Saturday, August 06, 2011

Why globalisation fails

Once again I see people blaming the current economic crisis on capitalism and failing to attribute culpability to the real culprit in this ongoing disaster - globalisation.

Why is it all down to globalisation? Well - to explain that I first need to explain what capitalism is and isn't.

Capitalism is an economic model - not a political ideology - whereas globalisation is an extension of capitalism into a political ideology.

The fundamental basis of capitalism is speculation. In a national context this is manageable because a nation has the authority and ability to enforce that authority.

The principle of globalisation as a political ideology is to circumvent national borders and, thus, national laws - as such it is, in its rawest form, an anarchic ideology.

When we last allowed globalisation to take root - just around the end of WW1 - it was in a raw form and was, consequently, very anarchic. The end result came inside 15 years and was the Great Depression.

This time around we tried to contain the anarchy with a number of transnational institutions which are supposed to impose some sort of control on the anarchic nature of globalisation (which is why globalisation is beloved by the new left - it gives them an excuse to create world governing authorities without the need for the inconvenience of democracy and elections).

But as anyone who knows capitalism will tell you, one of the features of capitalism is boom and bust. When capitalism is employed in a national context those booms are modest and the busts manageable and containable.

However, when you take capitalism global and remove the constraints that capitalism in a national context can apply, the effects are amplified significantly - the booms are massive but the busts spectacular.

It lasted longer than it did in the early 20th century, but still blew itself out inside 25 years.
This is why globalisation fails and why it will always fail.

Globalisation is not capitalism - it is the extension of capitalism into an ideology.

Globalisation is not sustainable - it is subject to the same cycles as capitalism, but because those cycles are so significantly amplified the busts are too painful to make the booms worthwhile.

It is not controllable - it is anarchic and self-feeding.

Until we understand that the economic failure we are seeing today is a failure of globalisation and NOT a failure of capitalism then we will not understand what needs to be done to recover from it. What is more, if we do not recognise where the problem lies we will see a resurgence of the extreme left just as we did post WW1 and that will give rise to a resurgence of the extreme right - just as we saw in the lead up to WW2.

What is needed is a return to nationalism before the extremes of either political wing can take root. Nationalism has a dirty name thanks to the ongoing smears of the left and the "useful fools" in the unthinking media - but we should never forget that Britain and the USA were once proud and very nationalist countries when they defended the world against Nazism.

Nationalism is not a bad thing - extremism is.

And extreme globalism is every bit as bad as extreme nationalism.


Antisthenes said...

Globalization has not failed it's bad governance that has failed. Suggest you see the problem for what it really is instead of what you want to believe it is.

Nationalism and protectionism has been, is and always will be a failure.

markymark said...

I agree that the globalisation has been a disaster for the majority of the populace in Western nations. The destruction of manufacturing in the West has in effect destroyed the productive capacity of nations which has been covered over by increasing debt and a phony economy based upon real estate speculation and financial games (banking & derivatives and what not).
This is particularly so for the US and the UK - Australia and Canada with their rescource bases and Germany and Japan which have retained an industrial base have held up better. The US and the UK (together with parts of Southern Europe) are starting to run up against limits - limits to the ability to borrow (at all levels of society) and hence the ability to continue on as in the past. The monetary system is starting to creak and people are fast losing faith in the ability of Governments to do anything effective. Governments talk a good game about re-balancing the economy but lack the guts to do so as it would be painful and the imbalances are so large. The main reason why it is impossible to change and why globalisation wont be halted voluntarily is that the elites - in business, academia, politics and media have (a) done extremely well out of globalisation; (b) all pretty much think as one - they are basically liberal progressives with a reflexive dislike of nationalism. An end to globalisation won't come voluntarily and the only way it will happen if if the system collapses as seems to be happening now - at some point the US and UK have to pay, with real money, for all the goods they import from abroad. Some of the brightest minds in the UK are working long hours in the City sending emails to each other and convincing themselves that their 'talent' is creating geniune wealth. If only it were true. They need to be redeployed into genuinely productive areas.

Although globalisation has been a disaster for the Western middle class and the bill is only just starting to be paid it has been of benefit to the Far East. If there is any consolation then hundreds of millions of people in Asia being raised from poverty into the middle class has to be it. Not much comfort for those falling down the global ladder in the west though.