February 7, 2017, Times of India , Samir Saran and Ashok Malik
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President Donald Trump’s initial policy pronouncements on migration and his increasingly evident determination for creating jobs in America itself are new markers in this post-globalisation era. They end an epoch that began 25 years ago today, when the Maastricht Treaty was signed, creating the European Union. Three years later WTO was inaugurated. By the turn of the century, Project Globalisation had gained unstoppable momentum courtesy the internet.
The vocabulary and ethic of globalisation was written in the liberal democracies of the West. There were some foundational assumptions: that as economies opened to trade, incomes would rise, consumer tastes would converge, and so would values and beliefs. The Davos Man (or Woman), as it were, would become the universal exemplar or at least aspiration. This made a whole generation of politicians, scholars, trade economists and stand-up commentators from the West robust evangelists for globalisation.
As is now obvious after Brexit, the revolt among European nationalities and the Trump mandate – several of those suppositions were flimsy. Additionally, the economic success of globalisation made it easy and convenient to ignore fundamental paradoxes in the international system. For instance, since the end of the Cold War it had been apparent that the multilateral order desperately needed updating. It had been crafted in the aftermath of World War I and metamorphosed into the United Nations 20 years later. Much of its institutional design was no more relevant.
Heady narratives enhanced the allure of globalisation and allowed for papering over many such discrepancies. They also obscured domestic tensions within societies and communities: between coastal and heartland America or rich northern Europe and depressed southern Europe. Since the financial crisis of 2008, the bottom has been knocked out of the West-driven globalisation model. Absent its economic deliverables, it is no longer able to stave off the challenge from societal tensions, political ghosts, institutional gaps and stakeholder inequities. This is happening both internationally and within nations. A “domestic South” is mirroring the grievances of a “global South”.
US elites, hitherto evangelists of globalisation, are numbed by the thought that the sun is setting on the “American century”. Its little people, on the other hand, are rudely rejecting the notion that globalisation benefits all. While rising inequality in emerging economies is widely commented upon, it is often ignored that the current generation in OECD countries will be the first in the modern age to have a standard of living worse than their parents. This has caused a new and sometimes irrational aggregation of grievances. It has resulted in, for instance, the paradox of down-at-heel Americans empathising with a gold-plated Trump.
Gradually, every pillar of the Atlantic System – American hegemony as a security guarantor of last resort; industrial capitalism; liberal trade and free markets; the irrevocable retreat of the state from the citizen’s economic life and well-being – is crumbling. Yet, the West is not alone. The industrial order of the past 150 years, with its stress on big manufacturing and relentless export, is being overtaken by the digital age. This has placed a question mark on the Chinese model, as currently practised. Services and innovation are the rising currency, not shop floors and industrial production. It is these factors that will drive growth in India and Africa.
Having said that, India’s economic transformation, China’s merger with the global political mainstream and Africa’s promise as the final frontier all require the liberal trading order to retain its essential vibrancy and osmosis. This is not necessarily due to any ideological belief in the inevitable universalisation of liberal values, but simply because of utilitarian benefits: market access, capital and technology needs. As such, the Indian state and Indian enterprise can live with, indeed embrace, the pressing reality of transactional capitalism. They are not dogmatically opposed to it, unlike free-trade ayatollahs who never face voters or meet real people.
In its own way, the past 20-25 years have written internationalism into India’s political DNA. In theory, it offers a halfway house and a proposition to moderate both the isolationist impulses of Middle America as well as the overreach of Brussels and the Eurocrats. In attempting this, India is only doing itself a favour. For its economic growth and well-being it needs partner countries, from the European nations to Japan to of course the US, to retain a certain buy-in to the open trading system.
The quest to reimagine the ethic and vocabulary of globalisation is not India’s alone. In January, President Xi Jinping donned the mantle of benefactor of the World Economic Forum in Davos and made a case for free trade (and China’s unfettered access to Western markets). On the same day, Prime Minister Narendra Modi opened the Raisina Dialogue in New Delhi by stating baldly: “Globally connected societies, digital opportunities, technology shifts, knowledge boom and innovation are leading the march of humanity … But walls within nations, a sentiment against trade and migration, and rising parochial and protectionist attitudes across the globe are also in stark evidence. The result: globalisation gains are at risk and economic gains are no longer easy to come by.”
The globalisation narrative is being reimagined by the leaders of both China and India. This has economic implications, but comes with political baggage too – for only one of these narratives is rooted in liberal democratic values. It is for India to promote its narrative, as much as for the West – even the transactional West – to make its choices.
Samir Saran is vice-president and Ashok Malik is distinguished fellow at the Observer Research Foundation