Suddenly, in the aftermath of President Trump’s tariff wars, even the most enthusiastic supporters of globalisation are on the defensive. They have been forced to acknowledge that a new era of economic nationalism, indeed of mercantilist protectionism, is now in the ascendancy.
Britain’s prime minister Keir Starmer put matters bluntly last week when he declared that ‘the world as we knew it is gone’. UK treasury minister Darren Jones quickly echoed his boss’s diagnosis, declaring that ‘globalisation as we’ve known it for the past couple of decades has come to an end’.
In truth, the obituaries for globalisation have been a long time in the writing. Throughout most of the 21st century, the durability of globalisation has been called into question. This happened most notably after the economic crisis of 2008, as world trade relative to global GDP fell by five per cent over the course of the 2010s and many national governments increasingly adopted protectionist measures.
The Covid pandemic in 2020 and then Russia’s invasion of Ukraine in 2022 further undermined economic globalisation. Indeed, in the aftermath of the war in Ukraine, we’ve seen the emergence of rival economic blocs, and a growing global competition for access to vital raw materials and energy sources.
Little wonder that economic commentators and geopolitical experts have been lamenting the end of globalisation for the best part of the past decade. Yet much of the commentary over the demise of globalisation fails to make a distinction between globalisation as an economic phenomenon, promoting the internationalisation of capital, and globalisation as the self-serving ideology of the cosmopolitan elites.
Globalisation as an economic process, promoting interaction among different people and nations in the world, may have hit the buffers, but it is clearly not about to end any time soon. Despite the rise of protectionism, capitalism continues to transcend national borders, and national economies remain interdependent on one another. There is little realistic prospect of any nation achieving genuine economic autarky. Even the Trumpian White House has been forced to retreat on its tariff plans in the face of pressure from the international financial markets.
It is true, however, that over the past two decades globalisation has lost its expansive dynamic. The rules and expectations that governed global economic relations no longer possess the force that they once did. We now live in a world where trade and economic rivalries have become far more politicised than in the recent past, and governments are more willing than ever to pursue protectionist measures.
More importantly, the relationship between economic blocs is being renegotiated with unpredictable consequences. The place of China in the new world order and the capacity of America to retain its privileged position in international affairs are the key economic and geopolitical questions facing the world today.
Yet while globalisation as an economic process may have partially stalled, it’s a different story for globalisation as an ideology, otherwise known as ‘globalism’. It’s fair to say that globalism has effectively been killed off by the Trump presidency’s adoption of hardcore mercantilism.
Globalism promotes the dogma that free trade, open borders and transnational investment benefit all and guarantee a stable and peaceful world order. It is an ideology that elevates the status of international institutions and devalues the role of national governments. In effect, it promotes the idea that national governments lack the power to determine their own countries’ futures in the face of global market forces and institutions. It renders politics pointless and condemns national sovereignty as an atavistic throwback. It was in this vein that Carl Bildt, ex-president of Sweden and the former chair of the European Council on Foreign Relations, declared that ‘politics is gradually being reshaped into a contest between advocates of open, globalised societies and defenders of inward-looking tribalism’.
But ever since Trump became US president for a second time, even the most fervent of globalists are now seeking refuge in their national state institutions. After the 2008 economic crisis and, later, the Covid pandemic, they continued to believe that it was only a matter of time before the world returned to its globalist senses. But, amid the tariff wars, they have been forced to recognise that national governments now have a vital role to play in determining the future of their societies.
Not that it will be easy for national governments to address the structural economic challenges they face. Trump may be right to focus on the re-industrialisation of America. But this won’t be achieved through a one-dimensional, mercantilist focus on tariffs. No nation can trade itself out of a deep-rooted economic crisis. America and other Western nations need to focus less on protecting their existing economies and more on investing in and developing new technologies and industries.
The unravelling of globalism serves as a wake-up call to national governments and their friends in business. It shows that they can no longer live off the old ways of doing things.
The challenges for the UK are particularly pronounced. Its long-standing productivity crisis will not be solved through clever trade deals. The government needs to show much more ambition, and pursue policies on the scale of President Roosevelt’s New Deal.
That way it might just be possible to ensure that the UK can take advantage of the opportunities that are set to emerge from the disorganisation and reorganisation of the new world order.
Frank Furedi is the executive director of the think-tank, MCC-Brussels.
