Goodbye, Davos man

Pundits haven't realized it yet, but the age of economic globalization is over

Topics: Globalization,

Goodbye, Davos manRobert Rubin (Credit: AP/Cliff Owen)

Now and then there are moments that clarify major trends in politics. Such a moment occurred recently, when François Hollande, the Socialist candidate for the French presidency, agreed with the French far right on the need to further limit immigration to France:  “In a period of crisis, which we are experiencing, limiting economic immigration is necessary and essential.” For his part, Hollande’s opponent Nicolas Sarkozy criticized immigration in his first electoral run and as president of France has denounced deregulated markets.

This is not just a French phenomenon, nor is it limited to immigration policy. In most of the world’s advanced democracies, the egalitarian left and the nationalist right are growing in strength among voters. After three decades in which apostles of financial deregulation, offshoring and immigration liberalization dominated the capitals of major Western countries, the pendulum is swinging in the other direction.

You would never know this from the prestige press, which is owned by billionaires and populated by upscale journalists, many of whom were able to begin their journalistic careers as unpaid interns thanks to affluent parents. According to the consensus in the elite media, history runs in one direction toward the merger of national economies in a single global free market, the elimination of borders for labor and the relaxation of restrictions on the free movement of capital. Any moves in the opposite direction represent dangerous backsliding that can only be motivated by racism and xenophobia and that threaten to produce new Hitlers and Mussolinis and trade wars leading to world wars.

But the voters of the industrial democracies are not listening to the elite transatlantic chattering class.  The late political scientist Samuel Huntington coined the term “Davos Man,” after the World Economic Forum at Davos, Switzerland, to symbolize the post-national, anti-populist global elite. Davos Man still exists, but he is in danger of going the way of Neanderthal Man. The Davos vision of a dawning post-national free market utopia was cracked by the al-Qaida attacks on Sept. 11, 2001, and then shattered by the global financial crash of 2008. Free market globalism continues to be the  orthodoxy in elite economic and journalistic circles, but in politics it has been in retreat for years. It is increasingly clear that libertarian globalism was never the wave of the future, but merely a temporary blip in history between the fall of the Berlin Wall in 1989 and the fall of the twin towers in 2001.

Consider the case of immigration policy. In every advanced nation, including the United States, governments under pressure from voters have moved to tighten up surveillance and control of immigrants, for reasons of national security and protection of the wages and cultures of their citizens from real or imagined threats. Parties of the center-left as well as of the center-right have adopted positions on immigration that would have been considered far-right in the globalist 1990s. America’s Democrats and the Labour Party of Gordon Brown have been forced by voter sentiments to carry out tough immigration policies that elite pundits of the left, right and center have denounced to no effect.

In the world economy, the major trend of our time is the rise of nationalist state capitalism, not the disappearance of national economic boundaries that was predicted by the prophets of globalization like Thomas Friedman following the end of the Cold War. When the world economy collapsed in 2008, leading industrial countries rushed to bail out national firms like America’s GM and Germany’s Opel, giving the lie to the claim that major corporations no longer had national identities. Instead of liberalizing its economy as it developed, China has made its state-owned companies more rather than less important. Most of the world’s energy companies, and a number of major shipping and aerospace industries, are state-controlled. The response in the U.S. has been growing economic nationalism, which is tapped by presidential candidates like Obama and Romney who call for defending and promoting American industry — at least when they are running for office.

It is true that protectionist policies have been limited during the Great Recession, compared to the Great Depression of the 1930s. But this arguably reflects the interests of working-class voters rather than the triumph of libertarian globalist ideology. A dwindling majority of wage earners in advanced industrial countries work in manufacturing industries that can be offshored to other countries. Most work in the nontraded domestic service sector. Only a few of them need to worry that their jobs will be sent abroad, but it is rational for many to worry about immigrant competition within their own countries for local service sector jobs. At the same time, the working class in Western democracies benefits from low prices for imports. It is perfectly rational, therefore, for working-class Americans or Europeans to be more concerned about immigrant competition than about trade. On another front, the deregulation of finance, the centerpiece of Clinton Treasury Secretary Robert Rubin’s global economic strategy, is being slowly but inevitably reversed, in the aftermath of the global crisis to which financial deregulation contributed. Unwilling to wait for global agreement on financial regulation, nations are unilaterally re-regulating the financial industry within their own borders. The result will be to reverse much of the financial globalization of recent decades and replace it with a patchwork of different national financial systems.

The Balkanization of global finance along national lines will be accelerated in the decades to come as many governments choose to deploy moderate inflation to burn away much of the public and private debt built up during the Great Recession, as the alternative to politically unpopular spending cuts and tax increases. What is known as “financial repression” — forcing national banks and, through them, national savers to accept government bonds whose value is being eroded by deliberate inflation — is a policy that is helped by a degree of segregation of national banking systems from the world economy. In the future, countries pursuing debt reduction by means of moderate inflation will find it attractive to partly re-nationalize their financial systems for this purpose alone. Most retirees in advanced industrial nations depend primarily for their retirement income on inflation-adjusted public pensions like Social Security, not on private savings. As a result, financial repression will hurt economic elites the most, while doing little harm to the working-class majorities in the U.S., Canada and Europe. Even as nationalism further fragments the global economy along national and regional lines, populism will redraw the map of domestic politics in one country after another, including the United States. Nationalist populists who break with the elite libertarian consensus, even those who, like Ross Perot, are centrist rather than far-right, are routinely demonized by the pundits of the mainstream press, whose moderate libertarian orthodoxy reflects the values and class interests of the owners of the media. But while populist outsiders are marginalized in the media and usually fail at the ballot box, their issues are often co-opted by mainstream conservative and progressive parties, the way that populist opposition to illegal immigration has been co-opted by establishment parties throughout the West in the last decade.   

Votes clearly count, even in plutocratic America. If American public policy reflected the objectives of the 1 percent, then long ago there would have been relaxation of border enforcement and amnesties for illegal immigrants, the privatization or means-testing of Social Security and Medicare and further deregulation of finance. On all of these issues, however, the oligarchic consensus is losing at the ballot box, if not in the editorial pages.

Davos Man is not dead, but he is on life support.  The libertarian globalist moment in world history is over. Free market globalism peaked in the late 1990s, before the rise of al-Qaida and Chinese-style state capitalism, when it appeared briefly that the Reagan-Thatcher version of capitalism represented the future. Most of our politicians and pundits are still living in the mental world of the 1980s and 1990s, but the future has arrived and it is not what libertarian globalists predicted.

Here and there, trade and immigration liberalization will continue, when it serves the interests of particular nations or particular pressure groups. And it will always be important, even in a partly renationalized world, to resist nativist bigotry and misguided forms of protectionism. Even so, the fading vision of inevitable progress toward the free flow of money, goods and labor across national boundaries was never anything more than a utopian fantasy, like the Marxist dream of international fraternity in a socialist world.  Capitalism in some form, partly private and partly statist, will endure. But less than a generation after the fall of the Berlin Wall, libertarian globalism has joined communism on the dust heap of history.

Michael Lind is the author of Land of Promise: An Economic History of the United States and co-founder of the New America Foundation.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    Ten spectacular graphic novels from 2014

    Beautiful Darkness by Fabien Vehlmann & Kerascoët
    Kerascoët's lovely, delicate pen-and-watercolor art -- all intricate botanicals, big eyes and flowing hair -- gives this fairy story a deceptively pretty finish. You find out quickly, however, that these are the heartless and heedless fairies of folk legend, not the sentimental sprites beloved by the Victorians and Disney fans. A host of tiny hominid creatures must learn to survive in the forest after fleeing their former home -- a little girl who lies dead in the woods. The main character, Aurora, tries to organize the group into a community, but most of her cohort is too capricious, lazy and selfish to participate for long. There's no real moral to this story, which is refreshing in itself, beyond the perpetual lessons that life is hard and you have to be careful whom you trust. Never has ugly truth been given a prettier face.

    Ten spectacular graphic novels from 2014

    Climate Changed: A Personal Journey Through the Science by Philippe Squarzoni
    Squarzoni is a French cartoonist who makes nonfiction graphic novels about contemporary issues and politics. While finishing up a book about France under Jacques Chirac, he realized that when it came to environmental policy, he didn't know what he was talking about. "Climate Changed" is the result of his efforts to understand what has been happening to the planet, a striking combination of memoir and data that ruminates on a notoriously elusive, difficult and even imponderable subject. Panels of talking heads dispensing information (or Squarzoni discussing the issues with his partner) are juxtaposed with detailed and meticulous yet lyrical scenes from the author's childhood, the countryside where he takes a holiday and a visit to New York. He uses his own unreachable past as a way to grasp the imminent transformation of the Earth. The result is both enlightening and unexpectedly moving.

    Ten spectacular graphic novels from 2014

    Here by Richard McGuire
    A six-page version of this innovative work by a regular contributor to the New Yorker first appeared in RAW magazine 25 years ago. Each two-page spread depicts a single place, sometimes occupied by a corner of a room, over the course of 4 billion years. The oldest image is a blur of pink and purple gases; others depict hazmat-suited explorers from 300 years in the future. Inset images show the changing decor and inhabitants of the house throughout its existence: family photos, quarrels, kids in Halloween costumes, a woman reading a book, a cat walking across the floor. The cumulative effect is serene and ravishing, an intimation of the immensity of time and the wonder embodied in the humblest things.

    Ten spectacular graphic novels from 2014

    Kill My Mother by Jules Feiffer
    The legendary Pulitzer Prize-winning cartoonist delivers his debut graphic novel at 85, a deliriously over-the-top blend of classic movie noir and melodrama that roams from chiaroscuro Bay City to Hollywood to a USO gig in the Pacific theater of World War II. There's a burnt-out drunk of a private eye, but the story is soon commandeered by a multigenerational collection of ferocious women, including a mysterious chanteuse who never speaks, a radio comedy writer who makes a childhood friend the butt of a hit series and a ruthless dame intent on making her whiny coward of a husband into a star. There are disguises, musical numbers and plenty of gunfights, but the drawing is the main attraction. Nobody convey's bodies in motion more thrillingly than Feiffer, whether they're dancing, running or duking it out. The kid has promise.

    Ten spectacular graphic novels from 2014

    The Motherless Oven by Rob Davis
    This is a weird one, but in the nervy surreal way that word-playful novels like "A Clockwork Orange" or "Ulysses" are weird. The main character, a teenage schoolboy named Scarper Lee, lives in a world where it rains knives and people make their own parents, contraptions that can be anything from a tiny figurine stashable in a pocket to biomorphic boiler-like entities that seem to have escaped from Dr. Seuss' nightmares. Their homes are crammed with gadgets they call gods and instead of TV they watch a hulu-hoop-size wheel of repeating images that changes with the day of the week. They also know their own "death day," and Scarper's is coming up fast. Maybe that's why he runs off with the new girl at school, a real troublemaker, and the obscurely dysfunctional Castro, whose mother is a cageful of talking parakeets. A solid towline of teenage angst holds this manically inventive vision together, and proves that some graphic novels can rival the text-only kind at their own game.

    Ten spectacular graphic novels from 2014

    NOBROW 9: It's Oh So Quiet
    For each issue, the anthology magazine put out by this adventurous U.K.-based publisher of independent graphic design, illustration and comics gives 45 artists a four-color palette and a theme. In the ninth issue, the theme is silence, and the results are magnificent and full of surprises. The comics, each told in images only, range from atmospheric to trippy to jokey to melancholy to epic to creepy. But the two-page illustrations are even more powerful, even if it's not always easy to see how they pertain to the overall concept of silence. Well, except perhaps for the fact that so many of them left me utterly dumbstruck with visual delight.

    Ten spectacular graphic novels from 2014

    Over Easy by Mimi Pond
    When Pond was a broke art student in the 1970s, she took a job at a neighborhood breakfast spot in Oakland, a place with good food, splendid coffee and an endlessly entertaining crew of short-order cooks, waitresses, dishwashers and regular customers. This graphic memoir, influenced by the work of Pond's friend, Alison Bechdel, captures the funky ethos of the time, when hippies, punks and disco aficionados mingled in a Bay Area at the height of its eccentricity. The staff of the Imperial Cafe were forever swapping wisecracks and hopping in and out of each other's beds, which makes them more or less like every restaurant team in history. There's an intoxicating esprit de corps to a well-run everyday joint like the Imperial Cafe, and never has the delight in being part of it been more winningly portrayed.

    Ten spectacular graphic novels from 2014

    The Shadow Hero by Gene Luen Yang and Sonny Liew
    You don't have to be a superhero fan to be utterly charmed by Yang and Liew's revival of a little-known character created in the 1940s by the cartoonist Chu Hing. This version of the Green Turtle, however, is rich in characterization, comedy and luscious period detail from the Chinatown of "San Incendio" (a ringer for San Francisco). Hank, son of a mild-mannered grocer, would like to follow in his father's footsteps, but his restless mother (the book's best character and drawn with masterful nuance by Liew) has other ideas after her thrilling encounter with a superhero. Yang's story effortlessly folds pathos into humor without stooping to either slapstick or cheap "darkness." This is that rare tribute that far surpasses the thing it celebrates.

    Ten spectacular graphic novels from 2014

    Shoplifter by Michael Cho
    Corinna Park, former English major, works, unhappily, in a Toronto advertising agency. When the dissatisfaction of the past five years begins to oppress her, she lets off steam by pilfering magazines from a local convenience store. Cho's moody character study is as much about city life as it is about Corinna. He depicts her falling asleep in front of the TV in her condo, brooding on the subway, roaming the crowded streets after a budding romance goes awry. Like a great short story, this is a simple tale of a young woman figuring out how to get her life back, but if feels as if it contains so much of contemporary existence -- its comforts, its loneliness, its self-deceptions -- suspended in wintery amber.

    Ten spectacular graphic novels from 2014

    Through the Woods by Emily Carroll
    This collection of archetypal horror, fairy and ghost stories, all about young girls, comes lushly decked in Carroll's inky black, snowy white and blood-scarlet art. A young bride hears her predecessor's bones singing from under the floorboards, two friends make the mistake of pretending to summon the spirits of the dead, a family of orphaned siblings disappears one by one into the winter nights. Carroll's color-saturated images can be jagged, ornate and gruesome, but she also knows how to chill with absence, shadows and a single staring eye. Literary readers who cherish the work of Kelly Link or the late Angela Carter's collection, "The Bloody Chamber," will adore the violent beauty on these pages.

  • Recent Slide Shows



Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>