The fall of the Berlin Wall in 1989 is often heralded as a pivotal moment that ushered in a new era of globalisation, characterized by the promise of liberal democracy and market capitalism replacing communism. This monumental event not only signaled a shift in political ideologies but also set the stage for unprecedented economic integration around the globe, particularly between the West and emerging economies like China.
In the early 1990s, the prevailing sentiment among governments in both developed and developing nations was that globalisation would spur economic growth and distribute prosperity. Political leaders in the U.S. and Europe saw it as an avenue to extend Western liberal values, further intertwining economic policies with ideological aspirations. The momentum of globalisation came to be viewed as a near-absolute force, with former UN Secretary-General Kofi Annan famously stating that opposing it was akin to arguing against the laws of gravity.
However, beneath this facade of unstoppable progress, globalisation began to reveal its vulnerabilities. Critics pointed out that while it contributed to significant economic growth, it also exacerbated inequalities, particularly in wealthier regions like the U.S. and Europe. The global financial crisis of 2007–2008 catalyzed a shift in public sentiment, revealing the cracks in the globalisation narrative. The steep declines in GDP per capita experienced by many Western countries post-crisis raised questions about the distribution of the benefits of global economic integration.
Donald Trump’s ascent to the presidency in 2016 marked a significant turning point, yet it was a symptom of broader discontent that had been brewing for years. Between the financial crisis and Xi Jinping’s rise to power in China in 2012, there was a growing skepticism about globalisation, particularly as wages stagnated while jobs were outsourced to countries with lower labor costs. These dynamics contributed to a burgeoning populist sentiment, which painted globalisation—and by extension, foreign competition—as scapegoats for many economic woes. This narrative simplified the complexities of rising inequality, shifting attention away from multifaceted issues like technological advancements and labor market shifts.
The case for globalisation’s role in fueling inequality is hotly contested. On one hand, economists like Branko Milanovic argue that while the global middle class gained significantly from increased integration, those in the lower and upper middle brackets in the West suffered as manufacturing jobs disappeared. On the other hand, Dani Rodrik contends that various factors—such as skills-biased technological changes and liberalising labor markets—also contributed substantially to the rising inequality seen in these regions. Rodrik posits a more nuanced understanding that calls for intricate policy responses, something that the populist rhetoric often glosses over.
As globalisation faced increasing scrutiny, the rise of Xi Jinping in China represented another complication. Initially perceived as a potential reformer, Xi’s leadership took a more nationalist turn, ushering in a wave of state-directed initiatives aimed at promoting technological self-sufficiency. The “Made in China 2025” initiative exemplified this strategy, targeting advancements in technology sectors that had previously relied on Western monopolies. This shift not only indicated a divergence from the model of liberalisation but also suggested a new phase of competition in which state and market forces would intermingle in unprecedented ways.
While Illicitly adhering to Western-style economic reform seemed an option for China, Xi’s regime has pursued a more assertive geopolitical posture alongside domestic repression. This duality has posed challenges for globalisation, complicating international relations and leading to economic strategies based on national security rather than open-market principles. Simultaneously, Western nations have increasingly viewed China not merely as a trading partner but also as a strategic rival, giving rise to a new era of geopolitical competition.
The ascendance of nationalist movements in various countries is revealing an unsettling truth: the global consensus on free trade and open borders is fraying. Where once globalisation was considered the undeniable path, it is now met with skepticism and resistance in significant quarters. Countries are questioning not just the economic frameworks but also the moral underpinnings of their relationships with one another, as comments from leaders continue to draw lines between “us” and “them.”
As we venture into what Neil Shearing terms the “fractured age,” it becomes clear that globalisation is no longer an unstoppable force. The complex interplay of economic interests, technological advancements, and shifting political paradigms suggests that the world is at yet another critical crossroad. The lessons learned from the rise of populism, the economic fallout from the financial crisis, and the changing dynamics with China underscore the imperative for coherent and comprehensive strategies that address the real causes of public discontent.
While it is easy to look back nostalgically at the optimism that accompanied the fall of the Berlin Wall and the ensuing wave of globalisation, the future demands a more sober assessment of economic integration. As we navigate this evolving landscape, it is essential for policymakers and leaders across the globe to foster inclusive growth that not only addresses inequality but also champions a multilateral approach to trade and diplomacy.
Ultimately, the narrative of globalisation is far from over. Instead of viewing it purely through the lens of benefits and detriments, there is an urgent need to reshape the conversation, focusing on sustainable practices that facilitate equitable growth while adapting to the realities of an interconnected yet increasingly fractious world. The lessons from history may guide the way forward, but the willingness to innovate and adapt will determine the future trajectory of not just economies, but societies as a whole.
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