Homecoming: The Path to Prosperity in a Post-Global World
By Rana Foroohar
Crown, 400 pages, $30
Not too long ago, being “anti-globalization” was the stuff of radicals and populists. I can attest to this as someone who spent much of his youth rioting (literally) against global capitalism amid the burgeoning anti-globalization movement of the late 1990s and early 2000s. In hindsight, it’s easy to see why that movement failed to make any significant political gains in the West. Most obviously, it refused to seriously engage with the question of national sovereignty and political power in Western nations, even as it called for the self-determination of distant Third World nations. Nonetheless, it’s hard to dispute that we were right in warning against the disastrous consequences of corporate-led globalization.
At the time, we anti-globalization activists were treated as extremists by the “very serious people” in charge of global affairs. Twenty years later, the “serious people” have come around to our views. There is no clearer sign of emerging elite skepticism of a borderless capitalist economy than Rana Foroohar’s new book, Homecoming: The Path to Prosperity in a Post-Global World. The author, a Financial Times columnist, celebrates the dawn of a new age of economic localization. Globalization is dead, Foroohar informs us—and we should all be grateful for that.
Homecoming is to the 2020s what The World Is Flat by Thomas Friedman was to the early 2000s. Friedman’s book encapsulated the neoliberal mania of that epoch, with its hubristic faith in free trade, American unipolarity, and “Western values.” Foroohar’s book reflects Western elites’ acknowledgement of that project’s failure.
Foroohar pulls no punches when it comes to describing the shortfalls of globalization, or at least the kind of “hyper-globalization” that we have known for the last several decades. Economic policies were tailored to the interests of a handful of immensely powerful corporations, and a narrow cosmocratic elite was allowed to accrue vast wealth and power. This new order impoverished the working class and laid waste to our industrial capacity, public services, vital infrastructures, and local communities. Western nations became ever-more dependent on foreign states for the supply of everything from energy to food to basic medical supplies.
The other big winner of globalization, alongside Western corporations, was China. As Foroohar rightly recalls, although we tend to associate neoliberalism with Ronald Reagan and Margaret Thatcher in the 1980s, the push towards hyper-globalization truly started with Bill Clinton in the ’90s. That’s when a series of trade deals, culminating in the entry of China into the World Trade Organization in 2001, took the guardrails off the global economy. “It’s amazing but true,” Foroohar writes, “that when it came to trade, Democrats in the ’90s were far less protectionist than the Republicans who came before them. Indeed, they supported the WTO rules that, by 2000, made it nearly impossible for countries to craft their own trade policies.”
Many US manufacturers went out of business during this period. About 80 percent of the decline in private-economy employment between 2000 and 2003 can be traced to factory job losses related to what academics have called “the China shock”—the process by which a seemingly unlimited supply of low-wage Chinese workers became available to multinational corporations following that country’s entry into the WTO. Research shows that “job losses from rising Chinese import competition” between 1999 and 2011 were “in the range of 2 to 2.4 million.”
Foroohar goes beyond the standard mainstream framing by recognizing that hyper-globalization wasn’t just an economic project, but a political one, as well: It wasn’t just about giving more power to corporations, but also taking power away from the people, by surrendering national prerogatives to international and supranational institutions and super-state bureaucracies, such as the WTO and the European Union. These institutions completely untethered capital from national democracy. What we ended up with was an increasingly hollowed out democracy—more akin to a plutocracy or corporatocracy. As Friedman approvingly predicted, “policy choices get reduced to Pepsi or Coke—to slight nuances of taste, slight nuances of policy, slight alterations in design to account for local traditions, but never any major deviations from the core golden rules.”
In the late 2010s, all this triggered a populist backlash against globalization in several Western countries, first and foremost the United States—and rightly so, says Foroohar. “This is often portrayed as a terrible thing—a comedown for America and a risk for the world at large,” she writes:
But I would argue that it is just as it should be. Politics takes place at the level of the nation-state. But economics has, for the last 40 years, been an increasingly global affair, the rules of which have been dictated by a global technocratic class that has more in common with each other than with the majority of people in their own countries. Populism is the natural result.
Unlike a few years ago, however, today it is no longer just Western voters who are turning their back against globalization—but businesses and political elites, as well. Much of this is, of course, a consequence of the Covid pandemic, which brought the fragility of hyper-integrated, just-in-time supply chains and delocalized production into stark relief, with countries finding out that they lacked factories to produce personal protective equipment or critical medicines.
Covid was the ultimate demonstration of the fact that far-flung supply chains were highly exposed to any sort of global stress. This underscored the national-security threat posed by hyper-globalization. Moreover, even as the emergency eased, coronavirus-related shutdowns in China and elsewhere continued to hamper the manufacturing, transportation, and distribution of goods worldwide, particularly in the Western automotive, electronics, and apparel industries.
As a result, more and more Western businesses have begun to rethink their supply-chain models—from globalization to localization and regionalization. One 2020 survey found that 64 percent of industrial and manufacturing companies planned to reshore some production to North America because of fallout from the pandemic. From pharmaceuticals to furniture to clothing and technology, industries have already begun rejigging their supply chains to make them less dependent on one or two large countries, and more resilient to risks of all kinds. Governments are also increasingly backing this trend, with the US Senate passing an expansive industrial-policy bill and the European Union calling for “restructuring supply chains more locally.”
Geopolitical conflict has added urgency to deglobalization. The Ukraine war has fractured the world along geopolitical lines and intensified competition between the United States and China. In November, Biden launched what Edward Luce in the Financial Times appropriately called “a full-blown economic war on China,” by introducing a vast array of restrictions on the sale of semiconductor chips to Chinese firms, as well as on the equipment needed to make them.
Given that the United States controls some of the critical nodes of the global semiconductor supply chain, such as advanced chip research and design, and that China still relies on imports for much of its high-end chip consumption, the impact on the Middle Kingdom could be significant—affecting not only the production of goods that require semiconductors, but also China’s ability to produce its own chips. More recently, the Biden administration announced even broader restrictions on Chinese tech companies, targeting China’s access to technologies that could be used for military purposes, including further prohibitions on semiconductors, artificial intelligence, and microchips.
The deeper roots of decoupling lie in China’s divergence from the Western economic model. By the time of the financial crisis, in the first half of 2009, state investment accounted for 88 percent of Chinese GDP growth—a share for which it is hard to find any parallel, in any country, at any time. Conservatives in Beijing, who had understandably long been wary of the excesses of US-style financialized capitalism, were emboldened. Assets managed by the state more than doubled between 2008 and 2012. With the accession of Xi Jinping to supreme power in 2012, the die was cast: For the first time in decades, state investment grew faster than private investment.
It became apparent that China wasn’t going to follow the grooves carved for it by the masters of Western-led globalization. From America’s perspective, globalization was based on the assumption that China would accept the role in the global division of labor assigned to the country—that of making stuff for Western multinationals—and would eventually embrace Western-style economic liberalism. Neither has come to pass. On the contrary, over the past decade, China has climbed its way up the global value chain, and today competes with Western companies in many domains. Meanwhile, the state’s role continues to expand.
For some time now, American policymakers have been growing anxious about China’s rise and its impact on the competitiveness of the US economy. The first political articulation of this came in the form of Donald Trump’s trade war. At the time, Trump’s protectionist policies were attacked by Chamber of Commerce-aligned Republicans and neoliberal Democrats alike. And yet President Biden today is largely following in Trump’s footsteps on China—and actually strengthening his protectionist policies. “It’s not an overstatement to say that making American supply chains resilient in the face of risks, be they climate related, geopolitical, or simply unpredicted, is now the administration’s number one economic priority,” Foroohar writes. “That will inevitably lead to more reshoring of crucial industries.”
For Foroohar, these developments should be welcomed with open arms. They herald the rise of a new “place-based economics,” she says, which—thanks to a wave of technological innovations, from 3D printing to vertical farming to cryptocurrencies—offers countries around the globe, and the United States in particular, an epochal chance for a reset. “The bottom line is that the notion that the global economy is an end in and of itself, rather than a means to national prosperity, is over,” writes Foroohar. “We need to understand that globalization is something we shape ourselves, not something that must de facto shape us. We need to understand that it’s okay for different countries and communities to have different ways of doing things—ones suited to their own local needs.”
Foroohar’s vision of deglobalization is appealing. Indeed, it’s one that my 18-year-old political self would largely concur with. The problem is that Foroohar’s cheerful vision of deglobalization is a far cry from the deglobalization actually taking place. The current Western trend toward deglobalization and reshoring—in itself a potentially positive thing—isn’t driven by the desire to create more just, sustainable, and self-sufficient economies that serve domestic policies and the overall welfare of people across Western nations (let alone across all nations). Rather, it’s animated by the desire to crush China, even at the expense of the wellbeing of Western citizens.
Take Biden’s focus on boosting America’s chip-making capacity. While semiconductors may be strategically important in “out-competing” China, they aren’t particularly labor-intensive. Reshoring traditional manufacturing sectors would benefit US workers much more—but it’s not their needs that are driving policy. As the Harvard economist Dani Rodrik writes: “It is good that we are now moving away from [hyper-globalization], given how damaging it was to our social fabric. … Unfortunately, the great powers seem to have chosen a different, even worse path. They are now handing the keys to the global economy to their national-security establishments, jeopardizing both global peace and prosperity.”
Foroohar is right in arguing that deglobalization is an opportunity—both for the United States and China. It could help address the structural flaws of both economies: China needs to boost domestic demand and reduce its dependence on exports, while the United States needs to boost domestic production and reduce its dependence on imports. The needs of the two countries are potentially complementary, meaning that trade between them could be diminished in the context of peaceful relations. But this isn’t the path currently being pursued by the US establishment, which views deglobalization as another form of empire-building.