Dani Rodrik once commented that states and markets are compliments, not substitutes, a fact that has seemingly be neglected for years, there are several indicators that suggest globalisation will soon be forced to come to an end.
Populist parties struggled to gain a stranglehold in mainstream elections for years, in 1998, just two governments in Europe had populists making up the power arrangement, in 2018 the figure stands at nine. 1 in 4 Europeans now vote for populist parties. Significantly, until 2008 and the global economic crash, populist vote share was around or under 10%. At which point, there was a distinct political decision to impose austerity. What has unfolded since, should come as no surprise to the political classes. Crude policies such as universal credit and other welfare reforms, have a direct consequence on election day. Needn’t we name, Brexit.
Kevin O’Rourke has long predicted that if states failed to protect the winners and losers from globalisation, they would soon be forced to dismantle global trade links, citing that even in 1914, advanced trading nations had social provisions for the losers of open trading. The choice to pursue neoliberal globalisation at the end of the liberal embedded compromise, has satisfied the criteria to ensure Kevin’s insight is correct. All indicators signal that globalisation is grinding, slowly, to a halt, trade has a share of global GDP has fallen by 3 percentage points from 61%. Multinationals share of global profits is also shrinking, and Foreign Direct Investment is also decreasing.
Nuanced analysis of voting trends suggests that those at risk of the negative effects of globalisation leads people to vote in a populist manor. For example, research at the University of Bologna has suggested that, those counties most heavily exposed to the Chinese import shock, were most likely to vote to leave the European Union, simultaneously listing immigration as their explanatory variable. In America, for every 1% increase in Chinese imports, voters were 2% more likely to vote for Trump. Interestingly, according to the National Centre for Social Research, concern for the economy was at its lowest post-war level on the day of the Brexit vote, the same can’t be said now.
The elites have long over estimated how long they could implement neoliberal policies without consequence, the electorate is biting back, further austerity will do little to change that situation.