Full Text of Adrian Wooldridge‘s talk- A future imperfect: Why Globalization went Wrong at TEDxLondonBusinessSchool conference. In this talk, Adrian Wooldridge will explore the much deeper issues with globalization and the backlash we are feeling from hyper-globalization over the past few decades.
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Adrian Wooldridge – Management Editor, the ‘Bagehot’ columnist for The Economist newspaper
In his wonderful book – ‘The Economic Consequences of the Peace’, John Maynard Keynes sums up an image of a middle-class civilized Londoner just before the First World War:
He’s lying in bed, reading his morning times, sipping his tea and using this new-fangled device ‘The Telephone’ to order commodities from all over the world. He’s absolutely certain that those commodities will arrive on his doorstep in the next few days.
He is using this new-fangled device to make investments in stocks and shares in companies that operate all around the world. He’s absolutely confident that he’ll make money from those investments.
And Keynes says that this Londoner is certain that the world will go on becoming more cosmopolitan, more integrated, more global. And he’s absolutely blind to the forces of nationalism, tribalism, and protectionism that are about to transform that world.
The global elite over the last 20 years has been rather like Keynes’ Londoner. We’ve been lying in our collective bed, sipping our collective tea, reading our collective Google, and we’ve been making our investments. We’ve been pressing our modern smartphones. We’ve been expecting our commodities to arrive from Amazon on our doorstep the next day. And we have collectively been absolutely blind to the forces of tribalism, nationalism and xenophobia, which are currently transforming our world.
Now, Keynes’ Londoner’s world was transformed by the First World War. The First World War divided the world into warring murderous tribes. After the First World War, you got economic crisis. Economic crisis led to protectionism. Protectionism led to depression.
After the war, you got the rise of Hitler, which led inexorably to the Second World War. You’ve got the rise of Stalin, which led to the division of the world into warring-ideological camps.
Now, after the Second World War, we gradually began to reconstruct the world of global integration. From 1945 to the Financial Crisis, the world became more integrated. You had a more ambitious, more hubristic notion of globalization constantly pushing the world together.
But I think what happened with the financial crisis was this period of globalization began to come to an end. Now I believe that globalization will continue in the sense that companies will continue to trade across borders wherever they can.
But globalization, as an ideological project, driven by policymakers who constantly want to lower borders, cheered by ideal ideologues and intellectuals who say that “globalization will produce a more integrated, more liberal, more peaceful world”, that globalization is beginning to dissolve before our eyes
The great era of globalization depended on the United States being involved with the world. After the Second World War, the United States took the lead in pushing the free trade and pushing for NATO in pushing for a global architecture of security.
But after the First World War, the United States did none of those things. It retreated from the world and that’s why you got the depression. That’s why you’ve got protectionism. That’s why you’ve got the rise of these monsters across the world.
I think we’re moving back to the attitude of the United States after the First World War, rather than after the Second World War. Secondly, globalization depended on the European Union advancing, sucking in more members. That process has reached its limits and is beginning with Brexit to reverse.
The European Union is essentially now reached its limits, essentially paralyzed. What’s gone wrong?
I think what’s gone wrong essentially is that the globalizers over-promised and under-delivered. They promise that globalization would produce a world of obvious benefits for everybody, a more prosperous and more stable and more pleasant world.
Well, they said that, of course there’ll be disruption. Of course, there’ll be difficulties. Of course, people will have to change and adjust to that world, but overwhelmingly you will see improvements in your life.
This clearly happened in the emerging world. I was in Qingdao, not that long ago, a city I’d hardly ever heard of. Everybody there seemed prosperous. There were brand new cars. There were skyscrapers. People had jobs. There was a great sense of optimism. Everybody was looking forward to the future. That’s a wonderful thing.
But if you leave that world, the emerging world and look at the rich world, what do you see?
You see that America’s standard of living has stagnated. The average American has seen that standard of living stagnating for the last 20 years. I recently went to Wolverhampton, the exact opposite of Qingdao, a world where people have seen their lives broken by de-industrialization, a world where people do not have hope for the future.
And the worrying thing to me is that in this periods of hyper-globalization, productivity and growth has actually been much slower than it was from 1945 to about 1970, when you had a much more controlled version of globalization.
So we were promised an acceleration in growth and what we’ve seen in the rich world at least, productivity growth beginning to stagnate… a great stagnation.
The globalized has promised that they would be a sort of platonic guardian class. They said, “Well, of course we’ll have turbulence. Of course we’ll have capital movements. Of course we’ll have hot money running around the world, but we understand the science of economics. We can control these things. We’ll give you the great moderation… will end the boom-bust cycle. We can control globalization. We’ll unleash this force. It’ll make you richer, and we can control it.”
Well, that argument was blown away by the global financial crisis, which was testimony to extremely poor financial management.
So things are not going well. The globalizers promised as well that all good things would tend to go together. You wouldn’t just get global markets advancing, you get democracy advancing. You wouldn’t just get global markets and democracy advancing, you get liberal values advancing. Everything would go together.
There was a lot of talk about how democracy is never go to war with each other. There was even talk about how two countries with a McDonald’s will never go to war with each other. That’s how silly things became. This hasn’t happened.
We haven’t had this triumph of global liberal values. We’ve had an alternative model of globalization, which is authoritarian globalization with people like Putin, people like Turk countries like Turkey, which are based on the idea of authoritarian-illiberal global capitalism as an alternative to the liberal West.
One of the great debates in the 1990s was between Francis Fukuyama and his arguments about ‘the end of history’ and Samuel Huntington, who talked about the ‘clash of civilizations’. But what we’ve seen is, Huntington win that argument absolutely dramatically.
Globalization has not killed nationalism, has not killed xenophobia. Quite often, it’s unleashed it made it even worse. And the very people who are making these hubristic arguments have actually engaged in a massive process of self-dealing. They’ve done exceptionally well out of this process of globalization.
At a time when we’ve seen economic stagnation, the global elite has got richer and richer and richer and made out like bandits. We’ve seen politicians in the revolving door going from running regulatory bodies, operating in parliament to working for these global companies.
We’ve seen global companies, great marvelous global companies that claim to be doing good in the world, concealing money from the tax system, engaging the most extraordinary process of lobbying, rigging the system, hiding their profits. We’ve seen a global elite preaching the virtues of globalization, but instead acting as sort of crony capitalists, crony globalists.
And I think something else has gone on at this time. Globalization offers a very difficult world. Its up-roots people’s lives. It challenges their cultures, but what does it offer in return?
I haven’t seen any great depth. The astonishing thing about globalization is how shallow it’s quite often been. how shallow its offering has been. So if you look back to the great age of liberal nationalism in the 19th century- You had an extraordinary flowering of culture. You had Balzac, you had Beethoven, you had great artists.
What have we had during the era of hyperglobalization?
Airport lounges, management textbooks. It’s been an extremely disappointing era from that perspective. But above all, what globalization or hyperglobalization has done is to unleash its opposite. It’s unleashed a very ugly form of nationalism.
So, confronted with broken promises, confronted with stagnant economies, confronted with crony-ish global elites that look after each other, the masses (people) are beginning to turn to the worst sorts of snake oil salesman. They’re turning to people who say, “Well, the best alternative to hyperglobalization is ethnic nationalism. The best alternative to doing too much to push freedom of movement of people and ideas is protectionism and managed economy from the top.”
So I think the great challenge of liberals over the next few years is to save globalization by reforming it. This will involve a great deal, more humility on the part of liberals. It will involve a willingness to compromise about fundamental things or things that they thought were fundamental.
And I think the free movement of people might well be part of that. I think the insistence by the European Union, that the free movement of people is absolutely undebatable is may well be going much too far.
It will involve a willingness to recognize that nationalism has a bright side, as well as a dark side. We need to rescue the good side of nationalism in order to prevent the triumph of the bad side of nationalism.
It will involve a sort of humility on the part of people. We’ve seen over the last, on the part of globalists. We’ve seen over the era of triumphant globalism. A sort of bourgeois triumphalism, the sort of notion where- “Everybody who doesn’t agree with us is wrong. Anybody who doesn’t agree with our values about free trade, free movement across borders, gender fluidity, and the rest of it, must be some stump-tooth-bigoted nationalists, and we need to demonize them and write them out of the script.”
And this is coming from people who have mismanaged this process and have made themselves rich in the process of globalization. And I think above all, we need to have a war against self-dealing, against global cronyism. We need to stop this door from revolve and we need to stop these tax havens from being created to save companies from paying any taxes.
So the price of failure from this process will be an ugly world of nationalism and xenophobia. And the people who will be responsible for creating this ugly world will be just as much overreaching globalists as they are tub-thumping nationalists. Thank you.
– Adrian Wooldridge