The democratic, free-market West against the rest of the world. This is how the return of the battle of the systems, which has also been fought militarily since February 2022, can be understood. More than almost anything else, globalization embodies the blessings and curses of the western economic and social model for friend and foe alike.
Some praise globalization as the strongest driver of progress in human history. It made it possible to break up encrusted structures and produce in the cheapest place. The others demonize it as an ideology to enforce and preserve Western dominance, power and interests. It was only about exploiting others and investing capital in the place where it had the highest return.
The fact is that never before have living standards and living conditions improved so much and so quickly for so many people as in times of globalization. From the late 1940s to the late 2010s, absolute poverty went from being the norm to the exception in market economies – with far too many families still remaining far too poor.
And a long, healthy life has gone from being the exception to the norm. In 1950, fourteen percent of all newborns worldwide died before their first birthday. Today it is less than three percent. As a rule of thumb, the economic situation improved particularly in those societies that exchanged national isolation for international economic relations. Korea may serve as a particularly catchy example.
However, it is also completely indisputable that huge mistakes and omissions went hand in hand with globalization. Questions of distribution too often remained unanswered. Differences between rich and poor were not overcome. In some places, the gap in assets has not narrowed even more than in income, but has actually widened. A few things have to change in order to win back the population’s trust in the positive forces of globalization.
It is just as impossible to keep silent about the fact that regardless of individual basic rights or minimum social standards, cheap workers had to risk life, limb and health for starvation wages in order to manufacture consumer goods for Western customers as cheaply as possible under unworthy working conditions.
Regardless of species extinction, global warming and environmental damage, the long-term survival of mankind has been called into question for the sake of short-term profits. There, too, a lot has to be significantly improved – without ifs and buts.
It is therefore a matter of “to be or not to be” when the future of globalization is on the political agenda. Will the West find the will and strength to reopen market economies and revive the cost-reducing international division of labor and specialization (re-globalization)? Or does one accept, more or less resigned to fate, an emerging departure from free trade and freedom of movement and that an anti-Western alliance led by China and Russia is becoming ever more powerful (de-globalization)?
There is a lot at stake for Germany. Because the German economy has benefited to a special degree from globalization. A “Vorsprung durch Technik” did not only come into play in the small domestic market for millions of local people. It could be used on the world market for billions of customers. The business model of exporting high-quality products secured a large number of well-paid jobs in this country and thus respectable “prosperity for all”.
How will things continue for Germany after a pandemic, a war in Europe in a world economy of disorder and insecurity? One thing should be clear from the answer: in times of scarcity – with prices rising sharply across the board – more globalization is and remains the most effective strategy.
Nothing else ensures long-term growth more sustainably and effectively. And only if supply increases faster than demand can the gaping gap between demand and supply that is the mother of all inflation be closed.
Of course, a re-globalization strategy will not be quick and easy. The circumstances are becoming too threatening. National governments, especially in the democratic West, probably believe that the national card is the best trump card. Anyone who wants to be (re)elected wants to take public opinion into account.
But in times of crisis, war and catastrophe, it rewards more nationalization more than more globalization. Even if this makes you too dependent on national interest groups and all too easy to become the victim of national, powerful companies.
In the fight for re-globalisation, Germany should claim a pioneering position. Anyone who recognizes that “freedom” is the indispensable material prerequisite for being able to finance “security” and real independence at all would become an ally. Efforts should be made jointly for more market economy and competition, more free trade and freedom of movement.
A successful re-globalization initiative would be the litmus test for the West. If it succeeds, it acts like a magnet on the rest of the world. Failure, on the other hand, would be proof of the failure of the western strategy for freedom with its market-oriented world economic order. Then, in future, a Chinese-Russian alliance will dictate the world (economic) order. It would be the end of a globalization that makes “prosperity for all” possible.
Thomas Straubhaar is a professor of economics, especially international economic relations, at the University of Hamburg.
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