Deglobalization, or finding a way forward backwards

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A fuse has been lit to ‘deglobalize' the planet, with increasing calls for protectionism, the championing of local production and for an end to the euro. But is a giant step backwards really the way out of the current economic crisis? The leftist economists who think so don't all agree on how to go about it. Ludovic Lamant presents the arguments of four leading schools of thought on deglobalization.
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A fuse has been lit to ‘deglobalize' the planet, with increasing calls for protectionism, the championing of local production and for an end to the euro. But is a giant step backwards really the way out of the current economic crisis? The leftist economists who think so don't all agree on how to go about it. Ludovic Lamant presents the arguments of four leading schools of thought on deglobalization.

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The Earth may no longer be as flat as New York Times columnist Thomas Friedman fantasized in his 2005 best-seller The World is Flat. The upheavals wrought by the US subprime crisis and the world recession have recast the contours of what was becoming an increasingly level global playing field. With calls abounding to re-erect trade barriers, prioritize local production and give up the euro, the hour seems to have come round to dethrone free trade and ‘deglobalize' the world.

After the ‘anti'- and ‘alter-globalization' movements, the idea now is to ‘sever' the ties of globalization forged since the 1980s. Why? Because globalization has not lived up to its promises. But now, after the flood, should we really take one giant step backwards?

To be sure, ‘deglobalization' is still a hazy concept, and has come to serve as a catch-all for left-leaning thought ranging (in France) from the likes of philosopher Edgar Morin and demographer Emmanuel Todd to socialist politician Arnaud Montebourg and economist Frédéric Lordon. Each envisions the post-crisis road map for deglobalization through his own particular prism. "Deglobalization isn't a strategy yet. It's a malleable concept. And not everyone defines it the same way, [but] according to their own interests," sums up economist Jacques Sapir, who has just unleashed a caustic critique of the status quo in his book La Démondialisation (Deglobalization).

 

One of the official coiners of the concept hails from the Philippines. He is Walden Bello, a sociologist, activist and founder of the Bangkok-based NGO Focus on the Global South and author of a book entitled Deglobalization: Ideas for a New World Economy (right) published in 2002. As he explained at the time in an interview with the New Left Review, he views deglobalization as an "alternative to the World Trade Organization". He went on to vilify the WTO as "an opaque, unrepresentative and undemocratic, non-transparent organization driven by a free-trade ideology which, wherever its recipes-liberalization, privatization, deregulation-have been applied over the past 20 years to re-engineer Third World economies, has generated only greater poverty and inequality".

His recipe in a nutshell: "In world terms, then, we call for greater decentralization, greater pluralism, more checks and balances." The ultimate objective is to bolster local autonomy against the supremacy of the major international institutions, from the International Monetary Fund (IMF) to the WTO.

The world economic crisis that first erupted in 2007 breathed new life into the concept of deglobalization - and endowed it with a whole panoply of definitions. Nonetheless, all its proponents do share one basic conviction: that the neoliberal brand of globalization, hitherto touted as an inevitability, has led the planet to disaster. Long gone are the days when US economist and 2009 Nobel Prize winner Paul Krugman could trumpet forth from the rooftops that "globalizationis not to blame".1 Over and above David Ricardo's old law of comparative advantage, Krugman extolled the tremendous economies of scale to be gained by extending international trade all across the planet. The present-day crisis, however, is systemic - financial, social, environmental and energy-dependent - and Ricardo's classics have since been shelved.

"Deglobalizing means undoing what the conservative revolution did," sums up Jacques Nikonoff, ex-president of Attac France and author of Sortons de l'euro! (Let's Leave the Euro, 2011). "Concretely, it amounts to giving the labour force a place in society again." The reference here is to how valued added gets shared out, which in the 1970s used to be by and large equitable, and even to the advantage of employees, but which was subsequently distorted to boost corporate profits. So deglobalizing is about bucking that basic trend (which in France began in 1983) towards padding dividends to shareholders at the expense of wages and capital expenditure.

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1: This is the title of the French translation, La Mondialisation n'est pas coupable, of Krugman's Pop Internationalism (1997).

In other words, deglobalizers aim to put paid to the cycle of financial capitalism touched off in the early '80s, championed by then-UK Prime Minister Margaret Thatcher and US President Ronald Reagan. Some are even bent on ending the era of American ascendancy, which commenced in the late 19th century when the US gradually became the leading world power to the detriment of China. "We are at a stage at which the dominant orthodoxy, that of the pure and perfect market, is no longer capable of producing new ideas. And it's alternative currents that are taking their place," insists Costas Lapavitsas, a Greek economics professor and associate Dean at the University of London's Faculty of Law and Social Sciences, and who is another champion of deglobalization.

A formidable challenge underlies this whole enterprise, however: that of restoring political authority against the sway of the all-powerful markets and rating agencies. In the conclusion to a recent study, Frédéric Lordon, a research director at the French National Centre for Scientific Research (CNRS), ventures a forceful definition of the movement: "If globalization is ultimately nothing other than the dissolution of sovereignties by the mercantilization of everything, then deglobalizing means repoliticizing."

But what does deglobalization look like on the ground? The term is so vague that one can broadly make out at least four main currents with different concrete proposals - proposals that are not necessarily very new, but which are all arousing renewed interest.


1 - Protectionism

In the face of unfettered free trade, some economists, emboldened by the crisis, have taken up their walking sticks to follow in the footsteps of Friedrich List (1789-1846), a pioneering German theorist of economic nationalism, and extol the benefits of protectionism. Trade barriers need to be thrown up again, they argue, to protect national industries from the low-wage competition abroad, especially China. In this sense, deglobalizing involves reinstating national borders.

After all, they point out, it is competition with companies in the South that has weakened the pay-bargaining position of wage earners in the rich North and consigned wage hikes to the back burner indefinitely. The pay squeeze has, in turn, diminished purchasing power and demand in Europe, hence the current economic doldrums on the continent. It follows that to defend employees' rights, their industries need to be shielded from the competition.

So Jacques Sapir, a fervent protectionist, suggests "renationalizing our economic policy" by imposing "country- and industry-specific levies". Demographer Emmanuel Todd argues roughly along the same lines, though he continues to hold out for what he calls "intelligent" trade barriers to be drawn around Europe as a whole, if possible: "In a world at war over payroll costs, Europe has the right to take a protectionist turn," he said in a recent interview with Belgian daily Le Soir.

Pierre-Noël Giraud, professor at the elite school of industry studies l'Ecole Nationale Supérieure des Mines de Paris (Mines ParisTech), advocates a different use of trade barriers: namely not to protect the crisis-ridden French industry, but the "billion down below", i.e. in poor countries. Giraud urges rich nations to institute a form of "differentiated protectionism" in Africa's favour. The idea is to "curb imports from what are now the emerging countries and remain entirely open to the poorest countries, so as to encourage the former to industrialize the latter". This distinction between emerging countries (such as China, India, Brazil) and developing countries (most of Africa) would then disappear after a few years.

This protectionist push is bound to come as a surprise to Giraud's readers after he made a solid case for globalization in his 2008 book La Mondialisation (right): "I've always considered protectionism an interesting option, provided it is cooperative and can be used to fight against inequalities," he explains. "We need to open up the protectionist debate, and do so seriously, by drawing up scenarios, by anticipating the consequences. That might take a couple tenths of a percentage point off our growth, but it could be worth it. We need to lift the taboo on debating these questions." Giraud suggests that an improved G20 (including Sub-Saharan Africa, for instance) might be an apt forum in which to conduct that debate.

 

2 - Financial deglobalization

Protectionism is a reaction to unbridled trade in goods and services. But some stress the need to rein in the forces of finance instead. Re-regulating the markets (as the G20 is struggling to do) won't suffice to counteract 1980s financial deregulation: a return to a more rudimentary, almost archaic, system is needed to tame the beast of finance.

This is the battle cry of the so-called ‘appalled economists‘, who advocate "strictly cordoning off the financial markets" and "prohibiting banks from speculating for their own accounts". One such appalled economist, Frédéric Lordon, research director at France's CNRS, actually proposes a whole slew of strategic nationalisations, e.g. nationalising stock trading platforms and even government deficit financing (the Greek debt, for example, is largely held by foreign banks).

3 - Offshoring ban and green taxation

This approach, where social and ecological considerations converge, is doubtless the most faithful to Bello's original theories. Although offshoring (moving production and jobs to cheaper sites abroad), an ever-recurring bugbear, actually remains a very marginal phenomenon at present, it could eventually trigger a radical reaction in the form of legislation to ban outsourcing and relocating abroad. In a similar register of ideas, green taxation, which is rapidly gaining momentum, could also help deglobalize: viz. by imposing a carbon tax at the European borders, for instance, or a mileage tax on heavy-duty lorries. (These and other forms of environmental protectionism are still on the drawing board.)

This is where French philosopher Edgar Morin takes his stand. "Deglobalization fights against offshoring, its wastefulness and the destruction of local relations: the production of a fruit yoghurt now requires 10,000 kilometres," he fumes. Deglobalizing is about "stirring up resistance to consumerist brainwashing", he adds, albeit taking care to avoid falling back on nation-state isolationism. Morin proposes moving towards a "pluralistic economy" combining globalization and deglobalization - returning to local production, even while promoting international solidarity and cooperation.

 

4 - Pulling out of the euro

While this is the most controversial approach, it is increasingly hailed as a way out of the crisis for ‘peripheral' countries such as Greece and Ireland. The idea, in the short term, is to enable these countries to devalue their currency, which would give their economies a badly-needed shot in the arm. "Discarding the euro is the most effective way to counter ongoing globalization. It's the first thing to do," maintains Greek economist Costas Lapavistas.

The proponents of a return to the French franc are all convinced that the European currency, overvalued against the dollar and the yuan, is a drag on French competitiveness. Jacques Sapir, for example, has long advocated the use not of a single currency, but of a common currency by which the Eurozone would keep the euro for purposes of external trade, while reverting to national currencies for trade within the zone.

So differences were bound to arise within the ranks of the ‘deglobalizers'. Setting priorities is the first bone of contention: "Which lever do we pull first? This is a very political question, and not everyone agrees," points out Cédric Durand, a lecturer at the University of Paris and a leading member of the ‘appalled' economists. "Some feel we need to begin by attacking offshoring. Others, by dismantling the power of the financial markets." Everyone is drawing up their own dream roadmap for transitioning out of the crisis, and the upshot is a compound headache.

Above all, certain points remain highly sensitive, and the strategy of the French far-right Front National (FN) party, which, more or less faithfully, has co-opted many of these issues into its economic programme, makes for an even more explosive powder-keg of a debate on the left. In a recent op-ed piece in the French independent weekly Politis, Thomas Coutrot, co-president of Attac France, takes aim at Jacques Sapir's brand of French protectionism: "Advocating national isolationism at a time when the planet is catching fire is downright irresponsible," seethed Coutrot, who refuses to "set nations against one another in the name of national interest" and play into the hands of populism in Europe.

To drive the point home, the economist equates Sapir-style deglobalization with what he calls a "Dany Boon policy", alluding to the comedian whose film Rien à Déclarer (Nothing to Declare), portrays the antics of customs officers on the Franco-Belgian border (poster above-right). Rather than taxing German products to protect French industry, Coutrot calls for a pay rise in Germany, which would automatically up the price of German goods.

"This piece is vile," retorts Jacques Sapir. "It's all well and good to wait around for wages to go up abroad, but we have no leverage on these matters. How are we to make the Germans increase their wages?" Jacques Nikonoff is equally irked: "This piece is pathetic and wishful thinking on Thomas Coutrot's part." In a word, they argue that the ‘left-wing separatists' are realists, whereas those pushing for international cooperation are woefully naïve.

For some weeks now, moreover, the selfsame Jacques Sapir has been wrangling with economist Jean-Marie Harribey, former co-president of Attac France, on the question of the euro. Their war of words can be perused in French here (Sapir) and here (Harribey). In particular, Harribey argues that, even if the French were to devalue their national currency by 25% and levy customs duties of between 15% and 30%, as Sapir recommends, Chinese industry would still be far more competitive than French industry, given the enduring production cost spread between the two.

So it looks as though deglobalization has generated rifts to the left of the left that haven't been seen since the referendum on the EU Constitution back in 2005. Jean-Marie Harribey agrees: "In 2005, we naysayers didn't take enough time out to analyze certain weaknesses in our victory. Beyond our rejection of the legislation, we'd never really debated what sort of Europe we wanted. That's what we're doing at present, and it's more complicated, given that the political space for broaching these issues in an acceptable manner is very narrow." In plain language, on the borders of that slim space, lurking in the shadows of deglobalization, is the far right.

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English version: Eric Rosencrantz

(Editing by Graham Tearse)

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