The Globalisation Of Autarchy: The Return Of Closed Economies
The world has entered an era when US, which led globalisation in the last century, is retreating from it and China of all countries is stepping in to fill the vacuum.
In such a world, India needs to give up on ideals and engage in one-to-one reciprocals with nations.
2. A completely closed economy which does not engage in international trade. Although many economies have wanted such independence from the rest of the world to increase employment, their enthusiasm has been tempered by an examination of the other effects of protection
See also: utopia
--Routledge Dictionary of Economics
Economics as the primary tool of engagement between nations is giving way to walls, some physical, most invisible, that will prevent the free flow of trade and capital. One country after another, one leader at a time, is shedding the weight of the past that knelt at the temple of GDP growth as a proxy for citizen well-being. This reversal would have been insignificant but for the fact that it is currently being led by the US and Europe, whose share in global GDP is significant.
Globalisation is dying. Autarchy is birthing.
Through a rather tumultuous present that is swinging the economic thought pendulum to an extreme unseen, we are steadily moving towards a future, where victims of inequality are seeking a reversal articulated by nationalism, where interdependence of nations through products and services created across the world is being glossed over by simplistic silver bullets of closed doors, and where democracy is confronting capitalism like never before. A new order is taking over, reversing the economic momentum and the resultant prosperity we have seen from the 1980s, smothering the fact that millions have been pulled out of poverty in the past four decades. In other words, we are witnessing the green shoots of the globalisation of autarchy.
Ironic as it may seem, autarchy, that strong idea embraced by insecure leaders across centuries and geographies, is the unsaid buzzword attacking economics today. Couched under a more nationalistic slogan of ‘self-sufficiency’, this ability of nations to survive and sustain without any external interaction has afflicted the minds of not only the former Soviet Union, pre-1991 India or current North Korea; ‘free market’ proponents like the US in 1808, Mussolini’s Italy in 1935, Nazi Germany in 1936, all have at some point fallen victims to the idea of a nation being a glorious economic island.
What we are sensing behind the face of US President Donald Trump today is not merely a loud rhetoric, which no doubt it is. The real implication of his policies of building physical and legal walls has its intellectual roots in, and will bear the fruits of, autarchy. But Trump is only the latest, the most high-profile and most influential whipping boy --- he is not alone.
The closing down of the United Kingdom (UK), through Brexit, is yet another move in the same direction. And though it has been led more by politics than economics, the fact that economics, encapsulated by the country’s global competitiveness or lack of it, was the trampoline from which the country exited the European Union (EU) on 23 June 2016. UK was only the first, it seems -- the voices against EU are finding political salience in Europe’s largest economies of Germany, France, Italy and Netherlands. Others are likely to follow.
Driven by hot money, economic globalisation --- whose go-go years began in the mid-1980s when finance took charge of economics in the west and the tail of traders and speculators began to wag the dog of the real economy --- is gradually being seen as an idea that is way past its use-by date, and is slowly becoming a footnote in the quaint history of utopia. Emerging countries like India that have benefited from it seem to be left holding its rotting carcass. As a nation that pushed for and demanded opening up of trade borders towards the end of the 20th century, the US is today leading the charge on closing them, while those that followed are finding themselves standing on shifting sands.
You can sense an impending doom when China becomes the strongest supporter of globalisation, as articulated by President Xi Jinping at Davos last month. Although the ideas Xi stated are all in order, all he has done is use the vacuum in the world leadership to quietly slip into the role of a global leader, an economic statesman, even as the nation he leads rejects all forms of globalisation --- it clamps down on human rights, it openly and brazenly supports terrorists and terrorist state of Pakistan, it grabs territories belonging to other nations in the South China Sea. And even within the confines of economics, the China model, with dumping as its calling card, currency manipulation as its engagement with nations, and the resultant huge trade surpluses with most countries as its diplomatic conversation, is certainly not the way forward.
It seems the world’s leaders are collapsing under the weight of an economic darkness under which the only act they are able to do is put food from their own plates into their own mouths. The power of democracy is getting stronger but narrower, its articulation increasingly the expression of economic rage, its final destination to eat the rich internally and beggar their neighbours in foreign affairs. The G20 was supposed to fix this but hasn’t. Instead, due to varying and conflicting interests, it has become a cosy club where leaders meet and greet and get on with their lives --- India wants the end of trade and financial protectionism, China wants no interference in its currency manipulation, the US wants a trade balance that’s more stable, France and Germany want stronger financial regulation.
Institutions like G20 are created with great enthusiasm but die equally inglorious deaths. As part of a single planet, humanity has been aspiring towards a psychological unity for millenniums, first through organised hunting, then agricultural cooperation, then tribes, then military conquest, then religions, then colonialism, then nations and then free trade between nations. The first world-scale experiment in serving this centralising centripetal force of unity, was the League of Nations in 1920. That failed and gave way to the United Nations (UN) in 1945. Now, we are seeing the legitimacy of the UN under threat, with the world’s biggest and most brazen inequality through the Security Council failing to fix the world’s problems. The resultant failure of the UN is predestined.
A new centrifugal force is raising its head to dominate world affairs, a force that is moving away from aspirations of a global centre towards fragmented, individual nations and interests. In fact, there is no centre anymore --- not moral, not military, not religious, not ideological, not economic. For some decades, economics had provided a foundation through multilateral institutions, free trade, free flow of financial capital, all captured in one word --- globalisation. That foundation has proved shaky and the free world of democracies is teetering under the weight of inequality, religious aggression, xenophobia.
The result is a strange colour of nationalism that is willing to let go of prosperity and harmony and embrace dark closets, converse within echo chambers of simplistic worldviews, place nationalities of products above innovation, citizenships above well-being. Like it or not, we are entering a world of barriers to markets on the physical plane and of closed minds in the realm of ideas.
There is no doubt that the world needs a stronger discourse. The days of superpower-nations are coming to a close. There is no way China can replace the US --- apart from bullying skills, it neither has the ability nor the intent. The new conversations will be made in the language of trade. For India, stronger and more effective bilaterals with Japan, Brazil, South Africa, Southeast Asia and neighbours, barring Pakistan (no trade in terror), would be a way out. Such would be the path for other nations unwilling to close trade borders, as well. This might have been difficult in yesterday’s world. But technological hyperjumps and the emerging digital superhighways now allow nations to manage such complex relationships with ease.
Creating this discourse would be a slow process. When seen from the window of GDP share, the skew could be towards the globalisation of autarchy. But what are a few decades, even centuries, in the destinies of nations? So, while not dismissing the current phenomenon towards an economic shut-down, we need to know that autarchy is intellectually an ageing concept, but historically a recent flash in the pan, practiced mostly in the 19th and 20th centuries. The 21st century world has moved on.
The edifices of our world today are open economies, international law and individual rights. A US under Trump may shatter them for some time. An arrogant and insecure China under any of its leaders may trample over them. But they remain ideas that will find their own expression, give or take. On the other side, as citizens, we find ourselves increasingly living in urban centres, having global work permits, holding higher levels of literacy, indulging in greater engagement through social media, consuming products made across the world, dealing with ideas that reach us at the speed of the latest search string, all of which culminate into a more organised and refined political mobilisation.
It is true that globalisation will survive Trump and Xi as it has Hitler and Mussolini. It will survive the brutal Islamic State as it has the violent Christian inquisitions. It will survive partitions as it has the world wars. Globalisation began when the first human decided to walk across Africa towards a better life. As individuals became nation states, the walk continued. India led this walk --- it controlled 32.9% of world GDP in 1 CE --- but fell by the wayside when it discarded this force and began the futile navel-gazing exercise.
Now that we are picking up the pieces and dusting off the past to create a more integral, more globalsied future, India cannot and must not take the wrong direction. True, there is a sense of nations shutting their doors to look exclusively inward. This could be an opportunity for the ‘market’ that is India. To get there India needs to give up on ideals and engage in one-to-one reciprocals with nations --- the door can’t swing in only one direction. In the medium term, we could even influence the texture of globalisation by bringing the factor that’s been missing for centuries --- labour --- into the equation.
The inward march of the existing world order raising its head today will finally end up as a mere a semi-colon in the span of history. Finally, the globalisation of autarchy will give way to a new world order, with new leaderships, new discourses. We need to prepare for, drive and create this new order --- not only with ideas that are abundant in our past but equally with actions where we have been lagging. Until then, we need to prepare for a world of walls.
Gautam Chikermane writes on money, power and religion. His latest book is ‘Tunnel of Varanavat’.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.