The current malaise of globalisation relates to a growing sense of internal paralysis in the major industrial countries and the sense that power politics have returned, says Harold James.
In the 1990s, globalisation was a red rag for intellectually disaffected bulls, but no-one else was too excited. Today, the big ideological debates about globalisation are over. The massive demonstrations that disrupted the 1999 World Trade Organization meetings in Seattle, or the 2001 Genoa summit, or the annual meetings of the World Bank and the International Monetary Fund (IMF) or of the Davos World Economic Forum seem to belong to a distant past. Many former critics now see at least some advantages to globalisation.
Globalisation also seems today to be quite robust. It easily survived the shock of the terrorist attacks of 9/11. There has been no repeat of the contagious emerging market crises of 1997-98. This resilience is sometimes, erroneously, interpreted as a demonstration of the inexorable character of globalisation. In reality, there are greater vulnerabilities. The intellectuals are calm, but everyone else is worried.
Globalisation pitfalls
Many of the former advocates of globalisation in the business and political world of the advanced industrial countries are now deeply worried, because in their countries, globalisation seems to be responsible both for job losses and pay reductions, as well as for apparently illegitimate rewards for the owners of scarce resources, in particular superstars with a reputation, whether sports or entertainment stars, or CEOs who market themselves like superstars.
The result is not only a political backlash, but also an intense populist concern in the rich industrial countries with corporate governance, corporate abuses, and the excesses of executive pay. The new backlash naturally terrifies business leaders, who want to devise some appropriate response that will not hurt them too much. Events such as the World Economic Forum, formerly parodied as the fiesta of pro-globalisation fanatics, are now packed with presentations by globalisation critics and choruses about corporate social responsibility.
In other words, the world’s globalisers have suffered a collective loss of nerve. They look for some reassurance, and many have the characteristically 20th century feeling that politics can offer a solution. After all, one of the reasons that globalisation was indeed so robust at the end of the 20th century, and that there was no repeat of previous collapses (such as the interwar Great Depression), was the sophistication and robustness of the international system.
Governance issues
But there is now a big problem in the governance of the system. The G8, with its massive over-representation of mid-sized European states, is not well designed to tackle global issues; the United Nations has a dysfunctional organisational structure; and there is a widespread sense that the IMF has lost its sense of mission.
The new malaise of globalisation goes beyond problems of the architecture of the international order, and relates to two developments; first, a growing sense of internal paralysis in the major industrial countries, and second, the sense that power politics (largely and fortunately absent in the second half of the 20th century) has come back. These are the developments that have paralysed collective attempts to formulate effective responses to global problems.
Sometimes we may think about the paralysis in terms too limited by an obsession with recent history. Commentators usually believe that US president George W Bush and UK prime minister Tony Blair have been simply and hopelessly discredited because of the happenstance accident of a catastrophic misjudgment that Mr Bush made about the Iraq conflict and with which Mr Blair, for some reason, fully associated himself and the British government. In fact, the obvious weaknesses of Mr Bush and Mr Blair have papered over the weaknesses and inadequacies of their rivals and opponents.
Political inertia
We can see the similar political helplessness in other countries that did not accept the Bush-Blair logic, especially in the ‘sick men’ of the EU, namely Germany and France. In each case, a general malaise about globalisation has produced a political blockage, with very narrow election and referendum results, and right and left-wing parties that are bitterly internally divided about liberalisation and globalisation. Governments throughout the EU – as well as in the US – have become incapable of effective action.
But action is exactly what is required, because of the second and quite new development of the new century. The world of the early 21st century is obsessed with power in a way that is quite different from that of the 1990s. Globalisation (as seen in the 1990s) promised a world in which markets would simply work, and provide the goods that more and more consumers wanted. But it failed to deliver on that promise. In the 2000s, instead, we see market failures everywhere: in relation to global warming and the environment, but also in energy markets.
Americans are worried about the stability of the Middle East, but also about Chinese efforts to set up special relations with producers of energy and raw materials in Africa and South America. Europeans (especially central Europeans) are legitimately concerned about the possibilities of Russia politically using its control of gas deliveries, both from Russia and from central Asia.
In the world of pure globalisation, small states such as New Zealand, Chile, Ireland, the Baltic republics, Slovenia and Slovakia do best because they are more flexible and can adjust easily to rapidly changing markets. By contrast, in the world of power, the new winners appear to be big states with large populations and rapid growth: Brazil, Russia, China and India. They project power more easily, but they also need to project power to compensate for their weaknesses.
First, how can these highly populous countries integrate their poor and ill-educated underclass (in China and India it is mostly rural) as they engage with world markets? Second, China and Russia have financial systems that lack transparency, while Brazil and India are financially underdeveloped. These flaws put further integration in the world economy at risk and make for a vulnerability to financial crisis.
Third, Russia is already facing massive demographic decline and an ageing and sickening population; China faces the near certainty of a Japanese-style demographic downturn from the 2040s as a belated legacy of the one-child policy.
Bungling giants
Flawed geopolitical giants have in the past been a source of instability (Germany before the First World War is an obvious analogy). There are good reasons to see them presenting increased risk in the 21st century.
In a world where there is a new preference for power, even moderate-sized states – such as the traditional big Europeans – are not big enough to act effectively on their own. The UK, France or Germany cannot tackle issues such as the Russian gas pipeline without a collective negotiating stance. The new vulnerability helps to drive a new obsession with ‘Empire’, although ‘Empire’ is almost always used as a bad term to describe what others do.
It is not only modern America that is seen by its enemies as an empire: the word is now used quite regularly in regard to Russian president Vladimir Putin’s resurrection of a tsarist autocracy and to Europe’s attempt to extend its interests as well as its ideals on a global stage.
Empire state: both the US and Russia, under president Vladimir Putin, are seen by their enemies as empiresModern and rich industrial societies are not used to thinking in imperial terms and bitterly resist the imperial implications. They recognise that imperialism has clearly failed in the past, and that the legacy of imperialism is a world of resentments and hatreds. Their ingrained predicament about the use of power has produced a deep despair. The nervous breakdown will not end until participants in the globalisation process lose their current obsession with producing institutional fixes, and think instead more intensely about what common values can hold a global community together.
Harold James is professor of history and international affairs at Princeton University, and Marie Curie professor of history at the European University Institute. He is the author of The Roman Predicament (2006).
