From this point, no return

the Necessity of Sustaining Globalization

he End of Globalization could occur within our lifetimes. Harold James's book of that title covers in detail the world's economic history of the last two hundred years - and leaves open the possibility that globalization may be brought to a quick and dark end sometime soon, much as it was similarly brought to a halt in the early 1900s by the Depression and a world war.

James would counter the transformationalists' argument that globalization is at the root of all the changes that are restyling our societies. In the conclusion of the End of Globalization, James declares it "easy to demonstrate the false assumptions behind much of the alarmism":

  • Competition from foreign imports is not eradicating unskilled jobs; such jobs are mostly in the service economy, "where international competition for obvious reasons is not easy." Paul Krugman agrees, citing several other reasons in his book, Pop Internationalism (47).
  • Wages of the unskilled are not falling due to globalization; actual studies of the numbers have revealed at most a 20% reduction in earnings.
  • Trade is not dominated by cheap imports from low-income countries. (203)

International trade does not lead to spreading technology so much as does the inverse. If anything is driving the changes in our societies, James would argue, it is technology (204). Technology is allowing more open and inexpensive borderless communication, which in turns pressures governments to open barriers to its expansion and distribution to all potential consumers. Such consumers didn't need any exogenous forces to make them want these technologies: they only need to know about them.

But James is concerned. He sees few essential differences between the globalization of the early 20th century, led primarily by decreased transportation costs, and the globalization of the late 20th century, led by decreased communication costs. If globalization was stopped pre-Depression, what will happen in the event of another worldwide depression or other economic cataclysm? (there are many to choose from)

He is not alone in his worries. The Economist, which happened to be around the last time globalization failed (the magazine was founded in 1843 to campaign for free trade), warns us as well that it could happen again:

Nonetheless, past experience shows how quickly faith in markets and openness can be overwhelmed by big economic shocks, such as the Great Depression of the 1930s. Faced with another severe downturn, some governments may still be foolish enough to try to use protectionism and capital controls to shield workers and firms from global forces. That would also shield economies from powerful sources of growth. ("One World?")

Others believe that globalization is destined for failure. They subscribe to the argument that we are headed for a "global glut" where capitalism becomes too productive and demand outstrips supply. As Krugman explains in a 1997 issue of Foreign Affairs, this argument has no real basis in either economic theory or fact. "The idea of a global glut does not stand up to examination," he writes. "[I]t is conceptually confused, and its advocates seem oddly unaware of even very basic facts."

Still, people like James and other leading intellectuals - without resorting to the global glut argument - have reason to be concerned. The recent rise in WTO protests, especially those in Seattle, have had a definite effect upon the progression to free world trade. The recent Asian economic crisis, the collapse of the Mexican economy, the African debt crisis, and the failure of Latin American countries to yet reach steady, productive democratic capitalist regimes all stick in the backs of their minds and make them wonder... would it really take such a large shock to send the world economy back into recession, if not depression? For if we repeat history, a new global depression would likely bring many of the same effects as before: set globalization back fifty years and possibly lead to a new world war.

What could possibly be the impetus for such an effect?

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