The Left Should Not Embrace Globalization: A Response

Neoliberal trade policies play a pivotal role in fostering economic inequality and disproportionately impact the Global South. To argue that global economic integration is consistent with leftist principles is deeply misguided.

May 2, 2021

Last week, The Gazelle published a piece by Abhyudaya Tyagi, managing editor titled “The Left Should Embrace Globalization, Not Oppose It.” Purportedly, this work challenges the nativism taking hold in leftist movements in the Global North and argues instead for a broader adoption of free trade as a means by which the gap between the Global North and Global South can be bridged. To give the author the benefit of the doubt, their intention in writing this piece appears to be arresting what they view as “the leftist opposition to free trade and increased immigration” that is “illogical at best and morally bankrupt at worst.”
Closer examination of the arguments, however, reveal the advocacy of an economic worldview that more closely resembles the right-wing, pro free trade neoliberalism championed by the Chicago School and the Washington Consensus — an economic worldview that has caused irreparable damage to the working class and the sociopolitical fabric of societies in both the Global South and North.
The author seems to view globalization as two distinct phenomena: pro immigration policies and economic integration, or free trade. It is economic integration and free trade, however, which form the meat of the author’s argument and therefore serves as the main point of contestation in this response.
It is important to acknowledge these arguments for what they really are: advocacy for neoliberalist trade policies. Broadly, neoliberalism refers to market oriented economic policy that supports privatization, deregulation, austerity and of most consequence to this article, free trade and global economic integration. The last 40 years have seen broad adoption of neoliberal policies, including free trade. Organizations like the IMF and the World Bank have served as champions of these policies and the removal of trade barriers is often a prerequisite for receiving any financial assistance from these institutions.
The author’s support for free trade policies comes from the belief that — contrary to the belief of leftists in the West — free trade does not harm wages and jobs in the Global North and even if it does, it is acceptable given that it benefits the Global South and bridges global economic inequality.
The evidence given for this argument rests on two examples: the East Asian Tigers and India. On the East Asian side, the author points out the decline of absolute poverty from 80 to 18 percent as a result of the adoption of free trade policies. However, the extent to which free trade policies were adopted and responsible for the Asian miracle remains questionable at best. Since the publication of the World Bank’s much lampooned “The East Asian Miracle” report, economists have worked to reevaluate the role of conventional neoliberal policies in driving growth in East Asia and have argued that state intervention, including in trade, was crucial. As Economist Dani Rodrik notes, trade subsidies in South Korea stood — by the latter half of the 1970’s — close to 50% of total exports.
The Indian case certainly provides stronger evidence of free trade driven growth, but this is a rare example. Numerous examples abound of free trade policies barely impacting, or even stunting, growth. Mexico, where GDP per capita doubled between 1960 and 1980, liberalized in the 1980’s and then signed onto the North American Free Trade Agreement in 1995. In the 20 years since, Mexico’s GDP per capita grew only by 16 percent, a far cry from the 99 percent of the previous two decades.
But debates about growth rates are secondary to the wider concerns regarding neoliberalization and free trade that justify the left’s advocacy of protectionist trade policies. It has long been established that free trade fosters inequality and, as Tyagi himself concedes, the benefits of economic integration disproportionately flow to the rich who benefit from lower wages in developing countries to drive up profits. India’s liberalisation has meant that top earners capture 22 percent of the total income today, a rise from six percent in the 1980’s pre liberalisation. Similarly, Chile, another so-called free trade miracle, has seen the rise of rampant inequality linked to free trade policies.
Any leftist knows that the struggle against inequality and the accumulation of wealth is central to leftist ideology and to support policies that promote inequality is tantamount to betrayal of the basic tenets of lefitst political thought. Tyagi does not see it this way. Free trade, he argues, is not the cause of rampant inequality, but rather, the blame rests with low corporate tax rates and the dismantling of the welfare state. That Tyagi manages to separate the three is surprising, given how intimately linked lower taxes, free trade and austerity have been over the last 40 years. Indeed, the IMF seems to believe that free trade policies can not be successful if they are not accompanied by “good” tax reforms that levy corporate tax at “one moderate rate.”
Furthermore, Tyagi argues that while globalization benefits the rich disproportionately, these benefits flow to the poor too. This has at least a hint of the invisible hand argument once promoted by Adam Smith and now long discarded by any serious economist.
But perhaps the most damning indictment of free trade and neoliberalism is the political crises it has created. It is well established that as inequality has worsened the world over as a result of free trade policies, including in Global North powerhouses such as the United States, it has fueled resentment and the nativist sentiment that Tyagi deplores. Politicians on the far right like Donald Trump and Narendra Modi have used these long seated resentments against the global elite to seize power, deal hard political blows to the left and foster further social conflict. Immigrants have been disproportionately victimized as a result of the resentments fostered by inequality.
Given the colored history of attempts to move the left towards neoliberalism and the resultant betrayal of the left by New Labor and Clintonists, it is surprising to see that anyone would still seriously consider making the case for free trade to the left. It is even more surprising that this case would come with accusations of “moral bankruptcy” on the part of leftists who do not support free trade, given the moral ramifications of supporting policies that promote rampant inequality and social conflict.
Sobha Gadi is Senior Opinion Editor. Email him at feedback@thegazelle.org.
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