Globalisation in reverse is better than a retreat to protectionism

WORLD VIEW:CONTRACTION IS the new buzzword to describe what is happening in world and national economies. Trade, investment, output and taxation revenues are shrinking, often dramatically. So is demand.

The globalisation that has driven expansion for 20 years has been put into reverse.

But will the contraction be open or closed? Will the reduction in activity be negotiated and agreed or express itself mainly in efforts to protect particular nations and regions? How mindful should we be of previous contractions that led to war?

Such large and increasingly political questions are being asked all around the world.

It helps to reflect a little on the word contract. It derives from the Latin contractus, bringing con-, together, into contact with trahere, to draw. Thus its meaning as a transitive verb is to effect by agreement; but intransitively (without an object) it means to shrink. A contracted shrinkage would be agreed and could be kept open in a transitive reading of the verb, whereas on an intransitive one it would close.

Such closure is conventionally read as protectionist. But this word also deserves some reflection. It too has a Latin base, coming from protegere, putting pro-, in front, together with tegere, to cover. To protect is to shield from danger, change, injury, capture or loss. In economics it has meant to seek to foster development by import duties. These have positive connotations in dangerous times – particularly for people vulnerable to global flows of toxic finance capital.

Within the conventional discourse, protectionism is negatively counterposed to globalisation and associated with economic nationalism. As the Economist magazine puts it, this is the emergence of a spectre from the darkest period of modern history. “Economic nationalism – the urge to keep jobs and capital at home – is both turning the economic crisis into a political one and threatening the world with depression. If it is not buried again forthwith, the consequences will be dire.” It calls on Barack Obama to take the lead in heading that prospect off. The current intense negotiations ahead of the G20 summit on April 1st-2nd in London are largely about this.

Undoubtedly these trends are real and worrying. But we should beware of the power of words in such a turbulent time. These vocabularies are used to frame and capture public discourse and thereby determine political action. They are not innocent, but laden with conflicting values and interests.

Globalisation is a case in point. Interestingly, it does not figure in the favourite dictionary from which I have drawn these other definitions (Chambers’s 1959 edition). There global is well defined as “affecting, or taking into consideration, the whole world or all peoples”.

Globalisation was used occasionally by sociologists in the 1960s but really became common among economists from the mid-1980s to describe the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. In that way it became part of the neoliberal policy and ideological revolution led by Thatcher and Reagan which proclaimed there was no alternative to these processes.

Free, deregulated markets were assumed to be the most efficient ways to achieve them.

As we emerge in crisis from the end of that era we should be careful about accepting its vocabularies at face value, or assuming the solution to this admittedly deep economic contraction is simply to restore the status quo ante. It is no ordinary economic cycle, but a truly worldwide convulsion with major political consequences. It could be the greatest depression modern capitalism has ever experienced. The words we use to describe it should reflect that particular reality.

In Grundrisse, Karl Marx’s extended notebooks for Das Kapital, he describes as “Robinsonades” how the classical political economists Smith and Ricardo built certain assumptions about isolated individuals into their economic analysis, after Defoe’s novel, Robinson Crusoe.

“In this society of free competition, the individual appears detached from the natural bonds etc which in earlier historical periods make him the accessory of a definite and limited human conglomerate”. Smith and Ricardo project these assumptions into the past not as an historic result, but as history’s point of departure, “not arising historically, but posited by nature”.

Marx goes on to say “the human being is, in the most literal sense, a political animal [Aristotle’s phrase], not merely a gregarious animal, but an animal which can individuate itself only in the midst of society”.

Production by an isolated individual outside society is as absurd as “the development of languages without individuals living together and talking to each other”. He criticised as twaddle the way 19th century laissez-faire economists revived such presuppositions, making them the basis of the discipline to this day.

Globalisation is also subject to such neoliberal Robinsonades. Recovery from this trauma will require re-examining the efficient global market hypotheses they are based upon, and multiplied by the financialisation of risk in the last decade. Globalisation is better defined as an expansion and intensification of social relations, interconnectedness and consciousness throughout the world than as such a limiting market phenomenon. The sociologist Roland Robertson relates it both to the “compression of the world and the intensification of the world as a whole”.

If that is true the current contraction of economic relations does not necessarily involve a retreat to 1930s-style economic protectionism but can promote a greater political interconnectedness as well.

This could generate greater “transcontinental or inter-regional flows and networks of activity, interaction, and the exercise of power”, as the prominent theorist of globalisation David Held puts it.

If that is to be so, we should remember that the Latin root of regulate is regere, to rule.