Why we need more, not less globalization
Why we need more, not less globalization
Since the beginning of the Covid-19 crisis, we have often been reading in the press and hearing on television news that liberal globalization would be the main culprit to blame. This crisis would allegedly demonstrate the fundamental harmfulness of globalization, which would subordinate our health to the “dictatorship of profit” and to “ultraliberal ideology”. Is this interpretation of events well justified? If it were followed through in practice, would the call for “deglobalization” currently issued by a host of politicians – ranging from the left to the right -, environmentalists and anti-globalist economists not ruin what has been for more than half a century one of the main growth drivers in rich countries as in countries belonging to what used to be called the Third World? Worse: will we not eventually suffer from the decline in globalization and the withdrawal of countries into themselves in the event of a new planetary crisis – be it sanitary or of a different kind?
Globalization: a “neoliberal” disaster doomed to disappear?
In an interview with Le Point (April 9, 2020), Francis Fukuyama blames the current globalization, which he associates with “neoliberalism”, and the limits of which would now be clearly apparent. Even before the outbreak of the Covid-19 crisis, globalization would have shown signs of its decline, so much so that the health crisis would have only hastened its questioning. Thus Francis Fukuyama declares: “I believe that we are witnessing today the end of neoliberalism, which is even already dead, and that we are going to return to liberalism as it had existed in the 1950s and 1960s, when market economy and respect for private property coexisted with an effective state, which intervened to reduce social and economic inequalities.” What the health crisis would reveal, he adds, is “the need for a strong state.” First of all, why is the term “neoliberalism” still so often used? By “neoliberalism”, we generally refer to the 1980s, to the era of Reagan and Thatcher, marked by privatizations, deregulation and the expansion of free trade. Yet Reagan and Thatcher simply applied classical liberal ideas, thus returning to the principles of liberalism as defended in the 20th century by Ludwig von Mises and Friedrich Hayek. We may here remark that in many cases the use of the prefix “neo” appended to the noun “liberalism” often serves to discredit the latter. Conversely, should we also speak, to characterize the 2010s, of a certain “neo-statism”, allegedly justified to correct the supposed misdeeds of the market and of globalization?
How should one interpret Francis Fukuyama’s assertions? We may here recognize a widespread idea, according to which we would currently be suffering from the consequences of the “conservative revolution” of the 80s, a revolution which would have extended to the 90s and 2000s, if not ideologically, at least in practice. However, the systematic attack on globalization is fundamentally biased as it dismisses the examination of its possible benefits – and the benefits of globalization are real, as shown by many books and articles that have been published over the last forty years or so. For one thing, it is not because globalization does indeed pose new problems, or makes problems that have long existed even more acute, that we should strive to put an end to it. And it is illusory to believe that the problems raised by globalization will be solved by a return to more state interventionism: if there is a lesson, perhaps, to be learnt from the history of liberal capitalism, it is that liberal capitalism itself tends to solve the new problems it may have generated or exacerbated, in a much better and much more effective way than the state can do. Entrepreneurs, innovators and civil society players tend to imagine solutions to problems which arise through a creativity which state bureaucracy is only too apt to stifle.
This does not mean, of course, that the state has no role to play in a crisis like that of Covid-19. The state should already play a role which the liberal essayist Johan Norberg rightly described1, in these times of health crisis, as hippocratic: Primum non nocere, “first, do no harm”. As Johan Norberg put it, the Swedish strategy to deal with Covid-19 has been based on this very principle, and it is not at all sure that this strategy will turn out to be worse than lockdown policies implemented by countries like France, Italy or Spain. History will tell.
Besides, when extolling the alleged merits of a “strong state”, we always tend to confuse the extent of the state with the real effectiveness of its action. Perhaps the time has come to stop believing that there is necessarily a correlation between the scope of the state within society and its capacity to make good decisions and act quickly and adequately. In countries where the state is still too present in sectors which should not be under its control, the state tends to be both invasive and ineffective: it is by limiting the states’ sphere of influence, it is by further liberating civil society from excessive state control, that the state will thus be able to fulfill its role effectively, for it will then only intervene within its sphere of legitimacy.
Admittedly, Francis Fukuyama advises us to remain realistic in our views. The “de-globalization” movement that is likely to take place will be of a quantitative nature rather than of a qualitative one, in the sense that the Covid-19 crisis will not undermine the foundations of globalization as such. If this were the case, he concedes in the same interview with Le Point, “the world would regress to the level of development it had reached fifty years ago, a prospect which would be impossible to envisage”. That said, it is necessary, he believes, to “change the balance between liberalism, social welfare and state intervention”. We can therefore see that Francis Fukuyama advocates a return to a model which surprisingly seems to correspond to the French modèle social, the alleged virtues of which we keep extolling in France with unabated self-satisfaction. A “model” that the world over is said to envy us unanimously, but which is also the source of many issues in our society which have hitherto prevented us from carrying out essential economic and tax reforms, which many countries elsewhere in Europe have managed to adopt.
One of the ideas that have resurfaced in France, and in Western countries more generally, during the pandemic is that current events would have amply demonstrated the limits and the alleged failure of “neoliberalism” and globalization, a conclusion that was already often drawn more than 10 years ago during the global financial crisis of 2008. The old dream shared by anti-globalists has not yet disappeared: whenever a world crisis breaks out, they always blame it on globalized liberal capitalism, which they see as moribund. Alas for them, globalized capitalism always ends up recovering, thus always refuting the same predictions about its final collapse. The same phenomenon will most probably happen again in the aftermath of Covid-19.
If Francis Fukuyama does not completely abdicate the principle of reality when he makes the aforementioned remarks, this does not always seem to be the case with various anti-globalist economists. Several months before the health crisis appeared, the economist and 2001 Nobel Prize winner in economics Joseph Stiglitz bluntly declared that neoliberalism “does not work”. And he even went further: “after decades of stagnant or even falling incomes for those below them, neoliberalism must be pronounced dead and buried2”. This reflects in fact the same old wish to see in recent economic history evidence of a hypothetical death of liberal capitalism … when in fact the latter always gets a new lease of life. Joseph Stiglitz is a Nobel Prize winner in economics, a distinction which gives him an aura in his public positions. However, as the essayist Guy Sorman said about another economist, Paul Krugman3, also a Nobel Prize winner in economics, the articles written by the latter economist do not necessarily have a direct relationship with the content of the research that won him the Nobel Prize. Could this remark about Paul Krugman also apply to someone like Joseph Stiglitz? According to Guy Sorman, there are in fact two different Joseph Stiglitzes: there is Stiglitz Number One, who “has the esteem of his peers” and who received the 2001 Nobel Prize with George Akerlof “for the research on asymmetric information and market transparency he conducted in the 1980s4”. By contrast, Stiglitz Number Two is, according to Sorman, “a fiery public intellectual with a Leftist political agenda, a media-savvy icon who revels in publicity” and who “has become leader of a vast anti-capitalist, anti-globalization, anti-free-trade crusade5”.
According to Joseph Stiglitz, three different groups of political ideas would remain after this alleged “death of neoliberalism”: far-right nationalism, center-left reformism (which he describes as “neoliberalism with a human face”, and which he says constitutes an attempt, still far too dominated in his opinion by neoliberal ideas, to update the policies formerly pursued by a Tony Blair or a Bill Clinton), and finally (the only group of political ideas that really matters to Stiglitz), the “progressive left”. The progressive left, which Stiglitz also calls “progressive capitalism”, would thus be the only group of political ideas really aiming to “restore the balance between markets, the state, and civil society6”. Josept Stiglitz also takes up again the widespread cliché, according to which “governments have a duty to limit and shape markets through environmental, health, occupational-safety, and other types of regulation”. This implies, therefore, this other cliché that the market and globalization would have a fundamental tendency to harm the environment as well as people’s health. In his book Why Globalization works (New York and London, Yale University Press, 2004), Martin Wolf stresses that liberal countries were in fact the least disrespectful of the environment, unlike countries like the late USSR, which, among other examples of absolute environmental disasters, had caused the drying up of the Aral Sea in the 1960s by diverting two of its tributaries to ensure the intensive irrigation of cotton fields7 … But today, as the Soviet Union no longer exists, we tend to believe that any pollution, any environmental disaster is intrinsically linked to globalized capitalism alone. Greta Thunberg was born in 2003, more than 10 years after the demise of the Soviet Union, so she has always grown up under the illusion that environmental problems are caused solely by liberal globalization.
In his book In Defense of global capitalism (Cato Institute, 2003), Johan Norberg had already sought to refute the old refrains on globalization as a systematic factor of aggravation of pollution in the world. He noted for instance that, contrary to the popular belief, “all over the world, economic progress and growth are moving hand in hand with intensified environmental protection8”. This can be easily understood: as Johan Norberg specifies, “abating misery and subduing the pangs of hunger takes precedence over conservation. When our standard of living rises we start attaching importance to the environment and obtaining resources to improve it9”. Thus, developing countries initially tend to be concerned above all with getting richer; and it is only when they have moved along this path long enough that they can start to show a greater concern for the environment. So this is sort of the application of the Maslow pyramid to developing countries. The conclusion that we should therefore draw from this is that if we are really sincere in expressing our concerns about the environment, we should then be encouraging the development of poor countries rather than delaying it! This implies, therefore, the expansion of globalization, the decline of which would be disastrous for developing countries, whose economy is highly dependent on foreign direct investment (FDI).
The call for the emergence of a “new world”: let us not fall back into the mistakes of the past
Anti-globalism has long been in existence, but it has definitely been revived during the Covid-19 crisis. We find for example the habitual criticisms of globalization in the manifesto for a post Covid-19 world by environmentalist Nicolas Hulot, which was published in Le Monde on May 7, 2020: “When Europe signs a free trade agreement with Mexico or the Vietnam, coherence is still lacking”, he says. And Nicolas Hulot adds: “While we should avoid falling into the trap of nationalists and protectionists, we must find this third way between autarky and neoliberalism”. Here Nicolas Hulot is just rehashing the longstanding cliché about the alleged appropriateness of the “third way”, which has always failed to come to fruition.
Already widespread in the 90s and 2000s, the hatred of classical liberalism and globalization actually intensified soon after the 2008 crisis and throughout the 2010s, with the return of populism and protectionism. One of the operating modes of this anti-globalization is the truncation and the falsification of the basic lessons of 20th-century economic history. Thus Marine Le Pen in France said after the victory of Donald Trump in the American presidential election of November 2016: “Clearly, the victory of Donald Trump is an additional stone laid in the construction of a new world, whose purpose is to replace an old order10”.
So, according to Marine Le Pen, the old order would be the globalized liberal order, which she wishes to see disappear in favor of an alleged new order of nation-states, in which the people would supposedly regain the control of its destiny. Is Marine Le Pen aware of the grossly erroneous interpretation she is giving of the most evident lessons of economic history of the past three-quarters of a century? It was clear, indeed, at the end of the Second World War, that the “old order” which had to come to an end was not that of globalization and free trade, but that, on the contrary, of nationalism and protectionism. A century ago, Europe emerged from the First World War in a state of complete destruction. But instead of examining the factors which had led to this situation, and rather than trying to implement solutions that could have helped avoid a new tragedy of the same kind, Europe became increasingly divided. America, too, was increasingly turning its back on the rest of the world. Statism and nationalism progressed, to the detriment of classical liberalism. Then came the 1929 crisis and the depression of the 1930s, marked by the collapse of world trade, the dramatic rise in unemployment and the decline in living standards. Let us note here in passing that it seems very difficult to attribute responsibility for the crisis of 1929 to liberal globalization, as the crisis was in fact largely the result of government monetary policies11. Globalization has always functioned as a convenient scapegoat, which saves us from having to acknowledge the (often statist) origins of the evils for which we make globalization unduly responsible.
Then, in the middle of the Second World War, England and the United States signed the Atlantic Charter (1941), in which was adopted the principle of international free trade. The Secretary of the Treasury under Roosevelt, Henry Morgenthau, declared in his inaugural speech at the Bretton Woods conference (July 1, 1944): “All of us have seen the great economic tragedy of our time. We saw the world-wide depression of the 1930’s. We saw currency disorders develop and spread from land to land, destroying the basis for international trade and international investment and even international faith. In their wake, we saw unemployment and wretchedness — idle tools, wasted wealth. We saw their victims fall prey, in places, to demagogs and dictators. We saw bewilderment and bitterness become the breeders of fascism and, finally, of war12”. This renewed attachment to the principles of free trade was in fact part of Roosevelt’s dream project of building a new world order which was intended to lead to lasting peace, and whose diplomatic component consisted of “collective security”.
At the end of the 5th century BC, Thucydides had undertaken in his History of the Peloponnesian War to extract history from the mere legendary narrative and from simple personal testimony, in order to establish the sole accuracy of related facts. And this not only to enlighten his contemporaries, but also for the benefit of future generations. Indeed, Thucydides wrote:
“it may well be that my history will seem less easy to read because of the absence in it of a romantic element. It will be enough for me, however, if these words of mine are judged useful by those who want to understand dearly the events which happened in the past and which (human nature being what it is) will, at some time or other and in much the same ways, be repeated in the future. My work is not a piece of writing designed to meet the taste of an immediate public, but was done to last for ever.”
In Thucydides’ views, history was a science endowed with real utility for the future. But what is the real purpose of history if its lessons are not taken into account as much as they should be, in order to best guide our current political choices? If we had fully reflected on the lessons of economic history since 1945, we would have been well aware of the misdeeds likely to result from the return of nationalist withdrawals and the revival of protectionism. So let us hope that history does not become again, especially among populists of all kinds, this “piece of writing designed to meet the taste of an immediate public”, in Thucydides’ words.
Why the Covid-19 crisis should be an opportunity to expand globalization
Globalization is often unjustly criticized. This is what Ian Goldin, professor at Oxford, reminds us of in an interview published in L’Express on April 30, 2020. Legend has it that globalization would cause the impoverishment of less developed countries. As Ian Goldin points out, we must on the contrary credit globalization with having allowed poverty to decrease in the world. Extreme poverty affected more than a third of the world’s population in 1990; today it only concerns 10% of this same population, even though the world has seen in the meantime an increase in population of 2 billion human beings. What is more, there has been a drop in infant mortality of more than 50%. Ian Goldin also argues that “globalization has been the most progressive force in history to reduce poverty”. This is also the conclusion drawn by Johan Norberg – whom I’ve already cited – in an interview published by L’Express dated April 23, 2020. Every day, and in spite of the increase in world population, 140,000 people are able to escape from extreme poverty. “The year 2020,” Johan Norberg concludes, “is the best year in history to deal with a pandemic. Epidemics have always existed. For the first time, humanity has a chance to limit one of them to the maximum.”
Ian Goldin also rightly notes the gap that has occurred in recent years between global economic systems which have become increasingly interconnected on the one hand, and, on the other hand, the status quo maintained, and even the backward policies carried out individually by a number of countries on both sides of the Atlantic. While the systems are more interdependent, he says, policies have failed to evolve accordingly, and have in fact become ever more fragmented, as exemplified by the withdrawal of the United States. This state of interdependence should therefore encourage us to set up greater cooperation, exchange of information and mutual aid between the countries which are exposed to similar risks. “We are like an electronic or a digital system”, Ian Goldin adds. “If one piece goes wrong, the whole system goes wrong13”.
In an interview published in Le Monde on May 9, 2020, the European Commissioner for Trade and former Irish centrist minister Phil Hogan also makes a case for globalization. It is essential for Europeans, he argues, to remain open to the outside world and not withdraw into themselves. According to Phil Hogan, not only must Europe maintain its free trade agreements with other countries, it must also strive to create new ones. The reasons are easy to understand: in Europe, 35 million jobs are connected with exports. And at a time when the growing control of some of our companies by foreign economic players is constantly being emphasized, we should also remember that foreign direct investment (FDI) in Europe has generated 16 million jobs. By 2040, Phil Hogan adds, 85% of global growth will take place outside of Europe, as Asia will continue to see its population grow and extreme poverty decrease. It is therefore essential to anticipate this coming development of the main places where world trade will become increasingly concentrated, not by curbing but rather by expanding free trade agreements. This will be made more necessary than ever once the pandemic we have gone through is over. “In order to bounce back from the recession we are going through, we will need international trade more than ever,” he adds.
As regards the Covid-19 crisis itself, it is also globalization which made it possible to act in record time. (Let us not forget that globalization is not only economic or commercial, it is also that of science and information.) As Johan Norberg also notes in the interview published in L’Express on April 23, 2020, it was Chinese scientists who sequenced the genome of Covid-19, and it was a Berlin company that was then able to produce tests in February, which became widely used thereafter. Moreover, the publication of Chinese studies, as well as access to information coming from Southeast Asia about the right strategy to adopt (but which a country such as France could not carry out or did not want to carry out, namely the strategy based of massive testing, isolation of the sick only and treatment) enabled Dr Didier Raoult and his team at the IHU Mediterranée in Marseilles to set up a vast testing program for the local population, as well as the now famous treatment based on hydroxychloroquine and azithromycin.14 […]
Let us here leave the final word to Yuval Noah Harari: “The antidote to epidemics”, he said in an interview with Le Point (April 2, 2020), “is neither isolationism nor segregation, but information and cooperation. The great advantage of humans over viruses is their ability to cooperate effectively. […] China can learn a lot from the United States about the virus, and how to manage it, it can send experts and equipment to help. Unfortunately, the lack of global leadership today means that we are unable to reap the full benefits of such cooperation.” Given that Europe seems to be intent on exerting an influence on international relations amidst countries like the United States or China, it is doubtful that the revival of anti-globalism we are currently witnessing will be the best way to achieve such an ambition. Let us hope that Europe understands that everyone would in fact benefit from living in a world even more open to exchanges between countries, be they intellectual, cultural, scientific or economic.
7 Concerning the often exaggerated criticisms directed towards liberal countries as regards environmental matters, see for example Martin Wolf’s aforementioned book, 188-194.
8 Johan Noberg, Plaidoyer pour la mondialisation capitaliste. Paris: Plon, 2003, 198.
9 Ibid., 199.
11 Alain Laurent, La Philosophie libérale. Paris: Les Belles Lettres, 2002, 16.
14 Whether this was the right treatment in the case of Covid-19 is still being debated. On Didier Raoult and his treatment, see two of my articles published in French:
Teacher and researcher in Paris, France
Philosophy, literature, art history and business graduate
Article initially published in French on the website of Revue politique et parlementaire on May 26th, 2020: https://www.revuepolitique.fr/pourquoi-il-faut-non-pas-moins-mais-plus-de-mondialisation/