September 28, 2024
Source: STRIKE!
Globalization has been the hallmark of the economic world in the late 20th and early 21st centuries. Since the Great Recession of 2008, however, globalization as we knew it has been changing fast. That change is an important part of what is being called the “polycrisis,” the convergence and mutual aggravation of geopolitical, economic, governance, climate, and other crises. This commentary examines the rise and fall of globalization as we knew it. The next commentary explores what is emerging from it. Both are part of a series on “The Polycrisis and the Global Green New Deal.”
Over the last four decades the world has undergone a transformation in the structure of the global economy — generally known as “globalization.” While there had been a global economy since 1492 or even before, this new globalization represented a profound change in the relations between national economies, national governments, and the world economy. Goods and money grew increasingly free to move anywhere around the world to make greater profits. Corporations went global. New global institutions enforced the unimpeded movement of capital. The ideology and political practice that has come to be known as “neoliberalism” beat down efforts by national governments and popular organizations to restrict this freedom. But since the Great Recession of 2008, the trend of globalization has been reversed. This Commentary examines why and how.
Globalization: The Backstory
Both neoliberal globalization and today’s retreat from it represent phases in the long history of the changing relations between markets and states. To grasp the rise and fall of globalization, it helps to put both in historical perspective.[1]
In medieval Europe, markets were extremely limited; most economic activity was controlled by feudal lords, whose peasants produced for them directly, or by guilds organized by craft. Within this system, markets, trade, and a class of capitalists gradually grew.
The emerging system of markets and capitalists had an ambiguous relation to the system of territorial states. Many capitalists traded internationally, but most also developed close ties with their “home” states, each providing support to the other. According to historical sociologist Michael Mann, by the time of the Industrial Revolution, “capitalism was already contained within a civilization of competing geopolitical states.” Each of the leading European states “approximated a self-contained economic network,” and economic interaction was largely confined within national boundaries – and each nations’ imperial dominions.[2] European states shaped trade, often aiding it by national policies, war, and empire. By the 20th century, Europe and its offshoots like the United States – what came to be known as “the West” — controlled most of the world.
A series of industrial revolutions, from the invention of machine production to today’s computer-based technologies, immensely increased human productive capacity. The increased production was and remains controlled primarily by capitalist corporations, which organized an ever-increasing proportion of the world’s economic activity. The size of these corporations grew exponentially. By the mid-20th century a small number of giant corporations, integrating all aspects of production from raw materials to the consumer, dominated major markets in each major country. A growing proportion of people became their employees.
The Great Depression of the 1930s represented a worldwide breakdown of this system, marked by decline of production and mass unemployment of human and material resources. Many nations began developing versions of “regulated capitalism,” in which the state assumed considerable responsibility for overall management of the national economy.
The general crisis also led to economic nationalism, intense international competition, national and inter-imperialist rivalry, and eventually World War II. As the war drew to a close, the victorious nations initiated the Bretton Woods system to establish a degree of international economic regulation to forestall trade wars and downward economic spirals. It instituted the International Monetary Fund to support fixed exchange rates among different national currencies and a World Bank to aid reconstruction and development. It established the General Agreement on Tariffs and Trade (GATT) to base world trade on the “Most Favored Nation” principle under which nations agreed to assure each other trade conditions as favorable as those they gave any other nation. The Bretton Woods system created international supports for regulated national economies in which countries would be able to forestall devastating recessions and depressions. National economies remained “coordinated and territorially contained,” at least in comparison to the impending era of globalization.[3]
Globalization and its Crisis
Regulated national capitalism and the Bretton Woods system contributed to an unprecedented period of sustained growth in the world capitalist economy from World War II to the early 1970s. The years from 1948 to 1973 saw global growth rates of nearly 5 percent per year. But in the early 1970s capitalism entered a worldwide crisis. Global economic growth fell to half its former rate and corporate profit rates plummeted.
This extended crisis was met by several related strategies on the part of governments and corporations that together constituted what came to be known as “globalization.” [4]
Capital mobility Companies expanded their “capital mobility”– their ability to move production and money around the world without impediment. This cut costs by moving production to locations where labor was cheapest and environmental and other regulations weakest.
Transnational networks Corporations restructured from vertical and horizontal integration within national economies to what economist Bennett Harrison described in 1994 as “the creation by managers of boundary-spanning networks of firms, linking together big and small companies operating in different industries, regions, and even countries.” The ultimate power and control remained concentrated with the largest institutions: “multinational corporations, key government agencies, big banks and fiduciaries, research hospitals, and the major universities with close ties to business.” Harrison described this “emerging paradigm of networked production” as “concentration of control combined with decentralization of production.”[5]
Neoliberalism International networked production was supported by a national and global policy framework that became known as “neoliberalism,” which aimed to dismantle barriers to international trade and direct all public policy to the goal of capital accumulation.
Together these practices have gone under the rubric of “globalization.”
Over the course of four decades globalization transformed the world economy. As one recent study put it, “State-centric territorial competition” has been “substantially displaced in significance” by an “economic globalization” which creates its own set of international structures through global networks.[6]
From the 1960s to 2007 trade growth as a proportion of global GDP nearly doubled, from less than 10% to nearly 20%. However, this global system produced a devastating crisis, generally known as the Great Recession. Since 2008 the same measure of global economic integration has dropped steadily – back to the level of 2000. In parallel, global cross-border bank lending fell from 60% of global GDP in 2008 to 37 percent by 2023.[7]
This apparent “de-globalization,” however, is far from reestablishing the “coordinated and territorially contained” economies of the pre-globalization era. In fact, world trade has continued to grow. What’s happening has appropriately been called “geoeconomic fragmentation.”[8]
Geoeconomic fragmentation is part and parcel of the polycrisis – both an effect and a cause. The growth of geopolitical conflict, preparation for war, and actual war are a driving force in geoeconomic fragmentation as nations, coalitions, and corporations vie for dominance in global networks. So is the rise of xenophobic nationalistic political movements espousing economic nationalist policies.[9] So is the response to the climate crisis, with global struggle to control networks of climate-protecting products and to displace the costs of climate protection onto others. At the same time, geoeconomic fragmentation and the economic warfare that accompanies it aggravates geopolitical conflict, nationalistic politics, and climate catastrophe.
[1] For a fuller though still compact review of this history see Jeremy Brecher and Tim Costello, Global Village or Global Pillage, 2nd Edition, July, 1999, Chapter 2: “The Era of Nation-Based Economies.” This account focuses on the capitalist West because most of the main forces shaping the global economy originated there. https://www.jeremybrecher.org/downloadable-books/globalvillage.pdf
[2] Michael Mann, The Sources of Social Power, 1986, Volume 1, p. 513. https://www.cambridge.org/core/books/sources-of-social-power/71430B753552703F801E9C6087E524D6
[3] Seth Schindler et. al., “The Second Cold War: US-China Competition for Centrality in Infrastructure, Digital, Production, and Finance Networks,” Taylor & Francis Online Geopolitics, Vol. 29, 2024, Issue 4, September 7, 2023. https://www.tandfonline.com/doi/full/10.1080/14650045.2023.2253432?src=
[4] See Brecher and Costello, Global Village or Global Pillage, Chapter 3: The Dynamics of Globalization,” Ibid. https://www.jeremybrecher.org/downloadable-books/globalvillage.pdf
[5] Bennett Harrison, Lean and Mean: The Changing Landscape of Corporate Power in the Age of Flexibility, New York: Basic Books, 1994; cited in Global Village or Global Pillage, 53-4. https://go.gale.com/ps/i.do?id=GALE%7CA17502440&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=00197939&p=AONE&sw=w&userGroupName=anon%7E9e9c1b95&aty=open-web-entry
[6] Schindler et. al., Ibid. https://www.tandfonline.com/doi/full/10.1080/14650045.2023.2253432?src=
[7] Adam Tooze, “Chartbook 198: Globalization: The Shifting Patchwork,” February 27, 2023.
ZNetwork is funded solely through the generosity of its readers. Donate
Globalization has been the hallmark of the economic world in the late 20th and early 21st centuries. Since the Great Recession of 2008, however, globalization as we knew it has been changing fast. That change is an important part of what is being called the “polycrisis,” the convergence and mutual aggravation of geopolitical, economic, governance, climate, and other crises. This commentary examines the rise and fall of globalization as we knew it. The next commentary explores what is emerging from it. Both are part of a series on “The Polycrisis and the Global Green New Deal.”
Over the last four decades the world has undergone a transformation in the structure of the global economy — generally known as “globalization.” While there had been a global economy since 1492 or even before, this new globalization represented a profound change in the relations between national economies, national governments, and the world economy. Goods and money grew increasingly free to move anywhere around the world to make greater profits. Corporations went global. New global institutions enforced the unimpeded movement of capital. The ideology and political practice that has come to be known as “neoliberalism” beat down efforts by national governments and popular organizations to restrict this freedom. But since the Great Recession of 2008, the trend of globalization has been reversed. This Commentary examines why and how.
Globalization: The Backstory
Both neoliberal globalization and today’s retreat from it represent phases in the long history of the changing relations between markets and states. To grasp the rise and fall of globalization, it helps to put both in historical perspective.[1]
In medieval Europe, markets were extremely limited; most economic activity was controlled by feudal lords, whose peasants produced for them directly, or by guilds organized by craft. Within this system, markets, trade, and a class of capitalists gradually grew.
The emerging system of markets and capitalists had an ambiguous relation to the system of territorial states. Many capitalists traded internationally, but most also developed close ties with their “home” states, each providing support to the other. According to historical sociologist Michael Mann, by the time of the Industrial Revolution, “capitalism was already contained within a civilization of competing geopolitical states.” Each of the leading European states “approximated a self-contained economic network,” and economic interaction was largely confined within national boundaries – and each nations’ imperial dominions.[2] European states shaped trade, often aiding it by national policies, war, and empire. By the 20th century, Europe and its offshoots like the United States – what came to be known as “the West” — controlled most of the world.
A series of industrial revolutions, from the invention of machine production to today’s computer-based technologies, immensely increased human productive capacity. The increased production was and remains controlled primarily by capitalist corporations, which organized an ever-increasing proportion of the world’s economic activity. The size of these corporations grew exponentially. By the mid-20th century a small number of giant corporations, integrating all aspects of production from raw materials to the consumer, dominated major markets in each major country. A growing proportion of people became their employees.
The Great Depression of the 1930s represented a worldwide breakdown of this system, marked by decline of production and mass unemployment of human and material resources. Many nations began developing versions of “regulated capitalism,” in which the state assumed considerable responsibility for overall management of the national economy.
The general crisis also led to economic nationalism, intense international competition, national and inter-imperialist rivalry, and eventually World War II. As the war drew to a close, the victorious nations initiated the Bretton Woods system to establish a degree of international economic regulation to forestall trade wars and downward economic spirals. It instituted the International Monetary Fund to support fixed exchange rates among different national currencies and a World Bank to aid reconstruction and development. It established the General Agreement on Tariffs and Trade (GATT) to base world trade on the “Most Favored Nation” principle under which nations agreed to assure each other trade conditions as favorable as those they gave any other nation. The Bretton Woods system created international supports for regulated national economies in which countries would be able to forestall devastating recessions and depressions. National economies remained “coordinated and territorially contained,” at least in comparison to the impending era of globalization.[3]
Globalization and its Crisis
Regulated national capitalism and the Bretton Woods system contributed to an unprecedented period of sustained growth in the world capitalist economy from World War II to the early 1970s. The years from 1948 to 1973 saw global growth rates of nearly 5 percent per year. But in the early 1970s capitalism entered a worldwide crisis. Global economic growth fell to half its former rate and corporate profit rates plummeted.
This extended crisis was met by several related strategies on the part of governments and corporations that together constituted what came to be known as “globalization.” [4]
Capital mobility Companies expanded their “capital mobility”– their ability to move production and money around the world without impediment. This cut costs by moving production to locations where labor was cheapest and environmental and other regulations weakest.
Transnational networks Corporations restructured from vertical and horizontal integration within national economies to what economist Bennett Harrison described in 1994 as “the creation by managers of boundary-spanning networks of firms, linking together big and small companies operating in different industries, regions, and even countries.” The ultimate power and control remained concentrated with the largest institutions: “multinational corporations, key government agencies, big banks and fiduciaries, research hospitals, and the major universities with close ties to business.” Harrison described this “emerging paradigm of networked production” as “concentration of control combined with decentralization of production.”[5]
Neoliberalism International networked production was supported by a national and global policy framework that became known as “neoliberalism,” which aimed to dismantle barriers to international trade and direct all public policy to the goal of capital accumulation.
Together these practices have gone under the rubric of “globalization.”
Over the course of four decades globalization transformed the world economy. As one recent study put it, “State-centric territorial competition” has been “substantially displaced in significance” by an “economic globalization” which creates its own set of international structures through global networks.[6]
From the 1960s to 2007 trade growth as a proportion of global GDP nearly doubled, from less than 10% to nearly 20%. However, this global system produced a devastating crisis, generally known as the Great Recession. Since 2008 the same measure of global economic integration has dropped steadily – back to the level of 2000. In parallel, global cross-border bank lending fell from 60% of global GDP in 2008 to 37 percent by 2023.[7]
This apparent “de-globalization,” however, is far from reestablishing the “coordinated and territorially contained” economies of the pre-globalization era. In fact, world trade has continued to grow. What’s happening has appropriately been called “geoeconomic fragmentation.”[8]
Geoeconomic fragmentation is part and parcel of the polycrisis – both an effect and a cause. The growth of geopolitical conflict, preparation for war, and actual war are a driving force in geoeconomic fragmentation as nations, coalitions, and corporations vie for dominance in global networks. So is the rise of xenophobic nationalistic political movements espousing economic nationalist policies.[9] So is the response to the climate crisis, with global struggle to control networks of climate-protecting products and to displace the costs of climate protection onto others. At the same time, geoeconomic fragmentation and the economic warfare that accompanies it aggravates geopolitical conflict, nationalistic politics, and climate catastrophe.
[1] For a fuller though still compact review of this history see Jeremy Brecher and Tim Costello, Global Village or Global Pillage, 2nd Edition, July, 1999, Chapter 2: “The Era of Nation-Based Economies.” This account focuses on the capitalist West because most of the main forces shaping the global economy originated there. https://www.jeremybrecher.org/downloadable-books/globalvillage.pdf
[2] Michael Mann, The Sources of Social Power, 1986, Volume 1, p. 513. https://www.cambridge.org/core/books/sources-of-social-power/71430B753552703F801E9C6087E524D6
[3] Seth Schindler et. al., “The Second Cold War: US-China Competition for Centrality in Infrastructure, Digital, Production, and Finance Networks,” Taylor & Francis Online Geopolitics, Vol. 29, 2024, Issue 4, September 7, 2023. https://www.tandfonline.com/doi/full/10.1080/14650045.2023.2253432?src=
[4] See Brecher and Costello, Global Village or Global Pillage, Chapter 3: The Dynamics of Globalization,” Ibid. https://www.jeremybrecher.org/downloadable-books/globalvillage.pdf
[5] Bennett Harrison, Lean and Mean: The Changing Landscape of Corporate Power in the Age of Flexibility, New York: Basic Books, 1994; cited in Global Village or Global Pillage, 53-4. https://go.gale.com/ps/i.do?id=GALE%7CA17502440&sid=googleScholar&v=2.1&it=r&linkaccess=abs&issn=00197939&p=AONE&sw=w&userGroupName=anon%7E9e9c1b95&aty=open-web-entry
[6] Schindler et. al., Ibid. https://www.tandfonline.com/doi/full/10.1080/14650045.2023.2253432?src=
[7] Adam Tooze, “Chartbook 198: Globalization: The Shifting Patchwork,” February 27, 2023.
ZNetwork is funded solely through the generosity of its readers. Donate
Jeremy Brecher is a historian, author, and co-founder of the Labor Network for Sustainability. He has been active in peace, labor, environmental, and other social movements for more than half a century. Brecher is the author of more than a dozen books on labor and social movements, including Strike! and Global Village or Global Pillage and the winner of five regional Emmy awards for his documentary movie work.
