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DIPLOMACYWhat Should We Expect of “Globalization 2.0”?

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Andrey Kortunov

These days, humankind goes through a protracted and painful process of deglobalization. It remains to be seen whether this process was historically predetermined and unavoidable; if this is not the case, one can speculate about who should be held responsible for such a turn of events. In any case, the global financial crisis of 2008-2009 and the post-crisis recovery of 2010-2013 sent a clear signal that globalization would hardly be a linear—let alone exponential—process. In the aftermath of the crisis, some of the key dimensions of global connectedness (international trade, foreign direct investments) returned to their pre-crisis levels only by mid-2010s, only to plummet once again by the end of the decade. Centrifugal trends, both of political and economic dimensions, have already accumulated a powerful momentum in the modern world; it would be rather naïve to expect that a single—however significant—international event like the 2020 victory of Joe Biden at the U.S. Presidential election could reverse or stop them. The immediate task of the international community for next couple of years seems to be cutting the costs and reducing the risks associated with economic and political deglobalization.

This formidable task notwithstanding, one should not dismiss longer-term global trends. There is little doubt about globalization coming back in one form or another. Two major factors push the world in this direction, with both of them getting stronger over time, no matter what anti-globalists have to say today.

First, humankind feels a constantly increasing pressure of common problems and challenges, ranging from the accelerating climate change to the threats of new pandemics to the coming global resource crunch. For the sake of our survival, these issues call for joint action in some form or fashion. The instinct of self-preservation of the human species should eventually embrace the form of “globalization 2.0”.

Second, the ongoing deglobalization has not hindered technical progress. On the contrary, technical progress goes faster than ever and it continues to provide new opportunities for remote communications of various kinds. The global physical space and the global resource pool are shrinking, while feasible models of geographically disbursed work, education, entertainment, social and political activities are multiplying. Napoleon’s old saw that “geography is destiny” is losing its former axiomaticity. In a sense, given its boost for online activities, the COVID pandemic turned out to be a Great Equalizer eroding many of the traditional hierarchies and international barriers.

Eventually, we will herald the dawn of a new globalization cycle. This “globalization 2.0” will be markedly different from what we lived through earlier this century, but it will evolve in a mostly similar direction, retaining some of the essential characteristics of the previous cycle. If we take the global 2008-2009 crisis as the starting point and assume that today’s world is already at or near the lowest level of the ongoing deglobalization, we can rather reliably predict the next U-turn in the global connectedness to take place in mid-2020s. Should we make allowances for the more complex and comprehensive nature of the 2020-2021 crisis as compared to that of 2008-2009, we would have to move the U-turn moment further forward by two, three or even five years—somewhat closer to the end of our century’s still young third decade.

After all, predicting the exact timing of the U-turn and the arrival of “globalization 2.0” is not that important. What is of true importance is to try and foresee the fundamental parameters of the new cycle of globalization which will make this cycle quite different from what humankind experienced at the beginning of this century.

1. Globalization with no hegemon

Globalization of the late 20th – early 21st century coincided with the historical peak of the U.S. international power and influence. Indeed, U.S. Presidents—from Bill Clinton to Barack Obama—were the ones who defined basic rules of the game in the emerging globalized world. U.S. hegemony extended both to international development and to international security. All major multilateral institutions—be it the United Nations, NATO, G8 and later G20 or the IBRD and the IMF, the WTO and even the OECD—reflected the U.S. global agenda and camouflaged the commitment to preserve Pax Americana for as long as possible. In rare cases, when the United States would fail to channel its decisions though appropriate multilateral organizations, Washington did not hesitate to bypass them with very limited, if any, resistance from the international community (e.g., the U.S.-led “coalition of the willing” military intervention in Iraq back in 2003).

The new cycle of globalization will be entirely different from this model. The United States is not likely to remain the indispensable driver of “globalization 2.0”. Moreover, it is far from evident that the world will need a committed and highly motivated global hegemon in order to launch a globalization reset. We are more likely to see the horizontal model of globalization, truly based on genuine multilateralism, making headway. Examples of this model are already there. For instance, late in 2020, fifteen Asian Pacific nations signed an agreement to form the Regional Comprehensive Economic Partnership (RCEP). The agreement formally launched the world’s largest free trade zone, with the total population of 2.2 billion people and the GNP of $28 trillion, or about one third of the global GNP. Interestingly enough, both friends and adversaries of the U.S. in the region joined the agreement. Contrary to what one could have imagined, it was not China that played the central role in getting the RCEP off the ground; the true drivers behind the agreements were the ASEAN nations which had been working on this ambitious project for about twenty years.

As for the United States, the U.S. leadership will have to accept that Washington will not be always in a position to act as the indisputable leader of the new cycle of globalization or as the indispensable actor in setting the rules of the game. Like any other country in the world, the United States will have to take the position of a yet another participant and sometimes that of an observer to the changing rules. In some areas, the U.S. will continue to be the rule-maker, while it will have to be a rule-taker in others. Such a shift will inevitably turn out to be very painful for the numerous factions in the U.S. political establishment who appeared on the political scene and matured there in times of the bipolar and the unipolar international systems. It is yet to be seen how the U.S. leadership will cope with this challenge.

2. Globalization with no center and no periphery

At the dawn of the previous cycle of globalization, the common vision was that its ‘waves’ would spread primarily from the economic, technological and political core of the modern world, which is to say from the “Grand West,” to its periphery. Large semi-peripheral countries such as China, Russia, India and Brazil were supposed to serve as transmission gears in this process. Early prophets of globalization also assumed that as we move away from the core towards the periphery, the resistance to globalization will increase, giving rise to conflicts and trade wars as well as sowing isolationism and nationalism. These ‘counter waves’ would slow the overall globalization process down, but they would not profoundly affect the global core, being gradually weakened in course of their proliferation from the periphery. While the periphery had to stay fragmented for some time, the core would continue to consolidate.

However, for “globalization 2.0”, the terms of engagement will be very different from this pattern. ‘Waves’ of globalization are likely to go in the opposite direction, from the global periphery to the global core. The “Grand West” is already trying to isolate or—at least—protect itself from the Global South though capping international migration, reinstalling protectionism, repatriating industries from overseas, demonstrating growing vulnerabilities to nationalism and xenophobia. Such a shift reflects a continuous fundamental change in the balance of economic power between the global core and the periphery. Back in 1995, on the eve of “globalization 1.0”, the GNP (PPP) of the seven top emerging economics—China, India, Russia, Brazil, Indonesia, Turkey and Mexico—amounted to about one half of the G7’s GNP which includes the U.S., the UK, France, Germany, Japan, Canada and Italy. In 2015, the GNPs (PPP) of the two groups were roughly the same. By 2040, the “emerging seven” will be twice as powerful in economic terms as the “developed seven”.

The global core still enjoys a major advantage over the global periphery—should we rather say the former global periphery?—in terms of their respective levels of engagement into major globalization processes. Nevertheless, this advantage is rapidly shrinking. For instance, China has surpassed the United States in 2020 as the global leader in receiving foreign direct investments. The question about who is to lead “globalization 2.0” remains open. One can even question whether “globalization 2.0” might have a single geographical center or whether it should be associated with a particular region or a group of nations. The next cycle of globalization is more likely to evolve as a network process without a clearly defined geographical hierarchy. The whole distinction between the global core and the global periphery might completely lose its meaning since virtually every country in the world features elements both of the former and of the latter.

3. Sustainable development rather than linear economic growth

The previous cycle of globalization was about acceleration of economic growth and increases in private and public consumption. Notably, “globalization 1.0” contributed quite a lot to overcoming global poverty and to expanding the middle class globally, especially in Asia. Flourishing international trade, augmenting foreign direct investments and emerging sustainable transnational economic and technological chains—all these factors contributed to the success of many ambitious projects of national modernization. Because of these positive changes, many in the world came to be convinced that “the rising tide would lift all boats”, meaning that the benefits of globalization will eventually become available to everybody on the planet.

To a certain extent, this assumption turned out to be valid. The average inhabitant of Earth lives a better, brighter and longer life as compared to that of his or her parents thirty years ago. Still, globalization failed to distribute its benefits among the global population in an unquestionably fair manner; on the contrary, “globalization 1.0” divided the world into new winners and new losers. Apparently, the borderline between the former and the latter does not always separate ‘successful’ states from ‘unsuccessful’ countries. More often, we observe deepening divisions within states—between certain demographic and professional groups, between metropolitan and rural areas, between wealthy and poor regions, and so on. In short, the new divisions emerge between those who were able to fit into the new way of life and those who were not. For example, the median incomes of the poorer half of the U.S. households experienced no increase over the last forty years, but only a steady decline. It goes without saying that such a situation serves as fertile soil for various forms of social unrest and political populism.

“Globalization 2.0” is likely to change the criteria of success. High rates of economic growth will still be important, but meeting sustainable development goals will become even more important than returning economic growth per se. This shift means that much more attention has to be drawn in the future to issues of social equity, life quality, environmental and climate agendas, community building, personal and public security, etc. The linear increase of private and public consumption is not sustainable; it will give way to the much more nuanced indicators of ‘smart consumption’. Moreover, the whole concept of the ‘consumption society’ will undergo quite radical changes. Countries will more and more often compete with each other in terms of the overall opportunities for self-fulfillment which they can offer to their citizens rather than in simple GNP per capita terms.

4. Social drivers rather than financial drivers

Transnational financial businesses were in the vanguard of “globalization 1.0”. Internationalizing financial markets, inter-state competition for access to foreign investments, growing geographical and sectorial capital mobility, the emerging trans-border community of financial managers aligned by their professional skills and a shared culture—all these trends have had a profound impact on production, politics, and even on mass culture and lifestyles. The cosmopolitan technocratic professional has come to be a role model and a symbol of change.

However, the 2008-2009 financial crisis exposed serious limitations of this model of globalization. Transnational capital has moved too fast ahead and too far away from the national production base as well as the domestic social environment. Cosmopolitan technocratic professionals have become a symbol of greed, moral relativism and social irresponsibility. Because of the permeating disappointment, the formerly limitless expansion of capital was contained by highly nationalistic economic and financial strategies, with the economic and financial priorities of the Trump administration being a graphic illustration of the defeat suffered by international bankers. Hopes and expectations of the self-confident economists of the early 21st century did not come true as economy never managed to defeat politics, turning it into an obedient servant. The opposite happened. Politics started overshadowing economy and dictating decisions that were quite apart with the narrative of economic feasibility. Paradoxically, “globalization 1.0” fostered a whole spectrum of new opportunities for anti-globalists to build their transnational alliances. These days, anti-globalists have arguably mustered globalization-related opportunities much better than their opponents.

There are reasons to believe that “globalization 2.0” will primarily have social rather than financial drivers. Even today, with international trade and foreign direct investments plummeting, it is worth mentioning that trans-border information flows continue to grow at a very high speed. The COVID-19 pandemic has become a powerful factor causing humankind to disunite; however, this is only its immediate impact. The long-term impact may well be the opposite, since the pandemic turned out to be an extraordinary accelerator of new information and communication technologies; and it would not be an exaggeration to argue that one of the most remarkable features of the post-pandemic world is the emergence of the first truly global civil society. Trans-border NGOs, professional communities, public movements, advocacy coalitions are likely to play a more active role in “globalization 2.0” than the old financial elites of nation-states. If so, we can conclude that “globalization 2.0” will have a much broader and a more robust social base than the previous cycle of globalization. Therefore, future resistance to anti-globalist trends might also grow stronger.

5. Social justice rather than individual freedoms

The previous cycle of globalization reflected the public demands for individual freedoms that were dominant in the global community since the 1980s or even earlier. The impulse of globalization had its roots in economic and political programs of such leaders as Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States; it gained momentum amid leftist egalitarian ideologies being in a crippling crisis caused by the failure of the communist experiment in the Soviet Union and Central European states. Visionaries of “globalization 1.0”—from Jacques Attali to George Soros to Thomas L. Friedman—dreamed of the future society populated by completely atomized “citizens of the world” with unlimited freedom of choice and very few, if any, constraints imposed by archaic group identities and related commitments.

The global political pendulum reached its extreme point in the very beginning of the century and in 2010s started moving in the opposite direction. It is very likely that we will see much more articulated and persistent public demand for social and political justice in the second quarter of the century. This implies a renaissance of leftist ideologies, an advance of left political movements and parties. There are already many indicators that societies in various parts of the world are more inclined to sacrifice some of their economic and political freedoms for the sake of what they consider to be the guarantees of social justice and fairness. We can envision an increase of the tax burden on the private sector and the wealthier social groups as well as new egalitarianism, politically motivated censorship and self-censorship, proliferation of political correctness practices, the emergence of new restrictive approaches to information management and restrictions of privacy justified by security considerations. Neither of the above-mentioned trends implies a total defeat of liberal democracies by authoritarian political models, although liberal democracies will have to put more emphasis on social justice in order to survive and compete with the alternative forms of social organization (as it was the case between the two world wars).

Globalization based on the priority of social justice has to be quite different from globalization based on the priority of individual freedoms. The modern society has yet to produce universal and legitimate standards of justice—both to be applied domestically and in managing relations between states. This suggests that the world in throes of “globalization 2.0” will not necessarily become a fair and just world – it will remain unfair and unjust for many social, political, ethnic, religious and other groups as well as for many nations. However, we can predict a much more consistent emphasis on national and international affirmative actions, non-market mechanisms of massive redistribution of material wealth on the national and international levels, more persistent efforts to bridge the gap between the “haves” and the “have-nots”. The art of successful global and national governance under these circumstances has to include the ability to balance diverging understandings of justice that exist in the world at large or within a given country.

6. Multitude of actors instead of nation states.

The retreat of “globalization 1.0” was largely accelerated, if not caused, by the demise of non-state actors in international relations. Notions of national sovereignty and supremacy of nation states, concerns about interference of foreign nations into domestic political affairs have become quite popular in many societies and, especially, within the traditional state-oriented national elites. These elites now have their revenge: almost everywhere in the world, we stand to witness the rise of social and political status enjoyed by state bureaucrats, the military, defense sector, special services and law enforcement agencies. To some extent, the traditional (i.e., linked to the industrial sector of economy) middle class also experiences an upward social mobility. At the same time, many role models of the early 21st century are losing their former lure and influence; the new creative class, private financial sector, cosmopolitan factions of national elites, liberal media, comprador intellectuals—all of these have to fight really hard to avoid complete marginalization. The world is getting back from the post-modern paradigm to the neo-modern one, while in a number of dimensions, the world is even falling into the archaic. The former non-state drivers of globalization—such as universities, independent think tanks, professional networks, transnational NGOs and foundations as well as a globally oriented private sector—are pushed to the sidelines of the international system.

Nevertheless, the subsequent period of deglobalization demonstrated that such reinvigoration of nation-states has its own limitations. The nearly universal emphasis on national sovereignty has prevented neither the COVID-19 pandemic, nor the implosion of the global oil prices, nor the increase in volatility of currency exchange rates. Stricter national fiscal regulations failed to eliminate global offshores, much as tighter border controls and visa regimes did not prevent millions of illegal migrants from getting to Europe. Despite their frantic efforts, nation states so far achieved only limited success in reinstalling their control over trans-border flows of money, goods and services, information and people. It is hard to believe that the ‘final victory’ is just around the corner.

“Globalization 2.0” is likely to offer a different model of interaction between state and non-state actors in international relations. Though states will undoubtedly remain the main building blocks of the global system, more and more international problems might find their solutions only in the format of broad private-public partnerships (PPP). For instance, in order to block the most dangerous and destabilizing avenues of the arms race, an active engagement by the private companies from the defense sector and research universities appears to be indispensable. The advancement of the “green agenda” is impossible without involving multiple civil society institutions and local communities all around the globe. Successful development projects in the poorest countries in the world are doomed to fail, if the private sector does not shoulder efforts of national or international technical assistance agencies. It is important to mention that non-state actors in such PPPs are not likely to limit their role to that of state subcontractors; they will come to the partnerships with their own interests and priorities, sometimes very different from the interests and priorities of states. The ability to build efficient PPPs will be critical for state leaders of the future.

7. Plurality instead of universality

The previous cycle of globalization coincided with the global triumph of political and economic liberalism. Many politicians and scholars regarded the notions of “liberal globalization” and “global liberalism” as almost synonymous terms or, at least, as terms that are inextricably linked with each other. A predicted final and global victory of liberal economic and political models should have become both a key accelerator of globalization and one of its most significant accomplishments. In this context, any non-liberal or illiberal developmental models appeared to be manifestations of archaism, symptoms of inconsistent and incomplete modernization, preventing their bearers from fitting into the new global world. One could have argued about what were the most efficient modernization trajectories when it came to one society or the other, but the view that the West stood as the symbol and the incarnation of modernity itself looked axiomatic.

Today, a direct causal link between globalization and political/economic liberalism is less evident than it was three decades ago. Political and economic liberalism is under pressure. Even in the “historical West”, they now question some of the liberal centerpieces, whereas alternative social, economic and political models demonstrate their sustainability and resilience, often coupled with high efficiency. One of the most emblematic illustrations of this new situation is the comparative experience of the United States and China in fighting the COVID-19 pandemic. The fight between liberalism and its opponents is surely far from over, but the West has already lost its former monopoly on how to define modernity, having itself turned into a target for condescending statements about archaism and obsolescence.

This new dynamic of global development suggests that “globalization 2.0” should find a way to combine the needed degree of global universality and pluralism of national trajectories for economic, social and political development. The rules of the game in the emerging international system have to be balanced in such a way that they become equally comfortable for a large variety of participants that go through different stages of their social and political maturation. It is not realistic to expect that only an adherence to political liberalism can grant nations a free and unrestricted access to the global world; this world should be open to all—whether liberal democracies or illiberal autocracies, theocratic republics or absolute monarchies. Multilateral global projects should emerge around common interests rather than around common values. One can assume that “globalization 2.0” (or a later “globalization 3.0”) should—at the end of the day—lead to a global convergence of values. The assumption is debatable, but it is clear that such a convergence can only follow globalization in some rather distant future, while it cannot serve as a precondition for “globalization 2.0”.

8. Asynchrony in lieu of synchronization

Though “globalization 1.0” studies initially focused primarily on its financial and economic dimensions, it was more than apparent that globalization was a complex process with a profound impact on all aspects of human existence. They assumed that the financial and economic globalization would inevitably pull behind itself—just as a locomotive pulls cars behind itself along the railway—other dimensions, such as social, cultural, political and so on. Furthermore, they expected globalization to somehow synchronize its advances in various areas. By interacting with each other, the various dimensions of globalization were to accelerate each other, resulting in a cumulative impact on the international system at large. Such a reductionist vision of the future of globalization can be partially explained if we recall that most of those who originally analyzed this phenomenon were scholars majoring in macroeconomic and financial matters; therefore, their economic and technocratic determinism should not look too surprising. The idea of synchronization looked nice—for some time, it seemed that global developments proved it right.

Over time, however, it turned out that ‘globalization resistance’ in certain dimensions of human life is visibly stronger than in others. Furthermore, it became clear that there is no direct causal relationship between integration and unification. The famous Aristotle’s quote about the polis as a “unity of dissimilar” can be applied to the globalized world just as well. It turned out to be impossible to synchronize, shall we say, the economic and the political facets of globalization. The growing gap between its economic and political dimensions turned out to be the most formidable challenge to “globalization 1.0” as economic imperatives called for strategic, system-driven, global, continental, proactive and multilateral solutions, while political needs pushed tactical, opportunistic, local, reactionist and unilateral moves to the forefront. As was previously argued, economic rationality failed to prevail over political considerations, which make a globalization setback practically unavoidable.

It is clear that “globalization 2.0” will have to be asynchronous, which is to say that it will imply diverging speeds of globalization in various domains of human life. For instance, the resilience of national cultural patterns to the global advance of mass culture should not become a formidable obstacle to the economic dimension of globalization. Commitments of societies to their historied traditions and unique identities should not pose a challenge to the growing unity of humankind—on the contrary, they should serve as a national contribution to the global diversity. Global diversity, in its turn, should enhance the overall stability of the global social system. Amid a profoundly asynchronous “globalization 2.0”, harmonizing the multiple elements of universalism and particularism transnationally as well as within the boundaries of nations will be an immense political challenge as it will require extremely delicate and highly professional political fine-tuning. Today, we can only guess about how future politicians will muster the skills needed.

Situational coalitions rather than rigid alliances

“Globalization 1.0” made full use of the Western security and development institutions that remained essentially intact since the end of the Cold War. The common expectations were that the continuous geographical and functional expansion of these institutions would ultimately facilitate unification of humankind under a common umbrella, which would solve most of the pressing global problems. In reality, most of these institutions, including NATO and the European Union, too soon manifested their limitations, even bordering organic deficiencies in some of the cases. At the same time, most attempts at launching new institutions as alternatives to the old West-led organizations were freighted with a chronic institutional fatigue that often prevented these initiatives from going much beyond a club format of their activities. Global politics polarizing even further over the second decade of the century contributed to incapacitating many multilateral institutions, including the United Nations framework.

It is hard to imagine the emerging world order with no institutional backbones inherited from the previous period. Still, the odds are that most of the international activity will revolve around specific political, social, environmental and other problems rather than within rigid bureaucratic organizations inherited from the 20th century. The remaining international hierarchies will gradually lose their former omnipotence; the notions of “superpower” or “great power” will look archaic and containing little, if any, explanatory power. At the same time, no “global government” endowed with extensive powers and universal legitimacy is looming on the horizon.

Seeking to approach specific problems, nations will likely form flexible situational coalitions of the willing which will include not only committed nation states but also various actors from the private sector, civil society and other actors involved in international affairs. Such coalitions will assemble, disassemble and reassemble with relative ease. There will be no place for complex and resource-consuming bureaucracies or excessively complicated decision-making procedures. Such a problem-based approach to international cooperation is not ideal, though; it has its own limitations and liabilities. Still, it may well turn out to be more meaningful and, therefore, in greater demand by the international community than the old institutional approach.

10. North–South divide replacing East–West divide

Conventional wisdom suggests that “globalization 1.0” has tri/pped over the confrontation between the United States and China. The 2020-2021 economic and epidemiological crisis is believed to accelerate the drift of the global economy and politics towards a U.S.-Chinese bipolarity. This logic implies that the main issue of our time is how rigid or flexible this bipolarity may come to be. A rigid bipolarity will literally divide the world into two opposing systems, as it was during the most part of the second half of the 20th century. A flexible bipolarity will allow most international actors to preserve some freedom of maneuver and a degree of autonomy in their respective foreign policies. This logic looks compelling, but only if one looks at the immediate future of the next couple of years. However, keeping “globalization 2.0” in a longer-term perspective, it looks highly likely that political and economic bipolarity will increasingly shift from the “East–West” axis, typical of the 20th century, to that of “North–South”.

Surely, the current divisions between the East and the West will not disappear for a long time. For at least a couple of decades, China’s modernization model will be explicitly different from the Western model. Still, the longer-term perspective we use, the more grounds we find to include China (as well as Russia) into a broadly defined Global North. To reach a strategic compromise between Washington and Beijing would require political will, commitment, patience, stamina and flexibility from both sides, but the contours of such a compromise are more or less clear. At the same time, even some general understanding on a possible North-South compromise is lacking. There are no grounds to hope for the Global North to come up with a comprehensive large-scale development assistance program for the Global South along the lines of the Marshall Plan offered by the United States to Europe in the aftermath of the Second World War. Quite on the contrary, we cannot rule out yet another rise of racism and xenophobia that would distance the Global North from the Global South even further. Amid such conditions, the world in throes of “globalization 2.0” might witness deeper integration of the Northern economies parallel to curtailing economic, political and even humanitarian connections to most of developing nations, tighter border controls in the North and new restrictions on trans-border migrations.

The critical challenge of “globalization 2.0” is not about pulling the laggards in the South up to the level of the leaders in the North. It is impossible for one simple reason—to extend the living standards of the Western middle class to all inhabitants of Earth would require imposing exorbitant pressures on the planet’s resources and dooming our planet’s ecosystem to irreversible degradation. It is also impossible because the liberal model of today’s North is not so efficient as it used to be in its heyday. The North is gradually losing its monopoly on modernity and is, therefore, less and less regarded by the Global South as a model to follow. Besides, over time, the geographical division between the North and the South becomes more porous. The North is expanding to the South—through huge ultramodern metropolitan areas in South Asia, the Middle East, Africa and Latin America, through new sectors of economy as well as through new consumption patterns. The South, in its turn, is infiltrating the North with its migration flows, its lifestyles, its culture and its religion. A ‘civilizational divorce’ between the North and the South is next to impossible; if humankind fails to agree on some civilizational synthesis within the next couple of decades, “globalization 2.0” will definitely fall short of accomplishing the most fundamental mission of the 21st century.