Global Implosion

When Silvio Berlusconi hosted George W. Bush, Tony Blair, Vladimir Putin, and the other G8 leaders in Genoa, globalization was taken as a fait accompli: a process that only had to be further deepened, endowing it with a moral as well as economic mission. The final communiqué promised “to make globalization work for all our citizens and especially the world’s poor” and stated that “[t]he most effective poverty reduction strategy is to maintain a strong, dynamic, open and growing global economy.”

Despite the trouble of the dot-com bust in 2000, neoliberal globalization was still at the peak of its hegemony. Multinational corporations like Nike, Coca-Cola, and Nestlé were penetrating the most remote markets, and China seemed destined to abandon the last vestiges of state interventionism.

In 2021, the situation is the near-opposite of what it was in 2001. Indicators of global interconnectedness in trade and finance have been plateauing for several years. Already in the 2010s, globalization “slowed from light speed to a snail’s pace” as signaled by the Economist. The coronavirus crisis has led to a collapse of global trade and finance, with international trade falling by 7 percent (though less than predicted), and global foreign direct investment plunging by 42 percent in 2020. While the global economy is recovering ground, it will take many years before these indicators return to pre-pandemic levels, if they ever do.

The change of mood was also visible in this year’s G7 summit in Cornwall, England. There, the likes of Boris Johnson, Joe Biden, and Angela Merkel asserted that “the COVID-19 pandemic has illustrated the risk to economic resilience posed by global crises and shocks” and promised to act against the “lowering of labor and environmental standards to gain competitive advantage.” While talk of “free and fair trade” and similar neoliberal free market lingo continues to pepper political discourse, many of the most vaunted terms in the globalization lexicon — openness, competitiveness, and opportunity — sound increasingly hollow.

The pandemic has highlighted how wrapped up globalization is with manifold health, environmental, economic, and political risks to which working people and most citizens feel exposed. It is no accident that today expressions of risk awareness like “sustainability” and “resilience” are obsessively invoked by politicians across the political spectrum.

The emergency has led countries, and companies, to reevaluate their reliance on long supply chains. Meanwhile the ever more apparent effects of climate change are making policy-makers more inclined to state interventionism, especially in infrastructure (water drainage, coastal defense, reinforcement of roads and bridges, the electric grid etc.).

This perception of fragility, or what my new book The Great Recoil describes as “agoraphobia” — a fear of open spaces, amidst a globalization out of whack — goes a long way to explain the change in contemporary political common sense and the return of state interventionism and trade protectionism in many Western countries.

While many believed that Donald Trump’s trade wars were a temporary anomaly, Biden has himself has taken protectionist measures such as “Buy American” public procurement rules. He has emphasized the need for a re-shoring of manufacturing jobs, and many US allies are also becoming less enthusiastic about free trade.

In coming years, it can be expected that geopolitical competition between the United States and China will exacerbate some of these tendencies, as will the attempt by other mega-states such as Russia and India, and quasi-states such as the European Union to carve out their own areas of influence. The fierceness of international competition and lagging overcapacity in the global economy means that these days the risks of “openness” often appear more urgent in the minds of policymakers than opportunities for profit.

Commenting on these trends, several authors have pointed to a move away from global capitalism and toward a more national capitalism. Economic historian Adam Tooze recently declared in a New Statesman interview with George Eaton that neoliberalism as an “ebullient, aggressive ideology is clearly dead.” In the same article, Eaton argued, “In the Covid era, however, global market forces are being subverted by domestic policy decisions. The age of neoliberalism is giving way to a new one: the age of national capitalism”; while James Meadway has warned that this is not necessarily good news, as an even worse form of capitalism may be in store.

Other authors such as Grace Blakeley and Quinn Slobodian have expressed reservations about this reading, arguing that neoliberalism is still very much with us and changes are more limited than some believe. If there are disagreements about the extent of this trend, there is little doubt about the direction of travel: the world is moving away from global capitalism and toward a more national one.

This shift raises important questions for left-wing strategy. What would a more national capitalism mean for trade unions, social movements, and the Left?

Ensnaring Capital

Many on the Left are instinctively worried about the implications of a shift from global capitalism to national capitalism — and, in particular, the way it may favor the nationalist right, and a growth in intolerance and chauvinism. Indeed, there are some good reasons for these concerns. Events in the mid-to-late 2010s have shown how the populist right could forge its own critique of globalization, scapegoating immigrants for all sorts of ills deriving from global imbalances.

However, worries over the effects of less globalization also risk overlooking some of the strategic advantages of the emerging scenario. Some degree of re-nationalization and re-localization of the economy could improve political opportunities to more effectively challenge economic power holders. Precisely the reason that trade unionists and socialists so feared the advent of globalization was that they thought it would make collective action more difficult, due to capitalism’s ability to use global space as a lawless sea outside of any political control.

As Zygmunt Bauman famously argued in his Liquid Modernity, contemporary capitalism is marked by an escapist impulse, as it constantly tries to shirk its responsibilities to the communities on which it preys. Global interconnectedness, with the smooth circulation of capital and commodities, has offered capitalists a number of “exit” strategies when confronted with pressure from workers and citizens.

We see examples of this drive in the various externalization processes — outsourcing mechanisms, offshoring, subcontracting, and the attempt to make workers ever more precarious — that were all the rage during the phase of high globalization. The “efficiency gains” achieved through global outsourcing, were mostly premised on the disempowerment of organized labor, by its nature reliant on “union density” and the physical concentration of workers in crowded workplaces.

Globalization has redesigned economic geography not only internationally but also within each country, with trade liberalization acting as a steamroller of local economic structures and social institutions. As Luc Boltanski and Eve Chiapello argue in The New Spirit of Capitalism, the neoliberal restructuring of firms led to the “closure of numerous ‘great bastions’ of trade unionism (coal mines, iron and steel, shipyards, automobiles, etc.), or their subjection to severe job cutbacks.” The net result of these moves was the scattering of workers across smaller firms that tended to be less unionized and did not have a tradition of resistance.

A globalized economy has given employers enormous blackmail power against workers as they can easily shift their plants to other countries if they feel wages are too high. This is something we have seen again and again over the last decades, with large plants being moved to countries in eastern Europe, to Mexico, Latin America, or to southeast Asia. The threat of plant relocation puts workers in an extremely vulnerable position: transnational alliances of workers have had limited effect and operating in interstitial cross-border spaces has allowed entrepreneurs to escape the grip of national regulations and the tax demands of treasuries.

While weakening workers’ power, global economic integration has engendered a race to the bottom in salaries and economic conditions whose destabilizing effects have fueled the populist insurgencies of the 2010s. In a globalized economy companies have had to fight tooth and nail against their international competitors, which mostly take the form of gigantic multinationals that are able to leverage huge economies of scale. The easiest option is to minimize costs, and in particular the cost of labor, engendering a global “race to the bottom” in which workers are inevitably the victims.

While under Fordism, companies had a vested interest in their home country being economically prosperous and their workers being well paid, enabling them to purchase their cars and washing machines, under globalization this partial reciprocity of interests has been severed. Unsurprisingly this attack on workers’ salaries has resulted in lagging demand, only partly compensated under neoliberalism by easier access to credit. Economic stagnation has become so dire that now even neoclassical economists concede that to reengineer growth it is necessary to boost demand.

The Post-Neoliberal Horizon

Paradigm shifts are most apparent when even former evangelists of the old faith start making ideological concessions. There are abundant signs that even the centrist establishment is taking notice and abandoning some of the dogmas that dominated the high neoliberal era. The slogans of the likes of Biden (“Build Back Better”) and Johnson (“Levelling up”) express the idea that the very base of society needs to be repaired, after decades of “race to the bottom.”

Biden’s two-track economy lays emphasis on the need to protect from fierce global competition the more fragile sectors of society to avoid a return of Trumpism. This is more of an attempt to save global capitalism rather than to do away with it altogether. But clearly, there is now strong political momentum toward a rather different kind of political economy; one that is more jealous about preserving national control and reinstating some forms of economic protection.

The possible advantages of such situation for the Left should not be overlooked. A more bogged down capitalism, one that has less options to severe its territorial links, is one that is easier for workers and citizens to ensnare and to extract concessions from. If manufacturing is partly re-shored, the domestic economy acquires more importance; and if global supply chains are shortened, this could offer new pressure points for the labor movement to exploit. As Bauman himself argues vis-à-vis such a Houdini-like capitalism, the Left’s strategy should concentrate on slowing it down, slackening its outward push and cornering it to a place where exit options become too costly.

It is true that a national capitalism risks seeing a more authoritarian politics, as the increasing corporatist collaboration between the state and national firms is likely to increase pressure for internal discipline and wage moderation as a matter of “national interest.” But this is not a foregone conclusion — and there are also ways in which a partial re-nationalization of the economy could be good for democracy.

Globalization has allowed the capitalist class to precipitate a game of smoke and mirrors whose ultimate aim is to hinder political accountability and fiscal transparency. This is most evident in the case of offshoring practices, by and large designed precisely to conceal economic power structures and make it harder to criticize and attack them. As British sociologist of mobility John Urry highlights, “the flows of money, finance and manufacturing, services, security, waste and emissions, which are in various ways offshored are catastrophic for transparent governance.” A more national capitalism could prove more legible, hence more conducive to popular pressures on decision-making.

The Genoa protesters of 2001 were right to denounce global capitalism as a nefarious force. Some of them thought that challenging global capitalism would mean acting at the same scale, by building a global democracy beyond national borders — as expressed in the slogan “our resistance has to be as transnational as capital.” Yet, twenty years later, we are seeing more of a de-globalization, like the one Bello advocated, than a democratic reclaiming of globalization.

Tax havens, offshored plants, gargantuan multinational corporations, and many other monsters of neoliberal globalization are likely to stay with us for many years to come. But in the climate of the 2020s, these pillars of globalization are also beginning to tremble. The Left’s task is to shape what comes after.