Globalisation Trilemma and End of Consensus

2017 has brought out all those Nostradamus and other doomsday predictions out of closet yet again, and this is because, rather ironically, 2016 has proved most predictions wrong and doomed the experts. This was a year of losing faith in expertise, as Britain's Michael Gove claimed on television, and sure enough, we got a Twitter-wielding American President before the end of the year. But if one expert has escaped 2016 unscathed, and indeed, vindicated, this would be Dani Rodrik of Harvard's Kennedy School.

Dr Rodrik came up with 'Globalisation Trillemma' in 2012: The prediction that Democracies, Nation States and Global Markets can not coexist! One can get two out of the three, any two, but not all three. For all the shock at the events of 2016, this is one model has just been proved right.

With all the hindsight of 2016, Dr Rodrik's model now makes abundant sense. At the heart of the 'Globalisation Trilemma' is the argument that Globalisation, by its very nature, creates winners and losers. Within the democratic systems operating within National boundaries, this means globalisation does not work for everyone. This has now become political common-speak, something for political leaders to say with a grave face and little understanding: 'Globalisation is not working for everyone!' This creates popular anti-globalisation constituencies, and eventually, the politics of anti-globalisation comes in the way of expansion of global markets. Just as it did in terms of Brexit!

This also means a divergence of political ideas. Since the Cold War, this impossible combination of Globalisation, Democracy and Nation State, was seen as the ideal, something all states should be striving towards. If anything, that combination stood for the End of History in the Hegelian sense. This is the model which the Neo-Liberals wanted to unleash on the world, and been at it since the end of Cold War. In a sense, 2016 meant the end of End of History!

Once the Trilemma genie is out, the ideals have began to diverge. The countries where Middle Classes have been beneficiaries of globalisation, like India and Philippines, the conversation is to undermine democracy in favour of global markets. So it would be in China too, and the dreams of the Chinese citizens trading their Gucci bags for multi-party elections will be farther than ever.

Countries in North America and Northern Europe, on the other hand, are facing a popular revolt and, in these countries, democracy is 'trumping' globalisation. This has led to a new politics, a right-wing populism that combines the rhetoric of anti-globalisation left with the business-oriented policies of the right, leading to a low-tax low-welfare governments that promises to arm-twist and incentivise companies to step back from globalisation.

The point is, of course, this politics - both of the emerging economy variety of globalisation and nation state and the developed country version of democracy and nation state - would come under a hitherto unforeseen force, that of automation. This was always there - Microsoft Word and Digital Telephone Switching Systems killed more middle class jobs than India and China combined - and this is one thing politicians never want to talk about. The technological unemployment, though John Maynard Keynes may have been speaking about it in the 1930s, was always treated as something seen in science fiction, not in real life. And, even when computers started killing jobs, the media and the politicians were looking the other way, whipping up the bogey of foreign competition, Japan now, China thereafter.

This is what changes now, 2017 and on, when technologies, of doing accounting, testing software, driving cars, managing hotels, are no longer science fiction material, but boring real life phenomena. The politics may pick and choose its options from globalisation trilemma - it is always two of three combinations, with nation state as a given - but automation would disrupt this neat formulation. The globalisers in emerging countries would see global jobs disappear - India is set to lose about 70% of those in the next few years - whereas the Small Islanders and other Western supremacists would see no jobs returning, only a disappearance of global demand as a result of all those walls and ditches we are going to build or dig.

This puts us in a new territory, one with potential of conflict, but also with the new possibilities. The march of globalisation helped a lot of people, and its celebration muted all the other possibilities. The breakdown of the consensus should allow new ideas to emerge - for example, the givenness of nation states and the territorial forms that exist now would all be open to questioning all over again. This is one thing to fear, as these changes would be resisted, perhaps with blunt tools of the past and bluster of ideas past their sell-by dates. But this is a conversation we should now open our mind to, as globalisation as we know come to pass, and we step into a new age of social and economic imagination. 




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