THE SOUTH CHINA Morning Posts’ Andrew Shang recently wrote a piece called, “From Brexit to the US-China trade war, it’s time to be realistic about solutions or risk massive global fallout.“ In this article, Shang bemoans the reversal of globalization and its implications for the global economy.
However, in another article entitled “The free market is a destructive myth. Down with the free market.” Shang writes: “And today, the populist revolt against the cruelties of the market and the revenge of nature (that is, climate change) suggest the human and natural worlds have had it with the free market, an idea that should be dumped in the rubbish bin of history.“
These two articles were focused on two issues, globalization and free trade, but they are actually interrelated. Free trade is the idea that the free flow of goods and services between two parties will lead to prosperity. It involves the elimination of tariffs and the reduction of government intervention with regards to economic activity.
On the other hand, the simplest and easiest definition for globalization is the unfettered flow of goods, capital, peoples and services all over the world. It is an ideology which assumes that reducing or even eliminating all national barriers to trade and travel will inevitably lead to more prosperity.
Shang condemns the former while bemoaning the collapse of the latter, but his positions are in contradiction with one another. The interconnected, interdependent nature of free trade is what allows it to work as a political and economic theory. Globalization takes this feature and applies it on a global level, thereby making the entire world interdependent and interconnected.
The assumption is that by making the world interdependent with one another, there will be more specialization and efficiency. More specialization and efficiency will – in turn – lead to more consumption, which in turn will lead to more economic activity.
Looking at the world today, however, that assumption hasn’t worked out too well, and the reason is that globalization and unfettered free trade makes the assumption that humans are just economic units. It does not take into consideration the religious, political, historical, cultural and even biological baggage that are built into human beings, and because of these factors, free trade has a built-in blind spot.
What this means is that free trade only works among those societies which have compatible socio-economic systems, and by work, I mean creating a mutually beneficial trade relationship. Globalization is failing because instead of creating mutually beneficial relationships, it is instead creating mutually exploitative and parasitic relationships.
This isn’t to say that globalization is all bad, but if you look at the populist and nationalist groups all over the world, it’s clear what they think about globalization and free trade.
So to go back to Shand’s articles, my position is that – based on his writing – his sentiments are contradictory. If he rejects free trade, as I do, then he should also reject its offshoot, globalization, because the latter is ultimately derived from the former./PN
