Menu for 2019: Inherited populism

Imtiaz A Hussain | Published: December 31, 2018 21:23:26 | Updated: January 05, 2019 21:19:29

One can hardly believe how the United States, with unemployment diving towards the incredibly low 3.5 per cent level throughout 2018, could still be clamouring so loudly with populist tones. The last time such a level was attained, in the late-1960s, the country experienced not just economic growth, but also globalised economic growth in which it was the pace-setter. Today it faces a rampant Chinese economy growing at twice the US rate, even though that Chinese growth-rate is only half of what it was only half-a-dozen years ago.

As China absorbs the US popular heat, evident most vividly in a ballooning tariff-war that bilateral negotiations have not corralled, across the Atlantic, West European countries face a similar malaise, largely, though not exclusively, blamed upon Syrian refugees, but thereby refugees and foreigners in general. As Julia Lynch and Jonathan Hopkin note ("Current History," November 2018), "xenophobic appeals have been successful in Austria, France, Switzerland, the Netherlands and across Scandinavia," because of "cultural change" trumping "an economic interpretation emphasising the dislocations of the [2008-11] financial crisis as the cause of right-wing populist success . . ." Although Barry Eichengreen attributes a similar sentimental base across the United States to a "growing segment of society of being left behind," he, first, distinguishes this current outburst from a century ago (depicting it then to "rapacious moneylenders and monopolistic railways," not to mention "robber barons-Carnegies, Morgans, and Rockefellers"), he does shift attention slightly from that "cultural change" towards "commercialisation." How it "exposed the farmer to international market forces" from the late 19th Century was replicated after World War II towards anything foreign, even when "keeping the assembly line moving became . . . more important than before" ("Current History," January 2017.

There is much to be learned from how economic progression can be twisted and turned to project a social shortcoming: politicians thrive on this, particularly under competitive circumstances. They deliberately ignore the long-term sways of economic (and mostly technological) sparks, since only the short-term pays off in political competition. An economist, John Maynard Keynes, spoke succinctly of their mindset (not to mention deficit-financing advocates, like him, among subsequent economists): "In the long run, we are all dead."  Academics, too, get more drawn into portraying the top political concerns that politicians create than they do those secular long-term trends that economists, engineers, and technocrats tinker with.

We might get a better sense of long-haul dynamics from those evaluating technological impacts upon society. Richard Baldwin's discussion of globalisation is one of them ("If this is Globalisation 4.0, what were the other three?" World Economic Forum, December 22, 2018). "Arbitrage drives globalisation," he posits, putting in clearer, crisper tones what is at stake than politicians and their academic sympathisers have: the "relative" advantage between people, societies, countries, and so forth. He places technological developments today into what he (and others) calls Globalisation 4.0, the fourth major moment when relative conditions have become so pernicious that they urgently need governmental bail-outs.

Globalisation 1.0 came with the First and Second Industrial Revolutions, when mass production demanded trade be globalised, often against stiff resistance by many countries/societies (such as colonies, as in British India). Though this arbitrage lasted even after World War II, the onset of neo-liberalism from the 1990s exposed a new form of relativity: it was no longer trading prices, but ICT (information and communication technologies) intervention now encouraged factories to be parcelled out globally based on relative wages, thus introducing what Alan Blinder calls "offshoring" production, or Globalisation 2.0. It was only a matter of time (and too little at that), to shift from off-shoring factories (production, that is), to offshoring services, for example, corporation customer engagements/negotiations in English could be done at a far lower cost (even if the quality of English got tainted), from India than inside the United States. Thus Globalisation 3.0 got underway before our very eyes and ears. It paved the way for Globalisation 4.0: digital technology (digitech), or tele-migrating, through which global networks manage the flow of upper-crust white-collared workers, as opposed to blue-collared (factory workers), or even low-level service-sector workers (call operators, as in the example above). Since technologies get created and nurtured in this domain, human production and consumption enter a new terrain, best captured by artificial intelligence (AI) substitutions under the Fourth Industrial Revolution.

This, Baldwin argues, requires a third "unbundling": sifting out the cream of the cream, that is, the AI progenitors and practitioners. Whereas the first "unbundling" related to Globalisation 1.0 and 2.0 involving purely blue-collar workers and how various governments have had to pacify them against local and foreign threats (actually, competition in which relatively more efficient producers win), the second shifted attention from trade to services, that is, from blue-collar to low-level white-collar, or service-sector dynamics in production and employment, with the third spiralling up the service-sector pole to the very top where innovators shift the ballgame from physical competition to intellectual competition. It was a shift not just from "hardware" to "software", but from "entry-level software" to "top-class software".

Now if we go back to the North Atlantic populism, we can see how the transition from one kind of "unbundling" to another, or one kind of industrial revolution to another, have produced social alienation from economic/technological upgrading. Behind the Syrian refugees across Europe and the Mexican migrants in the United States lie enormous domestic economic/technological structural changes, so huge that they cannot but have global consequences, in fact, reciprocally reflecting them with each and every move. If, for example, a US corporation finds a lower-waged foreigner, then why must not the high-cost native worker be displaced; and, indeed, if the United States government taxes its producers and factories more than other countries do to their own, why not shift production abroad? Similarly, if the frontiers of knowledge can be better scaled by hard-working, single-minded foreigners willing to work on Saturday night, then why not substitute the intellectually less-gifted and more socially engaged, party-prone native student/scholar?

Putting it bluntly, recruiting one single intellectually advanced foreign worker might get the juices of more than a thousand domestic competitors agitated; and to purchase a low-wage sweater from Bangladesh might hurt so many blue-collar workers, say in South Carolina, that the government would halt Bangladeshi imports eventually, even encourage robot-based domestic production to out-do the low-waged Bangladesh RMG workers, in the process hurting both Bangladesh exporters and high-waged European or US blue-collar citizens. This is the essence of the "cream of the cream" shift Globalisation 4.0 implies.

There are crucial lessons to be learned everywhere along this scale, in West Europe and the United States, as well as in Bangladesh. Winning the democratic vote prevents European and US political parties from heeding long-term technological prospects, with the result that populism, no matter how segmented, strengthens itself behind the false argument that "cultural change" produces inevitable winners owing to immediate past trends. For countries like Bangladesh, long-term prospects also get ignored because readymade garments (RMG) diversification kills immediate profits. When that long-term comes, Keynes might be closer to reality: neither side might be 'dead', but they will have become so inefficiently dispositioned that Globalisation 4.0 will fly over them to other takers.

Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.

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