Will globalization come to end within in our lifetime? This is the question asked by Peter Zeihan’s The End of the World is Just the Beginning, which examines the reasons for its ascendance and eventual fall from the global sphere.
In Pakistan, anti-globalization trends of the past can be divided into many categories: secularists feared that multinationals would take away a polity’s power to make decisions in light of their own interests; industrialists feared the liberalization of the domestic market; and the religious faction saw advanced Western economies as enemies of Islam and a threat to welfare states.
Pakistan’s leftists previously did not consider the fall of the Soviet bloc a defeat of socialism, and explained away the damages caused to the economy by the nationalization of the 1970s. People like Dr. Mubashir Hasan doubled down, calling for renationalization, while those like Khursheed Ahmad inclined to a strong state sector. The rightwing, alienated by nationalization, indirectly supported the diktat of liberalization, trying to understand the positive aspects of globalization even as their nationalism balked at a further opening up of the economy. The anti-globalization movement relied heavily on the defects of global capitalism, which were, and remain, plentiful. But while capitalism gathered many detractors, there has been no clear challenge to its supremacy in the global order.
Defects of global capitalism
According to Zeihan, there were three major “waves” of globalization. The first started with Christopher Columbus’ voyage to America in 1492, with Vasco da Gama reaching India in 1497. The second came with Industrial Revolution of Europe and lasted well into the Second World War, while the third began after World War II and is ongoing. Early globalization was essentially global trade but regional trade networks existed independently. A new wrinkle was that Europe, enriched by its conquest in the Americas, was able to engage with these networks in trade that mainly dealt with luxury goods.
The Industrial Revolution, triggered by the invention of the steam engine, allowed the accumulation of surpluses and made it easier to transport them over vast distances. However, it alone could not have propelled global trade without the refinement of payment systems rooted in the 14th century. These systems gave rise to the “forward exchange systems” of the 17th century, reducing currency fluctuation risks for traders. The European colonization of fertile and mineral-rich areas of America and the Pacific provided the raw materials that were key to the Industrial Revolution.
Between the two world wars, the nature of global trade began to change. Food and agriculture declined, while minerals, including oil, became dominant. Capital goods took second place to rising consumer goods trade. The subsequent mechanization reduced the difficulty in extracting minerals, reducing their trade, while seeing a rise of synthetic goods that negatively impacted items originating from the developing world. The third wave of global trade expansion saw its first decline in 1973 when OPEC raised oil prices; the second slowdown came in 1979 when the Shah of Iran fell.
After the Second World War
Global trade expanded rapidly after World War II because the General Agreement on Tariffs and Trade (GATT) cut tariff rates, favoring third world states against the protectionism of the developed world. GATT was replaced by the World Trade Organization (WTO) in 1995, which reversed this, forcing the third world to remove tariff barriers even as richer states only agreed to accept free trade on agriculture. Overall, WTO cut global tariffs from 10 percent in the 1980s to 5 percent in 1999, reducing third world tariffs to a degree that exposed them to economic dangers.
The 19th century credo of the rapidly expanding Western industry was the tariff barrier and the U.S. was its premier advocate, with high tariffs helping finance the American Civil War. The post-war 20th century has seen these doctrines decline, though double standards persist in Europe, America and Japan. The rich states of today spend billions of dollars daily protecting their wasteful farmland against third world exports, while dumping their excess grain in the global market. The 2003 Farm Bill in the U.S. paid American farmers $200 billion over 10 years as Indian farmers commit suicides over failures to net sufficient funds for their produce.
The same double standards hit the textile trade, with agreements such as the Multi-Fiber Agreement (MFA) restricting third world exports through quotas to protect the textile industries of the first world. The MFA’s later removal was unfairly used as a counter in discussions on intellectual property rights, giving rise to criticisms of the global system.
Amartya Sen on Globalization
In 1999, the World Bank hosted an international conference in Seoul on Democracy, Market Economy and Development, featuring Nobel Laureate Amartya Sen as the principal speaker. The economist read a paper stressing on democracy as crucial to development, debunking the “Asian model” espoused by many intellectuals of third world nations with bad human rights records. Opposing authoritarianism, he said: “I have discussed elsewhere (a 1983 article) the remarkable fact that in the terrible history of famines in the world, no substantial famine has ever occurred in any independent and democratic country with a relatively free press. We cannot find exceptions to this rule, no matter whether we look at the current starvation in Sudan or North Korea, or the recent famines in Ethiopia, Somalia or in other dictatorial regimes, or earlier famines in the Soviet Union in the 1930s, or in China during 1958-61 with the failure of the Great Leap Forward, or earlier still, the famines in Ireland and India under alien rule.”
Sen opined that China, despite an economy stronger than India, had seen 30 million people die of starvation in 1958-61 while Delhi—despite repeated famines under the British—had not seen similar crises after 1947 because of its democracy and freedom of expression. The crux of his argument was that famines are not the result of food shortages, but rather a failure of food to reach democratically unrepresented masses with no buying power. He said the lack of a parliament and opposition in China had allowed wrong policies to persist, adding that financial crises in Thailand and Indonesia had similarly occurred because the dispossessed there did not get the hearing they deserved. He referred to his Morgenthau Lecture at the Carnegie Council on Ethics and International Affairs in 1997 to debunk the so-called Asian ‘model’ that the “traditional value of discipline” was more fundamental to development than full democracy, including political and civil rights.
Warnings of Peter Zeihan
Author Zeihan seeks to put an optimistic gloss on the collapse of the global order, noting that globalization heralded the decades of the fastest economic growth humanity has ever seen. The current decline, he argues, is the result of shifting dynamics 30 years on from the end of the Cold War. The Americans are looking inwards and no one else has the military capacity to support global security and trade. As the American-led order gave way to disorder, workers and consumers across the world aged into mass retirement. In the rush to urbanize, no displacement generation was born. Since 1945, the world has been the best it has ever been—which is a poetic way of saying this era is nearing its end. The 2020s will see a collapse of consumption, production, investment and trade almost everywhere, shattering globalization. It will be costly and will make life slower. No economic system yet imagined can function in the sort of future we face.
Is there place for optimism?
To think the world will adapt easily or quickly to such titanic unraveling is naively optimistic. States reliant on trade, however, will suffer more. The U.S.—having gone through various restructuring of its political systems throughout its history—will undoubtedly survive and perhaps even thrive because its geography is insulated from the majority of the world and also has a significantly younger demographic profile. America’s strengths allow its debates to be petty, while barely affect its strengths.
However, capitalism without growth generates massive inequality, as those who already have political connections and wealth manipulate the system to control ever-bigger pieces of an ever-shrinking pie. The result tends in the direction of social explosions, with three prominent examples being the anarchist movements within the U.S. siring the Great Depression; the rise of Donald Trump in reaction to the region’s deindustrialization; and the general societal collapse of the Lebanese civil war.
However, the future of socialism is, if anything, darker than that of capitalism. Socialism cannot generate capitalist levels of growth even when the pie is expanding much less when it is shrinking. It might be able to preserve economic equality, but this is insufficient to save the model. Unlike capitalism, where at least the elites might survive, socialism would see everyone become noticeably worse off every year. Mass uprisings and state fracture are a feature, not a bug, and countries that might be able to retain an overseas empire in a post-2022 world would need three things going for them: a serious cultural superiority complex; a military capable of reliably projecting power onto locations that cannot effectively resist; and lots and lots of disposable young people.
A key reason for the collapse of the Soviet Union was the decline of its population, triggered by the devastation of world wars, Stalin’s urbanization and collectivization efforts, broad-scale mismanagement under Khrushchev, and organizational stagnation under Brezhnev. By 1980, the demographic pipeline was already running dry; and then the bottom fell out. The trauma of the Soviet collapse was economic, cultural, political, strategic—and demographic. Between 1986 and 1994, the birth rate halved while the death rate nearly doubled. Russia today is deindustrializing at the same time its population is collapsing.
The last country that boasted all three factors for an ‘empire’ was the U.S. after World War II. America’s rise in the 1800s and early 1900s was technological, geographic, demographic, and economic. This continued after the war, though the U.S. shied from occupying territories it had conquered—even when their potential subjects welcomed them as liberators. Today, we live in a world of accelerating demographic collapse with no countries that can boast the mix of youth and reach necessary to project power out of their own neighborhood on a cost-effective, sustained basis.
Whither old order?
Between the collapse of the global order and the inversion of global demographics, the old rules clearly no longer work, and it will take decades to figure out what might. Different countries will experience the collapse of the old system at varying speeds and different ways, and will react using approaches shaped by their own strengths and weaknesses and cultures and geographic positions.
A worthwhile example is Japan, which has been on the path to demographic oblivion for over five decades. Extreme urbanization started after World War II, with the cramped quarters of city-living making it difficult to raise families, much less families of size. The aging process is so deeply entrenched that some 30,000 Japanese die in their apartments every year without anyone noticing. Japan passed the point of no return in its demographic structure in the 1990s, with the Japanese government and corporate world pursuing new means— underlying its demographic weaknesses and strengths—to retain prosperity.
The future will see more focus on agriculture. Already, New Zealand’s ultra-mild climate makes it the world’s most efficient timber, and fruit producer, with cow paddocks, industrial forests, and orchards crowding out less profitable wheat fields. Similarly, Egypt grows cotton and citrus for export, using those funds to import cheaper foodstuffs like wheat that it could have grown itself had global agronomics pushed it in a more autarkic direction.
Wheat and the future
Banishing wheat to the periphery means the bulk of the world’s crop is grown in just a handful of places: the American Great Plains, the Canadian Prairie Provinces, Australia’s Murray-Darling Basin, the dry-lands of central Argentina, Southeast England, the endless small fields of highly protectionist France, dumpling country in northern China, Pakistan and India, and the great expanses of the Russian wheat belt, a zone that includes Belarus, Ukraine, a Kazakhstan. Of these, only France, Pakistan, and India grow wheat in areas that could grow other things more efficiently, but for these three efficiency is not what governments are targeting.
Manufacturing, energy and finance might have collectively brought the entirety of humanity into the modern age, but agriculture was, and remains, the first step along the path to today’s world. Should contemporary agriculture unwind, it would mean a massive contraction in volumes and varieties and availabilities and reliabilities of foodstuffs. It would mean that entire countries that have used modern agricultural technologies and markets to pull themselves out of the preindustrial age would now fall backward into the preindustrial past—at preindustrial population levels.
The first category of food-exporting countries are those whose systems for everything from finance to fertilizers to fuels are sufficient to allow them to continue producing their current product with minor adjustments. France, the U.S., and Canada check all these boxes; Russia is a near miss, as its aging population does not provide the necessary labor to maintain output with anything less than the sort of mammoth field equipment that it is incapable of manufacturing for itself. India would likely become a key provider of food to Bangladesh, which would find itself in the worst of all worlds: less precipitation in the southern Himalayas means the overall productivity of Bangladeshi rice paddies will drop, with water flows during spring potentially flooding rice production.
Cotton is a weird plant in that it needs loads of water and sun, which not many countries can provide. The solution is irrigation, as seen in the dependence on the Nile by Egypt; Indus by Pakistan; and the Amu and Syr by the Turkmen and Uzbeks. As de-globalization gathers pace, these countries will be forced to shift from saleable cotton to crops they can eat. Even if de-globalization does not occur, climate change will reduce the water they have available for irrigation.
Food, the ultimate killer
More than war, more than disease, food is the ultimate country-killer. It is not something the human condition can adjust to quickly or easily. It is the magic mix of industrialization and urbanization that makes modernity possible, and it is precisely those intertwined factors that are under such extreme threat. Weaken the pair, much less break them down, and it will take at bare minimum a generation to rebuild a mix of financial success and manufacturing supply chains and technological evolutions and labor forces that are capable of feeding 8 billion people. The time taken to achieve that will, tragically, see a decline in population numbers. The history of the next 50 years will be the story of how we deal with—or fail to deal with—the coming food shortages, the changes they create. How political and economic systems globally grapple with the one shortfall that matters more than everything else combined.
The 2020s and 2030s will be exceedingly uncomfortable for many, but this too will pass. Best of all, we can already see the sun starting to burn through the clouds. A few things to consider: capital availability is a function of demographics. The boomer generation’s mass retirement in the 2020s is to our detriment; they are taking their money with them. By 2040, however, the millennials will supplant them, making the system flush once more.
The real question—the real mystery—is what happens then? Never before in human history has an interregnum smashed so many countries and cultures across such a wide swath of the planet. Even the Late Bronze Age Collapse wasn’t so complete. The 20th century was often dubbed “the American Century” because the U.S. was globally predominant. In the coming age, the gap between North America and the bulk of the world will be, if anything, starker. Never before in human history has the premier power from the previous era emerged so unassailably dominant at the beginning of the next.