The book begins with a pleasant anecdote: the arrival of a teletype on August 8, 2008 at the newsroom of La Vanguardia in which it was warned that the BNP bank had suspended the reimbursement of higher-risk funds. Weeks later, the Lehman Brothers crash would come. Globalization as we knew it was never the same again. The journalist Ramon Aymerich reviews in El desencanto global (Librosdevanguardia, 2022) how he has gone from neoliberal euphoria to questioning globalization.
What broke that day?
The West won the cold war in 1989, and that is when we entered a phase of hegemonic globalization in which the US has practically absolute power. We all benefit, especially the poorest countries that entered the middle class for the first time, but also the consumers here, thanks to having cheaper products. This system in 2008 shows its first cracks. And some of the unwanted side effects appear.
And what is seen behind these cracks?
A lot of liquidity, with a lot of corporate debt, junk bonds, families stuck with mortgages, and so on. Then, the increase in inequality. Globalization is good for everyone, but above all very good for bankers and multinationals that relocate and increase margins. Instead, the western working class begins to see their incomes fall and politics care less and less about them. And the third issue is the speed with which the economy has grown, which has put the planet under unsustainable stress. From there, comes the narrative of Donald Trump, Brexit and the war in Ukraine these days.
What have been the drivers of globalization?
A huge increase in computing capacity in the financial and industrial sector, which has allowed companies to create large logistics chains. And then, the appearance of the unwanted guest, which is China, when it joins the WTO. Now many wonder if the United States shouldn't have been so naive about China, if Germany shouldn't have been so naive about Russia... Sure, they gave us cheap energy, cheap products. But Wall Street also duped European bankers with assets that were dynamite...
And that's when this resentment appears...
On the one hand, we have that of the impoverished middle classes. Donald Trump is the first to realize this. The consequence is that the country that has most defended free trade, the United States, is giving up because it believes that China has gone too far. And then there is the resentment of the Russians. In Moscow they do not understand why the USSR had to be ended.
Which brings us to the Ukrainian war
What this conflict has revealed is that the West is more alone than it was in 1989. Many Latin American countries lean towards Putin, because they see him as that man who was originally from the left. Then Africa is turning over to China and even the Persian Gulf region is turning its back on its traditional Western allies.
But globalization is irreversible.
There is no going back on many things. For example, in remote work. What there will surely be is a reorientation, towards a policy of blocks. The industry that left is not going to return to Europe, but it is surely possible that it will go to Morocco or that the logistics chains will be redistributed. Geopolitics rules.
In his work he outlines the inexorable decline of neoliberal euphoria.
At the end of the seventies the State was the problem. And it is true that the elimination of so much public economics led to significant efficiency gains. But now we have factors that push us towards the participation of the State, which are war, pandemics, food or energy issues. The transition towards a greener economy can only be financed from the State. There is also the demographic issue: before they only thought about growing, in the future it will be necessary to invest to face the aging of society.
Globalization killed inflation. Does deglobalization revive it?
We are heading towards a long phase with higher, unstable prices. We are entering an energy cycle that will produce an inflationary shock that will last for years.
After years of hypergrowth we find ourselves with monopolies.
It is another unwanted effect. The benchmark is Silicon Valley. Thanks to globalization and innovation, companies came out of the garage. But executives like Jeff Bezos have appeared, saying that if he stays with the entire sector, the sector will do better because he will manage it alone.
What does the 'man from Davos' think about what is happening?
We are facing the end of their ideology. Today companies have to look at sustainability. Although I am not clear that the system is capable of reforming so quickly. The West created the industrial revolution, the illustration, individual rights... And I think it is a very exportable pack. China, which is the great model of autocracies, has been an economic miracle, but it is not a model for the rest of the world. Ultimately, when the Iranians and Chinese demonstrate, it is because they want to be like the West. Especially the younger ones. There is a generational divide. What moves the West is the same thing that moves the Chinese, and it is consumption.
The West believed that if two countries traded there would be no war between them.
Paul Krugman has written that this thesis of peace through trade works among democracies, but it has not transformed autocratic regimes.
What to expect in the coming years?
When there is a hegemonic power that is in retreat, there is usually quite a bit of disorder. But the issue of climate change represents a much more serious, much more urgent common denominator. A global challenge that perhaps unites us all.
