With the credit crunch, sub-prime crisis, the collapse of the Doha talks and an apparent global recession, for how long can the shaky foundations of globalisation survive?
Perhaps collapse will prove too strong a word. But there are undoubtedly signs that the global order is changing, and even some of globalisation's biggest cheerleaders are questioning its effectiveness.
The globalised ideal rests on the economist's premise that comparative advantage can be obtained by maximising trade. Free trade will see cheaply produced clothing from Africa sold for high technology western goods, unmanufacturable in the developing world.
This ideal, like every economic theory ever, comes unstuck when pesky human free-will enters the equation. It has seen farmers switch to cash crops such as coffee in numbers high enough to make the local economy a net importer of food, and thus reliant on factors outside of their control.
Indeed 'factors outside of national control' is the biggest emerging problem. With the recent advances in communication technology globalised has spiralled out if control. With no international institutions to guide it, no international lender of last resort and no global authority, it operates under anarchy, in a way markets and people have not done for centuries.
Now, with high oil and food prices and the credit crunch affecting at least the entire western world, we are seeing that when global trade turns sour, its effects are catastrophic.
Where previously national recessions could be eased with outside help, now we are all as one. World food is scarce, the price high. Aid can not really help, because no one can afford to offer enough.
Even globalisations's cheer-leaders are turning on it.
Paul Samuelson and
Martin Wolf both have long histories globalisation fundamentalism. Both now recognise the need to reign in its darker side.
Though no solution can be agreed, in many cases that is because the answers are go against economists instincts. Global democracy, perhaps even a global tax system, at least in the west, is needed to make the world run like a nation. Trade is now free enough to make this a reality. The only way to ensure equitable food production is with some degree of organisation. The coffee boom of the 1980's, allied with some other booms, saw very short term gains followed by famine. That dreaded word 'planning' might have to return to deal with the fact that food is essential to humanity, but luxuries are desirable.
Trade is now too free, with no control anywhere. With beginning of an uncertain era, globalisation needs to evaluate itself. At the moment it doesn't even have the capacity to do that.
