patchwork A planet beneficial co-operation of governance. If so, you are likely find- The Covid-19 crisis has exposed the ing the coronavirus crisis even more depressing. From Donald arbitrary way in which we have stitched Trump’s branding of the disease as a specifically “Chinese virus” and his defunding of the World Health Organisation (WHO), to globalisation together. It’s time to go the violation of rules about sharing medical data and an unseemly back to first principles, and tailor a new scramble to secure masks and ventilators amid unilateral export restrictions, there is scant sign of global harmony just now. set of international rules around them The irony, of course, is that at the same time the virus risks setting globalisation (as we have conventionally understood it) spinning into reverse, it is also affirming anew our shared fate dani rodrik as human beings. That might seem like a paradox, but in fact our present-day globalisation is not and never has been the only way—or the best way—of meshing together our economies and other interests. And it is not only scholars in ivory towers who are wondering if this is a moment for a reset. hat do you think of when you hear the word “glo- President Macron of France is both a determined economic balisation?” It might well be the usual newspa- liberal and former investment banker, and yet he used a major per illustration—the container ship that moves interview with the Financial Times in April to concede that amid merchandise round the world. And if cross-bor- the strains of climate change, inequality and “weakening democ- W der commerce is what we mean by the G-word, racy,” “we already had the feeling that the established mode of then Covid-19 has brought it to its knees: the globalisation was coming towards the end of its life,” even before World Trade Organisation (WTO) is forecasting that it could the coronavirus crisis hit. And that now, we needed urgently to sink by as much as a third this year. establish a new “grammar of multilateralism.” Perhaps instead you imagine globalisation in terms of finan- It is indeed a moment to reflect critically on the route we have cial flows and border-straddling banks. In that case, the screens taken, an approach I call “hyper-globalisation,” and to interro- of red numbers seen on trading floors this year attest to there hav- gate the principles that should guide our global rules. We can ing been plenty of trouble on this front as well. Or perhaps you are also begin to imagine what a well-crafted globalisation embed- an enthusiast, and think of our global order as about mutually ding those principles might look like. JUNE 2020 27 The globalisation we have got policies than has been the norm under post-1990s hyper-globali- The first thing to understand about where we start from is that it sation. Nevertheless, both international trade and long-term cap- didn’t have to be this way. There was nothing foreordained in “glo- ital flows expanded rapidly. While trade in manufacturing was balisation” assuming a principally economic character, nor any- significantly liberalised under the General Agreement on Tariffs thing inevitable about (in Macron’s recent words) a settlement in and Trade, governments were free to devise their own regulatory which “the consumer and the financier were the strong elements.” models. By contrast, under the more recent hyper-globalisation, Global supply chains and cross-border finance might seem to have the WTO (established 1994) has pursued a “deep integration” been driven by fundamental trends in transportation and com- under which domestic regulations in health, environment, intel- munication technologies; but the truth is little was predetermined lectual property and industry have come to be viewed as ineffi- about the globalisation we have got. cient trade barriers. It runs on an extensive infrastructure of rules. Some of these Political settlements are the joint product of vested interests are formal regulations written into explicit contracts, as with and prevailing ideas. Our present system of globalisation is no global trade agreements, certain banking regulations, or the different. After the Bretton Woods regime ran aground with the European Union’s acquis communautaire. Others are simply norms oil shocks of the 1970s, many developing nations proposed a new of good behaviour that are internalised by political leaders and mode of integration organised through the UN agencies. But in officials, and then sometimes reinforced by transnational institu- the end the west and its allies pushed through rules that served tions such as the International Monetary Fund (IMF) and World the interests of large corporations, financial markets, and skilled Bank at moments when they enjoy leverage. This is the case, for professionals quite well, but did not do much for others—those example, with the presumption in favour of who did not have the networks, skills, or assets maintaining open borders to capital. to profit from global markets. Had there been Sometimes such presumptions—or prej- powerful lobbies pushing for global co-opera- udices—are so ubiquitous that it becomes tion over public health or the environment— easy to forget that, in theory at least, there “Had powerful and had those in power not bought into the is nothing to prevent different choices being lobbies pushed for misguided belief that “mainstream” eco- made. But we could have chosen instead to nomics dictated they pursue economic effi- privilege completely different global rules, it, we might have ciency over every other priority, and ever-freer which gave priority not to economic or finan- had a globalisation trade as an end in itself—then we might have cial interconnection, but to other dimensions centred on health, erected one of the other types of globalisation of interdependence. We might, for example I just sketched. and pertinently at this moment, have built a instead of trade” In sum, we ended up with today’s globalisa- © REX SHUTTERSTOCK globalisation for public health—targeted at tion not because of technology or forces out- preventing and mitigating health pandem- side human control, but by choice, in response ics, with not the WTO and the IMF at its to powerful voices demanding it (and prevail- centre, but instead the WHO that Trump is moving to defund. ing narratives that legitimised it). Recognising it as a choice is lib- Under such a globalisation, nations would benefit from an effec- erating, because it allows us to begin imagining how we might tive advance warning system, a common information base, large have designed a different globalisation from first principles. What medical research and vaccine development budgets, co-ordinated should those principles be? strategies for fighting emergencies, ample financing for poorer nations, regulated border closures, and prohibitions on moves that The “spill-over” principle can only advantage one country by disadvantaging others, such as The question that ought to determine whether a policy domain export bans on medical equipment. is ripe for global rules in the first place is this: is this a domain in Or—alternatively—let us imagine that we had constructed a which global co-operation and co-ordination is necessary, or can globalisation focused on our enormous environmental challenges. we leave decision-making to national authorities without great Such a global order would be targeted at slowing climate change costs “spilling over” on to other nations? and managing its consequences, and would centre on agreements Nearly all domestic policies create some spill-overs across bor- to do this. It would entail, at a minimum, nationally binding emis- ders. Consequently, the first temptation might be to apply global sion quotas for greenhouse gases and/or carbon taxes, a large rules to discipline virtually all national practices. For example, common research budget for green technologies, and plenty of our education policies shape our future “comparative advantage” financing for transition to renewable energy in poorer countries. in production, and hence tomorrow’s gains from trade of other Even within a specifically economic mode of globalisation, nations. When we acquire a more skilled labour force, some of substantially different variants are conceivable. During the hey- our trading partners (or at least, important constituencies within day of the Gold Standard, roughly from the 1880s to the First them) may end up worse off because their skill-intensive exports World War, globalisation operated differently from now. Workers will face tougher competition. So if we were being guided solely were as free to move across national borders as capital, creating by the spill-over principle, education could not be safely left to a very different balance of advantages and freedoms. The Bret- national authorities. Or what about national rules on speed lim- ton Woods rules, which governed the world economy in the dec- its? They obviously influence consumption and so the price of ades after the Second World War, were partly written by Keynes, fuel, and hence also the fortunes of oil-exporting nations. Sud- who envisaged capital controls to check the disruptive speculative denly, global disciplines are needed to set speed limits. financial flows that had wreaked havoc under the Gold Standard. The reason that such examples seem outlandish is that Built into the architecture, too, was scope for national stabilisa- there is a contending logic that pushes in the other, anti-glo- tion policies, with fewer restraints on nations’ fiscal and industrial balist direction. Nations each have different needs and 28 circumstances, and national authorities are, in prin- ciple, the best judge of how to respond to those. This argument applies with special force in democracies, since no one has yet figured out how to consult the people in effective ways across national borders.