Fernando Alcoforado*
This article aims to demonstrate that contemporary globalization is threatened due to the continuing depression in the world economy that started in 2008, the pandemic of the new Coronavirus that shook international trade, the dizzying public, family and business indebtedness further aggravated by the pandemic. and the deepening of the economic stagnation that hit the entire world economy. The world faces the prospect of profound change with a return to the national economy that would be self-sufficient. This shift is the exact opposite of globalization. The longer the pandemic lasts, it will compromise globalization and reinforce the discourse of the search for national self-sufficiency.
Over the past three decades, economic and financial globalization has been a resounding economic and also social failure. Economic and financial globalization is having winners like the international financial system and China and, as losers, the vast majority of countries in the world. It is a fact that the social losses caused by a more globalized world were immense. Unemployment affects millions of workers worldwide and social inequalities have reached record levels. Globalization was already under attack by populists, terrorists, commercial warriors and climate activists. Now, the new Coronavirus has arrived to shake the structures of globalization.
The United Nations Conference on Trade and Development forecasts a 5% to 15% reduction in foreign direct investments in the world in 2020 due to the new Coronavirus. The OECD projects that the global impact of the Coronavirus should generate a loss of 0.5 to 1.5 percentage points of global GDP. It is a value of 500 billion to 1.4 trillion dollars in wealth generation that will simply cease to exist. The new Coronavirus has no passport, it ignores borders, but it also fuels protectionism and nationalism.
The first impact of the new Coronavirus on the global economy was the shutdown of Chinese industries. From cars to iPhones, the most varied production chains spread across the planet began to suffer an unexpected shock, caused by the microscopic organism that escaped from the animal market in the Chinese city of Wuhan. The vision of the new virus as a “foreign invader” or a “Chinese danger” serves as food for nationalist ideologies and even pure and simple racism. The pandemic also revealed the risk of confidence in global production chains and brought protectionism back to life. As the virus spreads to Europe and the world, it makes China a little more fragile and its global dependence on it as ‘the factory in the world’ more doubtful.
The globalization of the disease happened with ships and airplanes that spread it very quickly on the planet. To protect themselves, the countries’ immediate impulse was to retreat and raise barriers. We already see flight numbers dropping dramatically. In a way, this virus highlights the imbalance in globalization. More than factories returning to their country of origin, we see companies diversifying the supply chain so that they are no longer as dependent on a country, like China.
The new Coronavirus can change the course of history. Its dissemination can be a decisive moment in the debates about how much the world could integrate or separate. Even before the virus’s arrival in Europe, climate change, security concerns and complaints about unfair trade had heightened anxieties about global air travel and globalized industrial supply chains, and reinforced doubts about the reliability of China as a partner. Along with the number of infected and dead, the economic impact is resized with each new sign that this crisis is deeper than previously thought.
The crisis of the new Coronavirus worsened the crisis of the global economy, which may be greater than the Great Depression of the 1930s. The capacity of the capitalist system to recover from the current crisis and to resume capital accumulation in the long term is being questioned which would be comparable to the economic depression that occurred in the 1930s and which recovered ten years later thanks to public investments in public works and military expenditures focused on the Second World War. A crucial issue concerns the level and growing of public debt, but also the debt of households and companies, to the point that debt cancellation becomes a political claim that can easily be assumed by a very large number of workers and, also, micro and medium entrepreneurs.
A fact that must be considered is that the global economic and financial crisis of 2008, that is, the great recession that started twelve years ago, never ended. Many economists call the Great Depression, the period opened by the world crisis, when the bankruptcy in October 2008 of the Lehmann Brothers bank was the culmination. This name is fully justified by the similarity of the rupture with what happened with the depression of 1929 and, mainly, by the very long phase, of recovery from the crisis that began in the early 1940s.
The crisis of the new Coronavirus found the world economy in a bad state because, in addition to being extremely indebted, it was stagnating in its growth. Furthermore, the countries of the world, especially the central capitalist countries, are facing the weakening of the available monetary tools, the loss of central bank intervention power and the very high level of public debt. From 2008 to 2020, the exploitation of natural resources led to an increase in the prices of basic raw materials, under the effect of the beginning of the scarcity of mineral resources and environmental degradation, while the impacts of global warming are beginning to reach all countries.
Today, the world faces the weakening of governments to intervene in national economies. Furthermore, the world is governed by the market forces completely unregulated, that is, out of control. Instead of stability, what we have today is a ruined, largely unregulated system known as “globalization” ruled by economic cowboys with no interest in economic and social justice and environmental sustainability. The new Coronavirus associated with the failure of globalization is causing the global northern and southern economies to stagger with a crisis that tends to bankrupt them.
The new Coronavirus is shaking the pillars that support the temple of globalization, causing the world capitalist system to become destabilized. The imminent collapse of the world capitalist system is an opportunity to redesign and rebuild the international economic and financial architecture again, so that it is more resistant to economic shocks and works to combat climate disruption and species extinction. What used to be economically unthinkable is now possible.
The failure of globalization had already put on the agenda the nationalist rhetoric that was evident in the speeches of Donald Trump in the United States and of Brexit supporters in the United Kingdom. The new Coronavirus reinforced this speech. The perception that is starting to happen is that the current globalization can be undone under the pressure of the pandemic and the failure of globalization. The greatest danger to globalization is represented by the new Coronavirus because the longer the pandemic lasts and the more obstacles to the free flow of people, goods and capital, this state of affairs will compromise globalization and reinforce the discourse of the search for national self-sufficiency.
The new Coronavirus pandemic has restored “national foundations”. In the absence of an international system of cooperation and coordination based on multilateral institutions such as the United Nations (UN) and the World Health Organization, countries were forced to use their own strengths, resources and institutions. Each country responded differently to the disease – according to its own health systems, cultures, political institutions and financial capacity. The new Coronavirus pandemic highlighted the countries’ dependence on China’s hospital equipment and the need for national self-reliance.
The world faces the prospect of profound change with a return to the national economy that is self-sufficient. This shift is the exact opposite of globalization. While globalization implies a division of labor between disparate economies, a return to the self-sufficient national economy means that nations would move in the opposite direction to globalization. It is this idea of self-sufficiency in national economies that I defend in my books “The invention of a new Brazil” and “How to invent the future to change the world”, both published by Editora CRV in Curitiba, Paraná, as well as greater coordination and international cooperation with the constitution of a world government that would act to order the chaotic world economy, build a world of peace and prevent the collapse of the life support of Earth and humanity with sustainable development.
In order to mitigate the negative impact of the new Coronavirus on globalization, an international pact must be signed through the UN and global organizations aimed at rebuilding the world economy on new bases because the globalization that operated until the advent of Coronavirus has ended.
* Fernando Alcoforado, 80, awarded the medal of Engineering Merit of the CONFEA / CREA System, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018, em co-autoria) and Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019).
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