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What’s after globalization?

7th July 2019

For decades it’s been assumed countries would become more open, liberal and cooperative with international institutions overseeing trading and finance. However in his new book “The Levelling”, former investment banker and Princeton economist Michael O’Sullivan suggests multipolarity is coming next.

Globalization is already over – killed by the poor and inconclusive response to the global financial crisis which failed to tackle the root causes of the crisis. O’Sullivan says as global economic growth slowed, central banks responded by pumping money into economies by buying assets to sustain expansion –  making growth more “financialized.” In addition, the side effects, or rather the perceived side-effects, of globalisation are more apparent: wealth inequality, the dominance of multinationals and the dispersion of supply chains, which have all become hot-button political issues.

In an interview with the Economist, he explains why he thinks the future will be multipolar, dominated by at least three large regions: America, the European Union and a China-centric Asia. Mid-sized countries; Russia, Britain, Australia and Japan will struggle to find their place in the new world order. The regions will all take different approaches to economic policy, liberty, warfare, technology and society while financial institutions such as the World Bank, the International Monetary Fund and the World Trade Organization will appear increasingly ineffective.

O’Sullivan’s describes a future of “Levellers” and “Leviathans”. The former are countries that hew to rights and freedoms while the latter are accepting of state-managed economies and fewer liberties. He points out that we’re already seeing signs of the multipolar world; with trade tensions, advances in technologies and the regulations of technology splitting the world into distinct regions that either follow a Leveller or Leviathan approach.  These large regions are already distinct in the workings of their economies, laws, cultures and security networks and are developing distinctly different ways of doing things that mean increasingly dispersed and regionalized economic power.

This is unlikely to be a smooth transition. Since the Industrial Revolution, O’Sullivan observes, the world has had an anchor point for the spread of globalization – Britain in the 19th century and the United States in the 20th century. Now with three – perhaps four major and culturally distinctive poles – the potential for friction and conflict is heightened. At the margin, O’Sullivan predicts the flow of people, ideas, and capital may be less global and more regional and in time could be reinforced by a growing sense of regionalization across the main poles. More alarming, a multipolar world may signal the world has already passed “peak democracy”

A future of levelers and leviathans seems a significantly more uncertain and complex one.