down national political boundaries. Excess competition created a world of greed, immorality, and the commercialization of all human activities, even those once considered the most private. It threatened, in essence, to make the family redundant.

The winners of neoliberal globalization in the rich countries, inspired by a cosmopolitanism they considered a virtue (which freed them from the toxic nationalism), quickly concluded not only that the well-being of their less successful compatriots was no more important than that of any foreigner, but also that their failure to compete openly indicated some human or moral flaw. To be economically successful was to be a virtuous man, or, as Deng Xiaoping, whose rise to power coincided almost perfectly with that of Margaret Thatcher and Ronald Reagan, put it, “it is magnificent to be rich.”

However, the political system is organized and operates within the borders of nation states. Less successful compatriots felt neglected and rejected. They did not like how they were treated. The willingness and desire of the rich to invest in distant lands was experienced as cruelty to domestic workers. Promises of new jobs to replace those lost through cheaper imports or online work abroad were difficult to fulfill. The resulting dissatisfaction caused political turbulence in the richest democracies. The global (or more precisely, Western) financial crisis of 2007-08 made everything that had previously only been suspected or did not seem politically relevant more than obvious and clear. The rich do not care at all about those left in the dust, and when the bill for the crisis came due, they made sure that someone else would pay it.

The disaffected, who in the past could choose between the extreme left and the extreme right, as during the Great Depression of the 30s, now have a much more limited choice. Left-wing parties have mostly already been discredited by the failure of “real socialism” or because they have been seen, through their Third Way policies, as accomplices of the center-right parties in promoting the neoliberal globalization that has disillusioned the working and middle classes in the West. Indeed, the peak of neoliberal globalization coincided with the rule of the formally left-wing governments of Bill Clinton in the United States, Tony Blair in the United Kingdom, and François Mitterrand in France. The disillusioned masses turned to right-wing parties that offered national solidarity, the abolition of equal treatment of natives and immigrants, the halting of migration, and, in moments of greatest enthusiasm, even the return of jobs on the wings of the new industrialization. That is why neoliberal globalization in international relations has been increasingly suppressed by neo-mercantilism, which resorts to economic coercion, confiscation of foreign assets, import bans, and unusual tariff policies in order to reduce or at least control the free flow of goods and services. It was easiest to stop the free flow of labor, because the popularity of such policies was negligible even at the height of neoliberal globalization.

Competition that knows no borders or time zones - as the other part of the neoliberal equation - has managed, thanks to technical innovations, to create a world in which our homes, cars and household chores, from cooking to caring for the elderly or looking after babies and pets, are "left over" to precisely those people who have lost their permanent jobs and thus become part of a class of malcontents. The desire for "greatness", that is, wealth, has erased the moral norms that held societies and families together. This perceived amorality has contributed to the further strengthening of anti-system right-wing parties. They have gained strength not only by promising the return of lost jobs, but also by promising the return of self-respect, a return to traditional values ​​- those that were probably more traditional than real even at their peak.

As in a Greek tragedy, the very qualities that neoliberal globalization celebrated and that brought it decades of success also brought its inevitable downfall due to internal political turbulence, the abandonment of cosmopolitanism, and the raising of protective barriers to the import of goods and people. In short, neoliberalism has been replaced by mercantilism and, so far, unsuccessful attempts to return to a more traditional world.

(Translated by Đorđe Tomic)