Populism and the Retreat of Globalisation
Ashutosh Varshney & Ridham Desai take on one of the most burning issues today
MUMBAI, 12 JANUARY, 2018: Asia Society India Centre hosted its first programme of the year at the National Gallery of Modern Art, Mumbai – a highly topical panel discussion with Professor Ashutosh Varshney, Director, Center for Contemporary South Asia, Brown University, and Ridham Desai, Managing Director, Morgan Stanley India, on the rise of populism around the world in the last few years, and whether this signifies a retreat for globalization.
Varshney opened the programme with a short lecture on the history of globalization and populism, pointing out that neither one is a new phenomenon. Despite what many think, the current phase of globalization being witnessed (termed by Varshney as ‘Globalization 2.0’) is not as intense as the first phase that occurred during the Industrial Revolution as a result of rapid technological developments (which Varshney termed as ‘Globalization 1.0’). Globalization, which in theory refers to the free flow of goods, capital and labour, in reality is freer flow of capital and goods than of labour. Populism also is not a new phenomenon, having been a staple feature of the 19th and 20th centuries – and can vary in ideology, from right-wing to left-wing populism. Yet, either way, populism claims to represent the people “authentically”, and is increasingly becoming a global trend and force to reckon with.
Globalization has led to a decrease in international inequality, but an increase in intra-national inequality, with Gini coefficients going up in nearly every country. Varshney pointed out that the effects of populism on globalization was as yet unpredictable – with labour likely to take the greatest hit, followed by curbs in long term capital flows as Western countries encourage businesses to invest more locally (although short term capital would not be affected drastically). The impact on free trade is less clear, noting that continued tariffs on Chinese goods, for example, could lead to serious consequences, such as a trade war which most countries want to avoid.
This was followed by the discussion with Desai, who led the conversation into an examination of the myriad policy issues – such as climate change – that have affected and been affected by globalization. Desai further pointed out that globalization is a complex issue and that there is too much interconnectedness between countries for a clean and complete reversal of economic globalization. Using China and the U.S. as an example, Desai explained that although cheap Chinese labour had hurt the manufacturing sector of the American economy, China had at the same time invested heavily in the U.S. treasury. So a total cut off is impossible and not practical between the two countries.
Varshney ended the discussion by making a case for finding a middle ground between unhindered globalization and total economic protectionism, or what he called “compassionate globalism”.