Goodbye to Economic Globalization?
This article was originally published by El Salto on 3 November 2023 and translated by John Collins.
I headline this article with a question that, given the economic, political, and also military fractures that are shaking the international scene, might appear to have an obvious answer: in effect, globalization is behind us. But there is another, earlier question that turns out to be quite revealing and, in my opinion, is necessary to pose: which globalization are we talking about?
In this sense, one has to specify that in general, what we came to know since the 1980s with the triumph of neoliberalism has been something quite different from what its most enthusiastic advocates have proclaimed. In their version, everyone won, especially the most struggling economies and the most vulnerable populations, in a context where the opening of markets, if faced with determination, provided extra growth whose motor lay in obtaining substantial advances in the productivity of both labor and capital.
This was the theory that ended up very far from the reality, which is what needs to be the starting point for any serious analysis. And this reality tells us that the globalization that really existed put governments, companies and citizens in very unequal conditions when it came to capturing benefits and bearing the costs of internationalizing markets.
“The Russian invasion of Ukraine and the subsequent war has had (and continues to have) important consequences in the configuration of the global scene.”
A globalization that has advanced and has been framed around the dictates (economic, political, military, and cultural) of the United States and the collapse of the communist bloc; in the existence of a deeply uneven playing field that privileged the ultra-wealthy and big corporations, the countries with the greatest competitive potential, and the finance industry - the undisputed motor of the globalizing process and the main, though not the only, winner of it; that has imposed restrictions on the developing world and burdened the populations of the most vulnerable economies with the costs. A globalization that, far from promoting convergence, has intensified social, productive, and territorial disparities and has enriched the elites. This and nothing else should be the reference when it comes to analyzing the changes that are happening in the operation of global markets.
If we focus on what has happened in recent years, it’s true that the growth in global flows has slowed down and, in some cases, stalled or regressed. At the same time, commercial exchanges, financial operations and foreign direct investment have remained high. Furthermore, commercial and investment operations associated with the digital universe and intangibles, and the corporations that carry them out, have progressed at a good pace. Far from the exuberance of the decades of hyperglobalization, we can say that cross-border movements continue to play a transcendental role in capitalist dynamics. And they will continue to do so. It becomes clear that, as I signaled at the start of this article, the tensions and divisions in the global panorama are far-reaching and are defining new rules and a new playing field.
Thus the pandemic, beyond the dramatic consequences it had in the short term (the closing of borders, collapse of markets, and the overwhelming of public health systems…), has exposed the weaknesses of a world economy that is connected by the global chains woven by transnational corporations, has shown the limits of a capitalism sustained by productivist logics that have enabled a predatory relationship with the natural world, placing the degradation of ecosystems and climate change at historic levels, and has revealed, in the end, the absence of global institutions with the capacity (and the will) to confront a crisis that has taken inequality to previously unknown levels.
Anti-war protest in central London. (Photo: Alisdare Hickson from Woolwich, United Kingdom, CC BY-SA 2.0, via Wikimedia Commons)
For its part, the Russian invasion of Ukraine and the subsequent war has had (and continues to have) important consequences in the configuration of the global scene. The prolonging, aggravation, and possible expansion of the conflict represent an enormous uncertainty that inevitably affects the configuration of markets and the strategies and alignments of nations and companies, with geopolitical considerations taking on great importance. Likewise, the leading role of the United States, NATO, and the military-industrial complex, and the subordination of European institutions and governments as well as community policies to this triangle of interests is another important vector in the new scene. And, of course, the policy of extermination that the Israeli government and military are carrying out against the Palestinian population as a devastating and criminal response to the Hamas attack opens a new front of tension in the region and on the global scale with unpredictable economic, political, and military consequences.
But before the pandemic and the wars broke out, we were already living in turbulent times of confrontation and great transformations that were affecting the work of global markets and the balance of forces, all of which implied a profound restructuring of the status quo.
“The prevailing economic model continues to be installed, despite the rhetoric of ‘green capitalism’ and the need to confront climate change, in the logic of growth as the supreme goal of the political economy and as the measure of its success. ”
On the one hand, there is the struggle for hegemony between one power clearly ascending over the past few decades and claiming to be a powerful global actor (China) and another (the U.S.) that is clearly in decline and whose hegemony is being openly questioned. It is a struggle between both powers - productive, technological, commercial, and financial - that could present a military dimension. The U.S. administration and its armed wing, NATO, is moving pieces in that direction and, in this sense, the war in Ukraine could be the prelude to a confrontation with China. In this context, the BRICS group (Brazil, Russia, India, China, and South Africa) - which recently has admitted new nations (such as Saudi Arabia, Iran, United Arab Emirates, and Ethiopia), with many other pending membership - is trying to reinforce its political and economic influence, keeping its distance from the American giant (for example, its initiatives in the monetary sector to reduce the dominance of the dollar in reciprocal transactions).
The other dimension that overlaps with the previous one and that marks what we could call the geopolitics of the conflict is the access to minerals, rare earths, and other raw materials and essential products, such as microprocessors, for the technological and energy reconversion underway and to sustain new consumption and mobility patterns. The supply of these resources is not only far from meeting the demand whose growth is and will be exponential in the coming years, but also very concentrated in certain countries and regions. Here is it noteworthy that China, in addition to being a major consumer of this kind of inputs, is a key supplier of them in the world market and also a key in supplying the European and American markets. Supply/demand tensions are and will be inevitable.
So we are witnessing profound transformations on a global scale in a very unstable and uncertain scenario. In any case, it is worth highlighting, to conclude this reflection, that two of the basic features of what I previously called really existing globalization remain intact or even reinforced. Consequently, it doesn’t make sense to refer to “deglobalization” or, obviously, to certify its disappearance.
The first feature is that transnational corporations continue to be, before and now, the fundamental actors of global markets. They are more powerful than ever, product of a process of business concentration that hasn’t stopped intensifying, with their interests more and more intertwined with those of nation-states and international organizations with the purpose of benefiting from public resources and regulations. They are updating and redefining their strategies in order to reinforce their privileged position, partially restructuring their value creation chains - productive, commercial, and financial - looking for suitable locations, trying to secure supplies and markets, taking into account the new geopolitical and military coordinates and the rivalries and alliances between nations and blocs.
The second feature to keep in mind is that the prevailing economic model continues to be installed, despite the rhetoric of “green capitalism” and the need to confront climate change, in the logic of growth as the supreme goal of the political economy and as the measure of its success. Such a logic on a global scale inevitably translates to an intense struggle for the control of raw materials and energy sources, the deregulation of labor markets and competition among workers, and the submission of states to the demands of capital accumulation.
