Self Help

The Crisis of Globalisation - henningmeyer

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Matheus Puppe

· 17 min read



Here is a summary of the key points from the dossier:

  • The crisis of globalization refers to the backlash against neoliberal globalization and the free market capitalism it promotes. There is a growing discontent over issues like inequality, lack of economic opportunity, and loss of sovereignty.

  • Globalization has deep historical roots dating back centuries as capitalism expanded across the world. However, the post-WW2 Bretton Woods system established a brief period of regulated markets and welfare states.

  • The rise of neoliberalism in the 1970s was driven by the discrepancy between nation-states’ limited power and an increasingly open world economy. Actors reshaped institutions in a self-reinforcing way to benefit capitalism.

  • Neoliberal globalization has slowed economic growth, increased inequalities, and led to nationalist backlashes. However, many anti-establishment movements still embrace market fundamentalism.

  • Simply critiquing neoliberal myths or reclaiming state power is not enough, as the capitalist system inherently expands across borders. Coordinated global solutions and new common institutions are needed to truly overcome the crisis.

So in summary, it analyzes the deep historical and structural causes of the globalization crisis, and argues national solutions alone are insufficient - transnational cooperation is required to build an alternative to neoliberalism.

  • There is an ongoing crisis of globalization characterized by several interrelated issues rather than a single crisis.

  • The financial crisis of 2008 led to a series of public debt bailouts that increased fragility in both the private and public sectors.

  • High levels of household, corporate, and government debt have made the economic system less robust to shocks.

  • Wages have stagnated while inequality has risen to unprecedented levels.

  • There is now widespread recognition of an existential environmental crisis that will have severe impacts sooner than expected.

  • We are facing a joint crisis of the environment and inequality that are interlinked challenges.

  • The next 15 years will be critical for making substantial progress on these issues through policy changes. Failure to do so could have dire consequences for the economic system and environment.

The interviewee argues that the current model of capitalism as facilitated by globalization is facing one of its most serious challenges since its inception. Specifically, three main problems have emerged:

  1. Labor’s bargaining power has declined significantly as national labor markets have integrated into a single global market. Strikes are no longer an effective tactic for unions.

  2. Despite massive monetary stimulus by central banks, there is little to no structural inflation. Low interest rates are not helping to redistribute wealth or address inequality.

  3. Digital monopolies like big tech companies are able to extract monopoly rents while other firms face intense competitive pressures with low margins. This stifles innovation.

The interviewee contends these issues characterize a new phase of capitalism that we have not experienced before. Policies are needed to address rising inequality, lack of wage growth, and monopolistic practices, but political will for meaningful reforms seems lacking. Better governance is needed to take on entrenched corporate interests.

Based on the discussion, here are the key points I would focus on in a policy agenda to address some of these issues:

  • Reform existing political party structures that are no longer accommodating the current political economic reality. This could involve trying to renovate old parties from within like Corbyn did with Labour, or starting new parties from scratch.

  • propose a vision and agenda that addresses people’s economic concerns and dissatisfactions with the status quo. Populism thrives on distrust in the establishment and lack of alternatives. A new agenda is needed.

  • Address inequality, lack of wage growth for many, and the disconnect between economic policy/rhetoric and people’s lived experiences. Propose policies that fairness and shared prosperity.

  • Tackle issues like climate change but do so in a way that doesn’t disproportionately impact certain groups. Propose fair solutions.

  • Reform structures of globalization and global governance to regain some national sovereignty and accommodate concerns of different economies, like those in Southern Europe.

  • Build new progressive coalitions and alliances that can mount effective opposition to nationalist forces and present voters with a compelling alternative.

The overarching goals would be rebuilding trust in democracy, relinking economic policy to citizens’ lives, and empowering people with a sense of agency over decisions that impact them. New thinking is needed beyond just modifying existing party structures or platforms.

  • The dominant global ideology in the 1990s following the collapse of the USSR was western-led globalization and the creation of a liberal world order dominated by banks. However, this project has now fallen short and may be collapsing.

  • Three factors have contributed to this: the rise of China, an increasingly assertive Russia, and mismanagement of finance in the US and Europe. China chose an alternative path to western democracy through massive state-led growth while maintaining political control.

  • The liberalization agenda failed in Russia, resulting in corruption, economic troubles, and an eventual rejection of Western democracy. Meanwhile US actions under Bush/Cheney demonstrated the limitations of Western military power and undermined respect for Western values abroad.

  • Globalization became synonymous with unchecked US dominance, even when military interventions became clearly counterproductive. The initial high hopes for spreading democracy and prosperity through a liberal economic order have now faded.

The rise of right-wing populism poses a major challenge for Europe today. Populism has gained support from traditional left-leaning voters who are disappointed with social democracy’s embrace of neoliberal policies. This has made majority government more difficult and increased dissatisfaction with democracy.

More fundamentally, populism thrives on the loss of optimism and sense of possibility that social democracy once provided to liberal democracy. Social democracy was historically the most idealistic and progressive ideology, arguing democracy could maximize capitalism’s benefits and create just societies.

Leaders like FDR and the Swedish social democrats paired concrete solutions to problems like the Great Depression with a vision of building a “better world.” This countered threats from fascism by convincing voters democracy offered the most promising future.

After WWII, social democratic parties adopted many of these approaches, stabilizing capitalism. But over time, some viewed the left’s role in more technocratic terms of management rather than transformation. This risked politics seeming like a “mere technocratic exercise” without moral purpose.

Today, populism peddles fear and asserts others are leading countries to disaster. Surveys show widespread pessimism, even when economic conditions have improved. To counter populism, the center-left needs pragmatic policies but also an optimistic vision that liberal democracy can solve challenges and create a better future, as social democracy historically provided.

The rise of populist politicians like Trump, Corbyn, and Macron demonstrates that many citizens are desperate for leaders who insist that politics and change are possible. If centrist parties do not respond to this yearning for change, voters will turn to other parties that promise change, with potentially dire consequences for liberal democracy. While centrist parties have focused on appealing to the middle class, populists have tapped into frustration among the working class who feel ignored. To regain voter trust, centrist left parties need to refocus on traditional policies like redistribution, poverty reduction, social housing, and public spending - but they also need to directly address the issue of migration, which is a major concern for many voters. Failing to discuss migration risks allowing right-wing populists to frame the debate, when in fact well-managed migration policies can be consistent with progressive values if done properly.

  • The speaker argues that the UNHCR refugee system, based on tented camps with free food/housing, no longer meets the needs of modern refugee situations. Refugees want autonomy and jobs, not long-term dependency.

  • In Jordan, Syrian refugees were able to find jobs but the government barred them from working to avoid undercutting Jordanians. The speaker’s proposal was for Europe to bring jobs to Jordan through firms, benefiting both refugees and Jordanians.

  • The goal was to align incentives by making globalization work for refugees where they are, rather than trying to move them to Europe. This approach empowers refugees rather than keeping them dependent.

  • European narratives portraying Africa negatively or dangling the prospect of European jobs/opportunities draw young Africans away from opportunities at home, which is unethical. Policies should focus on creating jobs for refugees and in Africa through economic development rather than migration.

  • NGO opposition to jobs for refugees out of misplaced concerns about exploitation was a major obstacle to the jobs proposal in Jordan. The real focus needs to be on empowering refugees through work rather than long-term dependency.

  • Policymakers have failed to develop long-term, sustainable policies on refugees and migration. Instead, they have reacted to short-term events in an unstrategic way.

  • A successful policy needs to be ethical by meeting duties to refugees and people in poor countries. Duties to refugees include showing solidarity and supporting countries keeping their borders open. Duties to poor countries include bringing economic opportunities to reduce instability and the desire to emigrate.

  • Policies also need to gain broad public support to maintain democratic legitimacy and trust in government.

  • Institutional thinking needs to become more joined up, for example having development agencies actively support refugee hosting countries economically rather than just focusing on migration flows.

  • Policies should focus on bringing jobs and economic opportunities to refugees and fragile states in the long run, rather than just managing migration numbers. This requires using development finance institutions actively.

  • Losing skilled migrants like doctors hurts their home countries’ development and is unethical if replacement training could occur locally. Overall mobility needs an ethical, developmental framing rather than just a migration one.

Here are some key points about what this passage is discussing regarding a “globalization for people, not business”:

  • There has been backlash against free trade and globalization from many people who feel its benefits have not been shared widely. Deeper economic integration is rejected by many.

  • Removing “non-tariff barriers” like regulations and norms can undermine important protections for labor, consumers, and the environment. It puts pressure on societies to weaken or equalize their standards.

  • Labor and environmental regulations reflect a society’s values and political/economic preferences. Treating them simply as trade barriers ignores this fact.

  • Unrestricted free trade could potentially lead to a “race to the bottom” as countries face pressure to lower standards to remain competitive. This would reduce welfare, especially for countries with initially higher protections.

  • Global trade needs to be shaped in a way that considers its social and political impacts, not just economic impacts. Not all regulations should be viewed as simply trade barriers to remove.

  • People’s jobs and living standards, as well as environmental protections, need to be priorities - not just the interests of businesses seeking fewer regulations and costs of doing business internationally.

So in summary, it argues for a form of globalization that puts people and societies first, not one driven solely by the interests and logic of businesses seeking unrestrained free trade. Regulations protecting labor, consumers and the environment need to be respected rather than threatened or weakened.

Here is a summary of the key points about standards from the passage:

  • Traditional trade deals sought to compensate losers from trade through high tariff revenues, but studies show gains from removing non-tariff barriers are minimal, especially with low existing tariffs.

  • Removing non-tariff barriers seems to have little wealth-enhancing impact. It’s doubtful losers can be compensated by these measures.

  • People oppose free trade agreements because they feel a loss of control as their way of life becomes subject to trade demands for the benefit of global firms. From this perspective, free trade limits freedom.

  • To preserve trade benefits while addressing these concerns, rules need reform. National regulations should not be part of trade deals, leaving room for democratic institutions to shape countries according to citizen preferences while still benefiting from low-tariff trade.

  • This allows for “globalization for the people, not just companies.” National sovereignty and democratic decision-making are protected rather than being dictated by trade rules and corporate interests.

To remedy the crisis of globalization and protect democracy in Europe, measures must be taken to promote social justice and redistribution policies. Institutions need to be strengthened through robust checks and balances, as these are what safeguard democracies from dangerous populism. This defense of democracy could position Europe as a bastion against rising nationalist forces worldwide. Stronger European cooperation is needed in foreign policy, border security, and trade to address global challenges collectively. However, nation-state interests still often trump cooperation. Growing right-wing populism has hampered compromise on issues like asylum policy and defense integration. differing economic performances within the eurozone have deepened political divides between members. Completing the political union is key to stabilize the eurozone. Protecting democracy in Europe requires remedies for economic divergence and addressing the legitimate roots of euroscepticism not just stemming from immigration.

  • The author argues that challenges facing the EU from figures like Trump, Putin, Orban, etc. may actually present opportunities for further European integration.

  • Trump weakens US commitment to Europe’s defence, allowing Europe to build its own independent security policy. His trade threats may also force Germany to accept more domestic demand-led growth in Europe.

  • Putin’s aggression prevents central/eastern eurosceptic countries from fully opposing western Europe due to fear of Russia. It also motivates energy transition away from Russian gas dependence.

  • Orban/Kaczynski won’t push for EU exits due to Russia, and their economies are tightly bound to western Europe. Their euroscepticism eases Germany’s reluctance for multi-speed integration.

  • Brexit removes the historically eurosceptic UK from blocking deeper integration. It also deprives Germany of an alternative partner to oppose French initiatives.

  • Salvini is forcing discussion of a common EU migration policy and challenging unsustainable Italian budget rules imposed by Eurozone hawks.

  • Merkel is weakened, reducing German resistance to further integration needed for Europe to confront challenges like Trump on the geopolitical stage alone.

In summary, the author argues current challenges can motivate deeper EU cooperation that member states have previously avoided or opposed.

  • The crisis of globalization stems from its asymmetric effects on societies, particularly in advanced democracies. It has undermined social contracts and increased economic inequality and social distance.

  • There is both an economic dimension in terms of diverging fortunes of different groups, as well as a social/cultural dimension as groups differ in values and worldviews.

  • This is partly due to structural factors like skills/education, but also due to the rise of a more neoliberal ideological framework since the 1970s among elites.

  • Politics played a role both in structuring the current model of globalization through institutions like the WTO and in failing to address its social impacts. This opened space for populist backlash.

  • While economic anxieties are underlying, populist narratives have effectively framed issues in cultural terms like protecting nation/identity from minorities/immigrants rather than focusing on inclusive economic policies.

  • The crisis stems from both economic and social cleavages created by asymmetric effects of globalization, which political systems have struggled to adequately address.

  • The person acknowledges there are left-wing populists but that right-wing nativists get more attention.

  • They believe culture plays a role but is not the deep cause of current political trends. Racism and anti-immigration sentiments have always been present below the surface.

  • The biggest change has been the economic context, due to political decisions made in the 1990s that have unleashed forces now feeling out of control.

  • Many perceive politics can no longer effect change, which empowers autocratic leaders.

  • The person argues politics still has power to shape globalization. Rules are dependent on elite choices, not technological changes.

  • Nation states still have significant control over policies like taxes, social insurance, wages. Supranational bodies also provide opportunities but nation states are the primary level.

  • Their agenda to reform globalization would rebalance priorities to consider labor/environmental issues more in addition to corporate concerns in trade agreements.

  • The focus should not be reversing but balancing globalization that privileges some groups over others. Areas like ISDS, IP protection need reforming to be less corporate-focused.

Here are the key points made in the article:

  • The period after WWII in Western democracies was unique due to two factors - the economy grew rapidly while also becoming more equal, and capitalism was tightly regulated economically and politically.

  • Banking was limited in what products/services it could offer. No exotic securities to destabilize the economy. Fixed exchange rates and capital controls.

  • Organized labor was empowered through acceptance of unions as social partners with influence.

  • Governments played a leading role in postwar reconstruction and public investments. This “mixed system” worked better than any prior version of capitalism.

  • The far right had no support during this period of social bargain and regulated capitalism.

  • This post-war social contract was a harmonious convergence of leadership, politics, and desire not to repeat instability after WWI that led to the rise of Hitler.

  • The author argues restoring social investment is key to reversing the current slide into authoritarianism, similar to the postwar economic policies that boosted equality and growth.

The main points are that the postwar period showed regulated capitalism with social protections can deliver stability and growth, in contrast to rising authoritarianism today, and restoring such policies may help reverse this trend.

  • After WWII, governments promoted globalization but also provided social protections like healthcare, education, jobs. This allowed open trade and capital flows.

  • But in recent decades, borders opened further without adequate protections. Financial crises hit and the 2008 crisis caused massive economic pain.

  • People felt governments bailed out banks but average citizens suffered austerity. This created resentment against globalization.

  • Beyond just economics, some reject openness itself and want to “take back control.” Slogans like “America First” resonate with feeling powerless against global forces.

  • In the last decade, as government spending declined after 2008, many felt the negative effects of job losses, income declines, and precarious work.

  • Now people vote for whoever will unequivocally be “on their side” and address their anxieties, leading to rise of populist politicians promising to roll back globalization. Overall there is a crisis of confidence in political and economic systems.

  • Globalization has led to widespread anxieties about jobs and prosperity being under threat. Politicians promising to manage globalization and protect local interests have gained popularity.

  • Trump successfully tapped into this by promising steel tariffs and to stand up to companies outsourcing jobs. However, such policies may protect some jobs but cost others.

  • Even economically successful countries like Germany show high levels of distrust in the system and pessimism about the future. Establishment parties are still dominant but losing support over time.

  • There is a clash between Western capitalist views focused on free markets, and more strategic views in countries like China focused on long-term national interests. Accommodating these different views will be challenging.

  • The crisis reveals weaknesses in short-term Anglo-Saxon capitalism and lack of strategic long-term thinking. Factors like ownership, governance and monopoly power are recognized as more important than in the past. Alternative models like China’s emphasize infrastructure, industrial policy and regional blocs over free trade.

Here are the key points from the summary:

  • The speaker argues Europe needs a long-term strategic plan for the technology sector, as currently no major European companies can compete with US/Chinese giants like Google, Alibaba. More thought needs to go into data regulation and developing European tech champions.

  • To stabilize politics and regain trust, governments must address basic socio-economic concerns like housing, health, education, jobs. This requires a reset to provide affordable housing and ensure decent living standards.

  • Attitudes towards migration may improve if underlying grievances are effectively addressed through investment in public services and communities. However, suspicion of outsiders is also human nature.

  • The speaker proposes starting European policymaking from a more local level to reconnect with citizens’ real concerns. Deep fault lines exist in the EU between creditors/debtors, Western/Eastern values, and on the immigration issue. More consensus is needed.

The key points focus on developing a long-term European tech strategy, addressing socio-economic challenges to regain public trust, and reconciling differences by starting EU policymaking from a more local perspective.

  • Globalization has led to a backlash against it as people feel helpless against market forces and uncared for by distant institutions.

  • Rodrik argued we face a trilemma between democracy, national sovereignty, and hyper-globalization. You can have any two but not all three.

  • The alternative is to moderate globalization through international regulation and make global bodies more democratic through public debate over national policies within them.

  • National politicians need to cooperate globally while debating policies domestically. Issues like human rights could be pressing election issues.

  • Attention must also be paid to local economic development and subsidiarity to empower regions and cities left behind by market forces. Social support is not enough - dynamic local economies are needed to give people pride and opportunity.

  • In other words, globalization can be reversed through strengthened global cooperation combined with empowered local communities.

The passage discusses strategies for addressing discontent among those who feel left behind by economic changes. It argues that collaboration is needed across different levels of government to identify and support new economic activities in areas outside major cities. Significant public spending is also important to improve local environments and quality of life. While some areas may inevitably struggle, planning and entrepreneurship can help reduce their numbers.

The discontent stems partly from how post-industrial shifts have focused attention on other inequalities, neglecting economic issues for the traditional working class. However, a return to old industries is not possible, and xenophobia and misogyny are not the answer. Instead, citizens need to feel comfortable with layered local, national and global identities that reinforce each other. The task of politics is to create environments where multi-layered identities can thrive, without insisting on any single identity. Neoliberal policies also need to accept higher taxes and public spending to sustain local communities.

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About Matheus Puppe