Will globalisation come apart?

Many people, most prominently Larry Summers, worry about the weak political support for globalisation in industrial countries. Intellectuals with a sense of history point to the terrible breakdown of the `first globalisation’ which started with British control of India (1858), telegraph lines linking Britain to the US (1866) and India (1870) and the Suez Canal (1869). This globalisation effort ended with the first world war. Concerns about the political foundations of globalisation are now at a new high, with the war in Georgia.

I have an article in Financial Express today where I argue that despite the difficulties that we see today, this second globalisation will not come apart as the first did.

The EU and NATO are playing a complementary role to OECD

I emphasise the role of OECD as a core of liberal democracies with market economies that (a) dominate the world economy and (b) will not introduce either trade barriers or capital controls. These countries are now the stable ballast for globalisation. Shlomo Avineri has a fascinating article After Communism: Travails of Democratization in Dissent magazine in which he emphasises the role of the EU in stabilising the turbulent politics of Eastern Europe that is often reminiscent of conditions of the early 20th century. He says:

THE ROLE played by the European Union turned out to be essential. It is true that the postcommunist countries that joined the EU (and NATO!) didn’t live up to all the entrance criteria. Still, their membership provided both an implicit guarantee against any Russian neo-imperial encroachment and something of an insurance policy against slippage back into pre-1939 semi-authoritarianism. Even if anti-EU sentiments can be heard in the mainstream right in Poland and Hungary, EU membership locks countries into democracy, liberalism, and market economics.

Russia

These questions are freshly relevant in the context of Russia and China.

Writing on the Project Syndicate, Richard C. Holbrooke and Ronald Asmus take stock of Russian relations with the West after the invasion of Georgia. Peter Baker, writing in the New York Times, sketches the geopolitical significance of Russia, and Simon Sebag Montefiore puts these events in a hundred-year perspective.

Daniel Gross argues in Slate that international economic integration will restrain Russia. The early indicators are that Russia has suffered some economic pain as a consequence. In this FT article is a sentence: The million-headed hydra of the bourgeoisie has sent a signal: change your course, comrades! wrote the popular internet columnist Dmitry Oreshkin on www.ej.ru in a joking reference to the communist background of Russia’s leadership. The Russian stock market has taken quite a beating. Russia is the worst of 88 countries this summer by stock market performance. Will the people who lost wealth have a voice in influencing the Russian State? Writing in FT, Anders Aslund argues that the best path for the West lies in continuing its economic engagement with Russia.

China

Alongside the Middle East and Russia, the third element of Authoritarianism 2.0, and the political threat to global prosperity, is China. Robert Haddick has a good article on the difficulties that the rise of China presents.

In the article by Shlomo Avineri mentioned above there is a passage that got me thinking:

….the pre-1939 histories of Poland, Hungary, and the Czech Republic provided important keys to their post-1989 development. Czechoslovakia, for instance, was a democratic, secular republic before the Second World War and for a short period after. It had an active multiparty system; parliamentary life; a free press; religious tolerance; and a centuries-old tradition of representative institutions, albeit of feudal character, linked to municipal autonomy and academic freedom; as well as a developed market economy.

Polish and Hungarian histories were more complicated, but both countries enjoyed forms of representative systems for centuries. They were not democracies, but they did create traditions of elections, representation, and limited government. Even though Polish and Hungarian politics were basically authoritarian before the Second World War, a remnant of parliamentary life survived. Even if they were not as industrialized as Czechoslovakia, Poland, and Hungary did undergo significant economic modernization, did possess a fiercely independent, politically organized peasantry, and boasted academic traditions on a West European model. Despite obvious differences among the three countries, they could, after communism, claim to be reviving early institutions and traditions. There were even some political veterans around who managed to survive Nazism and communism. In short, there were historical models on which a postcommunist edifice could be established and legitimized, sometimes with exaggerated pride. In the Polish case, the churchs relative autonomy under communism helped create the infrastructure of a civil society. Another factor was the legacy of upheavals in 1956 and 1968. After the rebellions were repressed harshly, the regimes later relaxed and allowed a modicum of free space, economically as well as intellectually.

These elements were largely missing in Russia. Before the Bolshevik takeover in 1917, there were few elements of civil society. This was one reason for the failure to establish a liberal constitutional regime between February 1917 (when the tsar was overthrown) and October. Pre-1917 Russia was an agrarian society and was not yet emancipated totally from the long legacy of serfdom. Elected institutions did not exist (efforts to create them in 1905 ended in repression. The country was ruled from abovebureaucratically, autocratically, hierarchically; the Orthodox church was subservient to the state; religious and national minorities faced constant oppression; the university system was subservient to the state. Soviet communism, so different from the emancipatory spirit of Marxism (rooted in Enlightenment traditions) was another layer of oppression grafted upon a servile society. So, despite some courageous dissenters, Soviet reform started from above as we noted. While Poles, Hungarians, and Czechs could look back and try to emulate a real (or imagined) precommunist legacy, Russians could not do likewise. Even the historical model of modernization associated with Peter the Great was authoritarian. It was conceived as state-building from above, not democratization nor liberalization.

When the system collapsed, Russia found itself in a vacuum. Mediating institutions of civil society were missing. Yes, individuals in Moscow and St. Petersburg could talk of modeling the New Russia on Locke and the Federalist Papers or retrieve the writings of Herzen and Belinsky, but there were no institutions or popular institutional memories to serve as legitimizing tools. No real political parties emerged for presidential or Duma electionsjust lists centered on personalities. The only exception is the unreformed Communist Party, which managed to retain some of its membership.

This perspective on the different trajectories of the successful East European countries — Poland, Hungary and Czechoslovakia — when compared with the failure of Russia, illuminates our thinking about China. The elements of a history, culture and tradition of civil society, dissent, respect for the individual, and democratic discourse that were absent in Russia of 1917 and thereafter are equally absent in China. This suggests that the cost and complexity of political change in China will be high.

India

In India, we inherited a very good experience of political mobilisation based on non-violence from 1914 (when Gandhiji returned to India) till 1947. We lost our way after independence and lurched into a deep failure in the Emergency, where we became just like any other mediocre third world dictatorship. But from 1979 onwards, we have now built up a 30-year experience of a fairly well functioning democracy.

This is, of course, a work in progress and a lot remains to be done for it to deliver a humane society which cherishes the individual. The state of human rights in India is bad. One pillar of liberal democracy – intellectual life in the universities – has run steadily downhill for the last 50 years. While we have freedom of speech, this has weak legal foundations, banning `offensive’ books is routine, criticising minor historical figures on Orkut is dangerous for life and limb, and the government has substantial control over electronic media.

While we have problems in absolute terms, in relative terms the difference is stark. When we compare India against either Russia or China, we have been lucky on inheriting good initial conditions in terms of the 1917-2008 period. Enlightenment values have roots in India in a way that they do not in the countries where the recent 100 years have been dominated by State brutality, and a multi-generation process of destroying the intelligensia.


Originally published at Ajay Shah’s blog and reproduced here with the author’s permission.

4 Responses to "Will globalisation come apart?"

  1. Geraldo Lino   September 10, 2008 at 1:10 pm

    The real globalization won’t come apart, but it’ll surely have to be re-oriented in order to take into account the Common Good of all peoples. As we’re witnessing day-by-day, the capitalism of the “survival-of-the-smartest” variety is dead. What we do need is a globalization of opportunities, not one of the law of the jungle.

  2. Guest   September 10, 2008 at 1:15 pm

    Neo-liberalism Globalization under the US Dollar hegemony regimehttp://www.globalresearch.ca/index.php?context=va&aid=10129When you look at the balance sheet of U.S. assets available for foreign central banks to buy with the $2.5 to $3.5 trillion of surplus dollars they hold, real estate is the only asset category large enough to absorb the balance-of-payments outflows that U.S. military spending, foreign trade and investment-capital flight are throwing off. When the U.S. military spends money abroad to fight the New Cold War, these dollars are recycled increasingly into U.S. mortgage-backed securities, because there is no other market large enough to absorb the sums involved. Remember, we do not permit foreigners – especially Asians – to buy high-tech, “national security” or key infrastructure. The government would prefer to see them buy harmless real estate trophies such as Rockefeller Center, or minority shares in banks with negative equity such as Citibank shares sold to the Saudis and Bahrainis.But there is a limit on how nakedly the U.S. Government can exploit foreign central banks. It does need to keep dollar recycling going, in order to prevent a sharp dollar depreciation. The Treasury therefore has given informal assurances to foreign governments that they will guarantee at least the dollar value of the money their central banks are recycling. (These governments still will lose as the dollar plunges against hard currencies – just about every currency except the dollar these days.) A failure to provide investment guarantees to foreigners would thwart the continuation of U.S. overseas military spending! And once foreigners are bailed out, the Treasury has to bail out domestic American investors as well, simply for political reasons.

  3. Chinetiger   September 13, 2008 at 12:55 am

    Thank you for your post of the comparison between Russian and the other Eastern European countries.I agree with the idea that Russian are lack of the adequate history and memory of capitalism development,or a relatively successful industrialization process. But it was not only the so called democracy institutions, or at least it’s not the most important preconditions. As for the comparison between Indian and China, I totally disagree with you. Please tell me,what’s wrong with the democracy system in India? Why the 50 years’ democracy practice in India can not reach the same result as the 30 years’ dictatorship in South Korea did? My answer is , the people. I think the institution and the beautiful conception only conception, but only the people they are the real factor. Without well-off 、good educated decent people,you will never have a real democracy. Stupid, the economy is the vital .