February 25, 2019 at 5:23 pm #2669
From: The Economist [i]
LARGE and sustained increases in the cross-border flow of goods, money, ideas and people have been the most important factor in world affairs for the past three decades. They have reshaped relations between states both large and small, and have increasingly come to affect internal politics. From iPhones to France’s ‘yellow vests’ globalisation and its discontents have remade the world.
Recently, though, the character and tempo of globalisation have changed. The pace of economic integration around the world has slowed by many—though not all—measures. How severe will it become? How much will a trade war launched by America’s president, Donald Trump, exacerbate it? What will global commerce look like in the aftermath?
When America took a protectionist turn two years ago, it provoked dark warnings about the miseries of the 1930s. Today those ominous predictions look misplaced. Yes, China is slowing. And, yes, Western firms exposed to China, such as Apple, have been clobbered. But in 2018 global growth was decent, unemployment fell and profits rose. In November President Donald Trump signed a trade pact with Mexico and Canada. If talks over the next months lead to a deal with Xi Jinping, relieved markets will conclude that the trade war is about political theatre and squeezing a few concessions from China, not detonating global commerce.
Such complacency is mistaken. Today’s trade tensions are compounding a shift that has been under way since the financial crisis in 2008-09. Cross-border investment, trade, bank loans and supply chains have all been shrinking or stagnating relative to world GDP.
Globalisation has given way to a new era of sluggishness or “Slowbalisation”, a term used since 2015 by Adjiedj Bakas, a Dutch trend-watcher to describe the reaction against globalisation.[ii]
Bakas states that modern capitalism, however successful, unfortunately possesses certain flaws that are currently tripping up the capitalist model. Many now have access to TV, internet and smart phones, and can see where in the world is a better place to live. They also now have money to pay people smugglers, and can use GPS on smart phones to communicate the best migration routes.
And so The Great Migration of the 21st century is a direct result of the success of capitalism. In the coming years this will lead to social unrest and maybe the end of Europe as we know it. At the same time there has been a bottom-up empowerment movement on the part of citizens. Using underground media, and facilitated by the internet, activist citizens are uniting against the worst excesses of Greed Capitalism and instead making the case for Karma Capitalism, the latter a concept also embraced by the enlightened elites. It is not just the banks that were bankrupted in the GFC crisis, it is the entire financial-economic system, and it is mainly the middle classes that are paying the price. The capitalist system always depended on twin variables: the market and the state. Some economists are pleading for more of a free market, whilst others believe there should be more state intervention.
However, as of 2015 it looks as if another variable has come into play: economically independent individuals who together become a mighty force, a ‘crowd’. It is thanks to the digitalization of recent years that more power has devolved to citizens. Nowadays we can access incredible know-how and computer power, previously the domain of big business, to power any start-up or SME. Designs can be translated into objects by a 3D-printer and the internet becomes a sales platform. And financing for the next big idea can be found via crowd-funding.
Digitalization and globalization have turned passive consumers into active prosumer-financiers. Meanwhile it seems as if the state has less of a grip on the economy and society, whilst low interest rates dilute the power of the market. Globalization is losing pace and turning into ‘Slowbalization’.
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