Deglobalization

… a core concept in Global Context and Atlas105

Concept description

Wikipedia (reference below) defines deglobalization as the process of diminishing interdependence and integration between certain units around the world, typically nation-states.

See also Globalization.

Wikipedia goes on to say:

“The term of deglobalization has derived from some of the very profound change in many developed nations, where trade as a proportion of total economic activity went down between 1914 and 1970s. … Periods of deglobalization are seen as interesting comparators to other periods, such as 1850–1914 and 1950–2007, in which globalization had been the norm, given that globalization is the norm for most people and thus even periods of stagnant international interaction are often seen as periods of deglobalization.”

Globalization waves in history

In a presentation to a symposium a the University of Toronto entitled Stakeholder Capitalism in Turbulent Times, Geoffrey G. Jones, professor of business history at the Harvard Business School, characterized the phenomenon in terms of globalization waves:

Click for pdf of Professor Jones’ presentation of 28 March 2017 at the University of Toronto

Professor Jones was interviewed in February 2017 by the Indian journal Live Mint (reference below). Excerpts are reproduced below:

Given the uncertainties with Brexit and Donald Trump’s policies, is there a reference point in history to understand where we are now?

I think we are in a deglobalization period. We are in the second wave now. The first one was the Wall Street crash that lasted until the 1970s. There was Communism, extreme regulation and controls that we had seen in that period. Think we are probably repeating that now.

What drives deglobalization?

It is policy. The question is why. I personally think globalization has a bit of an issue – it rewards winners. Losers, lose out. So, in the first global economy, in the early 20th century, the world as a whole got very rich. But there was a huge gap between the winners and the losers. So who did well? White men in the US and Europe did well. Who lost out? Women lost out, colonized people lost out, Muslims lost out.

Why is deglobalization repeating?

It is the revolt of the losers. In the first wave the colonized people revolted against that. There was a huge wave of extreme Muslim rebellion and Jihadi movement. We are seeing a repeat of that now. This time it’s not colonized people, but the blue collared, the white workers, the middle class due to the rising disparity in incomes and we are seeing that across geographies from the US to China. We are seeing a very close similarity between these two deglobalization periods. Our story is still starting out, but its direction seems rather too clear.

How long do you see this period of deglobalization lasting?

The last one lasted 50 years and included a spectacular war and much else.

So, have we not learnt our lessons from that period?

Surprisingly, no. We may have absorbed a ton of lessons from the 1931 financial crisis. The Fed policy was based on those lessons. But, the larger lesson that globalization runs into problems if too many people are losers – we have still to learn.

What does that mean for people?

For individual concerned citizens, it means they need to be involved in resisting these trends. For corporate leaders, they need to be aware that these things can happen and any sort of naïve optimism about globalization is not historically justified. Otherwise you have this view that everything has changed and that’s completely wrong. The one thing that has not changed is human nature. That’s the reason we have repeated financial crises – because there is this cycle of greed and fear that drives financial services (and) keeps repeating itself. You go back to the tulip crisis in Europe or any other and it’s always the same story. There are consistent patterns in human nature. One of the consistent patterns is that as societies come together, there is reaction or dislike of what they see in the other and we seem to be repeating that. We can see that right now.

Were there any winners in the first wave of deglobalization?

Yes. A number of people who lost out were winners. India had started off the deglobalization period with very few people who were educated. By the 1970s, education levels had shot up in India and female education in particular. Income inequality had peaked in the US in 1929 and shoots down until 1979. There was no financial crisis between 1931 and the 1980s—all the people damaged by the first financial crisis were winners. It’s kind of a trade-off. The innovation levels were very subdued in that period too as government regulations and controls were there. It’s almost a trade-off between fewer losers and government regulations. In the last 30 years we have seen economies opening up, innovations increasing…

So do you feel business houses need to lead the way to usher in change?

It’s a system-wide issue. For individual companies it’s very challenging, particularly if they are a public company, to take measures that are revolutionary towards alleviating that problem. It comes down to leadership in some ways and to say that this is not going well and we need to do something about it that’s very hard to do. Boards have a 3-6-month view of a business and to make some of these changes we need Patagonia’s (a sustainability-oriented apparel maker) kind of change.

Given that some of the challenges we are seeing are due to capitalism, should there be a different way to define capitalism? How would you define it?

Capitalism is a wonderful way to generate innovation and create wealth. But it has this troubled history around its distribution of wealth and that’s caused a ton of problems in the past and something we have to think harder about for what’s going to happen in the next generation. That is why I teach my MBA. I don’t tell them what to do but I explicitly show them examples of when things have not worked out and what it means… One of the most important things that business leaders can do is stop and take two minutes to think of what this service or product can do. For instance, all these people making driverless cars – it hasn’t caused their mind to think about what would happen to all those people driving cars for a living. The people who developed Facebook didn’t give the slightest thought to if you have this fake news, and re-enforce it.”

Atlas topic, subject, and course

Globalization Trends, Drivers, and Consequences (core topic) in Global Context and Atlas105.

Sources

Wikipedia, Deglobalization, at https://en.wikipedia.org/wiki/Deglobalization, accessed 29 March 2017.

Geoffrey Jones (2017), The Importance of Shibusawa Eiichi in an Age of Deglobalization, presentation at a symposium entitled Stakeholder Capitalism in Turbulent Times, University of Toronto, 28 March 2017. Uploaded to the Atlas with the permission of the author at http://www.atlas101.ca/pm/wp-content/uploads/2017/03/Jones-Deglobalization-28-Mar-2017.pdf.

Live Mint, We are in a deglobalization period: Business historian Geoffrey G. Jones, article by Sapna Agarwal and Aparna Piramal Raje, 18 February 2017, at http://www.livemint.com/Companies/tKamdGDvvyCt8Smn39TQMK/We-are-in-a-deglobalization-period-Business-historian-Geoff.html, accessed 29 March 2017.

Page created by: Ian Clark, last modified 29 March 2017.

Image: Systemic Alternatives, The Paradigm: Deglobalization, at https://systemicalternatives.org/2014/02/14/the-paradigm-deglobalisation/, accessed 29 March 2015.