The retreat of globalization may be permanent. Given how viable the political economies of Europe and the United States have been since the Great Recession of 2008, I think it pertinent to say that even the smart guys on Wall Street will miss what’s happening across the globe recently, and I don’t mean just contracting economies! I mean the social and political impact of digital technology on entrenched interests. Let me explain.
The rise of globalization should not be thought of as a victory for capitalism. For what occurred was the mass movement of capital across nation states for cheap labor. That’s only the first half of the story. The connecting of capital and labor, making producers and consumers out of emerging political economies and their relation to mature counterparts misses out on a glaring reality. The Great Recession has lifted the political economies of these foreign markets. It has also permanently altered their political topography in a way that hurts the U.S. economy. What do I specifically mean?
I mean that given the severe contraction that America has borne, it is in the interests in these newly created foreign markets to remake themselves, to identify themselves with digital media; fragmented, decentralized and most difficult to coalesce. Entrenched, they will now confront an American hegemony. These recalcitrant foreign markets will not come home. Nor are they politically affiliated. They are trans-national.
How do you win over a fragmented, entrenched foreign enemy?
Yes, American style capitalism brought hundreds of millions out of poverty, but it also permitted the birth of an offspring that must be conquered. Why? Because as of this writing, the intellectual foundation of the entire American political economy has failed, I’m speaking of Keynesian life! We are like Japan, a mature economy. We cannot expand outward, we must perform the arduous task of articulating an identity worthy of our best efforts. America must re-articulate its own identity.
As for the Keynesian life, well they got on well after the demise of Marxism. Let’s face it, globalized life gave the Marxists a new lease on life. For the twin enormities of confiscatory taxation, currency depreciation and hosts of burdensome regulatory requirements suffocated the American manna to seek life elsewhere.
We should know that this cyclical weakness is not our gravest concern. Our gravest concern is our unwillingness as a nation to seek out and conquer, vanquish false idols.
What if the dominant political class becomes recalcitrant, making our current contraction structural? What if the professional politicos remain enamored with short-term urgencies to the exclusion of long-term priorities? The fragmentation of globalization is happening, although there are regional differences, it will continue apace.
Think I’m overstating an empirical reality? Even well flushed Central Banks and Nation States cannot counter these prevailing market fragmentations. So how do we win?
Confront the intellectual failure that underwrites Keynesian life. Confront the intellectual threats that underwrite the fragmentation of our global political economy. Where should we begin? We should begin by acknowledging the social, psychological impact of digital technology. It liberates. We should pursue politics at a national level that will liberate the citizenry along decentralized fragmented pivots.
There’s no time for small ball.