The globalization is a process that began in the early eighteenth century, the Enlightenment one. It’s surely not the first opening of the national markets worldwide wave we knew. Indeed, we could begin to speak about globalization
since the day when the European ships started to travel around the world: it’s an ancient process that knows some acceleration through time. For a long time, globalization was the miracle solution to get an economic durable growth, but this statement is about to change. From Stiglitz to Krugman, many economists, before global friendly, shows today the limits of this model.
Globalization takes different forms here. Thus, the globalization we know concerns firms, finances, digital and nature[1].
Globalization of firms: Appeared a new kind of business, the multinational companies (MNF) implanted in various countries and selling worldwide. Indeed from 1990 to 2001, the selling of the 500 first MNF had tripled while the global GDP only rose by 50%[2]. We can also notice the improvement of the FDI. In other terms, the Globalization of firms means the development of great organisations concentrating wealth.
Globalization of finances: A process of interconnection of the capitals market on national and international scale, leading to the emergence of a unified market of money worldwide[3]. Sometimes, the globalization of finances is perceived as the globalization’s origins.
Globalization of digital: Also known as the Digital Revolution since the 21th century. Digital improves the speed of the information exchanges (and reducing the costs), but also improves the speed of transactions between economic actors. This trend is very well symbolised by the Gafa’s reign (Google, Apple, Facebook, Amazone) that represent alone the France’s GDP in terms of stock market valuation. The great informatics networks allow an integrated management of the MNF in real-time.
Globalization of nature: Environment exploitation became the norm by the extraction of natural materials sold worldwide or used to build final goods with additional value. Ecosphere is seen as a potential of raw materials and a tool at the service of development. The impact is so huge that we can speak about an economy of nature. The sustainable development is also a concept reinforcing this vision of the nature as a capital, because it intends reconcile nature protection and economic growth, and never calm down the economic growth to protect the environment.
A perfect example of a globalized organisation lays in the European Union (EU) where the liberalisation happened next the fourfold increase of interest rate in 1979 and the free movement of capitals, leading to a financial globalization. The consequences will be an increase in worldwide productivity and saving, but also the deterioration of the American deficit.
But why are criticizes of globalizations so numerous nowadays? It’s before all a conjunction between different factors. Many problems are impute to globalization: the raise of nationalist and populist parties and their access to power (Trump, Orbàn, Loukachenko), the climate change where the globalization of nature is mostly responsible, the inequalities of wealth that lead to migration waves of terrorism for some researchers. Another point is the global nature of the financial crisis that every country fears to face again.
So should the EU continue to regulate the market, in order to become the forefront of a new controlled globalization?
Two visions are opposed on this question since dawn of humanity. In one hand, the reformists think it’s necessary for the State to regulate the market, to put the limit to the market abuses. In other hand, the liberals argue against any State intervention in the Market. Adepts of the Invisible hand concept of Smith, they believe that the personal interests of individuals contribute to wealth and to the common good. The regulation politics are for them a thread to free-competition, a primordial factor to the economic growth.
The major point here is the raise of inequalities due to frenetic globalization. According to the WID (World Inequality Database), the 20% richest people become richer, and quicker than the middle class (the 40% middle). And it gets worst when we look at the 10 and 1% richest. In other terms, the richer we get, the most quickly we can earn more money. These stats can be observed for the United States and the great majority of European rich countries and can be comprehend as an internal fragmentation of the rich and capitalist countries. The same countries affected by an “averagization” cycle of their societies, the famous theory of Henri Mendras whereby the middle-class proportion increases while the richer and poorer proportion decreases. In other terms, globalization generates income and wealth inequalities mainly against the middle-class, which is majority in European and rich countries.
Another point highlighted by the WID datas in the raise of “Useless” men and women. It’ a concept invented by Robert Castel represents an adult who have no utility for others in economic life. It refers to unemployment and young new arrived people who try to join the labour market in vain. But it also designates the ones who survive by moving on many little jobs one after another: they gain autonomy, but they are not useful on an economic plan. The “useless” individuals are imprisoned in a trap, without any hope of evolving due to a lack of formation or qualifications. For some authors like Pierre-Noël Giraud or Amartya Sen, it must be a priority for the modern States. The way we look the useless individuals and the way we fear to become one of them have massive consequences: the economical situation is replaced by identity-based conflicts (ethnicity, religion, etc.). This could be aggravated by immigration (here again a cause of globalization) –while it’s proved nowadays that immigration have concrete benefits for local economies- seen like an unfair competition, increasing the identity conflicts, with a great risk of “civil war”, or at least a public security breach. Here, globalization has several economic effects including social repercussions. Fighting globalization equates to fight for civil peace and must be a priority by improving formations and training in the whole EU.
But EU could play an important role in the constitution of a new international economic order for three reasons[4]:
- Its dimension: about 445 million people and about 16 trillions euros of GDP and the first commercial power in the world.
- Its degree and mode of integration: EU liberalized its trade in goods, services and factors inside. This process is linked to an harmonization of the national norms and the creation of an unique money important worldwide.
- A great lineage of social development models based on market modernisation and benchmarking.
So what remains to be done?
First, the consensus mode of decision in the Council in the financial and social harmonisation fields is a great source of blocking. EU suffers from a lack of supranational authority that could determine a coherent management of the powers transferred by the Member-States. EU needs a great figure to emerge and combine solidarity and competitiveness in the governance model. It will also be more visible for the European citizens.
Then, the EU has to negotiate the compatibility of the rules it exports to the partner countries. Nowadays, the local context is not enough took in count; a major witness is embodied by the fishing agreement with Morocco in 2012 where the Council failed to meet its obligations if the resources exploitation will be benefit to the local population instead of heighten tensions between the monarchy and the separatists. The external States prefer to talk State-to-State, but the work of the European External Action Service is very important in this situation. Maybe should the Council less protrusive and, once again, let a strong supranational institution represents the interest of EU. More largely, it will be profitable if the EU tried to adopt a comprehensive and integrated approach to its external policy in order take in count the local agendas and produce more effective internationally effects.
[1] « Les globalisations », Pierre-Noël Giraud (2018).
[2] « Globalization des firmes », Pierre Veltz in Mondialisation, Villes et Territoires (2014), p121 à 157.
[3] « La globalisation financière », Dominique Plihon in Les enjeux de la mondialisation (2013) p23 à 40.
[4] « The European Union : Laboratory for Controlled Globalization », Pascal Lamy in Reflets et perspectives de la vie économique (2002) p9-26.
