The Fall, The Recovery and The Renewed Fall of Globalization-Causes and What Does the Future Hold?

 

Professor Tara Zahra 's book, Against the World:  Anti-Globalism and Mass Politics between the World Wars traces the cause of the breakdown in globalization which existed prior to World War I.  A telling statistic: 30% of global GDP prior to World War I was represented by foreign trade.  That fell to 10% by the late 1930s and didn’t recover to the 30% level until the 1970s. 

 

The causes of the breakdown in globalization following WW I were complex. There was the fracturing of not only nations but empires. Sanctions and blockades pushed nations toward a commitment to self-sufficiency, just like today.  We also witnessed the formation of autarkies, marked by their expansion beyond national borders through "colonization" of other countries, seen by the conquering country as part of its natural orbit.  For example:  Britain with its Commonwealth of Nations; Japan, with its vision and commitment to control the economies of the countries of  Southeast Asia; Germany, as it took over Austria and then sought to do the same with the entire continent;  the Soviet Union, with its expanding empire (Comintern Pact), and the United States, already largely self-sufficient as a result of previous land acquisitions, including ones achieved through two wars (against Spain and Mexico). 

 

Interestingly, one side effect of this drive for self-sufficiency was that it led many companies to start building factories and install on-the-ground operations in other countries. Examples nclude Coca Cola, Procter & Gamble and Mars. 

 

The actions following World War II started to bring back a more global, integrated approach to the economy and, to a lesser degree, to governance in an effort to promote economic recovery and avoid another cataclysmic war. There was Bretton Woods, a forerunner for the United Nations, followed by the European Coal and Steel Community.  There was the United Nations, a more robust even if a still very imperfect articulation of what the League of Nations had tried to do.  There was the Marshall Plan, an unprecedented joined multi-nation program to rebuild the devastated countries of Europe.  Then very significantly came the European Common Market. 

 

One element which Professor Zahra does not explicitly recognize was the role of "individual agency" in achieving the progress enabled by these vital initiatives. The European Community, for example, would not have happened in my opinion if it were not for Konrad Adenauer. 

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 Today, we see another push back against the global economic order. 

 

The invasion of Ukraine has been of extraordinary importance in upsetting the geo-political environment and the sanctions that have followed have reset the economic environment. 

 

The same political and economic repercussions are now flowing from the increasing divide between China and the U.S. and the West.  

 

On top of this, has been the impact of COVID.  Ideally, given the fact that this epidemic posed a global threat, it could have led to a global response.  But with few exceptions it did not.  Instead, it became a "blame game". What characterized the response was a commitment to secure self-sufficiency by each country in taking care of its own citizens. 

 

Another significant factor putting a brake on globalization traces to the gigantic increase in immigration driven by the refugee crisis in the Middle East,. Africa and Central America. This strong push back on immigrants is similar to what occurred in the 1920s, which was accentuated by the the Great Depression. 

Most important, perhaps, in explaining the push back against globalization is the too easily underestimated attraction and bias to favor what we are closest to physically and culturally, whether that be our family, or nation or region or religion or ethnic group. 

 

Having said all this, I believe there are important differences today compared to the inter-war period which favor a continuation of a "global economic structure.”  There is an awareness and a broad commitment to the cause of preserving the environment. This can be a unifying force, though its impact thus far has been relatively small. 

 

While trade has been reduced through sanctions and tariffs, so far you have to a high degree the continuation of capital flows, with the exception of Russia, that didn’t exist in the inter-war period.  Also the existence of multi-national corporations like Procter & Gamble, Coca-Cola, Boeing and Apple provide an integration of supply chains and the opportunity for personal relationships which did not exist at anything like the same level post-1920.

 

With all its weakness, we have the United Nations.  There are blocks like the European Common Market, which didn't exist in the 1930s, and alliances among countries in Asia and Latin America. 

 

Yet, we have great overhanging threats and challenges. Some are similar to pre-1914. Some are radically new, including the emergence of new technologies which carry great risk to mankind.* Others are geo-political including whether and how the West and China create a stable peaceful relationship which recognizes their and the world's mutual long-range interests. Also on the list is how to resolve the tinder box in the Middle East including the role  of Iran and the relationship of Israel and Palestine. And there is the still unresolved tragedy of   Russia's misbegotten war to subvert Ukraine's independence. 

As always, our future will depend on wise and courageous leadership. Nothing is foreordained. It never has been.

 

*The threats that are different as a result of the destructive potential of new technology are

 1) the threat of nuclear disaster, and 2) the capability of harming other countries through the use of AI and cyber-warfare. Both these threats will demand global agreements and monitoring if they are to be contained, just as will combating the deterioration of our environment.