Brexit does not signal the reversal of globalisation, but exposes the failing of nation states and regional blocs to manage the negative effects of globalisation. This will be the fundamental challenge moving forward – to ensure a new form of globalisation that works for all.
On Sunday, Huang Yiping, who is a member of China’s Central Bank monetary policy committee and a professor at Peking University, said: “Brexit could mark a reversal of globalisation, which would be very bad for the world."
But it is alarmist to believe that Brexit signals a new trend of Western countries retreating towards protectionism, or that the EU is set on a course towards dissolution now that Britons have voted to leave.
What is more likely is that the EU and the West will now have to engage in national and regional introspection to ensure that the gains of free trade are better spread amongst the workers, and that the workers are better cushioned against economic shocks.
We understand globalisation to mean the free movement of capital, people and goods. But it is more than that – it is a process of international integration arising from the interchange of world views, products and ideas, and aspects of culture. Globalisation is the term created to describe our reality – that we live in an interconnected and interdependent world.
There is no turning back from globalisation, from the reality that we live in a global village. But there are aspects of globalisation that have not served the poorer sectors of our societies, and this needs to be urgently addressed.
According to the respected Serbian-American economist Branko Milanovic, globalisation has largely benefited the poorest and very richest workers, but has not boosted the incomes of the working class in the West. This explains why many people in Europe and America don’t believe that a flexible globalised economy is working for them.
Milanovic has argued that the rise in populism corresponds to the decline in income share of the middle class.
“In the US and other rich countries, populism is rooted in the failure of globalisation to deliver benefits to the working class,” Milanovic has said.
This is very true in the case of Britain, which has deeply entrenched national geographic inequality, which has only been exacerbated by globalisation.
According to John Pilger, 600 000 residents of the greater Manchester area have been experiencing the effects of poverty and 1.6 million are slipping into penury, resulting in what he calls “a social catastrophe".
It was predictable that the growing inequality that has resulted from globalisation, and the loss of jobs to lower wage destinations, would lead to a backlash against the existing political establishments and against immigrants, who are blamed for compromising the well-being of locals.
In the case of Britain, as in other European countries, immigrants or “the other” are blamed for seizing jobs, driving down wages and overburdening the public service. The anti-globalisation backlash has exposed simmering racial tension and political polarisation. While the top issue of the Brexiteers was the “right to act independently”, the second biggest issue was immigration.
It is in the areas of Britain with the highest immigrant concentration, such as the east and west Midlands, where a vast majority voted to leave the EU at a ratio of 60-40. Workers in the north of Britain, many who are poor, are fiercely against immigration.
There is a tendency to blame immigrants rather than to help older workers adapt to new skills in new industries. In reality, it is far more likely to have been the Tory cuts – not the EU and immigration – that led to the parlous state of the Britain’s National Health Care system, education and health care.
British youth are not greatly concerned by multiculturalism or immigration. The vast majority of youth in Britain – 73% – voted to remain in the EU, but only 36% turned out to vote in the referendum.
Having largely left it to their parents and grandparents to decide their future, many are now frustrated that they will lose the opportunity to work in 27 European countries. They believe that the prejudice of the older generations has sold them down the river.
Across Europe, there has been a noticeable shift to the extreme right, with far-right nationalist parties gaining ground and capitalising on the frustration of the poorer sectors of their societies – blaming their misfortune on immigrants and refugees. Hungary’s right-wing Prime Minister Viktor Orban was one of the first leaders to close his country’s doors to migrants.
The leader of the anti-immigration party in the Netherlands, Geert Wilders, has been leading in the polls, and is calling for a referendum on leaving the EU. Similarly, the anti-immigration party led by Marine le Pen in France is also ahead in the polls for next year’s presidential elections and has also called from a referendum on staying in the EU.
There is a perception that jobs, living standards and welfare states were better protected in the heyday of nation states.
The 10% unemployment rate in the euro zone has been a concern, austerity measures have eroded welfare provision, and labour market protections have been stripped away. But these genuine concerns cannot be blamed on immigrants or refugees, and need to be strategically addressed by EU leaders in order to take corrective action.
What needs to be highlighted by EU leaders is the extent to which globalisation and economic integration has resulted in poverty reduction in many places.
There are significant benefits of shared ideas and greater access to trade has resulted in many cases in higher living standards. The benefits of partnerships with developing countries should also be emphasised.
While globalisation has necessitated giving up some national sovereignty, it is a process that is unlikely to reverse itself. Countries can’t shut their borders to trade, but they can renegotiate trade agreements to make them more advantageous for the working class.
While the distrust of the benefits of the global economic system may be at an all-time high, Brexit is certainly not the beginning of the end for regional economic integration. If anything, the fast-paced advances in technology remind us of our growing interconnectivity and interdependence.