Endgame

As globalization has lost momentum, nationalism has returned to the fore.

The period from 1914 through 1945, marked by two disastrous wars and a global depression, was a particularly dark one in modern history. Then came an epoch of peace and prosperity:?From 1945 to about 2015, the world experienced an unusual era of global integration and economic cooperation. From the smoldering remains of World War II grew an ethos of cross-border collaboration among the capitalist democracies of North America, Western Europe, and Eastern Asia. When the Cold War ended, globalization took off.

“Instead of growing to incorporate ever more of the world’s nations into it, a slowing world economy pits them against each other to fight over the remaining sources of growth.”

But in recent years, the world has pivoted again. Gone are the good vibes of transnationalism;?they’ve been replaced by a much gloomier mood. As the global economy slowed, individual countries took on a sharp-elbowed view of their neighbors. Yesterday’s allies became today’s rivals. With cutthroat competition replacing cooperation, protectionist policies gained momentum. In another shift, the developed world suddenly became a hotbed of conspiracy theories. Unhinged belief systems such as QAnon illustrated the trend — many people were suspicious of expert analysis and mainstream consensus. Into the breach has come not just QAnon but other?toxic narratives, such?as the?“Great Replacement” conspiracy, which purports that Jewish plotters aim to eradicate people of European descent.

In the years following the Cold War, a sunny brand of optimism prevailed.

The Soviet empire fell in 1991, and with the specter of nuclear annihilation no longer hovering over humanity, a new breed of calm prevailed. From 1990 to about 2005, the acolytes of globalization sang the praises of free trade, open borders, and international cooperation.?New York Times columnist Thomas Friedman was an influential voice for globalization, and he plainly declared that the ideological question had been answered once and for all. “The historical debate is over,” he said in 1999. “The answer is free market capitalism.” Who could argue? Russia and its former satellites seemed to have cast off Bolshevism for American-style consumerism.

“After the end of the ideological conflicts of the Cold War, it seemed as if the conditions were coming together for democratic societies to flourish as never before.”

In retrospect, the mood from the halcyon days seems quaint, even na?ve. Rather than embracing globalization, capitalism, and democracy, many nations have retreated into a far more cloistered position in relation to the rest of the world. In one of many twists, the liberals who once espoused globalization have changed their minds and now support a return to nationalism and protectionism.

In recent years, the United States has backed away from its emphasis on globalization.

Another turn came?in America’s weaponization of its currency in an attempt to shape the policies of China and Russia. The United States imposed harsh sanctions against Russia after it invaded Ukraine, and it has placed a variety of sanctions on China, such as impeding Beijing’s access to American technologies. The leader of the globalization pack isn’t quite so committed to international cooperation after all, it seems.

“It would appear that the project of globalization as we knew it has exhausted itself, and a reassertion of national sovereignty is the only game in town.”

It’s not just leftists and liberals who have turned on economic orthodoxy, of course. Globalization also is under assault from the right, as seen in the rise of such figures as Donald Trump in the United States, Boris Johnson in the United Kingdom, Marine Le Pen in France, Rodrigo Duterte in the Philippines, Viktor Orba?n in Hungary, and Vladimir Putin in Moscow. These figures place themselves squarely in opposition to what they consider the decadent and permissive policies of the “woke” left.

A neo-nationalist backlash has whipsawed global politics.

The Brexit vote of mid-2016 marked a new mood globally. By a narrow margin, British voters opted to leave the European Union and free themselves from the overbearing bureaucrats in Brussels. The Brexit movement found support on both the right and the left, and proponents said leaving the EU would place Britain back in control of its own destiny. Economic greatness would ensue, the Brexiteers and Lexiteers promised. Instead, the British economy has stagnated, and an eye-watering concentration of wealth has continued.

“One of the most visible symptoms of the current interregnum is the feverish neo-nationalism that has overspread the world in the last dozen years or so.”

At least Brexit mostly hurt Britain. Compared to Boris Johnson, there are far more menacing neo-nationalists on the loose — Putin, for example. His bloody invasion of Ukraine illustrated the worst-case scenario of anti-globalization and neo-nationalism. Meanwhile, the United States has transformed from globalization’s biggest cheerleader to one of its biggest critics, at least when Donald Trump was in the Oval Office.

Donald Trump’s appeal and talking points are taken straight from the script of nationalists across the globe.

He dreams of a sepia-toned era of American virtue, and he recoils at its current kowtowing to China. In Trump’s view, America has given in to the whims of Jewish financier George Soros, whose shadowy allies include Democrats, Black Lives Matter activists, and teachers’ unions, among others. Much as the putative populism of Brexit allowed the rich to get richer, so did Trump’s tax cuts enrich billionaires.

“At the highest level, the political class takes its marching orders from a corporate sector that, in the interest of its profit margins, has decided that the time has come for open conflict with China.”

Meanwhile, Americans have uniformly decided that China is the new enemy of the state. This consensus is surprisingly bipartisan. The left-leaning Washington Post editiorializes about the need to get tough on Beijing, as does the right-leaning Wall Street Journal. MSNBC and Fox News, otherwise polar opposites, sing from the same hymnal when it comes to China policy. The obvious conclusion is that US political leaders are out of real ideas to cure what ails the economy, and China makes for a convenient scapegoat. The historian Niall Ferguson has noted one welcome side effect of a common enemy. During the Cold War, Ferguson notes, internal fissures within the United States were muted as Americans focused on a common foe.

American policies belie a degree of hypocrisy.

Climate change is another issue in which partisan divides might not be as wide as they seem. For instance, after Joe Biden moved into the White House in 2021, he quickly brought the United States back into the fold of the Paris Agreement. At the same time, however, Biden quickly approved oil-drilling projects that represented major concessions to the fossil fuel industry. The disconnect plays out across the globe. Germany consumes large quantities of natural gas, a fossil fuel that produces ecologically unfriendly levels of methane, and it also exports coal. And China pays lip service to green energy but burns more coal than the rest of the global community combined.

“Far from trying to prevent the unmaking of global capitalism, the United States now leads the charge to demolish it.”

Meanwhile, US talking points about freedom and prosperity have a dark underside. The global golden days of the 1990s were premised on the notion that nations, even those formerly hostile to the United States, were free to join the global order and boost their own fortunes. Coercion had no place in the equation. But a darker interpretation was popularized by the economist Michael Hudson, whose book Superimperialism became influential. Hudson’s interpretation of the global world order goes like this: The United States issues the world’s dominant currency, and entry into the capitalist club requires allies to buy US Treasury debt. This allows the US government to spend beyond its means, but weaker nations can’t push back — bucking the United States could lead to financial sanctions. And America knows that if other nations were to abandon the superimperial model, the entire global economy could crash.

The quick fall of modern monetary theory underscores the complexity of managing the economy.

As the US central bank created money by buying bonds without ceasing from 2008 to 2022, traditionalists wondered why inflation hadn’t come roaring back.?A new concept came to the fore: Modern monetary theory (MMT) posited that, unlike households, governments need not worry about earning more than they spend. A fiat currency could be printed indefinitely, with no downsides, MMT proponents said. Printing money was fine — it could be done with no fear of inflation. This ran counter to a neoclassical belief that deficit spending inevitably devalues the currency.

“Simply put, MMT’s moment came to an end because it fell out of sync with the prerogatives of power.”

As the COVID-19 pandemic hit, MMT held sway. The Federal Reserve promised to keep churning out trillions of dollars. MMT undergirded this new thinking about money. Central bankers could liken themselves to doctors pumping oxygen into a dying patient; the influx of free money could keep the floundering global economy alive. MMT worked until it didn’t. The trillions of COVID?stimulus kept the economy alive, but all that cash was like kindling for an inflationary fire. When global supply chains malfunctioned, prices inflated. When Russia invaded Ukraine in 2022 and disrupted oil markets, prices shot up further. Inflation was back with a vengeance — and MMT rapidly lost credibility.

The financial crash shook faith in economic orthodoxy.

When the global economy melted down in 2008, the reckoning was quick. Former Fed chair Alan Greenspan, the laissez-faire maestro of the ongoing boom, no longer seemed so masterful. The gospel of free markets no longer engendered the same faith. In the aftermath, American politicians and regulators had little choice but to tighten the screws on the business community. The tougher rules treated some of the symptoms, but they didn’t cure the disease.

“The Great Financial Crisis of 2008 destroyed the credibility and confidence of what had been the neoliberal model of financial government, shattering the illusions of an entire generation of technocrats.”

What might finally shake the US economy from its long hangover? One prescription is “fiscal policy,” which generally means public investment in infrastructure and schools, along with modest tax increases. The International Monetary Fund and Harvard economists Lawrence Summers and Jason Furman have called for such a solution, as has the Biden administration. The calls for public investment don’t specifically mention the harsh reality of the modern US economy: It’s driven by financialization. Private investors don’t invest in critical infrastructure; that is left to the taxpayers.

American society is a place of stark racial inequality.

The 2020 death of George Floyd at the hands of a Minneapolis police officer unleashed a spasm of protest about the state of US policing. Floyd was a Black man who had used a bogus bill, perhaps unknowingly, to buy cigarettes. One of the white police officers called to the scene responded by choking Floyd until he died. The episode went viral, and protesters took to the streets in cities throughout the United States. Floyd’s murder brought new scrutiny to police policies and procedures. Over the past decade, American officers have killed an average of 1,100 people a year. In 2021, the tally reached a record 1,136, 28% of them Black.

“The armed guardians of private wealth kill people every day.”

Such statistics underscore the militaristic nature of the American criminal justice system — indeed, it’s difficult to interpret the inequalities as anything less than class- and race-based warfare. Urban police officers are outfitted as if they’re soldiers holding enemy territory. The US prison system holds two million inmates, nearly 40% of them Black. America incarcerates its citizens at a greater rate than did Joseph Stalin’s Soviet Union. It’s hard to ignore the line connecting economic opportunity and conviction rates. Unemployment among Black Americans runs double the rate of joblessness for white workers. The United States, with its laissez-faire policies and frayed safety net, simply pushes its economically unsuccessful citizens to the economic margins.