Just as with Brexit, the US Presidential election result will have the pundits writing about a mass rejection of globalisation. The far right is on the rise, and immigration and tax avoidance are the popular targets.
The benefits of globalisation, especially for alleviating poverty, are quickly forgotten. The public demands that national leaders answer their fears. This has presented social democrats with a staggering challenge, a challenge that remains unanswered. How can social democratic politicians in a national government bring balance to an international market?
The Donald Trumps of this world have thrived on talk of closing borders – but in fact, it is the competitive nature of nation states that makes it hard to address the balance. For example, instead of co-operating together on tax, countries compete to have a tax system that is seen as the most attractive to business. In 2013, developing countries lost $1.1trn in tax evasion and illicit finance. The rate of those losses increases at double the rate of global GDP.
The free flow of capital led, in part, to the 2008 financial crisis. The obvious solution is international capital controls – yet this isn’t even debated by social democrats.
Then take migration, the far right’s favourite stick to beat social democrats with. With the possible exception of North Korea, what nation state hasn’t had migration throughout its existence?
This is social democracy’s Gordian Knot. We believe government should bring balance to the market. Meanwhile, those who feel powerless by globalisation demand protection through strengthened nations, which can lead to culturism and worse, racism. They point at “them” and demand borders and walls to protect “us”. Such a stance leaves us institutionally divided at a time when humanity needs to co-operate globally to address the world’s financial challenges.
In fact, the modern concept of nation state is a 17th century institution designed for war, not regulating trade. Hobbes’ Leviathan rooted the social contract in security. As European monarchs realised that embracing capitalism and scientific exploration could expand their power, the need to separate “us” from “them” became pertinent. Only three years of the 17th century were without war between European nations: indeed, as the oldest among us remember first hand, war ravaged Europe until 1945. Nationalism became a useful means for colonial subjects to resist imperial rule.
Today, the founding purpose of the nation state has never been less relevant. Since 1945, no UN recognised nation state has been conquered and ceased to exist. Even prior to 1945, the last serious international war in South America ended in 1941. Today conflict is mostly within nations (think Syria’s civil war) or limited to border skirmishes and armed interventions. Only Africa provides more numerous exceptions to this trend.
This is an achievement of globalisation. War has become too expensive. We possess the technology to kill the powerful as they sit in the Kremlin or the White House far behind enemy lines. Meanwhile, peace has never been so profitable. The growth of long distance trade and foreign investment means that international peace brings much more wealth than international war used to. As globalisation continues, the raison d’être of nations will move towards irrelevance.
And the public are beginning to realise this. The Remainers demanding Calexit and Londependece are not just having a strop. It is illuminating that their reaction to electoral loss is not to protest the result, but to seek to replace a nation state with a smaller state rooted in a common humanity. Such states would be interdependent upon other power centres in order to survive. The Londepenence meeting I attended last weekend confirmed this.
As the global population grows and becomes increasingly urbanised, it seems more and more likely that such interdependent power centres will be based on cities or group of cities. The social justice challenge for progressives in the 21st century is how to ensure that, in a world of interdependent metropolitans, no one outside of these clusters gets left behind.