Globalization refers to the economic, social, and political integration of nations. Economic globalisation can be seen in the exchange of goods. It can also be seen in the rising movement of people and capital around the world.
However, Globalization is under attack these days from all quarters. It is because the race of globalization has left majority of the world's population far behind. According to UNICEF, the richest 20 per cent of the population gets 83 per cent of global income, while the poorest quintile has just 1 per cent. This trend is getting worse. A new UNDP report called "Humanity Divided" estimates that 75 per cent of the population lives in societies where income distribution is less equal now than it was in the 1990s, although global GDP ballooned from $22 trillion to $72 trillion.
Also the fundamental challenge posed by the increasing reach of global markets is that global markets are inherently dis-equalizing, making rising inequality in developing countries more rather than less likely. This is due to following reasons:
- First, the tremendous economic gains associated with deeper and more efficient global markets are not equally shared. Markets, after all, reward those who have the right assets - financial capital, human capital, entrepreneurial skills.
- A second reason why globalization is dis-equalizing is that global markets are far from perfect. They fail in many domains. The classic example of a market failure is that of pollution, where the polluter captures the benefits of polluting without paying the full costs. At the global level, high greenhouse gas emissions of the US are imposing costs on poor countries. Similarly with global financial crises; the financial crises was due to policy errors in few countries. But a healthy portion can be blamed on the panic that periodically plagues all financial markets.
- Finally, global markets tend to be dis-equalizing because trade, migration, and intellectual property regimes at the global level naturally reflect the greater market power of the rich.
In developing countries inequality is economically destructive; it interacts with underdeveloped markets and ineffective government programs to slow growth - which in turn slows progress in reducing poverty. Economic theory suggests why: weak credit markets and inadequate public education mean only the rich can exploit investment opportunities. Middle income and poor households cannot borrow and miss out on potentially high returns on their own farms and small business ventures for example - often higher returns than the rich are getting on their capital. The most able children of the less rich miss out on the education and skills that would maximize their own economic prospects and their countries' own growth.
Due to this, the trend has started to reverse to deglobalisation. Several prominent countries including the UK resisted globalisation by rising tariffs. Far-right parties in Europe gained popularity in this atmosphere of financial weakness and supporting deglobalisation.
What are the indicators of deglobalization?
Apart from rise of right wing parties across globe, which is political manifestation of deglobalization, economic indicators show that post 2008 economic slowdown de-globalization is becoming the norm.
- Trade: With global demand weak, and many nations erecting import barriers, trade is slumping. Measured as a share of global gross domestic product, trade doubled from 30 percent in 1973 to a high of 60 percent in 2008. But it faltered during the crisis and has since dropped to 55 percent.
- The flow of capital - mainly bank loans - is retreating even faster. Frozen by the financial crisis and squeezed afterward by new regulations, capital flows have since slumped to just under 2 percent of G.D.P. from a peak of 16 percent in 2007.
- The flow of people is slowing, too. Despite the flood of refugees into Europe, net migration from poor to rich countries decreased to 12 million between 2011 and 2015, down by four million from the previous five years.
What are the reasons for this new trend?
There are several reasons behind this trend today. Some of them are:
- Unequal distribution of benefits of globalization, rising inequalities, job loss especially in developed countries.
- MNCs across the countries and workers from developing countries benefitted the most leading to perception that workers from developing countries have stolen jobs from developed countries. This led to demands of stricter visa regime and relocation of industries.
- Global slowdown exacerbated the above mentioned situation and led to increase in demand for protectionist measures across globe.
- Rise of ISIS, increased instances of terrorist attacks and emerging security threats across globe. Immigration crisis further accentuated the security situation and as it is happening at the time of economic slowdown thus leading to anti-immigrant stand.
- Rise of populist leaders globally re-enforces the trend
Concept of de-globalisation
According to Walden Bello and Focus on the Global South, who coined the term "deglobalisation", the objective is not to withdraw from the global economy, but rather to trigger a process of restructuring the world economic and political system so as to strengthen local and national economies instead of weakening them.
De-globalisation questions the integration process dominated by the logic of capital and the supposed rationality of the economy that erodes the decision-making capacity of the people and States. Deglobalising means starting to think and build an integration process based on the needs of peoples, nations, communities and ecosystems.
Deglobalisation does not oppose trade nor the exchange of products or services, but proposes that trade is not done at the expense of the communities, the local and national economies and the diversity of its products whether agricultural or industrial.
The one size fit all policy of structural adjustment programs pushing countries to only remain producers of particular cash crops or goods, destroys that country's ability to satisfy people's needs, diversify and more importantly, be self-reliant in its ability to feed its people.
Deglobalisation embraces the principle of subsidiarity that affirms that all political or economic decisions must be adopted by the level of government that is closest to the problem. The ones who know the most about the local situation and will be the first to suffer the consequences of a decision must be the first to give their opinion and state their position. A political or economic decision that affects a local area must fundamentally be made at this level and only when it is truly necessary should this decision-making power be transferred to the national, regional or global level.
Currently, trade rules cannot be the same for all countries. Trade and investment rules must be asymmetrical so as to favour the smallest economies and countries whose economies and agricultural sector were weakened by transnational capital, colonialism and the interventionism of the superpowers. Trade policies - such as quotas, tariffs and subsidies - must be used to protect local economies from imported goods subsidised by large corporations that set prices at artificially low rates.
Principles of De-globalization by Walden Bello
- Production for the domestic market rather than production for export markets must again become the center of gravity of the economy.
- The principle of subsidiarity should be enshrined in economic life by encouraging production of goods at the level of the community and at the national level if this can be done at reasonable cost in order to preserve community.
- Trade policy - that is, quotas and tariffs - should be used to protect the local economy from destruction by corporate-subsidized commodities with artificially low prices.
- Industrial policy - including subsidies, tariffs, and trade - should be used to revitalize and strengthen the manufacturing sector.
- Long-postponed measures of equitable income redistribution and land redistribution (including urban land reform) must be implemented to create a vibrant internal market that would serve as the anchor of the economy and produce local financial resources for investment.
- De-emphasizing growth, emphasizing upgrading the quality of life, and maximizing equity will reduce environmental disequilibrium.
- The power and transportation systems must be transformed into decentralized systems based on renewable sources.
- A healthy balance must be maintained between the country's carrying capacity and the size of its population.
- Environmentally congenial technology must be developed and diffused in both agriculture and industry.
- A gender lens must be applied in all areas of economic decision making so as to ensure gender equity.
- Strategic economic decisions must not be left to the market or to technocrats. Instead, the scope of democratic decision-making in the economy should be expanded so that all vital economic issues - such as which industries to develop or phase out, what proportion of the government budget to devote to agriculture, etc. - become subject to democratic discussion and choice. This will entail the demystification of economics and a return to its origins as political economy and moral economy.
- Civil society must constantly monitor and supervise the private sector and the state, a process that should be institutionalized.
- The property complex should be transformed into a "mixed economy" that includes community cooperatives, private enterprises, and state enterprises, and excludes transnational corporations.
- Centralized global institutions like the IMF and the World Bank should be replaced with regional institutions built not on free trade and capital mobility but on principles of cooperation that, to use the words of Hugo Chavez in describing the Bolivarian Alternative for the Peoples of Our Americas (ALBA), "transcend the logic of capitalism."