How Has Globalisation fared in the Days of the Coronavirus Pandemic?

Author Name: Omer Aamir      07 Oct 2020     Covid-19/ Economy

Thomas Friedman commented, ‘there can be different brands of free-market vanilla, but, in the end, if you want higher standards of living in a world without walls, the free market is the only ideological alternative left. One road. Different speeds. But one road.’

Free market economic liberalism, which has been the cornerstone in driving globalisation, has inherent shortcomings. For example, unregulated competition has given birth to global monopolies and wiped out entire nascent industries in developing countries. Its proponents and opponents have, in recent years, put forth rational and strong arguments grounded in logic and history to defend or weaken it, respectively. However, the post-pandemic world has brought to light glaring discrepancies, flaws, and loopholes of globalisation. It has become clear that the current globalisation model is unsustainable.

Some trace the history of globalisation back to the collapse of Communism in Europe. Difficult but questions related to the state of economy and society were asked following the demise of the Soviet Union. Of all the possible choices, globalisation as the diagnosis emerged to avoid future conflict, certainly in the rhetoric of Washington Beltway. According to Fukuyama, in ‘The End of History and the Last Man’, collapse of the Soviet Union signalled the triumph of free market capitalism over state regulation. Globalisation, resultantly, provided a bridge between the past and future by arguing that victory in the Cold War had gone to the forces of free market democracies. In turn, globalisation affected all domains, ranging from trade to finance to disarmament to security. New-era globalists more vociferously advocated treaties such as the Non-Proliferation Treaty (NPT), Trade-Related aspects of Intellectual Property Rights (TRIPS) and fortifying financial and economic regulators such as International Monetary Fund (IMF), Financial Action Task Force (FATF), etc.

Keynesian economics teaches us that the measure of an individual’s well-being is the quantity and variety of goods he or she can consume. For one to enhance his or her consumption, they must have a source of income. This proposition inadvertently requires the creation of well-paying jobs. However, the shortcomings of the present-day interconnected, globalised world - where jobs are in short supply, less stable due to a contracting economy brought about by the Pandemic - have been poorly exposed. The rapid pace of globalisation has also inculcated fear in numerous indigenous communities, who have been relegated to the fringes of the global system.

According to anthropologists, entire languages such as Mardjiker, a Portuguese-based Creole, and Lower Arrernte have become extinct and have been wiped out due to globalisation. This change has come about as states have exploited vulnerabilities in the present global model to pursue broader geo-strategic interests. Powerful nations are normally more unrestrained and inadvertently wriggle out of market discipline. The United States (US), for example, has used its influence over Qualcomm to hamstring Huawei. Similarly, Japan has used its control over specialised chemicals to threaten South Korea’s electronics industry. These examples show how powerful states have exploited vulnerabilities in the global model to further their interests, wherever and whenever necessary.

The fallout of globalisation has indubitably benefited the powerful at the expense of the weak. The main narrative of globalists has concealed the problems of systemic fragility and state exploitation where the powerful run scot-free and the weak pay the price of a heavily skewed and biased rules-based system. When dominant states realise the frailty of global supply chains, they are tempted to redirect supplies to themselves at other’s expense. During the early days of the onset of Corona, when face masks and Personal Protective Equipment (PPE) were in short supply, a peculiar incident occurred. The cargo designated for European countries were out-bided by American buyers in a last-minute scuttle at the Shāngai airport.

Similarly, in another unprecedented development, the Trump administration applied the provisions of the Defence Production Act to redirect masks produced elsewhere by the American multinational conglomerate, 3M to itself. These examples were a manifestation of brute & unrestrained politico-economic power to protect self-interests. This power has despondently come to underpin the globalisation narrative that, as mentioned above, was until very recently seen as the panacea for the post-Cold War world order. Globalists and their sympathisers are on the back foot.

If Donald Trump happens to win the upcoming elections in 2020, the US administration under him will further bend the rule-based systems (to suit their interests) and increasingly move towards further protectionism. With the US being the primary guarantor of the current globalised world order, this will cause a tectonic shift in international dynamics towards increasing economic nationalism and result in other countries doing the same, if only as a retaliatory measure. The biggest casualty brought about by these shifting undercurrents will be free trade. Curtailed free trade will eventually lead to a lower standard of living and adversely affect the global economy and impact the gains made since World War II.

Thoughtful globalisation, on the other hand, requires a new approach to trade, one where free trade is managed rather than curtailed. Managing free trade will require the restructuring of the World Trade Organization (WTO) and allowing controlled protectionism for nascent industries of developing countries. WTO will have to play a more proactive role in curbing exploitation, particularly in the primary sector. Factory workers in garment industries of countries such as Bangladesh or Vietnam will have to be offered protection against the practices of avaricious multinational conglomerates, who have found innovative ways to exploit globalisation to its extreme.

Corona Virus has more profoundly exposed the antagonistic effects and dark nature of globalisation. The economy is hurting because of its profoundly interconnected nature as the global logistics and supply chain system are negatively impacted. Finding and transporting critical parts has become more difficult. The policies of ‘beggar-thy-neighbour’ have been rampant in the times of Corona. Moreover, the sinister working of these policies is evident from the ongoing trade wars taking place between China and the US. Economic growth has been stunted due to the ongoing trade war. As mentioned previously, this hostility will indubitably have a ripple effect that might wipe out entire nascent industries in developing economies and hamper free trade globally.

The last decade indicated towards a myriad of loopholes in the global economic system, which have been exploited by certain actors. For instance, the 2008 financial crisis rewarded short- term thinking, created risky financial products, with a poorly regulated system at the national and global level. According to Henry Farrell & Abraham Newmann writing in Foreign Policy, ‘because many firms were too big to fail, globalisation itself had to fail.’ Therefore, the unethical practices of these state and non-state actors, whereby they took advantage of the loopholes in the system, contributed to the demise of globalisation.

Following the onset of COVID-19, a new post-pandemic world is evolving where nationalism, protectionism, and isolationism are reigning supreme. There is a recognition that maintaining the complex global economy will require active measures to protect societies within it.

A thoughtful approach to globalisation will instinctively require a new approach to trade. For example, recommencing air travel in the world where viruses can quickly spread throughout the globe demands broad information sharing and counter measures to prevent the outbreak of another pandemic. Counter intuitively, at this critical moment in history, the Trump administration has defunded the World Health Organization. This move is likely to deal a severe blow to multilateralism and globalisation.

On political front, the coronavirus has also exposed deep inherent structural weaknesses in globalisation. Everything seems to be up for grabs, such as social movements challenging established political order. The forces of globalisation have also reinforced saffron terrorism in India. The pluralistic India of yesteryears has started to degenerate into one where dogmatic narratives prevail as a reaction to populist rhetoric prevalent worldwide. This terrorism is used to rationalise the acts by Hindu nationalists, mainly belonging to Sangh Parivar (Sangh family), Rashtriya Swayamsevak Sangh (RSS), Vishwa Hindu Parshad (VHP), Shiv Sena and Bajrang Dal.

RSS was banned in 1992 due to the demolition of Babri masjid by its militants, alongside their political patrons, the Bhartiya Janata Party (BJP). According to the Islamabad-based Centre for Strategic & Contemporary Research, Hindu nationalists have found new vigour after Modi & BJP assumed power for a second time with a much larger majority. The effect of globalisation on Hindu terrorism has been such that in 2018, CIA classified VHP and Bajrang Dal as ‘militant religious outfits’. The global scholars of terrorism studies understand the lethality of saffron terrorism. This form of terrorism is only one dark aspect of globalisation that has affected India. This extremism trend may also, in turn, affect other parts of South Asia as is evident from the rise of Buddhist hate-mongers in Sri Lanka and Myanmar over the last decade.

Moreover, globalisation has also had worrying effects on the Middle East. There are shifting alliances in the sand due to the Syrian, Libyan & Yemeni civil wars. Turkey, Azerbaijan, Hamas, the Government of National Accord based in Tripoli, Qatar, and the Muslim brotherhood have started to cement one camp. In contrast, Egypt, Saudi Arabia, United Arab Emirates, and Bahrain, backed by the United States, are in the other. A third bloc is led by Iran and its allies, including such disparate actors as the Hezbollah, Houthis, Bashar Al-Assad in Syria and the Orthodox Christian state of Armenia. These different camps are jostling for power and influence in the Middle East and the Caucus. However, it must be noted that there is not a clear demarcation of these alliances and no formal blocs to underwrite them. Rather, they are based on an overlapping of convergences and divergences amongst individual actors in each bloc. For example, Hamas is also an ally of Iran. Moreover, Saudi Arabia and United Arab Emirates have gone separate ways in the Yemeni civil war.

Domestically, globalization has left its mark on Pakistan’s economy, politics, society, law, and religion. It has changed the dressing, dietary habits, cultural values, purchasing power, and socio-economic system of Pakistan. The effects of globalisation have been successful in creating an identity crisis whereby a decline in social solidarity and complexity in social relations have become more pronounced. Extremism has been given birth as dogmatic ideas are reinforced due to the ever-increasing impact of globalisation brought about by the boom of social and electronic media in the society. Those on the fringes of the society are the ones most harshly effected.

On the universal scale, it can be concluded that globalisation’s dysfunction is a product of market forces and may not be solved by economic nationalism alone. The current crisis brought about by COVID-19 is an opportunity to move towards a different approach, one that prioritises people’s safety and prosperity. If a rational way forward is to be charted, it will have to be done, keeping the pros and cons of globalisation in the bigger picture. No doubt, it will take compromises on part of powerful states such as the US and China simultaneously. However, these compromises are the need of the hour if a new thriving world order is to take shape post-pandemic - one where the free market is regulated and its benefits reaped by all. The globalization model is too big to fail and there are too many actors who have a survival stake in it. Therefore, it must be rectified rather than be allowed to crumble.

 

-Omer Aamir is a Researcher for National Security & Legal Affairs at the Centre for Aerospace and Security Studies (CASS). This article was first published in The NHT newspaper. He has done B.A LL.B (Hons) from Lahore University of Management Sciences (LUMS), Pakistan. He tweets at @pakistaniforeva

 

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