The Turpitudes of a Global Market without a Global Society

There is an increasing awareness that the status quo is no longer a viable route for survival of a “civilized” planet

We are increasingly asked to choose between the status quo and something worse. Other alternatives do not seem to exist… A utopian spirit – a sense that the future could transcend the present – has vanished.

— Russell Jacoby, ‘The End of Utopia’

After the short reprieve of the festive season the beginning of the New Year has started on the same tragic vein as the end of the last one. It was dominated by the unending saga of the forced displacement of millions of people due to wars and the terrorist attacks of 13th November in Paris.

The first fifteen days of this New Year have unarguably been largely dominated by negative events on the global front. All commentators who have been making predictions about economic and political developments for 2016 have shielded their pronouncements with the usual caveat – “barring exceptional, unpredictable and serious conflagrations”. Little could they know that ominous signs of precisely this kind of events would mark the very first fortnight of the New Year.

The execution of about 40 people, including the Shiite cleric and predicator El Mehr, well-known for his attacks of the Saudi regime, has added a dangerous layer of tension in a region which was already a crucible of terrible dangers for regional and global peace. The main protagonists in this unfolding tragedy – Iran and Saudi Arabia – are already engaged in two ferocious proxy wars in Syria and Yemen.

Then came the announcement from North Korea that they had successfully tested the H-Bomb. A stunned world took some time to assess the probability and credibility of such a statement and seems to have reached the conclusion that it looks pretty improbable. Nevertheless the incident does provide a clear indication of the state of mind of the regime that is far from reassuring. The idiosyncrasies of the Kim regime are beyond rational analysis and remain a constant threat to stability in the region.

The first days of the opening of the Chinese Stock Exchange following the New Year weekend have witnessed a total rout of the values of stocks, so much so that the Exchange had to be closed on the very first day after only about fifteen minutes of operation. In spite of the frenzied efforts of the Chinese authorities to stop the rot, the situation seems to have gone out of hand at least in the very short term. Taking their cue from the situation in China, Stock Exchanges in most of the European countries and the US have followed suit and wiped off billions of dollars of value off the balance sheets of companies and the portfolio of individual investors.

The World Bank and the IMF have lost no time in revising their growth estimates for the global economy and expressed rather pessimistic views on the immediate future. The only silver lining in this rather gloomy picture comes from the performance of the US economy, where even the latest employment statistics provide reasons for hope of continued recovery. Overall though there is cause to rejoice.

All the above events whose complex interactions, complementarities and contradictions are bewildering to even the most sophisticated experts are a direct consequence of the emergence of globalisation during the last decades of the last century. Globalisation is a phenomenon best described as the compression of time and space in the delivery of goods and services across the earth’s surface on the back of momentous innovations and developments in technology. As such it remains characteristically an economic occurrence.

It is notable that this was a deliberate policy-led phenomenon which was driven by the “developed” countries of Western Europe and the US for the past thirty-five years or so. The institutional instruments which made it possible were the “trade liberalization” negotiations (from the Uruguay Round of GATT to the yet unfinished Doha Round) lately under the aegis of the World Trade Organization and the Structural Adjustments Programmes of the World Bank-IMF combine. The political condition which facilitated its deployment was the demise of the Soviet empire and the rise of the US as the sole global superpower.

The rise of China and India and eventually of the BRICS (Brazil, Russia, India, China and South Africa) as players whose economies had benefited from the expansion of world trade under the new conditions, and the fact that vast swathes of populations in these and similar countries had been taken out of extreme poverty, added credence to the positive contribution of globalisation to the world economy.

The enthusiasm for globalisation seems to have been tempered even among its most devoted promoters with the advent of the Great Financial Crisis of 2008. Brazil and South Africa, which were being pictured as the poster boys of successful integration and success, have since fallen by the wayside and face severe structural problems. China has now joined the fray of the “problematic” integration cases but with a huge difference. The economic weight of China is such that any slowdown and a hard landing of its economic growth scenario would have major consequences for the global economy.

What makes matters worse is that a player whose fate could have such a determining consequence is governed by an economic system which is elusive and whose travails are difficult to grasp. The frantic but vain manoeuvres of the Chinese authorities in trying to “control” the movements on the Stock Exchange market during the past week has been yet another eye opener about how what looks like a perfect “working arrangement” between an authoritarian Communist political regime and an increasingly market driven economy can suddenly lose its bearings.

Should the economic slowdown persist, it could result in massive social unrest among the population who now nourish expectations of continually improving standards of living. The response of the Chinese authorities to such a situation would be unpredictable and may be cause for worry for its new “business” partner nations.

The recent election of a pro-independence leader at the head of the Catalonia’s regional assembly in Spain, the yet unresolved issue of whether there can be a real solution to the Greek tragedy within the fold of the European Union, the threat of Great Britain exiting the EU following a referendum may be later this year and its dire consequences for Ireland, Scotland and Wales are other signs of an impending crisis of the global model of governance resulting from the latest version of globalisation.

As we are bombarded with “news and breaking news” on an almost continual basis, it becomes very difficult to distinguish signals from noise. Yet there is an increasing awareness that the status quo is no longer a viable route for survival of a “civilized” planet. Whether it is in terms of environmental sustainability or containment of the rising violence of “classic wars” or terrorist attacks, or the unacceptable inequity of a system where the infamous 1% are accumulating more than 90% of the wealth created on the planet in the face of continued mass poverty, it all boils down to one fundamental issue best described in the words of the famous Catholic theologian Hans Kung: “We are faced with a simple but overwhelming proposition, a global market economy requires a global ethic.”

 

* Published in print edition on 15 January 2016

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