By Enrico Verga, a writer, consultant, and entrepreneur based in Milan. As a consultant, he concentrates on firms interested in opportunities in international and digital markets. His articles have appeared in Il Sole 24 Ore, Capo Horn, Longitude, Il Fatto Quotidiano, and many other publications. You can follow him on Twitter @enricoverga.
Is neoliberalism, as classically incarnated at Davos, dead?
Two major establishment organs give opposing answers.
In the January 22 edition of the New York Times, Peter Goodman announces that Populism Is Waning; given that at Davos populists are not well-regarded, this is Reason to Party in Davos.
On the other hand, in the January 23 Financial Times, Martin Wolf, speaking of Davos 2018, declares that The liberal international order is sick.
One of the two major bulwarks of the current international capitalist order must clearly be wrong.
Who Comes to Davos?
The attendees in Davos fall into several categories.
The first comes from private sector finance: banks, insurance companies, investment funds – in short, any institutions with global financial interests. These groups think about other things besides financial speculation – developments in the business world more generally, pharmaceuticals and digital technology, demographics, and so on. As for speculation itself, it was at the base of the American real estate bubble that collapsed in 2007-2008, as well as the successive global commodities bubble that was the downfall of multiple countries especially dependent upon the export of raw materials, from Brazil to Russia to the Republic of South Africa. Among other goals, speculative finance dreams of a world without national barriers. A world without borders or walls, in the sense of a world where capital can leap from China to Africa in the twinkling of an eye.
This group typically supports politicians with a globalist agenda: those who also aim for a “world without walls,” in the sense of one where citizens – the labor pool – are unmarked commodities, interchangeable like the apples in a barrel. Politicians, in a word, like Hillary Clinton in the US, or Merkel and Renzi in Europe.
In a second category, we can place Bill Gates, Angelina Jolie, Cate Blanchett, foundation and university heads, and sundry other “do-gooders.” In addition to giving the event a bit of color, these personalities play other important roles. For one, they help sustain the perception that civil society is represented at Davos. In particular, celebrities – the “idols” of the common people – serve as stand-ins for everyone else. For example, Angelina Jolie attends as a representative of UNHCR, and as such she acts as a symbol for the idea that even the poorest of the world’s population is present in spirit at Davos.
New Faces in Davos
A third category of people in attendance at Davos are politicians.
These individuals represent a large portion of the world population.
What is new this year about their contingent at Davos is that many were elected with a nationalist agenda (although of course, whether or not these agendas stand a chance of becoming reality is highly variable). Let’s take a look at this year’s crop of leaders, with the help of a pictorial guide from the World Economic Forum web site.
First, we have the outright nationalists, those who speak in terms of “my country’s interests first, we can worry about the rest of the world later.”
One such is Narendra Modi, the Indian prime minister. His philosophy is more or less “India First.” True, his Davos speech was very globalistic, very “economically correct.” But his political agenda is the most nationalistic to surface in India for decades.
Then there is Donald Trump, the American president, who is straightforwardly nationalist in his rhetoric.
What about Theresa May, prime minister of the UK? Another nationalist, at the head of a nation that is trying to get out of a political and economic free trade agreement that had lasted decades.
Let’s now move on to the globalist impostors: on paper they are in favor of free markets, but in reality, for “reasons of state” (or in response to voters), they are rather nationalistic, especially in their economic decisions.
Take Liu He, the representative of the Chinese government and an expert in finance. Verbally, China is globalist, especially if one judges from the speech of its current leader. If we consider its actions, China can better be described as mercantilist: it’s true that when the goal is to export its products, or to to buy up or invade foreign markets, it is fiercely pro-globalization. If we instead observe its policies protecting key national businesses, or its strenuous defense of the currency and its other financial interests, China is anything but globalist.
How about Emmanuel Macron, the new French president? He is certainly in favor of globalization when the game is bringing in investments from other countries, even rather borderline ones (for example, Qatar, which has some issues with financing not particularly legal organizations), but he sings a different tune when the focus turns to international cooperation. Among his other not very globalist moves, we can cite his policy on immigrants and his foreign policy aimed at “defending national interests.”
Then there is Michael Temer, the successor as president of Brazil to populists like Lula and Rousseff, and possibly only an ephemeral presence on the Brazilian stage. He is now forced to deal with the penetration of Chinese companies and the resulting detrimental effects on national businesses. He is moreover under significant pressure from two populists in the upcoming elections, Lula and Bolsonaro.
Some nations are undecided – to some degree they are neutral, and they are also waiting to see how the wind blows. Here we can mention Switzerland and some of the African countries.
So who is left that we can cite as pro-globalization? Obviously Merkel, who has just signed a new Franco-German pact and is the proud paladin of a fluid, barrier-free economy. Certainly, if the issue is exports, Merkel is in favor of globalization: after all, Germany has a large export sur and cannot allow it to decrease. However, on immigration even Merkel is now running into substantial headwinds with her “potential coalition partners.”
Another straightforwardly globalist leader is Trudeau, the Canadian prime minister and a fierce supporter of the EU-Canada Comprehensive Trade Agreement (CETA).
Once again, though, his passion for free markets is easily explainable in terms of the Canadian trade balance, which makes it desirable for Canada to export raw materials and processed goods.
The situation that Wolf describes is simple: the populations, especially the middle classes, of a large number of countries that have historically been highly favorable to globalization, have become tired of the promises of neoliberal “growth.”
An additional problem, acknowledged even by the NYT, is the rise in debt. Ever more money is injected into a financial system which one worries might not be able to sustain another financial crisis. And if another crisis were to arrive, this will only increase the appeal of nationalist politicians ready to promise their populations protection from the globalized world.
Wolf is right, but at Davos his is a voice crying in the wilderness – the invitees prefer instead to credit the comforting reassurances that Goodman very helpfully provides. They avert their eyes from the fact that globalization (or neoliberalism, if one prefers), in its current form, is moribund.
An earlier version of this article in Italian was published by Linkiesta and can be read here.