Globalisation: that old chestnut

There are certain words, certain concepts, that, at certain times, are on everybody’s lips. Globalisation is one of them. Few people, me included, know exactly what we mean by it, but we hurl the word around, confident that other people will understand it even if we don’t.  

For some people, globalisation is exciting: the process by which the world’s future prosperity will be assured. For others, it is to be feared: the process by which they will lose their jobs and become impoverished. It is possible for both expectations to be correct, and they probably are.

A universal assumption seems to be that globalisation is recent. That a combination of disparate events in or around the 1980s – the closure of manufacturing industries, the collapse of the Soviet bloc and the diminished influence of socialism, financial deregulation, the growth and domination of multi-nationals, the consequent weakness of democratic governments (one could go on for ever) – has created a new world economic order that is epitomised by the word ‘globalisation’.

But there is nothing new about some aspects of globalisation. It is true that the particular combination of events described above has accelerated the process, made it more complex and made it appear more alarming, but this does not affect the principles involved. Nor should it affect the question of whether or not the process is beneficial to the world at large.

The BBC describes globalisation as ‘the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange’. This makes it sound exciting and greatly to be desired, as it should be. But, for many people in the West, the process creates three distinct fears: the loss of jobs to workers in other countries, an influx of economic migrants, and the apparent impotence of elected governments in the face of multi-national companies and financial institutions.

The first of these fears has existed for centuries, if not millennia. In the mid-19th century, to take one of many examples, over half the world’s cotton manufacture was in Britain. Yet Britain did not grow any cotton. It imported raw cotton from a variety of sources. It spun and wove it. And it exported cloth and cotton goods around the world. Cotton was a global industry 150 years ago – arguably the first global industry. It was grown on all continents, manufactured on all continents, and bought and sold on all continents. There was global competition within each branch of the industry, even if Britain had the lion’s share of it.

In time, British jobs were exported to other countries, which had become cheaper sources of production. India, for example, also mechanised its cotton industry and retained most of the cotton it grew. In 1860, it had supplied 15% of Britain’s raw cotton; by 1900, this had fallen to 2%. This process was replicated across the world, until the Lancashire cotton trade all but disappeared. Hundreds of thousands of jobs were lost. Yet overall, while those jobs were being lost, Britain became richer, average earnings rose and living standards improved. If the jobs had not been lost and replaced with other jobs, it is doubtful whether this would have happened.

Migration for economic and other reasons is hardly a new phenomenon either. Over the centuries, this country and most others have both gained and lost citizens on a regular basis. DNA profiles of both individuals and populations now make it possible to see how this has happened. The idea that England was a pristine Anglo-Saxon country until 1945 is a fantasy, as is the idea that it is now possible or economically desirable to pull up the drawbridge.

However, the pace of both outward job migration and inward population migration in the West has accelerated, along with a popular fear of both. To put it another way, more people are arriving just when the jobs they are hoping to get seem to be disappearing. Even if one thinks that both phenomena will be beneficial in the long run, that is not how they are experienced in the short term by those who lose out.

On top of that has come the third factor in globalisation: the growth of international business and finance and the apparent inability of governments to restrain it. The result of all three factors is that people feel that life is out of their control. No wonder ‘take control’ was such a potent mantra for the Leave campaign, even if it is a delusion.

There are surely things that governments can do to mitigate the worst effects of globalisation and to enable its benefits to become more apparent. Politicians in all Western countries have become too timid. They should be made to watch a superb recent American documentary on the Roosevelts and see how Theodore Roosevelt approached a not dissimilar set of problems, and the pugnacity and the belief in the positive power of government that he brought to it.

This need not entail a return to the days when governments attempted to second-guess the global economic future and poured endless money into their guesses. And there must not be a return to protectionism. But neither should there be a continuation of the ideology, associated with Margaret Thatcher’s Government and still prevalent today, that you can’t interfere with market forces and that it’s just bad luck for some people. The market might make it come right in the end, but that end might lie beyond many people’s lifetimes.

It is shameful that many communities that were devastated in the 1980s have received little productive assistance since, and have little hope of it in the future. It is shameful that multi-national companies can shuffle their finances around the world and shelter their taxes. It is shameful that institutional investors fail to control the salaries of senior executives. The only people who can do anything about these things are politicians. If they say that the law prevents them from doing so, we should remind them that they make the laws.

Globalisation should be a goose that lays golden eggs for everyone. In time perhaps it will be, but only if governments find new and better ways of restraining the greedy and protecting the vulnerable.