Globalisation is middle-aged, with plenty of years ahead of it but in the throes of a midlife crisis. It is fragmenting. It’s moving at different speeds and depths. It’s more like regionalisation now. Trade, globally, is slowing with knock-on effects for manufacturing and investment, while fears of recession are on the rise in countries from the UK to the US. Migration, meanwhile, is accelerating. And global financial integration continues, inexorably.
But economic globalisation is ever more out of step with political globalisation.
The international system failed to prevent the global financial crisis, has been unable to impose a system of taxation and regulation on technology, and seems to be doing too little, too late to address the climate crisis.
The question is whether there’s a third wave of multilateralism that will emerge from the current resurgence of nationalism – i.e. beyond Versailles, beyond Bretton Woods, and towards more effective international cooperation. Perhaps it’ll take root in different places – megacities taking on climate change, rather than leaving it to the nation states, or new clusters of countries setting new rules on tax.
Globalisation’s biggest problem, though, is at home. The domestic contract that underpinned globalisation was a combination of open markets and the welfare state: companies were free to make more money, so that they returned higher taxes to fund improved public services for those left behind by the market. That, in the words of Stewart Wood, economist and former Treasury adviser, speaking at our ThinkIn on Tuesday, “no longer butters the potatoes”. It’s the reason why, on both left and right, our politics is unmoored. Politicians understandably reach for identity or locality.
Culture, certainly, matters as much as – sometimes more than – economics. But those who believe the old economic deal will do, that after Brexit and Trump we’re going to go back to the Blair and Clinton years, are deluding themselves. We are looking for a new deal.