Rival economic nationalist projects pursued by key countries can only push the global political economy into a dangerously unstable new mercantilist era
Part I of the blog is available to read here.
Deglobalisation has become ‘the new buzzword’ of our times, according to Ruchir Sharma, the Indian author and chief global strategist at Morgan Stanley. It’s appropriate therefore to devote the next two posts in this series to exploring, in turn, the right and left versions of this proposed route out of the contradictions of neoliberal globalisation.
Sharma first used the word in a newspaper article in July 2016, just a month after the vote for Brexit in the EU referendum in Britain. He argued that this event moved the world into ‘the AC era – after the crisis of 2008’. Brexit was less cause than symptom:
“a manifestation of global forces unleashed by the 2008 global financial crisis, including slower growth, rising inequality, and a widening backlash against open borders and incumbent leaders.”
The consequences would be rising protectionism, falling global capital flows and reduced numbers of economically-dynamic migrants. Accordingly, his conclusion was stark: ‘globalisation as we know it is over’.
Yet, notwithstanding Sharma’s acute analysis of the ‘anti-establishment revolt’ that had spread across the major democracies since 2008, of which, as he quickly discerned, Brexit was a part, it remained the case in mid-2016 that there had yet to be articulated a specific ideology of deglobalisation. Indeed, the May government that subsequently took charge of negotiating Brexit claimed to want to move in the opposite direction towards the fantasy of a new ‘Global Britain’ in which this great island-nation would somehow again be able to roam the trade routes of the world as if Queen Victoria were still on the throne.
It was instead Donald Trump’s victory in the Presidential election in the United States in November 2016 which marked the end of global neoliberalism in its ideological sense and inaugurated what Mark Blyth has called the era of ‘neonationalism’ and what we are describing here as ‘deglobalisation from the right’.
The basis of Trump’s approach to engaging with the global political economy was unequivocally established in his inaugural Presidential address in January 2017 in which he outlined the new economic nationalist agenda of the United States:
“From this moment on, it’s going to be America First. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. We will follow two simple rules: buy American and hire American.”
This has been the mind-set from which has subsequently flowed US withdrawal from the TPP, the renegotiation of NAFTA, the imposition of punitive tariffs on various categories of Chinese, Mexican, Canadian and EU imports into the US and the rhetorically-charged ambition to build a wall along the whole of the US border with Mexico.
As a package, it’s not difficult to follow and no-one has really needed to elevate Trump’s globalisation policy to a theoretical level. What is interesting and important is the extent to which it has come about in response to a particular reading of China’s conduct in the era of neoliberal globalisation. The key author of this interpretation is Peter Navarro, a former business-school professor from the University of California, Irvine, whom Trump appointed Director of the Office of Trade and Manufacturing Policy. Although not speaking Mandarin or spending much time in China, he had previously produced several hawkish books and one infamous documentary (called Death by China) that argued that China had in effect cheated its way to global pre-eminence via the deliberate deployment of lax labour standards, environmental degradation and currency manipulation. His argument was that it had been engaged in an economic war with the US for 25 years and was winning hands-down at the expense of American jobs.
Trump reiterated exactly this view when he addressed his hosts in the Great Hall of the People in Beijing during his first visit to China as President in November 2017, adding only the rider that he didn’t ‘blame’ China for building up a huge trade surplus with the US, but rather gave it ‘great credit’ for ‘being able to take advantage of another country for the benefit of its citizens’. His response, however, was not to seek to level the playing field by imposing new rules via arrangements such as the TPP: it was instead to take China on in the old game of dog-eat-dog.
And, up to a point, of course, Trump had a point, not least in being sceptical of the virtues of ever-freer trade. By contrast, President Xi, China’s head of state, likes these days to endorse neoliberal globalisation, as he did at Davos in January 2017, knowing that it strikes an appealing contrast with Trump’s declaratory economic nationalism. Everyone knows, nevertheless, that China’s extraordinary economic growth over the last 30 years has been achieved by means of high levels of state control and intervention within its economy. As regards the global political economy, China has undoubtedly engaged, but carefully and on its own terms, even if it is now seeking – as of mid-2009, according to Gregory Chin and Ramesh Thakur – to play a more influential role in global economic governance.
We need to be clear what we are saying here. There is nothing misguided per se (other than from a neoliberal perspective) with deploying state power assertively in national economic management. The key distinction is whether those powers are used largely in a positive, developmentalist way to build economic strength nationally before entering into global competition, accepting the reciprocity this implies in terms of trade agreements, or in a largely negative fashion to fight global trade battles in crudely protectionist ways. Trump is a nationalist and a statist in this latter sense of these terms. In his other economic policies, he is pro-business, pro-marketisation, pro-rich and likely to do little economically for those who voted for him having lost their jobs in the de-industrialised parts of the US. He is a neoliberal at home and a neonationalist abroad. That’s a contradiction, but not one that would worry Trump for a moment, since so much of his power and style derives directly from his clever manipulation of contradictions.
So, what does all of this mean? The upshot of Trump’s ‘deglobalisation from the right’ is to leave the global political economy dangerously vulnerable to ‘strong man’ games, as Will Hutton described them in the column he wrote following Trump’s visit to Asia. He noted as well that Trump moved on from Beijing to Da Nang to attend the APEC summit where in his speech he railed hard against the WTO for its weakness and failure to ‘protect’ the US from abuse of global trade rules by China. Nor was this just for the road, because Trump has not backed away from more of these types of attack. The Canadian G7 Summit in 2018 was another case in point, whilst he could hardly have been plainer than in saying to the UN General Assembly in September 2018: ‘We reject the ideology of globalism’.
According to some reports, this last remark generated derisive laughter amongst other world leaders. However, it’s not funny at all. In the end, ‘deglobalisation from the right’ will probably not be pursued by any state hard enough or long enough to destroy globalisation. But it is already pushing the global political economy towards a dangerously unstable new mercantilist era in which countries fight each other for economic advantage with no sense of a greater common good. It’s a cul de sac that threatens to undermine even the limited forms of multilateral global governance that have been constructed over the past seventy years. We should seek to retreat from it at the earliest opportunity.
Read the first part of Matt and Tony’s new blog series ‘The political economies of different globalisations – Part 1: Neoliberal globalisation’