Why globalisation

The inevitable result would be a huge political backlash. As Rodrik would later recall, other economists tended to dismiss his arguments — or fear them. Over the course of the s, an unwieldy international coalition had begun to contest the notion that globalisation was good.

Activists were intent on showing a much darker picture, revealing how the record of globalisation consisted mostly of farmers pushed off their land and the rampant proliferation of sweatshops.

In , the movement reached a high point when a unique coalition of trade unions and environmentalists managed to shut down the meeting of the World Trade Organization in Seattle. In a state of panic, economists responded with a flood of columns and books that defended the necessity of a more open global market economy, in tones ranging from grandiose to sarcastic.

Language like this lent the fight for globalisation the air of an epochal struggle. Arguments against the global justice movement rested on the idea that the ultimate benefits of a more open and integrated economy would outweigh the downsides. The fact that proponents of globalisation now felt compelled to spend much of their time defending it indicates how much visibility the global justice movement had achieved by the early s. Still, over time, the movement lost ground, as a policy consensus settled in favour of globalisation.

The proponents of globalisation were determined never to let another gathering be interrupted. They stopped meeting in major cities, and security everywhere was tightened. Above all, there was a widespread perception that globalisation was working as it was supposed to. The local adverse effects that activists pointed to — sweatshop labour, starving farmers — were increasingly obscured by the staggering GDP numbers and fantastical images of gleaming skylines coming out of China.

With some lonely exceptions — such as Rodrik and the former World Bank chief and Columbia University professor Joseph Stiglitz — the pursuit of freer trade became a consensus position for economists, commentators and the vast majority of mainstream politicians, to the point where the benefits of free trade seemed to command blind adherence.

In a TV interview, Thomas Friedman was asked whether there was any free trade deal he would not support. I just knew two words: free trade. I n the wake of the financial crisis, the cracks began to show in the consensus on globalisation, to the point that, today, there may no longer be a consensus. Economists who were once ardent proponents of globalisation have become some of its most prominent critics. Erstwhile supporters now concede, at least in part, that it has produced inequality, unemployment and downward pressure on wages.

Nuances and criticisms that economists only used to raise in private seminars are finally coming out in the open. By , he was having doubts: the data seemed to suggest that the effect was much larger than he had suspected.

In the years that followed, the crash, the crisis of the eurozone and the worldwide drop in the price of oil and other commodities combined to put a huge dent in global trade. Among these implications appears to be a rising distrust of the establishment that is blamed for the inequality.

You need to make policy which brings people to think again that their societies are run in a decent and civilised way. If the critics of globalisation could be dismissed before because of their lack of economics training, or ignored because they were in distant countries, or kept out of sight by a wall of police, their sudden political ascendancy in the rich countries of the west cannot be so easily discounted today. Over the past year, the opinion pages of prestigious newspapers have been filled with belated, rueful comments from the high priests of globalisation — the men who appeared to have defeated the anti-globalisers two decades earlier.

Perhaps the most surprising such transformation has been that of Larry Summers. Possessed of a panoply of elite titles — former chief economist of the World Bank, former Treasury secretary, president emeritus of Harvard, former economic adviser to President Barack Obama — Summers was renowned in the s and s for being a blustery proponent of globalisation.

For Summers, it seemed, market logic was so inexorable that its dictates prevailed over every social concern. In an infamous World Bank memo from , he held that the cheapest way to dispose of toxic waste in rich countries was to dump it in poor countries, since it was financially cheaper for them to manage it.

Over the last two years, a different, in some ways unrecognizable Larry Summers has been appearing in newspaper editorial pages. More circumspect in tone, this humbler Summers has been arguing that economic opportunities in the developing world are slowing, and that the already rich economies are finding it hard to get out of the crisis.

Barring some kind of breakthrough, Summers says, an era of slow growth is here to stay. O ne curious thing about the pro-globalisation consensus of the s and s, and its collapse in recent years, is how closely the cycle resembles a previous era.

Pursuing free trade has always produced displacement and inequality — and political chaos, populism and retrenchment to go with it. Every time the social consequences of free trade are overlooked, political backlash follows. But free trade is only one of many forms that economic integration can take. History seems to suggest, however, that it might be the most destabilising one. Nearly all economists and scholars of globalisation like to point to the fact that the economy was rather globalised by the early 20th century.

As European countries colonised Asia and sub-Saharan Africa, they turned their colonies into suppliers of raw materials for European manufacturers, as well as markets for European goods. Meanwhile, the economies of the colonisers were also becoming free-trade zones for each other.

In addition to military force, what underpinned this convenient arrangement for imperial nations was the gold standard. Under this system, each national currency had an established gold value: the British pound sterling was backed by grains of pure gold; the US dollar by This entailed that exchange rates were also fixed: a British pound was always equal to 4.

The stability of exchange rates meant that the cost of doing business across borders was predictable. Category: FutureLearn Local , Learning. We offer a diverse selection of courses from leading universities and cultural institutions from around the world. These are delivered one step at a time, and are accessible on mobile, tablet and desktop, so you can fit learning around your life.

You can unlock new opportunities with unlimited access to hundreds of online short courses for a year by subscribing to our Unlimited package. Build your knowledge with top universities and organisations. Learn more about how FutureLearn is transforming access to education. Learn more about this course. Why has globalisation increased? On this step, we'll explore some of the factors that have led to an increase in globalisation. Globalisation is not a new phenomenon. However the process by which globalisation happens has accelerated in recent years due to some important drivers.

Want to keep learning? This content is taken from Coventry University online course,. The proponents say globalization represents free trade which promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers.

Competition between countries is supposed to drive prices down. In many cases this is not working because countries manipulate their currency to get a price advantage. It also provides poor countries, through infusions of foreign capital and technology, with the chance to develop economically and by spreading prosperity, creates the conditions in which democracy and respect for human rights may flourish.

According to supporters globalization and democracy should go hand in hand. It should be pure business with no colonialist designs. There is now a worldwide market for companies and consumers who have access to products of different countries.

Gradually there is a world power that is being created instead of compartmentalized power sectors. Politics is merging and decisions that are being taken are actually beneficial for people all over the world. This is simply a romanticized view of what is actually happening.

There is more influx of information between two countries, which do not have anything in common between them. Since we share financial interests, corporations and governments are trying to sort out ecological problems for each other.

Socially we have become more open and tolerant towards each other and people who live in the other part of the world are not considered aliens. True in many cases. Most people see speedy travel, mass communications and quick dissemination of information through the Internet as benefits of globalization. Labor can move from country to country to market their skills. True, but this can cause problems with the existing labor and downward pressure on wages. Sharing technology with developing nations will help them progress.

True for small countries but stealing our technologies and IP have become a big problem with our larger competitors like China. Transnational companies investing in installing plants in other countries provide employment for the people in those countries often getting them out of poverty.

True but these agreements have cost the U. For instance countries have value added taxes VATs on imports which are as high as The U. This has created a culture of fear for many middle class workers who have little leverage in this global game.