LUCA WOLLNY
In a clear challenge to the Neoliberal globalist consensus, Stephen D. King argues globalism to be an incredibly fragile state of affairs, and shows how recent anti-globalisation trends are part of a long-term systemic threat to international consensus.
Positing the post-war wave of globalisation to be neither inevitable nor irreversible, King’s provocative book Grave New World ultimately produces convincing geopolitical, economic, and sociological critiques of the orthodox neoliberal perspective on globalisation. He places the most recent wave of globalisation in historical context, showing it not to be a trend so much as part of a cycle, before retreading familiar ground with the tension between nation-states and globalisation. These two forces, he argues, will face tension clustered around three key challenges: migration, technology, and money. In the final part of his work, King attempts to offer solutions to the coming challenges facing globalisation.
King’s work relies on six main claims: international economic ‘progress’ is not inevitable and can run in reverse; technology can both promote and dismantle globalisation; economic development, which increases global living standards but deepens domestic inequality, will naturally pit global and national interests against each other; huge migration flows in the 21st century will undermine attempts at domestic stability; international institutions are losing credibility, and the divergence between nations’ goals mean new international institutions are very unlikely; and the preponderance of ‘superpowers’ and their disagreements over how globalisation ought to be conducted will lead to the return of an 1800s style Imperial model. Structurally, however, the book is divided into four parts, of varying quality and credibility.
The first part is an attempt to place globalisation in a historic (and cyclic) context, and forms most of the argument for the first claim. King attempts to demonstrate how, in the immediate post-war period, circumstances allowed for globalisation to be in the national interests of most parties. For the most part, he rests this claim on two factors: the destruction caused by the second world war; and the rise of the cold war. Given the two, there was a strong incentive for the US to invest energy and resources into the creation of a strongly integrated international order, and, given the level of bankruptcy and destruction in most other industrialised nations at this time, strong incentive for them to play ball with the US’s policy. Thus, many of the international institutions we know today were strengthened, since all parties (apart from Moscow) had incentives to cooperate. Post-cold war, King argues, these factors were less pressing, and the natural fractures in the system were held together less tightly.
In an unexpected twist, Minsky’s model – out of favour with the wider economic establishment – is offered as an explanation for how the great moderation placed additional strain on this co-operative system. It argues that as confidence in economic stability goes up, risky and foolish lending and investment will occur, until a bubble appears. This bubble must then pop, causing great economic damage – but clearing the system of inflated value – and restoring the economy to a stable level. Applied to the great moderation, King essentially argues that the lack of economic turmoil simply meant that a bubble (which to this day has not popped) was being formed in the world economy.
In the next part, King outlines his theory for the inherent long-term tension between national states and globalisation. Essentially, he argues that within any given market, trade is of infinite gain, since it increases the overall productivity of the market. This increased production, however, is often grossly unequal, and wealth will tend to congregate. Within a single market, redistribution can be affected, remedying any social concerns and allowing the benefits of blocwide trade to continue. King illustrates this by reference to the British- and French-backed international markets of earlier centuries. Between countries in the modern system, however, redistribution is not possible, since it will almost never be possible to force more prosperous nations to yield redistribution to other nations. He argues that this is exacerbated by the creation of a global elite, in whose interests it is to prevent redistribution. Just to hammer the point home, King then provides a quick interpretation of the various competing views of ‘the international community’, arguing that each is very likely to come to resemble something akin to an 1800s ‘sphere of influence’.
Three key threats to globalisation in the 21st century are analysed in part three. The first, migration, he rationalises thus: when the benefits of migration outweigh the costs of migration, many will migrate. Given that King considers globalisation to worsen inequality, the benefits of migration will only continue to grow in relation to the costs. As a more concrete example, he points to Africa and Europe; as the population of the one continent grows (which increases in healthcare and high fertility rates are, he posits, likely to cause), its citizens, increasingly able to travel, will in ever larger numbers realise there are better wages etc. to be had in wealthy Europe (a phenomenon unlikely to be lessened by Europe’s aging workforce).
The second threat comes from technology; while King posits several methods, the most familiar ought to be the idea of the ‘echo chamber’ – that is, technology may, rather than spreading bonds around the world, simply give people new ways to debase and insulate themselves. Perhaps King’s most convincing evidence comes from an analysis of the viewing numbers of early BBC programming, where the Open University broadcasts paled compared to the viewing numbers for The Black and White Minstrel Show (which, for those unfamiliar with British media history, was a staggeringly racist programme).
Lastly, King argues that the recent tendency towards monetary policy to tame economic crises indicates a dangerous trend towards countries trying to foist off deflation to each other, and that we face ‘currency wars’. As any student of Macroeconomics will be aware, a country can have any two of free capital flows, stable inflation, and stable exchange rates. The last of these is what promotes currency wars; the first is financial globalisation, and stable inflation is general in the national interest. Thus, King argues, without sacrificing financial globalisation at the first hurdle (and given that sacrificing the national interest is incredibly unlikely), we are faced with the prospect of a divisive monetary competition. Furthermore, he points to Japan’s 80s pain after the Plaza accords as a prime example of how even well-motivated attempts to co-ordinate monetary policy cannot end well.
Given, then, the litany of challenges King brings to globalisation, we ought not to be surprised that the single chapter comprising part four contains only three comparatively weak solutions for the situation. Among some astute criticisms of Varoufakis’, Stiglitz’ and Rodrik’s various solutions, King outlines the most plausible routes as: the reinstatement of fully floating currencies (and thus the breakup of the Euro and the abandonment of insulation against hot money); the creation of a binding, and financially muscular, international arbitration body to resolve credit disputes between nations; and complete sovereign globalisation, at least to the degree of the Pax Britannia/Americana.
These solutions, however, all suffer from glaring weaknesses. To adopt the first, the world would need to accept a de facto abandonment of globalisation – which is no solution at all – and to accept the second two, it would need to further abandon nation sovereignty. This will not happen any time soon. King’s better suggestions go boldly against the spirit of the times, emphasising the extent to which globalisation is under threat. These policies are very unlikely to occur, and even more unlikely to actually work. Arbitration would likely just increase the scale of financial issues, and the difficulty of redistribution on a global scale is self-evident. In fairness to King, his tepid endorsement of these solutions indicates some awareness of these failings, and he comes within a hair’s breadth of openly acknowledging that if his core thesis is correct, the most likely outcome is the creation of competing economic spheres and the end of liberal globalisation.
Despite the ultimate weaknesses of his conclusion, King provides a comprehensive (and economically meaty) analysis of the key challenges to liberal globalisation. As an inadvertent part of a newer wave of neo-realism, King captures the zeitgeist of the shift away from the Fukuyamaeqsue endorsements of neoliberalism that had come to dominate the IR debate. Indeed, as an overview of the key systemic threats to the current global order, King’s book serves as a welcome introduction, and contains enough economic analysis to force this reviewer to engage in early macro revision. Thus, while his book occasionally suffers from trying to pull its punches somewhat, it serves as a welcome grounding in the basics of how a geopolitical approach might systemically appear, given the modern order.