Is globalisation going into reverse? Nial Ferguson has argued precisely that. We disagree. Thanks to the Metaverse current problems with globalisation are temporary.
“Technology alone…does not determine globalisation,” says the famous economist Stephen D King in what turned out to be a somewhat prophetic book, ‘Grave new world.’
King, the senior economic adviser at HSBC Holdings and former chief economist of HSBC, wrote the book in 2017. He said: “If technology was the only thing that mattered, the Western Roman Empire — among other things an incredibly sophisticated technological and logistical infrastructure— would never have come to an ignominious end in AD 476.”
Stephen King is a brilliant economist, and the book in question was undoubtedly a good read. But is he right? For one thing, the Roman Empire ruled the best part of what was then considered the known world for half a millennium, or longer — maybe that is testimony to the power of technology. For another thing, Rome was partially defeated by a disruptive technology— the Huns with their ponies and the ability to fire arrows whilst leaning backwards.
But what we can say is that when the Roman Empire ended, an age of globalisation (of the known world) an age of multiculturalism, also came to an end, and the West was a good deal worse off as a result. The dark ages began, and it took centuries, possibly even a millennium, before the West saw living standards match those seen before the last Emperor of the Western Roman Empire — Romulus — was deposed by the Germanic general Odoacer.
Roughly 1500 years later, the first age of true globalisation began — an era of extraordinary wealth creation, sadly ending in 1914. They call this period the First Age of Globalisation. This was followed by a period in which the world became inward-looking. In 1930 the US passed the Smoot-Hawley Tariff Act, which increased the average tariff to 40 per cent. The Smoot-Hawley Tariff Act was followed by the US Great Depression, which was followed by the Second World War. US protectionism didn’t cause World War 2, but a reversal of globalisation, the Treaty of Versailles and lack of support to the League of Nations were all contributory factors.
That is why most of those who take a long-term historical perspective worry that we are seeing the second age of globalisation come to an end. However, Stephen King was not happy to draw the conclusions that he did, in a way, just like his more famous name-same, he was writing a horror story. It is just that Stephen King, the economist, felt he was writing non-fiction.
Omicron and the end of globalisation 2.0
And now, four years later, Nial Fergusson, the famous economic historian, says, “Omicron Sounds the Death Knell for Globalization 2.0.”
“Globalisation peaked — or maybe ‘maxed out’ would be more accurate — in around 2007,” he said.
His argument —just like King’s — is not a diagnosis he makes gleefully (he is more like a sombre doctor telling the patient they have a terminal illness) is supported by multiple pieces of evidence.
He says that if you look at data on global exports to global GDP, foreign assets to GDP, or flows of migrant labour, then you draw the same conclusion — globalisation peaked in 2007.
He then cites the election of Trump and the Brexit vote as further evidence. He argues that the backlash against China is further cementing the end. Didi’s decision to pull out of its stock market listing in New York adds further support to the idea of a reversal of globalisation. Covid didn’t help, of course — as the West blames China. This is why many people are so alarmed by the narrative the Covid virus began in a lab in Wuhan. Evidence to support this narrative is weak, yet it persists. If it turns out to be true, the Chinese backlash will be complete.
But Ferguson’s biggest fear relates to a possible conflict involving China and Taiwan. Here is a question for you: has the anti-Chinese sentiment in the West, exacerbated by Covid and encouraged by the Trump regime, increased the likelihood of a Chinese invasion of Taiwan? Maybe China feels that since the West doesn’t want to trade with it anyway, it might as well do as it wants and invade an island it believes is its by right.
If the above proves true, then we may see Cold War 2 — if we are lucky. Then, globalisation will move into reverse, and unhappy times will return.
Why the end of the globalisation narrative might be wrong
There are two reasons why the ‘end of globalisation’ narrative might be wrong. The first lies with the labour shortage. This is not a temporary problem; as the West ages, it will need to import labour from abroad to meet the needs of its retired population.
The Metaverse
But the key argument takes us back to the beginning of this article — Technology.
The Metaverse, or if you prefer, call it Web 3.0 or even Web 4.0, changes everything.
Accenture, for example, has been working with Microsoft and AltspaceVR to develop Nth Floor, a tool that enables “people to meet, interact & collaborate in virtual offices leveraging virtual reality.”
In a recent webinar, Kunal Patel, Co-Founder & CTO, BrandXR said that Accenture wants its 650,000 employees using Nth Floor. Patel presented an image showing a mock-up of a worker in Soul talking to someone else in America, complete with real-time language translation in virtual space — as if they are in the same room.
The clash of two forces
In truth, we see the clash of two forces. On the one hand, we see an anti-globalisation movement frequently supported by older people, who often find technology alarming. They fret about automation destroying jobs, about social media reducing attention spans and have a nostalgic view of a better past — they want to make America or Britain or France or wherever great again.
On the other hand, you see another mindset that sees technology as the solution — as the answer to climate change via renewables and an electric revolution, as the answer to labour shortages via automation. It also sees automation, and technology leading to greater efficiency as the answer to a better quality of life.
As for cultural understanding versus division and the backlash against immigration and refugees, we are seeing the growing popularity of foreign language content on Netflix. In addition, evidence shows younger viewers are lapping up international content complete with subtitles. Maybe there is overlap between those who love foreign content and react with horror at the treatment of refugees.
As for the Metaverse, this is emerging as the top layer in the technology revolution. If we view our desk through a VR headset, we can have as many virtual computer monitors as we like — they are free. We can go where we like, and we can communicate with anyone we want. So given how the Metaverse will make it easier and easier to communicate with anyone on planet Earth and given how it will help improve cultural understanding, how can it not give globalisation more impetus?
The technology clash
Technology is changing whether you like it or not. It will make the world seem like a smaller place. You can say you don’t want it. But if you do that, you will lose. The technology tide is irreversible. It can’t be commanded to stop. Must we learn that lesson the hard way, as King Canute’s advisors did? Or should we instead embrace technology, what it means and turn it to our advantage?
The reality is that the world needs the technology markets to thrive. The world's economy is investing in technology and without continued growth in the sector we risk economic meltdown, a real 'reset' that will set us back more than a few levels.
Globalisation might have peaked in 2007, but the subsequent reversal is temporary. It will regain momentum later this decade; technology will ensure this. Whether that is good or bad depends on us, but first, we need to understand that it is happening.
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