Sunday, March 19, 2017

Globalization and Anti-Globalization

It is common to hear - Globalization is not working for everyone! The Right says it, and believes that closed societies with open economies is the answer; the Left says it too, though they believe that the solution lies in closed economies with an open society. The Left says that the Right is xenophobic, and the Right says that the Left is living in cuckooland! And, the Right-of-the-Right and the Left-of-the-Left steal the wind from the sails of their clueless moderates, claiming, in consensus, that globalization is the problem, erasing the right-left divide into a new politics of For and Against Globalization.

At least in theory, global trade is good: It should keep the wars away. Stopping trade is the first rumbling of the war, the moment when the possible booty of extraction seems bigger than benefits of exchange. And, this is not just about flows of goods and money: Flow of people too, since when people started to matter in politics, is important in reducing conflicts. Once you have a Muslim friend, Islam stops being a cartoon in Charlie Hebdo; Mormon colleagues dispel the myths that surround that religion. George W Bush's point that democracies don't wage war on one another was empirically weak, but democracies which trade with one another surely have the least incentive to bomb one another.

However, this discussion misses one important thing: Globalization is not only about global trade. It has become, at least since the 1970s, a way of generating and recycling global surpluses in a specific way. This is perhaps the greatest innovation of capitalism in the last forty years, an unsung one and quite deliberately so. This is an elaborate conjuring trick - originating in the immediate aftermath of Nixon's abandonment of the gold convertibility - built around an US economy that recycles everyone else's surpluses (as was advised by Pat Volcker to Nixon). 

This system has become omnipresent and all-too-powerful today, with all the big economies in India and China joining the system. This is what globalization really is: Global flow of Capital and surpluses! This is how it works: Each country has its own rich and powerful, who are extracting its surpluses, and putting it into the global flow, into dollar accounts and sterling bonds. All this surplus is flowing into the rich economies of North America and Europe, in the form of a subsidy to its voters' cheap mortgages and high house prices, as its currencies and assets are seen to be secure (until the moments they are not - as crisis wipes away all the surplus from time to time, as it was in 2008). This is why today the inequality between the countries are reducing - the rich is getting richer and having a greater proportion of the wealth in every country - whereas the inequality inside the countries, between those who toil to produce value and those who extract the surplus, are increasing. Globalization, in its current form, is this elaborate system of recycling of global surplus.

What is surprising is that this is now creating a new politics, in the developed nations and in the developing, but the direction of these developments are mutually opposed. 

People in the developing countries, with expanding education and converging ideas of good life, want more of this: They want to willingly sacrifice more of their time, brain and energy to be pliant accomplices of global capital, wanting more of cheap loans, polluted air and longer hours slaved away- more globalization, not less! They want to vote for politicians who promise them these, and laugh at those who talk about outdated concepts such as rights of the poor or environmental protection.

People in the developed countries, on the other hand, standing over the ruins of the welfare state bought about by a muscular financial services sector who wants to replace public handouts with cheaper loans, want less of this: They are revolting against their own bankers and the poodle politicians and bureaucrats beholden to lobbyists, blaming globalization - justifiably but counter-intuitively, for their indebted lives, poorer health and broken families. They are voting for those politicians agitating for a new hot war that would replace the subtleties of surplus recycling with the assertiveness of conflict and conquest, wanting more globalization of a disappearing kind.

All politics around globalization then are based around the politics of inequality. The globalizers want a global poor and a global rich, a smooth system of capital flows where the power resides in those who direct these flows. The anti-globalizers, so called, want more inequality between the countries, and want to pursue the old politics of gunboat diplomacy, an extractive system that leaves enough to bribe their public and yet boost their profit. It is only a disagreement about means, not the end.



 


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