LAST week, the World Trade Organization (WTO) slashed its forecast for global trade growth to 1.7 percent this year, which the WTO pointed out would be the slowest growth since the immediate aftermath of the global financial crisis in 2009.
“The dramatic slowing of trade growth is serious and should serve as a wake-up call,” said WTO Director General Roberto Azevêdo. “We need to make sure that this does not translate into misguided policies that could make the situation much worse.”
Azevêdo has been sounding this particular alarm all year; in a statement in the WTO’s midyear report a few months ago he said, “In the current environment, a rise in trade restrictions is the last thing the global economy needs. This increase could have a further chilling effect on trade flows, with knock-on effects for economic growth and job creation.”
He is probably right, but if history is any indication, he is probably vain to think anyone will actually pay attention to him. The major economies certainly are not; just this week, Britain’s prime minister, Theresa May, indicated her government would begin to accelerate efforts to remove the UK from the EU, and the candidates for the US presidency – former Secretary of State Hillary Clinton and current blubbering idiot Donald Trump – have both, albeit with markedly different degrees of coherence, expressed distaste for broader multinational trade agreements, in particular the Trans-Pacific Partnership trade pact. Ratification of the TPP, which was signed last year, must take place at the national level; at this point, it is not even being discussed by the US Congress, and in most of the other 11 other countries involved, the process is moving at a snail’s pace, if at all.
Work on other broad agreements such as the China-led Regional Comprehensive Economic Partnership (RCEP) seems to have slowed as well, which could be attributed to a cooling Chinese economy. The “slowdown” in China, which is blamed for the current decline in a lot of the world’s economic indicators, is a bit of a smokescreen, however; the Chinese economy is not cooling so much as it is shifting its focus inward to become more domestically-driven, another sign—and a rather stark one at that—globalization has at least for now lost its appeal. China is still fairly energetically pursuing bilateral economic ties, and that has helped to push the developing economies, the ones who presumably have the most to gain from globalization, further away from the concept.
Although the WTO is right in its assertion that globalization is beneficial on a broad scale, the reason it is unpopular now is that the way it has manifested itself in the post-Cold War era has significantly deepened inequality. Yes, the world is better off, on a global scale, than it was 50 or even 20 years ago; deep poverty has been reduced by nearly half, and the WTO and other advocates of globalization rightly point to that as a positive effect. However, the effect has been relative—the poor have gotten a little richer, but the rich have gotten a lot richer, which has simply raised the bar on poverty. The great majority of the world’s population, it seems, perhaps feel they are objectively better off than they were before, but not in relation to their economic environment; growth is still perceived as passing a lot of people by, which is why there is now an apparent backlash against globalization and a political shift towards greater protectionism.
What the current trend suggests is that WTO-style globalization may have run its course, because what the world really seems to be experiencing is simply an ebb in the long-amplitude cycle of global relations. Trade is a fact of life, but the perspective towards it by organized society historically has waxed and waned. Working backwards through history, since the end of World War II globalization has been on the rise, and has accelerated since the fall of the Iron Curtain. In the period from the beginning of World War I to the end of World War II, it was in decline; in the colonial age preceding World War I, it was expanding. That had been going on since about the mid-19th century, when the European revolutions put an end to the protectionist leanings of the post-Napoleonic era. And so on.
History suggests that until the world’s concept of “globalization” changes – until some world-changing event or trend forces us to evolve beyond neoliberal economics – national economies are going to continue to draw themselves inward. The world will survive; civilization has managed to keep plugging along for 50 centuries or so already, I think we can be confident it will make it for at least a few lifetimes more.