*First published in International Socialism
The election of Donald Trump as US president crystallised fears in sections of the financial elites that the world economy was beginning to spin towards a new era of protectionism. Trump used rhetoric during his campaign which echoed right wing populist parties elsewhere in the developed world. In its most virulent form, the envelope of trade protectionism was conjoined with anti-immigrant discourse aimed at Mexicans and other Latinos ‘south of the border’. The message was designed to appeal to workers disaffected and distanced from the neoliberal elite whose free trade policies had supposedly been the cause of job losses as employers sought cheaper labour production locations abroad. The message worked for Trump, as the Democrats had no place to hide from the suggestion that they were to blame. Since taking power Trump’s tilt towards protectionism has caused a row within Washington. The US President has withdrawn the US from the Trans-Pacific Partnership (aimed at competition with China) and plans to renegotiate the North American Free Trade Agreement (NAFTA) and to not ratify the TransAtlantic Trade and Investment Partnership (TTIP) between the US and Europe. According to one source the disagreements are akin to ‘a civil war……..over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.’ Writing in the Financial Times in May 2017 Martin Wolf states that Trump ‘appears to be intent on replacing multilateralism with bilateralism, liberalism with protection and predictability with unpredictability.’ These divisions over strategy will not go away soon. One of Trump’s first moves as President was to establish a White House National Trade Council under the directorship of Peter Navarro, the author of the book Death By China which takes aim at US-China trade policies. The substance of the new policy is ‘repatriation’ of international supply chains (especially those involving China) and the construction of alternative ‘domestic’ supply chains within the US. Trump’s decision on June 2nd 2017 to pull out of the Paris Climate Agreement was also dressed up by him as defence of ‘Pittsburgh’ rather than the planet, suggesting a deepening of a long strand of Republican ‘isolationism’ cloaked with economic nationalism. Parallel to these moves Trump has raised possibilities of new trade deals with the EU (outside of TTIP), and indeed with China. This ambivalence and ambiguity in Trump’s agenda suggests that a re-ordering of trade arrangements is under way rather than pure destruction and retreat into protectionism.
The new vogue of trade protectionism, which lays like a shadow over Trump’s policies, also reflects those of right populists/fascists in Europe such as France’s Front Nationale. The protectionist mind set sits side-by-side with the proposition that we have now entered a period where globalisation as we know it is at an end. Indeed, suggestions of globalisation’s demise began more than a decade ago after 9/11, claimed by some commentators as marking the end of the new liberal world order promised by Francis Fukuyama in his 1989 essay The End of History. The ‘end of globalisation’ thesis thus runs as a follow up to the ‘end of history’ nirvana promised by the Fukuyamists. Prominent in the debate has been the conservative historian Niall Ferguson. Ferguson equates contemporary political developments with that of the period at the beginning of the 20th century, when an earlier period of ‘globalisation’ collapsed into war and economic nationalism. His approach is affirmed by the work of John Rawlston Saul, who has suggested that after 1995 (his considered ‘high point’ of globalisation) nationalism, ethnicity and religious fundamentalism have all but destroyed the dream of a liberal world order and accentuated division in the political and economic spheres. Outside of this essentially conservative political assessment has been more measured economic critique, most notably by Hirst and Thompson in their 1999 book Globalisation in Question. The book drew doubts on the ‘hyperglobalisation’ thesis predicting the end of the nation state, by pointing out that the overwhelming majority of foreign direct investment (FDI) was not between global North and South but was ‘in-house’ and traded between the rich nations, and more often than not within the same corporations over national boundaries. What we are seeing now, however, is a new period of doubt and caveat on the efficacy of globalisation, spurred by economic data showing a reversal of trends from previous decades.
The reversal stems from the breakpoint of the 2008 financial crash. The crash exposed major weaknesses in the neoliberal global business model. Declining rates of profit on investment had stemmed world economic growth, while money shifted into financial speculation eventually burst its own bubble. Since the crash new data has cast doubt on the continuing efficacy of globalisation as an irresistible phenomenon. Free trade, low or non-existent tariffs, and liberal market rules are all part of what we understand as modern day globalisation. If the tide was to be reversed then surely over four decades of ‘globalisation’ would also peter out. This indeed is the view of those writing a very influential article in March 2017 in the Wall Street Journal entitled ‘Whatever Happened to Free Trade?’. The article followed fashion and linked a decade of economic retrenchment to an upsurge in populism. The authors point to the slowdown both in world trade volumes and foreign direct investment (FDI) since the 2008 financial crash, and refer also to the 7000 plus protectionist measures that have been enacted within the world economy since 2009, ‘half of them aimed at China’. Capital controls across borders had also become more severe ‘In all, 31 out of 108 countries tracked by economists Menzie Chinn and Hiro Ito became less open to global capital flows between 2008 and 2014, while 13 became more open. That’s a sharp reversal from the five-year pre-crisis period, when 40 countries became more open to global capital flows and 12 became less open’.
All this would certainly indicate that globalisation may have already had its day in the sun. But if this is the case, how sustainable is the trend away from globalisation, and what are the underlying causes and changes in political economy that have driven these changes? This article seeks to address these questions, first by defining and examining previous waves of globalisation, and second by probing the political ideology behind the neoliberal project which is now under attack.
Trends in Globalisation?
In purely structural and economic terms (rather than cultural or political) we can suggest that the world economy is in a phase of ‘globalisation’ when the rate of growth of world trade is greater than the rate of growth of world production of goods and services. Such a positive ratio would indicate that the world economy is becoming more integrated, as cross-border trade and foreign direct investment increasingly replaces or substitutes for production of goods and services for the home market. When the trend reverses, it generally indicates a period of protectionism and import substitution. This was the case in the inter war years, when tariffs were raised and exchange controls imposed in a period of economic nationalism which began in 1914 as geo-political tension between the Great Powers accelerated. It took a practical form not only in the Great War but also in its aftermath. Between 1913 and 1950, world trade grew at only half the pace of world output of goods and services, indicating the severity of the retrenchment that fed the Great Depression and then the second world war. 
However, after the end of WW2 we see a change in the world economy towards more integration. From 1949 until the financial crash of 2008 global trade grew on average at 10 per cent per year outstripping growth of world production by about twofold. The reversal in fortunes in the immediate post war period was clearly a response to US political and economic strategy to reconstruct the capitalist order outside of the Soviet bloc. It was the political engine of war and then the Cold War from which emerged first the Bretton Woods agreement to create a world financial system conducive to open trade and investment and then the Marshall Plan to reconstruct (western) Europe. The variations and developments of the ensuing ‘peak’ globalisation are discussed later but generally the world economy expanded in parallel with globalisation of goods and service production and trade. Since 2008, however, the process of expansion appears to have been reversed. There was an upturn in world trade in 2010 as the world economy began to recover but since then trade growth has again slowed down massively and settled to around 2.5 per cent growth per year. World production figures, measured in GDP, have also slowed down since the crash and are also now stabilising with growth rates well under 3 per cent by 2015, with rates less than 2 per cent in the developed economies. This retrenchment appears to have been triggered not only by the crash of 2008, but also by the slowing down of economic growth in the far East, particularly China, which had acted as an engine of both imports and exports within the wider world economy.
We can point to other indicators. For example, the post WW2 period of ‘peak’ globalisation has also been associated with an expansion of production networks and supply chains as enterprises in the global North seek cheaper labour areas to exploit in the global South. However, there is emerging evidence that the rush in the last few decades to expand global supply chains and to outsource production across world networks has also slowed down and in some cases gone into reverse. Large US corporations, for example, such as American Apparel in clothing, Zara in beauty products, IBM in computers and Caterpillar in agricultural machinery who used to spread production across the world in the search for cheap labour, are now switching back to a system of production based on ‘vertical integration’. This assumes a much closer geographical link between R&D and production facilities, whereby consumer market trends can be more quickly and easily accommodated and re-shoring takes place alongside changes in labour practices which may include a new phase of automation.
Trends towards reshoring, however marginal, have also been matched with a decline in world totals of FDI. According to the latest OECD reports, FDI flows decreased by 7 per cent in 2016, dropping to 2.2 per cent of global Gross Domestic Product (GDP), a drop to half the rate of that when compared to the decades of ‘peak globalisation’. Some of this decline is undoubtedly due to economic caution amongst investors following the financial crash, but the OECD also point to evidence of nation states using security concerns as a reason for adding more restrictive measures on both outward and inward FDI. An OECD background note in March 2017 reported this trend ‘Governments are increasingly concerned about the potentially non-commercial objectives of investments by state-owned enterprises or sovereign wealth funds and about the lack of potential reciprocity in terms of the market for corporate control in the country of the investor. Multinational enterprises may also face a resurgence of restrictions on outward investment from their home country’. Such sentiments would seem to match the desire of Trump and others for a new period of ‘economic nationalism’, triggered in part by wider geo-political concerns of competition from China, which is now a net exporter of FDI.
It would be a mistake, however, to view globalisation and its future purely through a statistical lens. Deeper political and economic forces underlay the surface changes found in the statistics, and it is to these deeper forces that we need to turn to develop our understanding. Before doing so, however, we need to consider the history of ‘industrialised’ globalisation, and to learn from its pattern of behaviour.
“The colonial system ripened, like a hot-house, trade and navigation. The “societies Monopolia” of Luther were powerful levers for concentration of capital. The colonies secured a market for the budding manufactures, and, through the monopoly of the market, an increased accumulation. The treasures captured outside Europe by undisguised looting, enslavement, and murder, floated back to the mother-country and were there turned into capital.” (Marx, Capital Vol 1, Chapter 31: The Genesis of the Industrial Capitalist)
In this passage Marx was highlighting the developing relationship between the forces of empire and trade and capitalism’s need to appropriate funds for further expansion. He was writing as Britain had created its empire from the primitive accumulation of capital based on slavery and exploitation of its colonial ‘possessions’. The competitive advantage that Britain and other European powers enjoyed (together with the USA after the ‘Great Depression’ of 1870 – 1880) was utilised to its maximum to fund the coffers of corporations and the state. Technological advances, with the introduction of the telegraph and steam powered ships aided the process. The system of colonial exploitation was based on trade advantage which although espoused as ‘free’ by its apologists was an expression of economic power backed by military boots on the ground and the Royal Navy at sea. As Engels observed of the contemporary scene. ‘Political economy came into being as a natural result of the expansion of trade, and with its appearance elementary, unscientific huckstering was replaced by a developed system of licensed fraud, an entire science of enrichment’. Indeed, as John Newsinger describes in his book The Blood Never Dried, during the opium wars in China ‘The British Empire was the largest drug pusher the world has ever seen’.
While trade was the driving force of this earlier period of industrial ‘globalisation’ it was not conducted on a basis which would boost the industrial economy of the colonies. The world’s industrial working class remained firmly rooted in the advanced nations, and the colonies were exploited more for their country specific commodities (tea, cotton, sugar cane etc.) and raw materials (e.g. rubber) rather than their industrial labour power as in our modern period of ‘peak globalisation’. The search for raw materials and commodities threatened to cause inflation as supplies were infinite, and so plunder, extortion and theft became the normal behaviour of the richer colonialists while the living standards of the dispossessed were deliberately suppressed. The financial surpluses extracted through colonialism aided and abetted capital accumulation through the extraction of ever more surplus value from waged workers in new and existing factories in the homeland. The imperialist projects of the Great Powers were thus a fusion of capitalist expansion and territorial gain. The colonies were simply left behind in the process. Indeed, just taking the case of India, as Mike Davis observes ‘there was no increase in India’s per capita income from 1757 to 1947’. More generally, what we see is that the industrialised world of western Europe and the USA leapt ahead during this time, leaving the colonised world behind. In 1750 the southern and eastern continents had accounted for 73 per cent of world manufacturing production, its share fell to 50 per cent by 1830 and by 1913, at the end of the first globalisation wave, its share stood at just 7.5 per cent. This is important to note, as liberal and conservative historians such as Niall Ferguson will persist in portraying empire as benign and benevolent, when as Davis has portrayed in Late Victorian Holocausts, the British Japanese and US empires left a legacy of dreadful famine and poverty akin to ‘cultural genocide’. The violence of the period is its key feature, and was made necessary to defend the empire from revolt and insurgency. The most notorious incident of British repression in India, for example, took place in 1919 after the arrest of Gandhi, when in Amritsar, Punjab, General Reginald Dyer ordered his guns (held by Gurkhas) to be turned on a crowd of thousands of people listening to pro-independence speeches. Hundreds were massacred on the spot or left to die in the dust as curfew approached. The violent repression continued to the last days of the British empire, and included the torture, summary execution and hanging of over 1000 prisoners in the Mau Mau revolt in Kenya in the 1950s. Britain, of course, was not alone in committing imperialist atrocities and expanding its territory. As Eric Hobsbawm has written the ‘Age of Empire……was essentially an age of state rivalry’. Within this rivalry the plunder was absolute. In the ‘scramble’ for Africa over a 30 year period between 1880 and 1910, 110 million Africans became subjects of five European empires, that of Britain, France, Germany, Italy, Portugal plus the Belgian monarch. By the turn of the 19th century British dominance had begun to fade and by 1913 the four chief economies were the USA (providing 46 per cent share of industrial and mining production, including construction), Germany (23.5 per cent), Britain (19.5 per cent), and France (11 per cent).
Hobsbawm described this emerging variegation in power as a period of ‘growing pluralism’ of the world economy which began to gather pace at the turn of the century. Britain’s share of all exports from Africa, Asia and Latin America fell from one half in 1860 to one quarter by 1900, creating a world which was no longer ‘monocentric’. But then, as today, Britain did not suffer too much from its relative decline in world trade share, as it found a new role as the world economy’s banker and insurance broker in the City of London. Its previous position of domination had left it with considerable overseas ‘assets’ and in 1914 Britain still held 44 per cent of all world overseas investments. But the resulting geo-political tensions caused by the ‘scramble’ for Africa and other parts of the world became like a pressure cooker of geo-political tension. The quarrels between the Great Powers culminated in retrenchment into protectionism followed by the Great War and then two decades of economic turmoil.
From this overview we can distinguish three pertinent features which have shaped globalisation in the past, and which may offer us insights into its present dilemmas and the future. First, we can see that while the period of Pax Brittannica placed England and then Britain as the monocentric hegemonic power throughout the eighteenth and nineteenth centuries, such power was threatened by new entrants to the game, as state rivalry and polycentric power emerged. The political state rivalry, the pursuit of economics by other means, eventually led to a breakdown of the world system, war and recession. Second, we must note that far from being consensual, or benign, or benevolent, the process of globalisation was violent, entailing famine, murder, torture and state military power to guard against revolt and rebellion. Third, we can note from Marx and Engel’s writings on the first wave of ‘globalisation’ that the process of trade expansion and colonisation was integral to the structural development of capitalism at the time. ‘Political Economy’ flowed from their analysis of why capital needed to plunder outside its industrial heartlands to accumulate. Our task is now to determine if these three key features of the earlier period of globalisation can aid our understanding of the stability or fragility of the neoliberal order and its own particularised project of globalisation. Most importantly, as capitalism continues to falter with a crisis of profitability and in the aftermath of financial turmoil, is Pax Americana waning to such an extent that it is now being replaced by a new order of polycentrism? If this is the case has globalisation peaked, or is it simply morphing into some other form?
The shift to Pax Americana implies a hegemonic dominance of the USA over world affairs acting both as economic superpower and ‘world policeman’. Indeed, the view that globalisation is a primary product and objective of a singular state power has pervaded much of the literature on our period of post war ‘peak’ globalisation. The Marxist writers Leo Panitch and Sam Gindin, for example, appear to reduce the explanation for ‘peak’ globalisation to American hegemony and its ability to ‘dis-articulate’ domestic capital in other nation states which, as a result, are ‘no longer represented by a coherent and independent national bourgeoisie’. However, as Alex Callinicos has shown in this journal this position is in many respects an overstatement of the importance of the USA’s ability and willingness to direct its economic and military power in the post war era. It is not the case, for example, ‘that the return to the Great Power rivalries of 1870-1945, while containing an important element of truth, stated baldly implied a simple repetition of earlier historical patterns without taking into account the effects of the concrete forms taken by economic and geopolitical competition in the intervening Cold War era’.  In reality, the development of globalisation in the post war period has been a much more complex affair, involving different stages and backgrounded not so much by an overwhelming US hegemony but rather a set of strategic position games of which the USA has played the major, but not all-consuming role. Most notably, rather than the ‘third world’ becoming left behind through imperial dominance as in the first ‘wave’ of globalisation up to 1913 the net result has been an expansion of industrialisation in the global South. This expansion has been encouraged by sources of cheap labour costs in the global South which have been utilised for manufacturing production. By 2005, as de la Dehesa records ‘60 per cent of Northern exports to the South are manufactures, as are 60 per cent of Southern exports to the North (author’s emphasis). In general, the manufactures exported by the North are capital and technology intensive, while those exported by the South are labor intensive’. The industrial expansion has not produced convergence in living standards, rather the reverse, but it has produced a degree of multi-polarity which has made ‘policing’ the world system of nations more difficult.
The stages of development of post war globalisation also need to be analysed in a little more detail to reinforce our assessment of the limits of US hegemony. The process of restructuring the world economy began as the Allies sensed victory towards the end of the war. The Bretton Woods Agreement was signed in 1944. The participants at the three-week long meeting in New Hampshire hotel, included representatives of all 44 of the Allied Powers including the USSR and the emergent new state of Yugoslavia. New supra-national institutions, the International Monetary Fund (IMF), and the World Bank, were created after the meeting to stabilise the world financial system essentially by fixing exchange rates to the dollar (which in turn was fixed to gold). Money would be transferred through the institutions from those states with surplus funds (creditors) to those in deficit (debtors) to preserve the stability of exchange rates and to help boost world trade. Loans would be repaid with interest determined by the IMF/World Bank. US leadership was assured, both institutions were to be based in the USA, with governing and decision-making bodies dominated by creditors. Two thirds of the world’s gold was held at the time in the USA. The final agreement was not ratified by the USSR, which laid claim that the institutions were ‘branches of Wall Street’.  The political effect of Bretton Woods was to tie the western powers into a shared economic project of financial and economic reconstruction, albeit under US leadership. This new strategy stood in contrast to the failures of the inter war years, which had seen a retreat into economic nationalism, and then depression and reinvigoration of the drumbeat of war. A secondary development was the creation in 1947 of the General Agreement on Tariffs and Trade (GATT) which was designed to complete multilateral agreements on tariff reductions and to regulate tariffs and to boost world trade. GATT morphed into the World Trade Organisation (WTO) in 1995 and the last round of deals under the process of liberalisation was that struck as part of the Doha Round in 2001. On the geo-political front the end of the Korean war heralded the consolidation of the Cold War. Here the US buttressed its allies in western Europe through Marshall Aid in 1948, which amounted to a total of $17 billion granted in aid in return for purchase of US commodities such as food, fertilizer, machinery and fuel. The plan also had an ideological edge, advancing the cause of institutions that allowed labour representation to promote a social democrat alternative to west Europe’s still large Communist parties. While the Soviet Union and its satellites were offered Marshall Aid, the offers were blocked by Stalin, who in turn developed an alternative ‘Molotov Plan’ in its own sphere of influence. Similar programmes were established by the US for Asian countries fulfilling the ‘Truman Doctrine’ of 1947 which detailed a US mission to create a physical barrier to the territorial spread of ‘Communism’. A need for financial back-up to the doctrine was engendered by the UK’s post war admission that it could no longer finance the suppression of the communists in the ‘borderland’ region between East and West that was Greece. The net effect of these US-led political and economic initiatives was that a new era of military power was established both in the North Atlantic (the Washington Treaty establishing NATO was signed in 1949), and in the Pacific. The borders of this new globalised world were drawn in Cold War terms, relatively fixed in Europe, but less specific in the Far East (until after the Vietnam War), and more fluid in Africa and South and Central America. By accepting US ‘leadership’ smaller nation states could be guaranteed a share, however small, in an advancing world economy within what Giovanni Arrighi has described as a distinct ‘regime of accumulation on a world scale’ associated with a particular (i.e.US) hegemonic state. This new regime provided the necessary political stability and ushered in a ‘golden age’ of capitalism in the immediate post war years as the economy expanded alongside rising real incomes and the mass purchase and production of consumer goods. Behind the golden age however were materials of darker hue – coal and oil. Fossil fuels steamed ahead to shape a world economy in which the mass production of the motor car allowed for further expansion of the cities into the suburbs in what Ian Angus has called the ‘great acceleration’ in carbon emissions. In turn, it then frame-worked the political economy of US and other smaller imperialisms in chasing oil and subjugating oil rich states to their will.
Whilst the new ‘regime of accumulation on a world scale’ was successful in many of its aims (at least from the perspective of the American ruling class) it was not without its problems. Neither US nor indeed Soviet Union ‘hegemony’ was accepted automatically by nation states in the less developed world. Newly independent states (NIS) such as India and Pakistan, many African states and Latin American states, as well as the Titoist regime in Yugoslavia were keen to distance themselves both politically and economically from the major powers. At an inter-state level the desire for independence from both Washington and Moscow took its effect in the establishment of the non-aligned movement following the Bandung Conference in Indonesia in 1955. The main movers of the Conference were the states of Indonesia, Pakistan, India, Burma and Ceylon (Sri Lanka) with other NIS also involved. The Peoples Republic of China was represented at the conference (just six years after the Mao revolution) fuelling US fears of an alternative source of Communist influence. US post war foreign policy had sought to court anti-colonial elements in the global South, but this brushed against a parallel objective of drawing closer to those very countries (France, Britain, Spain etc.) who had been culprits in colonial misdeeds. This placed US hegemonic intentions with a dilemma, so too did the ‘human rights’ approach of Bandung when framed against the racist Jim Crow laws in the south of the USA. The dilemma was partly solved by a change in the policy of the majority of the European colonial powers towards their colonies. Rebellion from below had first been met with repression, shootings and concentration camps, just like in the old days. But this strategy gave way in the face of continued resistance to one whereby local elites were cultivated to rule their countries, but within the continued remit of the interests of the former colonial masters. In the British case, as Chris Harman records: ‘Even where Britain did try to stand firm against making concessions to the ‘natives’ – as in Kenya, where it bombed villages and herded people into concentration camps where many died, and in Cyprus, where troops used torture – it ended up negotiating a ‘peaceful’ transfer of power to political leaders (Jomo Kenyatta and Archbishop Makarios) whom it had previously imprisoned or exiled’.  In political terms US hegemony survived the strains of the break-up of the colonies albeit by seeking accommodation with elites of the newly independent states. The Soviet response was to parallel that of the west, by constructing its own trading bloc (COMECON) and by courting leaders of those states elsewhere who were willing. Flare ups were inevitable, most notably in the Berlin Blockade of 1948/49 and the Cuban missile crisis in 1962, but the Cold War remained cold and allowed western capitalism to expand across the majority of the globe unhindered and policed by growing US imperialism which sought to glue together the pillars of political, economic and territorial power.
But the ‘independence’ of the NIS posed another problem for the US rulers’ intentions to expand global capitalism under its influence. Efforts were made by many of the NIS to develop their own economies through programmes of ‘import substitution industrialisation’ (ISI), whereby home-grown manufacturing would make up for the deficiencies in domestic industry that had accumulated under centuries of colonialism. Import substitution would act to encourage ‘nation building’ by making the country less dependent on the outside world, but could only be achieved if tariffs on imports were raised and not lowered as required by the Bretton Woods/Washington mantra, and if tight exchange controls were imposed outside of the US$ zone. The ISI approach was particularly virulent in South and Central America, most notably in Mexico, Brazil and in the 1950s Peronist regime in Argentina. Currency exchange rates against the dollar and sterling were kept deliberately low, to encourage exports and to make imports more expensive, while manufacturing was subsidised or nationalised through the state. Such a ‘state capitalist’ approach became adopted by third world regimes where ‘young Turks’ had assumed power by rebellion against the old order, such as in Egypt, Libya or Cuba. The development of a local auto industry was a key feature of the ISI programmes, partly because of the developing demand for autos in the age of oil, and partly because of a sense that an emerging nation state should have its own car brand (alongside a state airline and state railway). In India, for example, the old UK manufactured Morris Oxford was relaunched in 1957 and built within the country as the Morris Ambassador, which for the following 30 years was viewed as the ‘Indian’ car. Some success can be claimed for ISI policies, as the growth rates of those countries pursuing it may testify. One study highlights that ‘by the early 1960s, domestic industry supplied 95% of Mexico’s and 98% of Brazil’s consumer goods. Between 1950 and 1980, Latin America’s industrial output went up six times, keeping well ahead of population growth. Infant mortality fell from 107 per 1,000 live births in 1960 to 69 per 1,000 in 1980, [and] life expectancy rose from 52 to 64 years. In the mid-1950s, Latin America’s economies were growing faster than those of the industrialized West’.  ISI was grounded in critical trade theory, taking its cue from debates over ‘dependency’ as it related to a post-colonial world. The associated Singer-Prebisch thesis, developed in 1949 by Hans Singer (a UN economist) and the Argentinian economist Raúl Prebisch, suggested that countries such as the UK went through an early stage of ISI as part of their own development. Indeed, ISI is presumed to work better in a developmental stage as the income elasticity of demand for manufactured goods is greater than that for primary goods such as food. This would mean that as incomes rise, while the demand for food stays roughly the same (assuming no one is starving), the demand for consumer manufactured products rises at a faster rate. If such manufactured goods are produced within the nation state, then a positive cycle of growth ensues. Without ISI, it is suggested by ‘dependency’ theorists as well as neo Marxists such as Immanuel Wallerstein in his presentation of world systems, that structural inequality would develop between the richer nations and the poorer, or the ‘core’ and the ‘periphery’.
By the 1970s the new rulers of the world, crystallised in the alumni of Harvard Business School and the Washington/Treasury nexus, had begun to challenge ISI in a global push for market liberalisation known more colloquially as neoliberal capitalism. However, it was not just the challenge of ISI that produced neoliberal mantra. More importantly, the economies of the advanced industrial nations entered their first crisis during the early part of the decade as growth rates faltered, debts accrued, and inflation soared. Prior to 1973 the expansion of the system was almost unprecedented, As Michael Kidron observed in 1970: ‘High employment, fast economic growth and stability are considered normal’ while the system as a whole had been working ‘twice as fast between 1950 and 1964 as between 1913 and 1950’. The underlying reasons for the onset of the economic reversal from ‘golden’ to ‘leaden’ age have been well rehearsed by authors familiar to this journal over decades. Evidence of a decline in the rate of profits from investment in western corporations from the late 1960s conjoined with the faltering of the ‘permanent arms economy’ as the West German and Japanese growth spurt tailed off and US spending on arms became an increasing burden. The consequences of the slowdown alerted the ruling classes of western nations to the fact that a new way would have to be found to restore profitability, and the forces of the market were to be utilised as a result.
Enter the Market, Enter the Dragon
We can date the beginning of the new wave of economic globalisation from the late 1960s onwards. The process was driven by a desire of the western based financial and industrial elites, increasingly stifled by saturated markets and declining profits on investment, to create new areas for production. This could restore profitability by reducing unit labour costs for certain types of batch and low technology production. The low tech and assembly-based nature of production was to be facilitated by tapping into huge new reserves of labour in the global South, drawn often from the peasantry or urban dispossessed as well as child labour, at skill and wage levels which would be low enough to overcome increased transport to western markets and other infrastructure costs. In Marxist terms it would then be possible for capital to undercut the ‘socially necessary labour time’ required for many manufactured items previously made in the advanced industrial nations. A spin-off from the process would be to create new markets in the rapidly urbanising global South for manufactured goods produced by western multi-national enterprises. An expansion in information technology capability engendered by the silicon chip (from the late 1960s) allowed for a leap forward in logistics capabilities, as did the construction of ships suited to the use of modular containerisation (the first dedicated container ship left Newark, New Jersey in 1956).
The resultant upturn in levels of FDI, and the expansion of the volume of world trade over and beyond that of world production of goods and services that we have alluded to earlier in this article, then gathered pace. However, this seeming juggernaut had to be accompanied by a process of bullying and coercion of the NIS within the global South to open up the necessary markets to western capital. Strategies of ISI would need to be abandoned, import tariffs would need to be reduced or abolished, exchange rate controls would have to be dismantled, and the state subsidisation of domestic industry would have to end if the ‘market’ was to rule supreme in the interests of western capital. This became the new neoliberal stage of capital accumulation strategy. The institutions of Bretton Woods, the World Bank and IMF, were corrupted from their original purpose of alleviating poverty and used instead to work with local interlocutors in the process of coerced globalisation, by bribing and cajoling the political elites in the NIS to accept the pensée unique of neoliberalism in return for a taste of honey in the new globalised economy. As Ngaire Woods has written in her book The Globalizers:
The(new) mission of the IMF and World Bank is not just to define economic programs…..Each institution deploys a mixture of technical advice and coercive power in bargaining with borrowing governments, lending or withholding resources, disbursing or suspending payments, and imposing various forms of conditions. Yet the institutions can successfully deploy this power only where they find and work with sympathetic interlocutors who are both willing and able to embrace the policies preferred by the institutions.
This was sometimes a violent process, drawing parallels with our earlier period of globalisation. The radical journalist John Pilger outlines in his book The New Rulers of the World that where resistance from below was offered the response of the elites was brutal. In Indonesia for example, which under General Suharto was touted as the World Bank’s ‘model pupil’, a million died as the Indonesian regime imposed its will to allow full access for western capital. Pilger further reports that “Within a year of the bloodbath, Indonesia’s economy was effectively redesigned in America, giving the West access to vast mineral wealth, markets and cheap labour – what President Nixon called the greatest prize in Asia.”  With the collapse of the Soviet Union and COMECON in 1991, the forces of global market dominance were boosted once more. The ensuing immediate period of ‘peak’ globalisation was thus backgrounded by a seeming victory of market capitalism over the state capitalism of the eastern bloc. This all took place under the Presidency in the USA of Ronald Reagan, who together with Margaret Thatcher placed an immutable seal of approval on private mantras of capital accumulation over that of state direction, consolidating the ideological aspects of neoliberalism in the process. Indeed, the unrestrained entry of the market carried with it a re-regulation of pre-existing social settlements, most especially in the field of labour protection and state benefits for the old or unemployed, whose social support structures were stripped to their bone on the basis that they were obstacles to free trade and unfettered competition. This is not to say that the ‘state’ was abandoned by political and financial elites as an agent of capital accumulation. As Alex Callinicos reminds us: “ Reagan’s combination of cutting taxes and boosting military spending hugely increased government borrowing, representing, according to Robert Brenner, “the greatest experiment in Keynesianism in the history of the world”. Rather, the state was used as an agency to re-regulate the system in the interests of a new regime of capital accumulation.
But did these new trends represent a monocentric or polycentric distribution of power? Most certainly the leading player was and continues to be the USA, but the first signs of alternative power axis began to appear with the consolidation of the EEC/EU across the Atlantic in the 1970s and then with the rise of Japan in the 1980s. Indeed, the rise of Japan as an industrial powerhouse with new manufacturing methods prompted a state initiative in the US to study Japanese work organisation and to launch the ‘lean production’ model across western enterprise. The resultant book in 1990 by James Womack and colleagues The Machine That Changed the World became the new mantra of business school education not only in the USA but across most of the west, challenging traditional Taylorist methods with new forms of team-working, continuous improvement and lean production. Japan’s new prominence in industrial manufacturing also prompted shifts in global supply chains as the lean production model co-joined with global economic trade networking in an effort to create value added on a worldwide ‘just-in-time’ basis. Auto manufacture, for example, was spread across many countries in the supply chain, and at the final ‘screwdriver’ factory assembly auto parts from a dozen or more countries were added to the chassis. But in more recent years it has been the rise of China that has worried American strategists even more and created further possibilities for polycentrism. The USA’s position as leader in world trade in merchandise was eclipsed by China in 2012, following years of Chinese economic expansion. At the time of China’s entry into the WTO in 2001 Chinese share of world trade was only one fifth of that of USA, so the growth has been spectacular and, of course, accompanied by suspicions of Chinese military ambitions in Far Eastern waters. Since 2000 this growth of China within the world economy has been paralleled by a shrinkage in the importance of the US. US imports have fallen from 17 per cent of world total to 12 per cent over this recent period, while its percentage share of exports has fallen from 12 per cent to 8 per cent.
This relative collapse of US trade hegemony mainly at the hands of China, and to a lesser extent the EU under the powerhouse of Germany, has been accompanied by a rapid increase in Chinese investment overseas, including grants and loans to less developed states made without the stringent neoliberal strings that come attached to similar cash sums from the IMF or World Bank. The majority of Chinese FDI is geared towards natural resource-extraction activities in Africa, Australia, Canada, and Latin America, but as part of Beijing’s ‘Going Global’ strategy investment is increasing in high tech industries as the CCP seeks to drive the economy to a higher end of the world’s markets in manufacturing production. In Australia, for example, which is a major recipient Chinese investment, FDI has been focused in the past on mining by purchasing mines extracting ferrous and non-ferrous metals such as gold, lithium and copper. More recent investment, however, focuses on healthcare and agri-business.  It is perhaps this threat from China which is of greater concern to the US elites than that of China’s growing domestic economy. As fossil fuels are challenged by potential climate change regulation, and rare earth metals are purloined by China, then the business model of the USA, based as it is historically on cheap oil and coal becomes threatened. Peak globalisation corresponded with a period of peak oil, and as James Howard Kunstler has argued in The Long Emergency as the peak has passed countries heavily dependent on cheap oil, such as the USA with its car oriented cities and long inter-state transportation distances, may be ‘sleepwalking into the future’.Trump’s appeal for ‘Pittsburgh not Paris’ over an international climate change agreement is a real sign of the times. Chinese multinationals may also become larger players in hoovering up privatised public services at the expense of the US. So a second sign of the times is the threatened post-Brexit trade deal with the UK which may well involve granting access of US multinationals to Britain’s health service.
We are undoubtedly witnessing a re-ordering of the locus of power within the world economy, as the USA’s hegemony is challenged and visions of a more polycentric world continue. This is not the end of globalisation, but rather a reshaping which involves a fragmentation of existing trade relationships as new ones are formed in a new world regime of capital accumulation. Britain’s Brexit and post Brexit negotiations for new trade deals are part of this process, with new deals proposed not just with the USA but with China, India as well as the rest of the EU. However, the whiff of economic nationalism and protectionism is also in the air, driven in part by electoral ambitions to appeal to a working class pacified by anti-import and ‘nothing can be done about globalisation’ rhetoric from trade union leaders and others. It is this economic nationalism which partly explains the search for a new order, particularly on behalf of Trump. Far from such economic nationalism being a new idea it has a longer history within the Republican Party and with Trump himself. Trump’s critique of US trade policy goes as far back as the 1980s, in response to the ‘threat’ from Japan as the new pace-maker in automobile and consumer goods manufacture. As Adam Tooze suggests, Trump has since successfully convinced a large enough section of the Republican Party of his views to make economic nationalism and protectionism a live issue. Indeed, in real terms a shift towards a more protectionist world would harm the US economy a lot less than its rivals. In the US economy trade (imports and exports) measured about 30 per cent of all GDP in 2014. This is compared to shares of 59 per cent in the UK, 42 per cent in China, 85 per cent in Germany, and up to 167 per cent in smaller industrialised countries such as Belgium. This makes any protectionist turn less harmful to the USA in aggregate than to its competitors, giving the USA continued asymmetrical bargaining power in negotiations over trade deals. It is this economic power that will continue to be used by the US, most likely with the objective of restricting the lineage of global supply chains by shifting a higher proportion of production towards home based manufacture. However, the strategy is a huge gamble, particularly so as China waits in the wings ready to scoop up the remnants of a new US economic isolationism. The future of globalisation is contingent on the outcomes of such tensions within the US political and financial elites. Let us not also forget that after four decades of an increasingly globalised economy the world is more unequal in terms of wealth distribution than at any time since the early part of the twentieth century. When coupled with a decade of austerity since the financial crash neoliberal capitalism has also awarded its working class with a steady succession of accumulated grievances in the core industrial countries. This is a heady cocktail, the outcome of which is unpredictable.
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 Wolf, 2017
 Donnan, 2017
 Fukuyama, 1989
 Ferguson, 2005
 Saul, 2005
 Hirst and Thompson, 1999
 Davis and Hilsenrath, 2017
 See Maddison, 1991 for data.
 World production figures since 1950 can be unreliable, due to vagaries in data collection, but estimates of proxy growth in PPP (purchasing power parity) from 1950 collated by the Institute of Institutional Economics suggest that world growth rates were approximately 2.5 per cent annually from 1950 to 1980 and 2.65 per cent from 1980 to 2000 ( see https://piie.com/publications/chapters_preview/348/2iie3489.pdf).
 WTO, 2016
 IMF, 2014
 Foroohar, 2016
 OECD, 2017a
 OECD, 2017b
 See Cox, 2004 for a review of debates on the relationship between capitalism and imperialism.
 Engels, 1844 p1
 Newsinger, 2006 p 48
 Davis, 2001 p 311
 Bairoch, 1982, p 269-325
 Hobsbawm, 1995, p. 51
 Hobsbawm, 1995, p. 51
 Pollard, 1985 p 492
 Panitch and Gindin, 2004 p 47
 Callinicos, 2005 p117
 De la Dehesa, 2006 p31
 Mason and Asher, 1973 p 29
 Arrighi, 1994 p 9
 Angus, 2016
 Harman, 1999, p 557
 Hoogvelt, 1997
 See Toye and Toye, 2003 p. 437-467 for a detailed explanation of the Prebisch-Singer hypothesis.
 Wallerstein, 1974
 Kidron, 1970, p11
 See, for example, Harman, 2009
 For a review of the ‘permanent arms economy’ debate see Pozo (2010) in this journal. For ongoing assessment of the data on the fall in the rate of profit in the post war period see Michael Roberts (2016).
 Woods, 2006 p10
 Pilger, 2002 also for quotes go to video at http://johnpilger.com/videos/the-new-rulers-of-the-world
 Upchurch, 2009
 Callinicos, 2017 citing Brenner, 1998, p182
 Womack et al, 1990
 Romei, 2014
 KPMG, University of Sydney, 2016
 Kunstler, 2005 p1
 Although Trump’s ‘Pittsburgh’ reference was critiqued by the Mayor of Pittsburgh see http://edition.cnn.com/2017/06/01/politics/pittsburgh-mayor-donald-trump/index.html
 See http://www.independent.co.uk/news/uk/politics/theresa-may-donald-trump-nhs-us-trade-deal-brexit-torture-a7548156.html
 See blog from Adam Tooze, 2017
 Ortiz-Ospina and Roser, 2016