Is the Bond Unbreakable?
How globalization began?
Some scholars placed the origin of globalization in the Age of Discovery. Tracing back to the 15th century, since human races first set sail for the New World, a strong but later found abnormal connection had been built among regions, and even resulted in the division of the world. The triangle trade brought gold, commodities, cheap labours and infinite wealth to the west, accelerating the Primitive Accumulation of Capital, which hastened the process of both colonization and technological development, but only disastrous life and everlasting poverty were left behind for people in Africa. Others alleged the Industrial Revolution to be the onset. Both cultural and scientific revolutions went on and on until UK launched the first Industrial Revolution, the fruits of which were later shared by countries in western Europe. Productivity had been highly lifted since the invention of steamed ships, railroads and other mechanics. Nevertheless, the history always bears mute testimony that enormous technological transformation is bound to bring about wars and conflicts, which was also one factor that propelled the First World War, which then triggered the Second World War.
The similarity of the two assertions is that globalization began with an urge for efficiency, more profits and the absolute power, along with the need for an accordingly political system to justify the invisible exploitation and expansion.
The consequences of the two wars were chaos and economic depression for decades in the world, except that the U.S., who made much of its fortune during the wartime, became the largest economy in the world.
Leaded by the U.S., the second wave of globalization gained further momentum in the 1940s, when people finally reached a consensus for the reconstruction with mutual efforts, owing to hyperinflation and labour crunch in the post-war time. Just as what Nadav Eyal, a journalist of Channel 13 International News in Israel, mentioned in the Revolt Against Globalization, the Age of Responsibility began as the U.S. established the Bretton Woods System, prompting US dollars to be the most acknowledged trading currency, which eased the pressure of currency devaluations to some extent. Thus, the global supply chain involved more members from various regions, giving rise to interdependent relationships and the wider spread of the concept of democracy, which elevated people’s living standards, reduced children’s death rate, and shrunk the wage gap between the developed and developing countries by encouraging the export of agricultural products.
The third wave of globalization got its path after the collapse of the Soviet bloc, when China implemented the reform and opening-up policy and became an emerging economy. Facilitated by radical development in information and communication technology, the service sector hooked new focus, which also “inaugurated a new era of outsourcing and remote work”, as what William H. Janeway mentioned in the New York Times.
But why is globalization in retreat?
Economically, there are three reasons. Firstly, the global supply chain brings about more uncertainties. On one hand, the more interdependent, the more vulnerable it is when confronting a sudden lockdown in some parts of the chain. For instance, Shanghai, a metropolis in China that is deeply entangled in the global supply chain, is recently in lockdown because of a severe outbreak of Omicron, which might suspend production and transportation of some kinds. Though Chinese government has tried its best to ensure the smooth operation in ports and logistics, it will still influence the decisions of some foreign investors in the long run. On the other hand, globalization follows the basic principles that the market leverages resources with the most efficiency. That is to say, while globalization provides job vacancies for people in developing countries where the labour cost is apparently lower, unemployment rate rises in developed countries, which would arouse protests against production abroad and even cause economic patriotism.
Secondly, the over-interdependence on US dollars makes global economy fluctuate according to the US market. In 2008, world economy declined due to the Subprime Mortgage Crisis in the United States because of too much reliance banks had on derivatives and the false monetary policy adopted by the Fed. Actually, as an import-oriented country, the U.S. has long enjoyed the supply of commodities from other countries by issuing bank notes and national debt to offset the effect of the adverse balance of trade. However, the transfer of the real sector, such as most heavy industry, from America to other developing countries, exposes the hollow inside of America’s economy that is supported mostly by finance and other third sector, which also reveals the instability of the US dollars system.
Thirdly, by taking advantage of loopholes in laws and trade treaties, multinational corporations exploit labors and enjoy tax exemption by shifting profit into jurisdictions with lower tax burden, gradually monopolizing the market with lower costs in production and by building technological barriers of core materials.
Politically and culturally, religious and ideological differences, and the blind classification of the alliance and the enemy induce more conflicts that provokes further humanitarian problems like the allocation of refugees and their competitions with the local.
After all, tolerance to diversity and a mutual goal for a more sustainable and better future are what matter when globalization is in retreat. Thus, the raise in tax rate for multinationals, and the improvement of the currency system are of desperate need.
By Jennifer Liu
