WAYS FORWARD will be a new Series which examines ideas to bring the UK through the self imposed hazard of leaving the EU and will focus on the very real changes demanded by the magnitude of that decision. It will not explore the reasons for, or wisdom of, the decision itself, which this Blog opposed, but accept it and move forward to find a path which could offer a new deal for everybody. Before we set off we must examine the character of the key component of where we are. Globalization.
Globalization is now a word used by almost every commentator to explain almost everything, as if it is a new phenomenon. There is nothing new about globalization. When the first primitive human stood upright and walked to the next valley, it began. It has been going on for hundreds of thousands of years. But it takes many different forms and has many different drivers. It is the drivers which determine the model of the age. We have had models driven by migration, trade, empire, famine, tyranny, industrialisation and so on. Each model is different and tends to have different aims and beneficiaries. Some are so restrictive in structure that they are thought of as closed rather than open. Each depends on communication and travel, so early models were tiny, covering a known world which today we would regard as no more than a neighbourhood. That meant that countless models operated simultaneously without contact with, or even awareness of, the others.
To succeed these various structure must bring benefit to the people they are inaugurated to serve. The model which was ushered in by the industrial revolution eventually split into two competing halves; capitalism and communism. Capitalism prevailed in the West, was led finally after two world wars by the United States and brought unprecedented improvements in living standards for all who lived within its boundaries. Communism prevailed in the East, was led by the Soviet Union and while it provided security and a basic standard for all its people, it did not raise their standard of living by anything approaching the margin of the rival capitalist model and therefore it eventually collapsed.
This coincided with the end of the Cold War, the reunification of Europe, in particular Germany, and the morphing of China into a one party autocratic state calling itself communist, but which embraced capitalism as its economic model. Added to these political influences came the belief that markets should be given freedom to lead. Meanwhile huge advances in technology, communications, the internet connected to the palm of any hand or carried in any briefcase, and strides in aircraft design and supporting infrastructures, allowed this emerging model of globalization to become truly global for the very first time in human history. And this time it was not controlled, but allowed to find its level. It was driven by free markets.
To begin with the idea was liberating and successful but the model is failing and in its final act. Markets follow patterns not unlike a flood. They advance where there is least resistance. Thus the current globalization model has created huge imbalances between trade surpluses and deficits, Forex reserves and government debt. Put loosely most of the money is in the East and most of the debt is in the West. But that could perhaps be resolved were it not for one fatal flaw. The rich are getting ever richer and the middle and working classes are seeing their standards of living fall. The young have a much tougher prospect than their parents who are the authors of this failure, did when they were young. This is not about an unequal advance, it is about a divergence of direction, making this unfettered capitalist model exhibit the same flaw as the controlled Soviet Communist one. Ordinary people are not benefiting. How and why this is, we will explore in future posts.
Enough to conclude by saying that the next model will still be capitalist, but it will be driven not by markets, but by people, whose advancement capital will this time more fairly serve.