Peak Globalization – Bruce Nussbaum (Harvard Business Blog)

Posted on December 29, 2010 by

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A very interesting critique of globalization. Is capitalism undermining Western hegemony?

Peak Globalization

by Bruce Nussbaum

Centuries sometimes take a decade or so before their true contours take shape and the 21st is no exception. In an uncanny fashion, the beginning of this century mirrors that of the last — the speed, scale, and disruption of globalization is generating a strong nationalist backlash. We, in fact, are living in an era of Peak Globalization as the costs and benefits of globalization begin to diverge according to country, class, and constituency. The international political consensus of the universal economic benefits of globalization that defined much of the 20th and early 21st centuries is breaking down. The centrifugal forces drawing nations toward globalization are giving way to centripetal forces pulling them away from it. Looking forward toward the next decade and beyond, we are seeing countries increasingly prize sovereignty over multilateralism, national interests over international cooperation, and local constituencies over global populations. In short, the tide of globalization washing across boundaries for so long has reached a peak and is receding. The result will be a more uncertain, chaotic and dangerous world that feels more like an old Cold War than a new End of History.

What are the major forces at work producing this Peak Globalization moment? I count Five Forces of Disruption at work, with the two most powerful being the rise and fall of nations and the rise and fall of generations (the other three are global urbanization, the spread of social media technology, and planetary biostress through overpopulation and warming). Let’s deal with the first two.

The year 2010 was the first in the new century that truly revealed the crisp lines of the defining dynamic of our time — the contest for the role of global hegemon between China and the U.S. Not since the Soviet Union has the U.S. faced a challenger of such economic, political, military and ideological might.

After decades of framing itself in terms of “partner” and “participant” in the global system, China in 2010 revealed its aspirational identity as challenger to the economic and political status quo and, specifically, the U.S. In a single year, China expressed its ascendancy in terms of irredentism (the Sprately and Paracel islands, like Taiwan, are now “core” national interests); mercantilsim (indigenous innovation, local content rules, and local control of partnerships are designed to force massive transfers of foreign technology); militarism (clashing with Japan, hacking into Google and foreign technology companies and government agencies, and expanding its blue water navy with an aircraft carrier and missile capacities); ideological (projecting its authoritarian state capitalist economic model as an alterative to failed liberal market capitalism). These are all expressions of national interests and represent strong centripetal pulls away from globalization.

Generational change is also playing a critical role in the expression of Chinese nationalism. Research performed by Western consulting companies reveal that the members of Gen 1, the 300-to-400 million 16-28 cohort born into China’s new prosperity, are far more nationalistic than their parents. Born into One-Child families, often raised by grandparents or family members other than their parents, their social ties are loose and they identify uniformly as consumers. They have little knowledge of the Cultural Revolution or Tianamen Square. Despite the publicity surrounding political dissidents, research shows that the overwhelming majority of young Chinese are proud of their government and accept its authority and direction. Unlike their parents, Gen 1ers prefer Chinese over Western brands. They are very sensitive to perceived Western insults to a rising China. Gen 1 is often overtly anti-American, thanks to an education system that consistently frames the U.S. as an enemy. This rising generation reflects and reinforces China’s growing nationalism.

America’s rising nationalism is taking a different form but it is powerful nonetheless. The positive consensus toward globalization that defined the U.S. economic model for many decades is unraveling as a result of the recent recession. The benefits of globalization are increasingly going to corporations and banks and a small number of elite beneficiaries, while the middle class gains little. The burst housing bubble, collapse of the stock market, and end of the credit explosion has left most middle class families no better off than they were 20 years ago. Wealth and income inequality are at levels not seen since the 1920’s. Outsourcing of blue and white collar jobs, and now R&D, is hurting the middle class, which cannot find the educational resources to increase their skills and value-added contributions. The Tea Party movement is a protest against big business and banking as big government. Increasingly, globalization is seen by the middle class as the enemy of their well-being, not the friend.

Generational change is also playing a strong role in rising U.S. nationalism. Gen Y culture has strong local tenets — local food, DIY, sustainability (which means locally grown and made things that don’t require energy-using global transportation). There is a strong antagonism toward big corporations and the outsourcing of jobs overseas, as Gen Yers worry about their future. Raised during a period of continuous foreign warfare, bursting tech and housing bubbles, the worst recession in half a century, and the rise of China, Gen Yers worry about America’s economic future because it is their future. From the Gen Y perspective, globalization is not providing opportunities for the future. Just the opposite.

Finally, Germany appears to be pulling away from the concept of “Europe,” as it begrudgingly comes to the aid of Southern European countries in financial trouble. Young Germans identify far less as European than their parents and are far less willing to should the burdens of financing a Europe with their tax dollars. In that, they are one with the Gen Y generation of America. The young in the U.S., China and Germany, in their different ways, are pulling away from their parents notion of “globalization.”

The 21st century appears to be revealing itself as a multipolar world of rising and falling nation states jockeying for economic, political and military position in a weakening global system with shrinking popular legitimacy beset by growing conflict. Brazil, Turkey, India, China, Russia, America, Germany, Japan — are the actors in a world that Metternich would recognize. Now, who would have guessed that would be the case in 1999?

Bruce Nussbaum, former assistant managing editor for Business Week, is professor of Innovation and Design at Parsons School of Design.

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