On 23 June, in a historic referendum, the British public made a decision that would reverberate across the world: they voted to leave the European Union. Within just a few hours of the news, $2 trillion was wiped off global stock prices, the pound sterling plunged to a 30-year low, and decision-makers in Europe and beyond were left wondering what it all meant.
To many of them, it was clear: this was about more than the EU. It was a vote of no confidence against globalization. “There has been a backlash against globalization,” Nouriel Roubini – best known as the economist who predicted the last financial crisis – told participants at a recent Forum meeting.
But for every person expressing shock at the outcome of the referendum, there are others who wonder how we didn’t see this coming. After all, globalization has been on life-support for some time. Just last month, the IMF – one of the biggest advocates of globalization – questioned whether the process had been as positive as promised.
Is this the great unravelling of globalization? Or can it still be fixed to make sure it works for the many, not just the few? That’s a question we’ll be tackling in a series of articles and videos this month.
The two sides of globalization
Any discussion on the merits and failings of globalization must recognize one undeniable fact: it has, for many people, been a great force for good.
“In aggregate terms, the human race has never had it so good. Life expectancy has risen by more in the past 50 years than in the previous 1,000. When the Berlin Wall fell, two-fifths of humanity lived in extreme poverty. Now it’s one-eighth,” write Ian Goldin and Chris Kutarna of Oxford University.
But this isn’t to say that there haven’t been problems along the way. Yes, many people have gained immensely from globalization. But others have been left behind. And no amount of data on the so-called benefits of a more connected world will make them feel better.
“Statistical proof of overall well-being is cold comfort to a middle class whose real wages have stagnated, or to poor people in the US and other so-called ‘rich’ countries whose poverty has deepened,” Goldin and Kutarna argue.
Joseph Stiglitz, a Nobel Prize-winning economist who has written extensively on this topic, agrees that this is the root cause of the current backlash against globalization. “We’ve never had a democratic globalization. The lack of transparency and openness has meant that we’ve wound up with a form of globalization that works for a few, but not for all of us,” he explains in a video.
The difference today, Stiglitz argues, is that the biggest losers from globalization are no longer staying silent. “Citizens now are beginning to understand that globalization matters. They are demanding a voice.”
A new approach to an old debate
Of course, pointing out its failings does not mean abandoning globalization completely. “To shun holistic global engagement because of such hazards would be a missed opportunity,” writes Calestous Juma of Harvard University. His article does something that’s normally missing from the globalization debate: it looks at it from a non-Western perspective.
“The last three decades have been marked by intense political activism against globalization. The opposition, however, has been driven by a narrow view that equates globalization with international trade liberalization advanced by Western countries. But globalization is about more than that.”
Africa is moving towards more regional and global integration, after decades of near-isolation. The West’s backlash against globalization should not deter them, Juma maintains. In fact, Africa could even provide a model for a new, less flawed form of globalization.
It’s a similar argument advanced by Brownkey Abdullahi, a refugee and women’s rights advocate who was born and raised in the Dadaab camp – and has never experienced this globalized world that’s currently up for debate.
The small amounts of globalization she has benefited from – (limited) internet access, for example – have already made a large and positive difference in her life. But it’s not gone far enough, and her story is unfortunately far from unique.
“The process of globalization is a complex one, there is no questioning that. But as I watch those who have felt at least some of its benefits turn their backs on globalization, I can only hope that I will one day have the same opportunities it has offered them.”
Making it work – for all
Even those who point to globalization’s flaws recognize that it can be a positive force. “Clearly we can make a globalization that works,” Stiglitz notes.
Doing so starts with reforming our global institutions, Mary Kaldor of the London School of Economics argues. “Our institutions, designed in the 20th century, are not fit for purpose: they cannot address the problems of the 21st century.”
But rather than pulling back from institutions like the European Union, the United Nations or the World Trade Organization, we instead need to focus on reforming them, Kaldor maintains. After all, it is only through them that nation-states and their citizens can hope to shape a globalization that benefits all.
Making globalization work for all also requires policy-makers to recognize that there will always be winners and losers. Today it’s the rich world’s working class, tomorrow it could be those same people who have benefited from globalization the most, Edward Alden of the Council on Foreign Relations points out. “Like the older manufacturing jobs, there are millions of service jobs in the wealthy economies that face the potential for new competition from lower-wage countries.”
It’s only by compensating those losers that we can shape a sustainable, more equitable form of globalization, he argues. But so far, many countries, including the US, have failed to do that.
Alden outlines a range of ways for making globalization work, some that will be greeted with almost unanimous support – skills development for those whose jobs are displaced – and others that are slightly more controversial – a basic universal income and a (limited) restoration of some forms of trade protectionism.
His conclusion sets out what might be the most important question in this series, and indeed in the globalization debate more broadly: “Rather than marking the end of support for globalization in the rich countries, the current political climate offers a second chance to get it right. The question is whether political leadership in the West can rise to meet that challenge.”
Read the full series here.