Larry Elliott: Of course there’s a globalisation backlash. It has failed billions of people
An era of open markets
and open borders – where trade and transnational capital flows rose rapidly as
a share of global output – has run its course. The instruments of
deglobalisation are being weaponised. Deglobalisation has
happened before, notably between 1914 and 1945. It is happening now as a result
of geopolitics, economic torpor, rising inequality, the failure to develop new
political structures to manage globalisation, and the response to new threats.
Companies are
realising that lengthy global supply chains have costs as well as benefits.
Coronavirus has brought that home with a vengeance. Today, governments are
less interested in breaking down barriers and more concerned about safeguarding
jobs, preventing intellectual property theft and the risk of cyber crime.
Companies are realising that lengthy global supply chains designed to take
advantage of low wages in the developing world have costs as well as benefits.
Coronavirus has brought that home with a vengeance, and is likely to further
encourage the repatriation of production that was offshored in the 1990s and 2000s.
Every wave of
globalisation has required a champion, a hegemonic power confident enough to
spread the gospel of free trade and open markets. That role fell to Britain in
the late 19th century and the US in the second half of the 20th century. But America’s
self-confidence has been punctured by the rise of China as a strategic threat,
and the power struggle between the world’s two biggest economies is heating up.
Stock markets were jubilant when Washington and Beijing signed a trade deal but – rather like the Molotov-Ribbentrop
pact of August 1939 – it is merely a truce of convenience. If Trump wins
re-election in November, hostilities will resume.
Countries also get
defensive when times are tough, as they have been ever since the financial
crisis of 2008. The most recent wave of openness occurred in the decade after
the collapse of communism, culminating in China becoming a member
of the WTO in 2001... read more:
