NYMAG | Only the Left Can Save Globalization Now

To most on the U.S. left, globalization is a dirty word — the name of that Frankensteinian amalgam of forces that turned America’s industrial centers into Rust Belts, its trade unions into laughingstocks, and New Deal Democrats into anachronisms. And these associations are far from baseless. The model of trade liberalization that the United States pursued in the last quarter of the 20th century favored footloose capital over landlocked labor, financialization over industrial production, and, thus, the corporate wing of the Democratic Party over the progressive one.

For this reason, Blue America’s internal debates over trade policy have traditionally pitted progressive protectionists against moderate globalists. From the battle over NAFTA under Bill Clinton to the fight over the Trans-Pacific Partnership under Barack Obama, centrist “free traders” advocated for ever-greater economic integration, while labor-liberals championed economic nationalism with progressive characteristics (in 2016, Bernie Sanders condemned “corporations who want to invest in low-income countries around the world rather than in the United States of America”).

But since Donald Trump’s election, the decline in comity between Washington and Beijing has softened these intra-Democratic divisions. In the face of China’s growing economic power and political authoritarianism, many moderate Democrats have lost faith in “free trade” and have come to see industrial policy as a precondition for fortifying American global supremacy. Joe Biden’s recent Cabinet appointments testify to this convergence of “Establishment” and left-wing Democrats on questions of global trade.

Not all progressives consider this a victory. In fact, some contend that America’s turn toward protectionism and “great power competition” will condemn its economy to long-term stagnation and humanity writ large to chronic geopolitical instability (if not world war).

Jake Werner is one such progressive. A historian of modern China, research fellow at Boston University’s GDP Center, and co-founder of the organization Justice Is Global, Werner argues that a slowdown in global economic growth since the 2008 crisis has bolstered the nationalist right in countries across the world while fostering a spirit of zero-sum conflict between nations. In his analysis, the slowdown in growth is rooted in the negligible purchasing power of the world’s poor, which has prevented total consumer demand in the global economy from rising to meet total productive capacity. According to Werner, if Biden can do on a global scale what Franklin Roosevelt did on a national one — and revive growth by expanding gainful employment to the economically marginalized — then he can initiate a virtuous cycle of shared prosperity and progressive political advance. By contrast, if Biden leaves the root causes of global stagnation unaddressed, and opts to grow the U.S. economy at China’s expense, he will strengthen reactionary forces both here and abroad. For the moment, Biden appears to be heading toward the latter path — and only the left can stop him.

Intelligencer spoke with Werner last week about his theory of global economic growth, vision of “progressive globalization,” and hopes for U.S.-China policy in the Biden era.

You frame “progressive globalization” as an alternative to both the “free trade” consensus of the 1990s and progressive “economic patriotism.” What do you think those paradigms get wrong?

Well, let’s start with the free-trade consensus. I’m not sure it got anything wrong, exactly — because its goal was not to achieve progressive ends but to secure profits for U.S. businesses, keep the economy growing, and consolidate support for the Democratic Party in key sectors of the economic elite. Or, put more broadly, the goal was to maintain stability in the global system. And it actually succeeded up until 2008. I don’t think that the rhetoric about increasing openness and integration — or promoting liberalization and democratization and world peace — I don’t think that rhetoric was a lie.

I think the people who organized free-market globalization believed that rhetoric. And I think that they had evidence to support that belief. The “end of history” ideology was right before it was wrong. We were progressing toward that neoliberal utopia — a single global market with democracy and human rights — right up until 2008.

What was the evidence for that progress?

If you take the core components of the idea, economic liberalization and political liberalization, both of those things were proceeding globally. And they were actually proceeding quite rapidly in China. The economic bit is uncontroversial. There was market opening and reform and a larger role for the private sector. But it was also true in the political realm. Obviously, China didn’t democratize, but there was increasing space for labor activism and feminist activism. There was increasing tolerance for the work of human-rights lawyers and increasing intellectual freedom for journalists and academics.

The political repression never ended, but there was some opening. And then it shut down and went into reverse — incidentally, at the same time that political liberalization reversed in other nations around the world. Too much discussion of China focuses very narrowly on what’s happening within its borders. But you can’t understand Chinese development before 2008 without reference to the bigger picture of expanding free trade. And you can’t understand what’s happened since then without accounting for the ways that this model of globalization delegitimized itself. Economic liberalization brought political opening in China and elsewhere. But it also brought higher inequalities, both economic and social. It brought corruption and, eventually, declining opportunities for more and more people. These are not favorable conditions for political liberalization; they’re favorable conditions for authoritarianism. And as they materialized, we began to see a reactionary turn, both in China and around the world.

So, in your view, it wasn’t Xi Jinping’s assumption of power that knocked China off the road toward liberalization but rather the social inequities that the global trade regime fostered. Is that correct?

Yeah. I don’t think there’s any question that these trends started before Xi Jinping took power. He did really escalate it. So I don’t want to say that he is irrelevant. But when you look at the history of neoliberalism in the United States, America’s economic model started to shift under Jimmy Carter, who oversaw financial deregulation, capital-gains-tax cuts, austerity. But then Ronald Reagan really ramped it up and consolidated these changes into a new system. I think you can make a similar distinction between the transition from Hu Jintao to Xi Jinping. But the direction was already starting to shift by 2008.

What makes you confident that the global economic system is the key driver of the nationalist right’s advance in all of these disparate countries? A skeptic might note that the pattern isn’t quite universal and that there are alternative explanations for why authoritarianism might gain strength simultaneously across nations. To take one example, some argue that demographic change is the key variable in the United States and much of Europe: Across “the West,” you have these societies that were long structured around white supremacy or colonialism seeing an unprecedented rise in the nonwhite or foreign-born share of the population. And this poses an inherent challenge to conceptions of national identity and social hierarchy that are prevalent among segments of the aging white electorate, which the political right can further cultivate and exploit. Why do you think that sort of story, or others rooted in demographic or cultural change at the national level, are insufficient to explain the reactionary turn?

I don’t think the choice is between the local and the global. I think those are two sides of the same coin. The global, as a structure, is created and sustained through patterns of everyday life that are irreducibly local. But I think that it is just very hard to explain how it is that societies as different as China, the Philippines, India, Turkey, Poland, France, the United States, Mexico, Brazil, and Nigeria, among others, have seen a sharp populist shift along the same timeline.

The common denominator across national contexts has been a structural shift against elites, against the unevenness and inequality that has grown so sharply. In some contexts, that unevenness is getting interpreted as racial difference or cultural difference rather than as economic inequality — rather than as class difference. It can take a progressive or reactionary form. But what we’re seeing all over the world, in all these different countries, is a similar structural shift in politics and, underneath that, a change in sensibilities. And not just at the popular level. Elite sensibilities are changing too.

So whereas before, it was very natural for the elite in places like the United States and China to think about the economy as something that could be conceptually separated from other aspects of politics — such as national security — now, people all over the world are connecting those things and saying, “No, actually, economic policy is defense policy.” And that’s happening more strongly at the elite level, actually, because it’s more relevant to their projects. There is a breakdown in the quality of common sense, in the framework for interpreting the world, which we’re seeing across the globe. And that leads me to believe that we need to conceptualize this as a disintegration of — or a transformation within — the global system rather than looking narrowly at individual countries.

That does not mean that there aren’t idiosyncrasies in individual nations. I mean, the nature of the neoliberal global system was that it generated unevenness: A place that is oriented around manufacturing for export, like China, is going to develop a different set of social relations than a place like the United States, which is oriented around finance, business services, corporate headquarters, and military supremacy. The economic order assigned nations different roles. And that difference is going to manifest socially and politically. But when we see these deep changes in political sentiments, and the way that people think about how the world works — and they’re parallel across all these radically different countries — I think we really need to be able to analyze that at the level of the global system.

So let’s analyze it at that level. You’ve described the unraveling of neoliberal globalization in broad terms. But could you say, more specifically, why that model of global growth proved unsustainable and how its unraveling has heightened tensions between the United States and China?

Sure. So, in the ’90s through 2008, you had this very rapid increase in the growth of trade and foreign direct investment, and both of those were deeply connected to GDP growth at the country level. More and more countries were trying to figure out how to integrate themselves into the global system. And it wasn’t just an economic desire; it was also a political, and even aesthetic, desire to be more and more cosmopolitan — to imitate what was considered to be the cutting edge in terms of culture, in terms of music, intellectual currents.

So everyone was going in the same direction. And that was undergirded by the fact that economic growth was very strong and integration was increasing. But as that growth was happening — and as people found a place for themselves within that system — there were also these pressures that were building up. Economically speaking, there was the fact that corporate profitability was built on suppressing wages. Which is effective for a while. But eventually the wage-suppression model hollows out the consumer market that it needs to absorb production. For a while, this hole was plugged by debt-financed consumption in the Global North along with debt-financed public spending by the governments of rich nations.

What happened in 2008 is that this debt bubble fell apart. Consumers became much more wary about taking on debt after the crisis. Public-debt crises rippled through Europe. And Japan’s long-term stagnation deepened. So these wealthy nations that had previously driven demand in the global economy all cut back their spending simultaneously. That has a major impact in the rich countries, of course, as everyday citizens no longer feel things are getting better. And that pessimism feeds on itself. It becomes self-fulfilling. People cut back spending because they anticipate a future of low growth, which helps to bring that future into being. So you get a cycle of unwinding that is the opposite of the cycle that was playing out when growth was strong.

The impact of that unwinding was mitigated by China, which poured money into the global economy through massive stimulus. Basically, China debt-finances this huge building spree of residential housing and government buildings. You get a huge expansion in a bunch of Chinese industries. As a result, even as the rich countries stagnated, China rapidly recovered. And it pulled much of the developing world up along with it, as it restored global demand for commodities like aluminum and copper.

All this fed into really sharp resentments of China in the rich countries. Because part of what the Chinese stimulus does is push foreign exporters and investors out of the market. And so these powerful, pro-integration interests in rich countries — their buy-in to Chinese growth starts to attenuate.

At the same time, the political elites, especially in the United States, become wracked with anxiety. Because they had really bought into the end-of-history ideology. And they thought everything was going their way, and America was going to be prosperous forever. Now the free-market ideology is discredited. The whole sense of security in the rightness and stability of American global leadership starts to falter. China becomes the focal point for these anxieties.

Meanwhile, Chinese elites are developing their own anxieties. In the immediate term, Beijing revives global growth, but this growth is built on a mountain of debt. And the CCP [Chinese Communist Party] leadership starts to fear that, at any moment, this huge debt bubble that is sustaining the growth in China could collapse. And social order and the party’s grip on power could go down with it.

So in both the U.S. and China, elites are more and more insecure about their own status and power. And at a popular level, the ideology of globalization is discredited. People are naturally fed up with globalization. Nationalism, as its opposite, is the most obvious alternative. And nationalist sentiment also provides the raw material that elites can use to construct a new foundation for their own authority — and a new framework for reviving growth.

This has been a slow process. But it really seems like we’re heading in this nationalist direction. I think the way that Biden’s team is talking about these things suggests as much. I think we are heading toward a world in which elites in the United States and China organize their political legitimacy and economic strategy around a framework of nationalist competition and zero-sum struggle in the global economy. And that terrifies me.

How do we get around that? What alternative model for global growth — and of U.S.-China relations — should American progressives be fighting for?

So, right now, the U.S. and China are stuck in a scarcity framework. And if we just accept scarcity, then it is natural to draw lines of conflict over who’s going to survive and who’s going to suffer. And those lines are liable to trace those of race or nationality or whatever. And it puts you into a toxic cycle of growing resentment along those lines.

But this does not have to be a zero-sum contest. If we bring people together behind public investment and job creation — if we can unite behind policies that bring global demand into alignment with global industrial capacity — then Chinese corporations and American corporations, U.S. workers and Chinese workers, and, importantly, the rest of the world’s workers can all benefit. The model of growth I’m describing does not require social revolution; in the short term, at least, it has the potential to dampen class conflict by reducing the sense that either business owners or workers have to win, while the other has to suffer.

But what robust global growth does require is massive public investment in places like India, Nigeria, Indonesia, and Mexico. There are literally billions of people living off the scraps of the global economy. If you invest in them, they will become workers and consumers capable of supplying the demand necessary for the restoration of a high-growth global economy. But that entire Global South is just invisible in the discussions of U.S. elites. And Chinese elites, too. Because the Global South is weak. So it is ignored.

Eventually, it may come back on Washington’s radar as a venue for competition with China. If we continue on this path, we may get to the point where the Global South is seen as a worthy setting for proxy wars and mass death. But for now, it’s just totally excluded from strategic considerations.

The progressive approach requires foregrounding those who have been excluded and finding a way to bring them into the global economy. And if we did that, we would revive growth and ease the pressures that are steering us toward a great power conflict.

Would it be accurate to characterize this growth model as a globalized version of the New Deal paradigm, which aimed to restore growth by increasing the purchasing power of ordinary laborers?

Absolutely. It was the reforms of the New Deal, and the restructuring of corporate governance and labor rights during World War II, that created the middle class. Which is to say it created a new economic model in which growth was fueled by wage increases, improvements in labor conditions, and the integration of more people into society.

And this inclusive economy fostered non-zero-sum attitudes and thus social progress. As growth proceeded, it improved people’s living conditions, and that in turn created the foundation for a politics of inclusion. One reason why the civil-rights movement happened when it did is that this larger context of inclusive growth made it conceivable that everyone could be included — that gains for the marginalized groups would not necessarily come at the expense of dominant ones. And the sense that everyone could prosper fueled popular outrage over the fact that some were being arbitrarily excluded from prosperity. Obviously, that doesn’t mean that struggles for racial justice automatically win under conditions of inclusive growth; they’re still struggles. But shared prosperity is the terrain on which battles for the entire range of democratizing, progressive reforms become winnable. That’s how things worked in the U.S. in the postwar period. Broadly speaking, that’s how things worked all over the world. By contrast, in the neoliberal period of slow growth and middle-class decline, all those things became unthinkable. Even people who were sympathetic to such causes dismissed them as impractical.

So progressive globalization is the project of reestablishing this virtuous cycle of economic growth and social integration by scaling it up to the global level.

You sounded a pessimistic note about the Biden administration earlier. But in your account of how the neoliberal growth model broke apart, you suggested that a decline in consumer purchasing power and access to credit sapped demand and spurred stagnation. It seems to me that, on the domestic level, Biden’s $1.9 trillion stimulus plan suggests that he shares some portion of your analysis.

Yes. I am borderline ecstatic about what we’re seeing out of the Biden administration in terms of domestic policy. I think it shows that the ideological strictures of the neoliberal period have completely broken down. And that means that it’s possible for us to start thinking about how we can reshape the economy through public investment in the way that we need to do — both to save the economy and, of course, to save the climate. And the Biden administration’s early moves on climate change also look really great.

The problem, though, is that their vision is strongly oriented around national interest. There’s a lot of discussion about developing a foreign policy that works for the middle class, etcetera, but that’s happening within this scarcity mind-set that aims to aid the American middle class at the expense of Chinese workers. I think that’s going to fail both politically and economically. Politically, a climate of rising tensions between the U.S. and China is going to be favorable to right-wing forces who can ride jingoism to power and then dismantle the progressive economic project.

But even if that political analysis is wrong, a strictly national economic progressivism just won’t be sustainable. You’ll see a growth pickup in the short term, assuming that the pandemic comes under control. But to sustain growth in the long term, you need productivity increases. And there’s not a lot of space in the U.S. economy to drive productivity increases. The U.S. is already a highly productive economy. The possibilities for productivity growth lie primarily in the Global South. Again, we’re talking about billions of people whose productivity is essentially zero because they’re shut out of the economy. If we want sustained growth in the United States, we need to invest in the places that have been starved of capital for the last 40 years, or 100 years, and get them contributing to the global economy. And if we do that, then everyone can succeed together. If we try to do it on an individual-nation basis, then we’re going to exhaust our growth prospects while fostering geopolitical conflicts that themselves stymie global growth.

One concrete way that America has been pursuing national growth at the expense of global growth is through the enforcement of U.S. firms’ intellectual-property claims. As you’ve noted, there’s a pretty broad political consensus in favor of intellectual-property protectionism; even Bernie Sanders has criticized U.S. corporations for transferring “our technology” to China. And this has become a central tension in our geopolitical conflict with Beijing, as U.S. leaders lambast China for “cheating” in global trade. You argue that progressives should welcome such “cheating,” as China’s violations of IP laws are better understood as attempts to “break the monopoly of the rich countries on high-productivity techniques.”

That’s right. And the reasons for this are twofold. First, there’s the basic issue of values. I think being progressive means being committed to reducing inequality and improving the lives of those who are most vulnerable. If we take those values seriously, then we need to commit to global development as a human right. Which means we need to figure out a way to diffuse the technologies that are currently enabling a handful of rich countries to be massively wealthier than the vast majority of people in the world.

The stakes of making technology more transferable aren’t just economic; they’re literally life and death. We’re seeing that right now with the pandemic. The Global South has a very limited capacity to produce vaccines, which is partly a product of intellectual-property laws stymieing its development. And then, where developing nations do have the capacity to produce vaccines, IP laws are preventing them from doing so. As a result, billions of people are going to continue to suffer from the pandemic, for the next year or more, because they were unable to break the rules of the global economy. So that’s the values argument.

But there’s also a very practical argument, which is that China’s successful skirting of the intellectual-property regime is what allowed China to grow in wealth. And China’s growing wealth has been the most important driver of growth in the global economy for the last 30 years. That growth hasn’t just benefited people in China but also millions of U.S. workers who produce things for export, and universities in the U.S., and filmmakers in the U.S. All of these American industries would have faced stagnant demand if it hadn’t been for the Chinese government’s success in enriching their society through the violation of intellectual-property laws.

For many left-of-center China hawks in the U.S., the argument for attempting to defeat Beijing in a great power competition rests on the moral horrors of the CCP’s governing model: its repression of political dissent, labor rights, and, above all, ethnic minorities. In recent days, reports have emerged that Chinese officials are systematically raping Uighur women imprisoned in forced labor camps as part of an open campaign of cultural genocide. Is prioritizing the avoidance of great power conflict compatible with using American power to combat the Chinese regime’s illiberal policies in general, and atrocities against the Uighurs in particular?

I feel very pessimistic about the possibilities for changing things within China in the short term. I think there’s no question that the United States, and anyone with humanity, should be condemning what’s going on in Xinjiang against the Uighurs and other Muslims. It is a shocking and horrifying atrocity. I don’t think there would be any reason to not condemn it in the harshest terms and pursue some of the measures that people have been advocating, such as strengthening protections against forced labor in corporate supply chains in the West.

But I think that, over the longer term, reshaping the global system in the way I describe would foster more democratic impulses within Chinese society. I don’t want to say that U.S. hostility toward China is what has caused the reactionary turn in Chinese politics. The reactionary turn predates the ramp-up in U.S. hostility. But we can try to create conditions in which progressive forces in China have some space to push back. As long as the Cold War framework deepens, that space is going to get smaller and smaller. That doesn’t mean we stay silent about atrocities. But U.S. pressure on human rights would be much more credible and effective if it weren’t associated with policies aimed at stifling Chinese economic development.

I feel like this gets at a core tension in your analysis. On the one hand, you oppose a framework of great power competition and champion a form of globalization that can allow everyone to win. On the other hand, you suggest that — under progressive globalization — Xi Jinping will lose. For the Democratic Party, an anti-authoritarian, pro-labor global system isn’t just good for the world but conducive to its own political power. For the Chinese Communist Party, by contrast, such a system is a threat to the survival of its one party state. So why isn’t the pursuit of such a a system not “great power competition” by another name?

It’s a great question. There definitely is a tension there, but I don’t think it’s an insuperable tension. Just ten years ago, the Chinese Communist Party saw an expanding sphere of independent political action as being perfectly compatible with its own security. I think that these changes would have to roll out relatively gradually, and if there were a sudden upsurge in popular resistance, that might lead to a crackdown. I think the key is to negotiate around issues that the Xi Jinping government sees as being in its interest and compatible with its projects.

For example, the party is now clearly committed to decarbonizing the economy. So there’s going to be no problem trying to find common ground there. Labor rights will be more challenging. But the party is actually committed to increasing wages in the domestic economy and transitioning to a more consumption-driven model of growth. And that necessarily requires a certain level of improvement in the power of labor. If a raising of labor standards were implemented through official institutions, such as the All-China Federation of Trade Unions — a labor federation that is part of the party structure, and that nominally represents hundreds of millions of workers in China, but actually functions as a company union — that would create frictions in Chinese society. There would be conflicts between labor and management all over the place, probably. But it would also be in line with the party’s large-scale economic goals. And if this happened gradually, it could change the landscape in a way that made the party feel a bit less threatened by democratization than it does now.

I don’t want to offer panaceas or anything. But if we’re serious about democracy — democracy in China, democracy globally, and saving democracy in the U.S., as the Biden administration says it wants to do — then we have to ask, “What conditions make democratization thinkable?”

It doesn’t happen through sanctions or invasions. Much of the U.S. foreign-policy elite has given up on democracy promotion because their preferred way of doing it — invading a country, overthrowing its government, and installing a regime sympathetic to U.S. interests — works poorly. But democratization, historically, has happened through the empowerment of the working class. And progressive globalization is the necessary framework for empowering workers in both the U.S. Rust Belt and in China’s.

Eric Levitz