The peak of globalization was reached about 15 years ago, but only now, faced with viruses, wars and global instability, are most politicians and commentators assessing what happened in the rather distant year 2008.
The contraction in the ratio of global trade to GDP is perhaps the most commonly cited indicator, but many others could also be cited. For example, the share of exports to China’s GDP shrank from 31% in 2008 to just 17% in 2019.
Economists can suggest others. In recent years, however, the unraveling of globalization has gained additional speed, along several lines.
The clash of the West with the East
The aggravation of relations between the West and China and the partial disconnection between them is one of these lines. Another has to do with COVID-19 and promoting the idea of resilience over speed,’just in case‘ (just in case) vs ‘just in time‘ (just in time).
This has led to the proliferation of regional economic agreements, although some of them do not go directly against globalization. Already there is even talk of ‘friend-shoring‘, moving production and operations to friendly and allied countries.
The second Russian invasion of Ukraine and tensions over Taiwan have brought back geopolitical risk and are further generating obstacles. Industrial policy is making a comeback everywhere, which in many cases directly hits various economic interdependencies. Beyond these more current and measurable indicators, however, the last decade has imposed several important adjustments to the globalization wave of a different nature.
The restoration of the idea of the nation-state
Perhaps most essential is the restoration of the nation-state as the basic structure of the communities behind it.
It was in no small measure delegitimized in the years since WWII and upon it rested the blame and the presumption that it invariably grew and threatened to degenerate into authoritarianism or totalitarianism. Therefore, it was re-founded not simply as a pluralistic democracy with systems of mutual control, but as an internationally cooperative organization. In other words, it was stripped of some of its sovereignty – not simply to solve problems in an increasingly global environment, but also to avoid its power atrophy.
The EU, NATO and the Council of Europe are organizations of this logic. Globalization since the 1990s has also added a new element. If the main problems are cross-border, in the field of economy, security or defense, then the solutions must be so. In this spiral of ceding sovereignty, at some point the nation-state began to resemble a hollow and helpless organization that merely administers.
However, the wave of crises after 2008 generated a lot of social dissatisfaction with this development of the state, clearly reminded its place and role and pushed the political processes towards a new balance between it and international and transnational organizations. This process is just beginning.
The modern nation after the middle of the 20th century.
The dynamics are similar with regard to the modern nation, which in many places from a basic community of liberal democracies in the 20th century transformed into an aggressor and caused world wars and countless smaller conflicts. It is therefore no surprise that the years after 1945 were devoted to making it “restrained”, open beyond the majority, turned towards difference and its groups and minorities. This attitude also gave birth to one of the most interesting and dynamic periods in Western history as a cultural and social environment. But for many, the nation remained forever scarred by the excesses of the past century.
In the end, however, globalization and the endless opening to the world caused its backlash. The national community may change, but it remains a foundation, a value, an important world of belonging, of solidarity.
The business world and changes in the economy
The correction in the field of economy remains the most commented on. The global world is notoriously “flat,” in the words of Thomas Friedman. In it, everything moves with minimal obstacles, horizontally, between societies, countries, continents and jurisdictions. The business world is becoming hyper-liberal, stagnation is becoming an obstacle, an untapped opportunity for investment and entrepreneurship.
It was in this new world that modern production chains were created, which work on the principle of ‘just in time‘, complex, tangled webs crossing dozens of countries and time zones. Outward liberalization also became possible through inward liberalization. It included loosening the welfare state, lower taxes, full opening to foreign companies from all directions, and more. Openness and dynamism created more uncertainty, but this was to be offset by most opportunities and access to new markets and industries.
Predictably, the unprecedented liberalization brought a host of problems that gradually began to delegitimize it. The promised automatism that was supposed to accommodate the people who fell out of these shocks did not work, and inequality grew too much in most Western societies. Along with automation, globalization has contributed to unprecedented displacements of production and industries, and aid mechanisms have not been very effective against entire social strata and regions. The discontent created brings corrections to globalization in this respect as well, and this process will continue for years before a new, more acceptable balance is reached.
Culture and global and transformation
Modern culture was also influenced by the global transformation. It was driven by several understandings that began to leave a deep mark on the Western world. The new age offered infinite diversity, an opening to the distant and different, a valuing of every cultural specificity, even a new cultural synthesis from the communication of the local and the distant.
An understanding was created that a national culture invariably carries within itself the capacity to be self-enclosed, self-sufficient and, almost certainly, intolerant. And that had to be overcome. A la carte a cultural world that brings plasticity, questions every cultural habit and looks for something that complements, modifies, displaces it.
Accelerated migration and technological changes in media space and communication further brought multiple cultures closer to most citizens in individual societies. But gradually access to them and getting to know them was turned into an insistence on synchronizing with them, on changing one’s own culture in their image. Quite predictably, this was perceived by many in the Western world as a loss of identity and caused resentment. Moreover, parallel to this was the transformation of multiculturalism from a project of recognition and acceptance of multiple cultures into a dogma of the guilt and repentance of the majority culture. It is here that one of the sharpest corrections of globalization is currently taking place, which also causes the most debates.
Globalization and politics
The changes of the last decades had a great impact on politics itself. Broadly speaking, it ran out of content in two ways. The logic of the market and liberalization shrunk political debate and managerial options, the expansion of the market mechanism simply displaced managerial variability and debates about alternatives. The transfer of sovereignty and the presumption of solving problems at a supranational level weakened it from another direction.
That is why it is no coincidence that for years the pouring of blame in the direction of Brussels has become a political sport. It is no accident that politics has become empty of content, the stakes have fallen, powerlessness has taken over and the globalized world has become an alibi for managerial helplessness.
The problem now is that we are faced with increasingly weak and impersonal political elites, deprived of sufficiently adequate political socialization and experience. Taken as a whole, we are in the midst of a series of adjustments to a protracted liberal globalization, the outcome of which is still unknown. From now on, however, it is clear that a new balance will have to be found between national and transnational, local and foreign, the capacity of the nation-state and governance will have to be restored, mechanisms will have to be found to control the incessant economic uncertainty.
The turbulence is just beginning.
* Opinions expressed in the Opinion column may not reflect the position of Free Europe.