The local adverse effects that activists pointed to — sweatshop labour, starving farmers — were increasingly obscured by the staggering GDP numbers and fantastical images of gleaming skylines coming out of China. With some lonely exceptions — such as Rodrik and the former World Bank chief and Columbia University professor Joseph Stiglitz — the pursuit of freer trade became a consensus position for economists, commentators and the vast majority of mainstream politicians, to the point where the benefits of free trade seemed to command blind adherence.
In a TV interview, Thomas Friedman was asked whether there was any free trade deal he would not support. I just knew two words: free trade. I n the wake of the financial crisis, the cracks began to show in the consensus on globalisation, to the point that, today, there may no longer be a consensus. Economists who were once ardent proponents of globalisation have become some of its most prominent critics. Erstwhile supporters now concede, at least in part, that it has produced inequality, unemployment and downward pressure on wages. Nuances and criticisms that economists only used to raise in private seminars are finally coming out in the open.
By , he was having doubts: the data seemed to suggest that the effect was much larger than he had suspected. In the years that followed, the crash, the crisis of the eurozone and the worldwide drop in the price of oil and other commodities combined to put a huge dent in global trade.
Among these implications appears to be a rising distrust of the establishment that is blamed for the inequality. You need to make policy which brings people to think again that their societies are run in a decent and civilised way. If the critics of globalisation could be dismissed before because of their lack of economics training, or ignored because they were in distant countries, or kept out of sight by a wall of police, their sudden political ascendancy in the rich countries of the west cannot be so easily discounted today.
Over the past year, the opinion pages of prestigious newspapers have been filled with belated, rueful comments from the high priests of globalisation — the men who appeared to have defeated the anti-globalisers two decades earlier. Perhaps the most surprising such transformation has been that of Larry Summers. Possessed of a panoply of elite titles — former chief economist of the World Bank, former Treasury secretary, president emeritus of Harvard, former economic adviser to President Barack Obama — Summers was renowned in the s and s for being a blustery proponent of globalisation.
ticseydijit.tk For Summers, it seemed, market logic was so inexorable that its dictates prevailed over every social concern. In an infamous World Bank memo from , he held that the cheapest way to dispose of toxic waste in rich countries was to dump it in poor countries, since it was financially cheaper for them to manage it.
Over the last two years, a different, in some ways unrecognizable Larry Summers has been appearing in newspaper editorial pages. More circumspect in tone, this humbler Summers has been arguing that economic opportunities in the developing world are slowing, and that the already rich economies are finding it hard to get out of the crisis.
Barring some kind of breakthrough, Summers says, an era of slow growth is here to stay. O ne curious thing about the pro-globalisation consensus of the s and s, and its collapse in recent years, is how closely the cycle resembles a previous era. Pursuing free trade has always produced displacement and inequality — and political chaos, populism and retrenchment to go with it. Every time the social consequences of free trade are overlooked, political backlash follows. But free trade is only one of many forms that economic integration can take.
History seems to suggest, however, that it might be the most destabilising one. Nearly all economists and scholars of globalisation like to point to the fact that the economy was rather globalised by the early 20th century.
As European countries colonised Asia and sub-Saharan Africa, they turned their colonies into suppliers of raw materials for European manufacturers, as well as markets for European goods. Meanwhile, the economies of the colonisers were also becoming free-trade zones for each other.
In addition to military force, what underpinned this convenient arrangement for imperial nations was the gold standard. Under this system, each national currency had an established gold value: the British pound sterling was backed by grains of pure gold; the US dollar by This entailed that exchange rates were also fixed: a British pound was always equal to 4. The stability of exchange rates meant that the cost of doing business across borders was predictable. Just like the eurozone today, you could count on the value of the currency staying the same, so long as the storehouse of gold remained more or less the same.
When there were gold shortages — as there were in the s — the system stopped working. To protect the sanctity of the standard under conditions of stress, central bankers across the Europe and the US tightened access to credit and deflated prices. This left financiers in a decent position, but crushed farmers and the rural poor, for whom falling prices meant starvation.
Then as now, economists and mainstream politicians largely overlooked the darker side of the economic picture.
Businessmen were so distressed by Bryan that they backed the Republican candidate, William McKinley, who won partly by outspending Bryan five to one. Meanwhile, gold was bolstered by the discovery of new reserves in colonial South Africa. But the gold standard could not survive the first world war and the Great Depression. By the s, unionisation had spread to more industries and there was a growing worldwide socialist movement.
Protecting gold would mean mass unemployment and social unrest. Britain went off the gold standard in , while Franklin Roosevelt took the US off it in ; France and several other countries would follow in The prioritisation of finance and trade over the welfare of people had come momentarily to an end.
T he trade system that followed was global, too, with high levels of trade — but it took place on terms that often allowed developing countries to protect their industries. Because, from the perspective of free traders, protectionism is always seen as bad, the success of this postwar system has been largely under-recognised. In short, we dislike it, and we are beginning to despise it. The international systems that chastened figures such as Keynes helped produce in the next few years — especially the Bretton Woods agreement and the General Agreement on Tariffs and Trade Gatt — set the terms under which the new wave of globalisation would take place.
Bretton Woods stabilised exchange rates by pegging the dollar loosely to gold, and other currencies to the dollar. In that respect, the institution proved spectacularly successful.
Partly because Gatt was not always dogmatic about free trade, it allowed most countries to figure out their own economic objectives, within a somewhat international ambit. These were useful for countries that were recovering from the war and needed to build up their own industries via tariffs — duties imposed on particular imports. Gatt, however, failed to cover many of the countries in the developing world. Under this rubric, many countries — especially in Latin America, the Middle East, Africa and Asia — adopted a policy of protecting homegrown industries by replacing imports with domestically produced goods.
It worked poorly in some places — India and Argentina, for example, where the trade barriers were too high, resulting in factories that cost more to set up than the value of the goods they produced — but remarkably well in others, such as east Asia, much of Latin America and parts of sub-Saharan Africa, where homegrown industries did spring up. The critical turning point — away from this system of trade balanced against national protections — came in the s.
Flagging growth and high inflation in the west, along with growing competition from Japan, opened the way for a political transformation.
A story in the Washington Post said “20 years ago globalization was pitched as For instance countries have value added taxes (VATs) on. Contingently all the essays on globalization can be divided into 2 groups: the first group supports globalization and tells about its advantages, the second one is.
Not only did these ideologies take hold in the US and the UK; they seized international institutions as well. Gatt renamed itself as the World Trade Organization WTO , and the new rules the body negotiated began to cut more deeply into national policies. Its international trade rules sometimes undermined national legislation. The purest version of hyperglobalisation was tried out in Latin America in the s.
Well into the s, economists were proclaiming the indisputable benefits of openness.
But the Washington consensus was bad for business: most countries did worse than before. Growth faltered, and citizens across Latin America revolted against attempted privatisations of water and gas. In Argentina, which followed the Washington consensus to the letter, a grave crisis resulted in , precipitating an economic collapse and massive street protests that forced out the government that had pursued privatising reforms.
These revolts were a preview of the backlash of today. R odrik — perhaps the contemporary economist whose views have been most amply vindicated by recent events — was himself a beneficiary of protectionism in Turkey. This personal understanding of the mixed nature of economic success may be one of the reasons why his work runs against the broad consensus of mainstream economics writing on globalisation.
Consumer pros and. Globalization Introduction The continued accelerating pace of change in globalization is forcing an entirely new level of emphasis on individualized, highly targeted marketing across the many regions and countries of the world. Global marketing today must contend with a wider array of constraints, both economic and cultural, that as ever been the case in the past Gupta, These constraints fuel a high level of creativity and focus on how to overcome cultural and economic constraints through.
Some social, economic and environmental issues are discussed in the paper. This essay will highlight the positive and negative effects of globalisation, but also discuss solutions and evaluate them. However, the principles and ideas of globalization have not spread to the twentieth century. Globalisation is.