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Articles, Commentaries, The Edge

International trade remains the basis for global goodwill

By OOI KEE BENG; For THE EDGE MALAYSIA, 28 Sept – 4 Oct 2020.

Is the Covid-19 pandemic the third nail being hammered into the coffin of globalisation? While the historical process connecting all of humanity under one economic umbrella cannot be stopped, it can be redirected where its decisive dynamics and its major actors are concerned.

How this affects specific countries and regions in the coming years will depend on how well they manage global forces post-2020. The multi-polar world that we have been predicting for a couple of decades may already be showing itself, albeit in a form we had not expected.

Surviving it and thriving in it will not be so much about the administration of public health as about the consolidation of regional economies and the ability of national economies to posit themselves advantageously within their immediate regional economy, and yet remain exposed to creative impulses from other regional economies.

As the Soviet Union went into political bankruptcy in the late 1980s, China eagerly adopted international trade as its engine for growth by letting its economy evolve into the manufacturing centre of the world. In this process, China allowed innovations and inequalities to increase within its one-party system, and global capitalism went from triumph to triumph, pushing back the physical boundaries of the Eastern Bloc.

Under the laissez-faire umbrella of neoliberalism, established multinational corporations continued their battle for market share and their influence over supply chains, now partnered with and propelled by internet companies. More so than with traditional global industries, information and communications technology (ICT)-driven enterprises have been able to seriously aim for de facto monopoly status.

The ending of the Cold War thus coincided neatly with the coming of the Internet Age. Not surprisingly, Russia’s return to big-power relevance appears to be happening within cyberspace. Social democracy as the middle ground has quickly lost credibility and efficacy, and has arguably been replaced by frail ideas, such as the United Nations’ Sustainability Development Goals.

Without ideological battles to fight, configuring the trade infrastructure, connecting producers to consumers, and controlling information flows became the new arenas where ICT gladiators and investors wrestled for global oligopoly status, if not monopoly status.

The One Percent notion has thus become an increasingly viable description for the global income gap. But what it expresses is in fact a Marxist warning that capitalism, left to its own devices, will undermine itself by creating unsustainably huge income gaps.

Once the majority in society no longer gets to experience or to dream about the benefits of capitalism — a condition that social democracy was once constructed to avoid — effective resistance appears. It seems though that this resistance is not one that is class based, but is instead a cultural challenge, a conservative backlash.

This development is too huge to be considered a nail in the coffin of globalisation — it is the coffin itself. The nails came later.

On June 23, 2016, Britain held its Brexit referendum. The result was in favour of its exit from the European Union. This was the first inadvertent nail in the coffin of post-World War II globalisation — shocking because Britain was the original global power.

Six months later, in November 2016, the US, guardian of the legacy of global trade, voted in a president that has placed the single superpower on an anti-globalisation path. The shock had now turned into trauma.

Instinctively an ethnocentric character, a climate change denier and an opponent of multilateralism, Donald Trump’s four years in office has been the second nail, a comparatively long one, banged into the coffin cover of post-WWII globalisation. The trade war he started against China soon after taking office has since moved from traditional tariffs on imports and exports into cyberspace. His administration’s unrelenting attacks on Huawei and TikTok are illustrative of what it deems to be at stake.

Whatever damage these two turns of events did to global trade pales, however, to what Covid-19 — the third nail — has already accomplished so far. No policy by any one country, no matter how powerful, could have wrought the havoc to international trade and travel, and multilateralism, that this pandemic has managed in less than a year. And no end to the ailment is yet in sight. The trauma is turning chronic.

The 1918-1920 influenza pandemic, to which the present catastrophe is inevitably compared, stretched over three springs. If we assume the same for Covid-19, then governments should not only be battling the health crisis, but should also be considering how the regionalising of globalisation can be played to their advantage.

And what is to their advantage would not only be economic in nature, but geopolitical and cultural as well. The post-WWII period of globalisation is over, and countries such as Malaysia, founded within the aggressive geopolitics and ethnocentric configurations of those times, will need to reconsider their troubled self-image, their long-term goals and their international role.

International trade and the globalisation it fosters have necessarily been accompanied by an increasingly freer movement of people, capital and goods. Any retreat into isolation, protectionism and parochialism as a response to Covid-19, western insecurities and income inequalities would allow the coffin lid on globalisation to appear more solidly shut than it is.

We do not want the chronic trauma the world is suffering to turn into a complex one that sustains a protracted geopolitical situation of alarm, anxiety and authoritarianism.

Datuk Dr Ooi Kee Beng is Executive Director of Penang Institute. His latest book is As Empires Fell: The Life and Times of H S Lee, the First Finance Minister of Malaya (ISEAS 2020).

About Ooi Kee Beng

Dr OOI KEE BENG is the Executive Director of Penang Institute (George Town, Penang, Malaysia). He was born and raised in Penang, and was the Deputy Director of ISEAS - Yusof Ishak Institute (formerly the Institute of Southeast Asian Studies, ISEAS). He is the founder-editor of the Penang Monthly (published by Penang Institute), ISEAS Perspective (published by ISEAS) and ISSUES (published by Penang Institute). He is also editor of Trends in Southeast Asia, and a columnist for The Edge, Malaysia.

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