"What is in the interest of General Motors is in the interest of the United States, and vice versa," he said in the 1950s. This was consistent with the state of the international system at that time, given that it was based on “nation-states” and “national economies”, whose strength was linked to the resources and capabilities available to each country. But the so-called globalization movement, based on trade liberalization and capital movement, has dismantled the traditional calculations of economic power, undermined the prevailing political formulas domestically and the balances of power in the international system. These political fluctuations and strategic rivalries threaten the coherence and continuity of the globalization model itself.
The United States was largely on the international scene because it emerged from World War II with a strong economic base, while destroying the productive bases of all other nations involved in the conflict. Therefore, the products of the American companies dominated the international markets without competition, and this reinforced the American hegemony politically. As the economic power of industrialized countries increased in Western Europe and Japan, these countries joined the United States. Known economically as the Bretton Woods system, which adopted the foundations of the capitalist system as applied in the West. The European countries and Japan assumed a privileged position in this system for their economic strength, although they did not possess concrete military capabilities, where they did not have alliances with the military power of the military.
This alliance was also in the interest of the United States, which, while still occupying the position of the largest global economy, could not prevent the rise of other economic powers, so it resorted to containing it in this alliance, to ensure that it would not be supported by any movement that would support it. Economic globalization, which enabled them to open the markets of developing countries to their products, and to protect the intellectual rights of their It will continue to occupy the forefront of the world order, economically and politically.
But the balance of power has changed after several decades of globalization, with emerging economies threatening Western hegemony, led by China, which the United States views as a strategic adversary that seeks to undermine its position. Unlike the European countries and Japan, which the United States has managed to contain its rise, China has different values and a different production and development model, in many of its dimensions contradicting the Western model.
State of the World
Although China has benefited from all the facilities of globalization, it has not adopted the approach of market freedom, but the state has a clear grip on it, whether through the laws and rules established by the direct or indirect participation of the economy. Despite its repeated promises to open its market to foreign companies, it still restricts their entry into certain activities and imposes harsh conditions on technology transfer to companies that allow it to do so.
The status of large companies in both the United States and China reflects the difference in the state's relationship with the economy in both countries. While the strength of Chinese companies is directly supported
This is no longer entirely true of the US economic system. The major technology companies have so far been able to avoid taxation, so they do not enrich the US treasury, or the treasury of other countries in which they operate, in addition to the fact that many of these opportunities are not available. It does not enrich the purchasing power of the American consumer, which is the mainstay of the US-based economy. It is available only to groups with advanced levels of education, and not to community groups that have been working in traditional industrial companies, such as General Motors.
On the other hand, American companies have had relations and interests with foreign countries, including China, which do not pass through the gate of the state, which may often be inconsistent with the vision of the American institutions of these interests. These external relations take place within the framework of the system of “global governance”, which is controlled and established by international institutions, outside the framework of bilateral relations between States in their traditional form.
The logic that guides the movement of companies in this regard is one that reduces the cost of production, profits and open markets to increase sales. This situation is changing as the United States feels threatened by the emergence of its competing forces rapidly and threatens its political and economic leadership.
President Donald Trump's administration has begun to pressure US companies to reduce their dealings with China under the pretext of protecting US interests and national security, and imposing restrictions on Huawei as a clear example.
The United States' recourse to economic weapons is primarily to confront its opponents because it recognizes that military power alone is not the solution that will ensure that it continues to lead the world stage and is an essential goal.
Technological development in the field of weapons, especially nuclear, has made any military confrontation between the major powers or even smaller ones with nuclear capabilities, a process fraught with danger, and the American voter is not prepared to have any of its resources.
On the other hand, the economic instruments that have been resorted to, such as imposing tariff penalties on imports, the use of the special status of the dollar in the international banking system, and the pressure on American companies and allies to support the government and the system of government. It would encourage other States to use the same weapons, which could lead to the disintegration of its unity and integration.
Contradictions of economic globalization
Some analysts argue that the system of economic globalization is unsustainable due to structural contradictions among the foundations, most notably the professor of international economics at Harvard University Danny Roderick, who devised a three-pronged approach.
Rodrik points out that the three-sided global economic system is difficult to meet and achieve at the same time. The first of these is the global governance system, that is, the institutions and rules that have governed the interactions of the international economy in recent decades.
Referring to the neoliberal philosophy embodied in these institutions and rules, the main objective was to protect capital and private ownership from the consequences of the emergence of nation-states and the nationalization trend that seeks to dominate the economic and financial resources of the nation-state.
Economic globalization theorists in international institutions promoted the concept of interdependence of economies and their mutual impact at the global level, and that the unit of study and understanding should be the 'global economy' and not the 'national economy', and then supported the creation of a 'creation of an enterprise' to create The World Trade Organization (WTO), which regulated the rules of economic interaction, came into being, not only “among” countries but “within” countries. Also, conditions or rules that States should apply to obtain accession privileges. The basic idea was to isolate the rules of the world economy from the pressures and fluctuations of domestic politics, but the system of economic governance clashes directly with the second side of the world economy, according to Roderick, the nation's sovereignty. Notwithstanding all that has been said about the integration of the world economy, the national State remains the fundamental unit of the international system. It establishes the infrastructure upon which economic activity is already based, but the global governance system has limited its control and ability to control its resources and the flow of funds. While the process of globalization has unleashed capital mobility, where companies have flourished, it has undermined the economic foundations of the state, losing the ability to impose taxes or tariffs to support their budgets or achieve their internal goals.
The third pillar on which the world order was based is political democracy, which Western countries have deployed as a son of economic liberalism, believing that this is a guarantee of world peace, as the countries that share the economic interests of the two countries do not share the economic interests of the world. Democracy is a “undermining” factor of global cooperation and not a supporter of it. On the one hand, the democratic system is supposed to give voters authority over the decisions that affect their lives, through their control over elected Governments and legislative institutions. But the institutions that governed the process of economic globalization and laid down their rules were not elected, but rather “supranational” institutions, intentionally isolated from domestic policy interactions.
When the negative effects of globalization began to emerge, it was only natural that the affected groups would have an impact on the system, and on its national political leadership, which it had endorsed and dedicated to its continuation.
This was indeed the case. In Europe, public anger against the institutions of the European Union, which are also “supra-national”, and their policies, has increased, reflected in the successive electoral defeats of the pro-European parties. The principle of the free movement of people, one of the fundamental freedoms of the European Union, has been under severe attack in the view that expatriates are crowding out “indigenous” citizens in access to available jobs, health services and social services. The British vote to exit the Union on the principle of “restoring sovereignty” on the border and from the European Union was a triumph.
In the United States, the relocation of many American industries abroad led to the collapse of local communities, where unemployment and addiction to painkillers known as the Opioids
Economic prosperity, and US infrastructure collapsed as local incomes from the taxes generated by these companies declined. The anger of these societies was the driving force that Trump has brought to power, which pushed him to pressure American companies to create new jobs at home, in an effort to nurture the nation.
Challenges of international cooperation
The 75th anniversary of the Bretton Woods Conference, held in July 1944, was an occasion to assess the functioning of the global economic system to which the Conference set its first blocks, and to review the challenges facing it. On this occasion, the Bretton Woods Commission issued a
Senior economists, including Paul Volcker, former president of the US Federal Reserve Bank, and Nicholas Stern, professor of economics from the London School of Economics and others. Articles in the performance of the system have found much to celebrate.
While the world's population has tripled since 1950, the level of per capita income globally has quadrupled, and the number of people living on less than $ 2 a day around the world has fallen from about 10% in 1950 to about 75%. Globalization 39 times in the same period.
However, there is widespread skepticism about the ability of the global economy with its current system to continue to achieve such positive results.
Weak growth rates that have plagued the world economy as a whole and Western economies in particular since the outbreak of the financial crisis in 2009 are a strong indicator of this.
Although unemployment rates have fallen sharply in the largest Western economies, the United States, the purchasing power of large community sectors is still weak, with opinion polls showing that the majority of the public is facing a majority.
The trend towards mergers or acquisitions between companies, which is devoted to a monopolistic model by a few large companies on economic activity in its various branches, reflects the weakness of the current capital system's ability to take profits. It is assumed that market freedom is based on competition, which is in the interest of the consumer, but the big companies are in fact resisting the emergence of competitors, and to acquire them, so as to maintain a large margin, and profitable society.
As a result of this situation, the gap is clearly widened between the small group benefiting from the current economic model and the rest of society, which has lost confidence in the ability of this model to achieve sufficient surpluses to meet their needs, and provide a fair opportunity for new generations to improve the social and economic ladder, and achieve a better life. Economic data reflect the widening gap, showing that only 0.1% of the American population controls nearly a fifth of the nation's wealth, or the equivalent of 90% of the American population.
In this context, voices have been raised calling for a tax on wealth and for high-tech companies that do not contribute to the national economy. Perhaps the escalating demands of the major beneficiaries of this system themselves for the need to take the initiative to address this situation have demonstrated evidence that they feel that the current system is unsustainable.
The latest initiative of this kind was the open letter signed by 18 major American riches in June 2019, in which they called for taxes on the wealth of “a class in the United States”. The signatories included George
Soros and Chris Hugh are one of the founders of Facebook.
"The United States has a moral and economic responsibility to tax our wealth, which can contribute to confronting the consequences of the climate crisis, improving economic conditions and health services, and providing more opportunities," the letter says.
The future of the global economic system
There is no doubt that the regime that has governed the interactions of the world economy in recent decades faces many challenges, raising questions about its viability, especially in the context of the plurality of alternatives. Just as the world has known the “Washington Consensus” that has prevailed in the past decades, there is now an alternative model, the Chinese development model, which has proved its efficiency in lifting millions of people from the horrors of the world. In particular, it is based on pragmatism and a common interest in promoting it, and does not address the need to embrace certain political values. The Draft Belt and Road demonstrates the seriousness of China in the dissemination of this model, and the formation of relations and alliances that support its rise as a major nation.
Some analysts argue that technology giants are also presenting a different vision for regulating global economic interactions.
There is no doubt that these companies have become major players in the global arena, and aspire to play the roles that were played by international institutions or governments, some of them have presented new insights on how to govern the Internet.
Facebook has also entered fields that were previously reserved for governments by announcing the intention to launch a global cryptocurrency.
On the other hand, some analysts believe that there is a risk that the world economy will be divided into spheres of influence, surrounded by the major economic forces of the United States, China and the European Union. In the context of competition and the declining climate of openness and international cooperation, each of these forces will seek to protect their economic interests by making trade agreements with the smaller and weaker countries surrounding them.
The agreements give major powers preferential treatment in the promotion of their goods or access to raw materials, while at the same time preventing competing forces from achieving an economic presence in their sphere of influence. While this seems primarily economic competition, the risk of sliding into military confrontations becomes significant, when these forces feel that excluding them from certain areas threatens their interests.
For this reason, most analysts argue that it is important to maintain current economic intervention as one of the best defenses of world peace.
Karen Abulkhair is an international affairs advisor at the Center
The system that has governed the interactions of the world economy in recent decades faces several challenges, raising questions about its viability, especially in the context of the plurality of alternatives on the ground.
The United States was largely on the international stage because it emerged from World War II with a strong economic base, while destroying the productive bases of all other nations involved in the conflict.
US companies have relations and interests with foreign countries, including China, which do not pass through the state gate, and may often be inconsistent with the vision of US institutions for these interests.
These external relations take place within the framework of the system of “global governance”, which is controlled and established by international institutions, outside the framework of bilateral relations between States in their traditional form.