Globalization Lessons from History

DEBATES and protests about globalisation have been muted since last September's terrorist attacks. But that silence does not mean that they are over.

Indeed, protests about globalisation seem likely to return with more normal times. When they do, our understanding of the process will be greater if we look back at history.

Among historians, globalisation provokes a keen sense of deja vu: we were here a century ago. Great achievements - material progress, dizzying new technologies such as the car, the telephone, the typewriter - existed back then, but also protests against a world that seemed out of the control of traditional political institutions.

Then, as now, the backlash came chiefly from rich industrial countries, rather than from poor peripheral countries which were often seen as the objects of capitalist exploitation.

It was advanced countries that imposed tariffs against 'unfair' competition from abroad. Central banks were instituted with the responsibility of managing disorderly capital flows. Migration policy became more restrictive, as some big recipients of immigration began to debate selectivity in their choice of immigrants.

The process of integration was reversed after World War I and finally destroyed in the Great Depression, in a series of vicious shocks: tariff protection, contagious financial panics that spread from the periphery to the heart of the world's financial system, and a turn to economic nationalism and autarky.

What had before 1914 been safety nets against excessive globalisation became after WWI gigantic snares which strangled the world economy.

The most remarkable characteristic of globalisation backlashes is how they create an odd alliance of right and left.

In the late 19th century, Europe's land-based aristocracy was weakened by the competition of cheap grain and other foods shipped across the oceans.

As farm prices and rents fell, the aristocracy faced decline. So it mobilised small-scale farmers, artisans and small producers who shared the landed elite's belief that unfettered competition was harmful.

For these groups, globalisation amounted to redistribution.

On the left, the growing working class sought to use political power to change economic relations - to advance more progressive tax policies, or to stop the use of tariffs to protect the old order.

Progressives also decried international capitalism's undermining of labour standards.

The German sociologist Max Weber made his reputation with warnings of the dire consequences of further Polish immigration to Germany.

'There is,' he wrote in an echo of today's globalisation debates, 'a certain situation of capitalistically disorganised economies, in which the higher culture is not victorious but rather loses in the existential fight with lower cultures'.

In the centre - beleaguered by the anti-global reactions of left and right - a liberal commercial elite saw the products of economic opening or globalisation as wholly beneficial.

Instead of a two-part split between left and right, there was thus a triple division, between anti-globalisation conservatives, pro-globalisation liberals and redistributionist leftists.

When the extremes of the political spectrum became radicalised, as they did in the inter-war period - the anti-international right moved to fascism, the left to communism - democratic politics became paralysed.

For much of the post-1945 period, these divisions disappeared as right and left fought battles for redistribution within national economies. The old triple polarisation returned only with the new wave of globalisation.

Again, there is an anti-international right that has come to play some role in all the major industrial countries, and that tries to defend existing prosperity and property rights from the vagaries of international markets.

The protectionist anti-globalisation impetuses of the left are less visible in political parties than in labour movements, but these can shape political programmes.

For unions, the new right is a competitive challenge for support. For their members, international competition is a major threat as imports or immigrants may cut the wages of less-skilled workers.

Consequently, a demand for the exclusion of the products of 'unfair' competition is transmitted to mainstream centre-left parties, such as the French Socialists or America's Democrats.

Fear of lowered wages plays into a broader coalition based on umbrella anti-globalisation resentments directed against multi-national corporations and international financial institutions.

In the modern centre is something similar to the endangered liberal order of late 19th-century Europe: the political movement of an elite that espouses globalisation because it benefits from it. This is the group that cynics have termed 'Davos man'.

It is hardly likely that such a programme - presented in these terms - can ever command massive electoral popularity.

The costs of globalisation, and the resentment that it generates, are too obvious.

This type of party, committed to simple liberalisation and opening, rarely moves beyond the range of 5 to 10 per cent of the vote that Germany's liberal Free Democrats attracts.

This new politics incites wide feelings of malaise and helplessness.

The old movements of the 20th century are largely exhausted: classic conservatism because the world changes too rapidly for conservatism as stasis to be coherent or appealing; classic socialism because the rapidity of change erodes traditional labour positions in exactly the same way.

The bankruptcy of these two respectable but now out-moded positions opens the door for a new populism, based on an anti-globalisation groundswell.

The new/old politics is inward-looking and likes the idea of the revival of the nation as a protective bulwark against foreign goods and foreign migrants and foreign ownership.

It is also dangerous and destructive, and was in large part responsible for Europe's hideous politics in the first half of the 20th century.