In a recent coronavirus update, the toxicologist and forecaster, Chris Martenson suggested that one positive outcome from the current Coronavirus Outbreak might be a reduction in globalisation and the present deeply interconnected state of the global economy and global supply chains.
Maybe we’re going to discover that globalisation wasn’t such a hot idea after all. … If it means that companies and countries rethink this and relocalise a lot of very vital manufacturing, maybe that’s a good outcome. (But…there’s going to be absolutely massive problems in between.)
The coronavirus outbreak has indeed brutally exposed the shortcomings of globalisation and just-in-time supply chains, manufacturing and logistics.
No doubt in the months to come, many will advocate other failed models, principally socialism and communism, as solutions to capitalism’s failures.
This would be a grievous mistake.
Wherever it is implemented, socialism invariably deprives people of not only their economic freedom, but their civil and social freedoms too, while few ideologies have produced more hardship for more people than communism.
Instead, the best models we have for unwinding the worst excesses of globalisation are economic nationalism and mercantilism (of c. 1500-1750).
With a mercantilist international trade model, states would be far more resilient and self-supporting, and we would probably not have seen the massive expansion of population and accompanying resource depletion that we have witnessed under globalisation.
Trade should be free within a country, and subject to tariffs and custom duties without.
Certain production is so essential to the security of the state that it should be protected, and where no producers nationally can be found, the state should be the producer of last resort.
In reality, this would happen only very rarely. Economic nationalists have no interest in states being directly involved in production, but they do believe that states have a role in setting the conditions for all production essential to national security being protected. If contemporary globalisation means that 98% of antibiotics consumed in the United States are produced overseas, then free trade can only be said to have succeeded in reference to certain limited, self-determined aims. It has failed to guarantee the wellbeing and security of the population.
Proponents of free market capitalism will argue that economic nationalism and mercantilism would make the world’s economy less efficient. I would actually agree that globalisation as a system would probably lead to greater economic efficiency and allows for faster technological development. I would disagree that these are fundamental human goods. Globalisation has created states that are less resilient, and more vulnerable to the sort of brutal economic shocks that may well accompany the coming coronavirus pandemic. Even without COVID-19, it will only be a matter of time before a crisis comes along that fully exposes the fragility of the globalist economic model.
The coming US presidential election offers a choice between various economic models: Donald Trump’s economic nationalism, Michael Bloomberg’s globalism, Elizabeth Warren’s socialism, and Bernie Sanders’ communism-wrapped-in-a-socialist-flag.
The coronavirus outbreak is making Donald Trump’s case for him. Trump, Bannon and Navarro’s economic nationalism is being massively vindicated, if not necessarily for the reasons they anticipated. Their 2016 pitch to the American voters, which at the time looked left-field, now looks prophetic. Trump is no shoe-in for 2020, particularly as US public finances are in a terrible state, but he can now at least argue foresight in anticipating strategic economic vulnerabilities for the US economy, and taking some small steps in advance of the present crisis to forestall them and mitigate their impact.
Other leaders of developed nations may not be so lucky. Most have hitched their wagon to the oxen of global free trade.
For some, such as Singapore, this is as a matter of geopolitical necessity; given its limited non-human resources, Singapore has no option, but to champion free and unbridled global trade.
But the prosperity of global hubs such as New York, London, Tokyo and Singapore should never have become the principal driver behind economic policy. What sort of a world is it when farmers are scraping by, struggling with debt and bankruptcy, while bankers go from seven-figure to seven-figure bonus?
If the reaction to the current economic disruption is a little less globalisation and a more nuanced approach to free trade – instead of a full-scale descent into globalism, communism and other totalitarian temptations – the present crisis will have had at least one silver lining to it.
Much will ride on the wisdom of our nations’ leaders.
Author: David McHutchon