The end of hyperglobalization

Image: Zeeshaan Shabbir
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By RICARDO ABRAMOVAY*

The idea of ​​a global community governing all interactions on the planet and abolishing regional geopolitical interests collapsed

Economic science, as it has been consolidated since the end of the XNUMXth century, removed from its intellectual and cultural horizon the discussion about the ethical-normative values that govern the way human societies use the material, energetic and biotic resources on which they depend. This distance was radicalized with the dominance of what an increasing number of economists have been denouncing as the ultraliberalism that marked the discipline, especially since the mid-1970s.

The central idea of ​​this strand was that markets had an intelligence necessarily superior to that of any planner. This presumption did not refer only to the State, but to the private sector itself. Who should dictate the way companies organize themselves was not his direction, but the markets and, especially, the financial markets. Shareholders and investors should have the final say, expressed in numbers, on the value of companies' shares and assets.

Business decisions would, in this view, be permanently subjected to the decentralized scrutiny not of an administrative bureaucracy with its own interests, but of an instance over which no one has control. The business organization of the XNUMXst century would thus extirpate the parasitism of conventional administrations, be lighter, operate in a network and gain agility to take advantage of opportunities, thus providing greater economic growth. Neil Fligstein, one of the most important authors of contemporary economic sociology, described this process in a fundamental book published in 2001.

This fiction, which has been imposed globally since the mid-1970s, began to collapse with the 2008 crisis, but still survived with impressive arrogance, until the onset of the pandemic. The invasion of Ukraine has definitely driven the nails into its coffin. The idea that the interests of individuals and companies could be expressed in a kind of global community, where innovation and efficiency would be necessary and sufficient conditions to increase wealth, thus promoting convergence between countries and the abolition of geopolitical interests regions, this idea collapsed. And with it, another naive belief also collapsed, that democracy results from the ability of societies to respect markets and prosper from this respect.

Dani Rodrik, professor at John F. Kennedy School of Government at Harvard University in interview with Daniel Rittner, at Valor Econômico, expresses this idea well: “Hyperglobalization, says Rodrik, was a world in which we assumed that geopolitical and security concerns could not only be managed, but weakened or even eliminated thanks to economic and financial integration”. China, for example, would approach the West and become more democratic, thanks to the power of economic integration, of markets.

This illusion is similarly denounced by Timothy Snyder, historian at Yale University and author of TheRoad of Unfreedom in what he calls “the politics of inevitability, a feeling that the future consists of more of the present itself, that the laws of progress are known…that nature brought the market, that it brought democracy, that it brought happiness”.

The collapse of this world and the decomposition of the myths on which it is based bring two fundamental consequences for the future of contemporary societies. First, as the pandemic had already shown, the bet on the efficiency of global value chains for the provision of goods and services necessary for economic growth, belongs to the past. Regional blocs will be strengthened and dependence on long circuits will be put under suspicion. Geopolitics, more than economics, will play a decisive role in commercial relations and, in general, in international relations. It is clear that this horizon inspires fear, especially in view of the real threat that conflicts of interest may escalate into nuclear aggression.

But there is a second consequence that, in a way, is opposed to the first. The collapse of what Tymothy Snyder called the politics of inevitability, of the magical link between the market, democracy and happiness. This collapse places the discussion of ethical-normative values ​​at the heart of both theory and economic decisions. The pressure is impressively increasing so that the initiatives of companies and the infrastructures planned by governments are guided no longer by the general and abstract ambition of promoting economic growth, but by the urgency of carrying out the triple fight against the climate crisis, the erosion of biodiversity and the advancement of inequalities.

Offering goods and services demanded by different markets will be less and less enough to legitimize companies' social license to operate. The European Union has already decided that it will no longer buy commodities coming from deforested areas as of December 2020. The declaration of thirty-four Brazilian organizations that belong to the Observatório do Clima (Climate Observatory), proposing that European restrictions apply not only to the Amazon, but also to the Cerrado, the Caatinga, the Pantanal and the Pampa is an important indication of the unavoidable presence of ethical-normative values ​​(in this case, the urgency to guarantee the services ecosystems on which we all depend) within markets.

Another example in the same direction, which opposes the idea that there may be an automatic, decentralized mechanism capable of ensuring a constructive link between the economy, democracy and prosperity, comes from the European central bank which has just released a report showing that none of the 109 banks it supervises had a satisfactory level of transparency regarding climate change: “a lot of white noise and no real substance”, says the ECB report. Only 15% of the banks disclose data on the emissions of companies financed by them.

The advantage of the end of hyperglobalization is that it will demand from citizens, consumers, companies, civil society organizations and governments that all, absolutely all of their decisions be taken based on ethical-normative values. And as these values ​​are, fortunately, not unanimous, the way is open by which democracy and economic life can pass through a constructive reciprocal fertilization. It is our biggest and most fascinating challenge after fundamentalist fanaticism is removed from the Planalto and Esplanada dos Ministérios.

*Ricardo Abramovay is senior professor at the Institute of Energy and Environment at USP. Author, among other books, of Amazon: towards an economy based on the knowledge of nature (Elephant/Third Way).

Originally published on the portal UOL.

 

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