Abstract
Brexit and the election of Donald Trump both seem to originate from a deep dissatisfaction with globalization and what it seemingly represents. The growing discontent against the rapid growth of global goods, services, capital and labor began during the third wave of globalization in 1979/80. This cumulated into a full-blown backlash against globalization in the aftermath of the 2007/08 global financial and economic crisis. The then combustible mix of historic disruptions to the flow of capital in the USA (and partly the UK) and the unchecked growing income gaps in the West erupted when the global immigration crisis began to unfold.
This chapter further stipulates that the third wave of globalization may have run its course and that the world is entering a fourth wave, possibly marking the beginning of a period of a reversal of multilateralism and regionalism in favor of bilateralism, and of further restrictions on immigration and labor mobility.
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Notes
- 1.
The first phase of globalization can be identified with the period coinciding approximately with the “Belle Époque”, otherwise known as the “Beautiful Era or the Golden Age” (and that corresponds approximately with the US “gilded age”) from the beginning of the 1870—with the opening of the Suez Canal and coinciding also with the coming of age of the French Third Republic—until WW1. This was a period characterized by peace, prosperity, optimism coupled with scientific/technological and cultural advancements in Europe where literature, music, theater, and visual art thrived. After the interlude of the two world wars, the second phase of globalization began from 1945 through the economic recovery and the high growth rates of the 1960s, to the instability of the 1970s (Della Posta 2009, 2017).
- 2.
But this time difference may just reflect the usual distance that it takes between the occurrence of significant economic events and the political response to them, as it has been the case already in the 1929 Great Depression, followed by the new deal only a few years later, and of the 1973 oil crisis, followed by the neoliberal political revolution only a few years later (Kaletski 2017).
- 3.
Post-truth is commonly referred to as that situation in which emotional or not verified beliefs prevail over objective facts.
- 4.
At least until the end of the 1990s.
- 5.
Only recently the role of neoliberalism in shaping those policies has been discussed critically by Ostry et al. (2016).
- 6.
A critical review of the process of globalization over the last two centuries is provided by Nayyar (2007).
- 7.
Several well established and respected economists agreed with some of those complaints, including Rodrik (1997, 1999, 2000, 2007) and Stiglitz (2002, 2005). The critical aspects of the process of economic globalization were also analyzed by Della Posta (2009), European Commission (2002) and Oxfam (2002). Bhagwati (2004) instead is among the most convinced supporters of the benefits of economic globalization, especially when considering trade in goods and services. The role of economic theory relative to globalization was clarified by Krugman and Obstfeld: “If the market failures are not too bad to start with, a commitment to free trade might in the end be a better policy than opening the Pandora’s box of a more flexible approach. This is, however, a judgment about politics rather than economics. We need to realize that economic theory does not provide a dogmatic defense of free trade, something that it is often accused of doing” (Krugman and Obstfeld 2008, p. 229). As argued by Rodrik (2016a), the fear that acknowledging some problems with globalization would have opened the way to populist critics, made most economists always support the case of internationally free markets, thereby undermining the credibility of the profession. This fits perfectly with what Zingales (2015) also wrote about the fact that too often economists have seemed to flank even bad financial institutions, again, just because not doing it would have meant to risk giving arguments to the anti-globalizers.
- 8.
The reduction of inequality across or within countries was not included among the Millennium Development Goals.
- 9.
The Doha Round has not been concluded successfully yet, also because of the resistance by developed countries to accept the reduction of the protection granted mainly to agriculture and manufactures.
- 10.
It should be noted that the average tariff rates had already been reduced substantially and it is difficult now to reach an agreement in the remaining most contentious sectors, like agriculture and services, that had not been covered under the previous Uruguay Round.
- 11.
This is far from new. When the USA had an economy still characterized by comparative advantages in agriculture, the “infant” industry claimed protection, and somebody like the US President Abraham Lincoln (1861–1865) was making declarations like this, in response to the British economists who were arguing against the imposition of American import tariffs: “I don’t know much about the tariff, but I do know if I buy a coat in America, I have a coat, and America has the money” (reported by Oxfam 2002, p. 59).
- 12.
This idea was originally designed in 1950 by Merrill Flood and Melvin Dresher of the RAND Corporation and later Albert Tucker formalized into a “game” using prison terminologies and renamed it the “prisoner’s dilemma” (Poundstone 1992).
- 13.
Vilfredo Pareto (1848–1923).
- 14.
A large part of the American population is not persuaded either (Blinder, 2016).
- 15.
Shinal, John (2014).
- 16.
The assistance to workers losing their jobs is usually seen as potentially distortionary, since it might remove their incentives to actively look for a new job. It can be questioned, however, whether a structural and widespread loss of unskilled jobs—with fewer and fewer alternative possibilities of employment, as it has been happening in the past and is expected to happen in the future—may require a different approach.
- 17.
Aeppel, Timoth (2015)
- 18.
- 19.
A customs union is a free trade area with a common external tariff.
- 20.
Coined by Thomas Raines, Research Fellow and Program Manager, Europe Programme, Chatham House, in his Nov 16, 2016 article “Britain is Caught between Trump and a Hard Place”.
- 21.
Coined by Scheherazade Rehman, Director EU Research Center and Professor of International Finance/Business, The George Washington University, 2017. URIC @ copyright Scheherazade Sabina Rehman @ January 2017.
- 22.
All across Europe there is a resurrection of right-wing and/or populist parties, for example, UK Independence Party, Norway’s Progress Party, Finland’s Finns Party, Denmark’s Danish Peoples Party, Netherlands, Party of Freedom, Belgium’s Vlaams Belang, Poland’s Law and Justice, Switzerland’s Swiss People’s Party, Austria’s Freedom Party of Austria, Slovakia’s Slovak National Party, Hungary’s Fidesz, Jobbick, and, with more populist connotations, Italy’s Lega Nord and 5 Stars movement.
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Della Posta, P., Rehman, S.S. (2017). Brexit: Origins and Future Perspectives. In: da Costa Cabral, N., Renato Gonçalves, J., Cunha Rodrigues, N. (eds) After Brexit. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-66670-9_2
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