Globalisation Pros and Cons: An Economic Analysis

Economists on Peace contributor and Emeritus Professor Jacques Fontanel, considers how economics and peace play into globalisation.

Historical Context

For contemporary economists, peace is a strong hypothesis, never discussed, or included in their analyses. Yet, unfortunately,  war remains a constant in our societies and the twentieth century was particularly fond of deadly conflicts.

In the early 1990s, after the collapse of USSR, economic globalisation was supposed to increase productive efficiency, to produce greater solidarity between the nations and to promote the economic development of all national economies.

Francis Fukuyama spoke about “the end of history”. However, three decades later, international tensions have not diminished. Since the creation of the World Trade Organisation, economic and financial crises have often resuscitated state economic protections and nationalist sentiments.

Donald Trump, as president of the United States, wants to return to a more political and mercantilist conception of economic policy, expressed by the slogan “America first”.

Today, economists do not have one, but several different and often opposing conceptions of the economic and peaceful interest of globalisation.

Proponents of globalisation

For proponents of the theory of globalisation, growing economic interdependence tends to reduce government intervention in the economy, and the generalisation of market rules is a factor of solidarity and peace.

Three basic postulates are required.

First, the growth of international trade is a factor of peace, which is the normal situation of the market economy.

Secondly, improving the knowledge of economics promotes economic development and justifies the incomes of each.

Finally, the international economy has undergone structural transformations that call into question the economic role of the state, and therefore any manifestation of “economic war”.

For economists of Marxist inspiration, the class struggle has not disappeared. International tensions are rooted in the fundamental contradictions of the capitalist system.

In other words, the conflicts and the war of classes and nations are inscribed in the heart of capitalism. There may be temporary peace, but excessive exploitation and injustice inevitably lead to social conflicts, civil wars and the collective and progressive actions in favour of the eradication of human exploitation.

Many economists highlight the domination of rich countries, to the detriment of poor people and the excluded.

The military conflict is replaced by the economic competition, which is first and foremost a problem of power expressed in all dimensions of social and cultural life.

Under these conditions, the conquest of markets in all countries can be likened to the interest of a territorial invasion without military armaments.

It is a permanent war for richness, waged by powerful nations and their companies, in order to obtain a share of world production more favourable to their national or private interests. The resurgence of protectionism and trade wars between major regional blocs is to be feared.

There is not one but several models of capitalisms, more or less well adapted to the economic war.

Sometimes, these institutional and historical analyses defended the thesis of the decline of the Anglo-Saxon model of capitalism, and therefore of the American economy.

Therefore, the question was whether there are some opportunities to develop international public goods, including global security, with a general and progressive disarmament process.

For Robert Reich, a country must be driven like the business of an enterprise. “Wild” globalisation is leading to the inevitable disintegration of national economies and risks increasing insecurity and impoverishment.

Through an adapted industrial policy, the US is destined to be the arbiter of a now globalised economy, in the framework of a “controlled” international peace based on democracy and freedom. In this concept, it’s about getting the world leadership of a country.

Globalisation for humanitarianism

For the political economy of humanitarianism, the search for satisfaction of needs presupposes collective action, undertaken by the public sector or by NGOs, with a view to reducing poverty, improving the living conditions of each and ensuring dignity and human security.

For François Perroux, the fundamental objectives of any economy are of feeding people, caring for people and freeing slaves. Amartya Sen analyses “entitlements” as the fundamental indicator of the economic development of a society.

Globalization will become a fruitful process only if it is able to resolve the issues of employment, living conditions, precariousness and solidarity between states and citizens.

With globalisation, comes war and violence

However, globalisation does not have any moderating mechanisms, thus creating the conditions of violence with regard to the distribution of wealth.

Washington, a great defender of the principle of economic globalisation at the beginning of the century, now feels aggrieved by the results produced and decides to return to a more protectionist policy.

The power relations of the US are all the more effective today, as the process of globalisation has made most multinational companies dependent on American laws, thanks to their extraterritoriality.

Economic war and military power threats are used for the interest of the US. This policy demonstrates that economy is still a cause of war, a means of armed conflict and an efficient arm against “rogue states” and their friends.

The refusal of modern economists to include political hazards and comparative power of States in their analyses tends to make them less and less comprehensible for immediate action.

Economics has overshadowed the political economy. Economic crises remind us that the economy is also political and that the great theories cannot overshadow the reality of human life.

The opinions expressed throughout this article are the opinions of the individual author and do not necessarily reflect the opinions of Vision of Humanity or the Institute for Economics & Peace.