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The New Perspective

"At Davos, the Globalizers Are Gone," is an excellent article by Ian Bremmer, and in sharp contrast to another excellent article I posted yesterday by George F. Smith writing at Mises Daily, By the Way, Free Markets Are Free. I would submit that the ideals of a truly free market are an illusion because we do not have the political system and laws framed in such a way as to support a truly free market system. We cannot go straight to free market remedies because we cannot dispense with the need for a functional, non-corrupted, political and legal system – laws constraining freedom – to provide the framework in which a free market can operate.  And hence, "free" is not completely free and it can’t be. – Ilene

The New Perspective

Woman Standing on Globe Beach Ball

Courtesy of Michael Panzner at When Giants Fall

Say what you will, but one reason why globalization has had the traction it has up until recently, despite anecdotal and other evidence that it has not lived up to many of the promises of its proponents, is because of the support of the movers and the shakers. In America and elsewhere, corporate executives and other powerful interests have used their money and influence to ensure that policymakers were not swayed to move in a different direction. But the times are a-changin’. As foreign policy expert Ian Bremmer notes in a commentary for the Washington Post, "At Davos, the Globalizers Are Gone," some of the biggest supporters of unfettered cross-border trade and free markets, no doubt shaken by the events of the past two years, seem to have lost their mojo.

For 40 years there’s been a consensus view at the Davos World Economic Forum that globalization’s increasingly free cross-border flow of ideas, information, people, money, goods and services is both irreversible and a powerful force for prosperity. As with meetings of the G7 group of industrialized nations, there was broad agreement on the proper role for the state in the performance of markets. Sure, a French cabinet official and an American investment banker might spar over the relative merits of state paternalism and Anglo-Saxon labor laws, but the bargaining table was still reserved for champions of Western-style free market capitalism.

Davos has always had its critics. For those who believe globalization empowers the rich at the expense of the poor, the forum exists to allow the wealthy to pretend they’re at a film festival. There are the Hugo Chavez/Mahmoud Ahmadinejad-type critics who insist that Davos represents post-modern imperialism with an alpine backdrop. There are the NGO critics who argue that the forum is more about partying than problem-solving. There are the conspiracy theorists who charge that Davos is simply the spot where Council on Foreign Relations commissars and their bosses at the Trilateral Commission make plans for the future and make time on the slopes.

Crumpled map in glass jar, close-up

But for the first time, some of the most powerful folks inside the Davos event are challenging the value of globalization. These aren’t the have-nots of years past. These are the men and women driving some of the world’s fastest-growing economies.

This massive change has its roots in 2009, when Davos served as the world’s single most important multilateral gathering. The discussion was much franker and more open here than anything on display at the London and Pittsburgh meetings of the G20, the United Nations General Assembly or the climate change conference in Copenhagen. At Davos, leaders from the public and private sectors gathered for open discussion of the still-developing crisis, as a financial tsunami created a heightened sense of unity.

Now the sense of crisis is gone — and so is the unity. Sure, there are still plenty of delegates warning of the lasting effects of the financial crisis and global slowdown, plenty of anxiety that jobs aren’t coming back quickly enough and that the worst is yet to come on sovereign debt defaults. But other delegates have moved beyond fear of what has already happened to anticipation of what’s to come. They’re talking about a wave of populism and protectionism — and the momentum behind the drive by some governments to use state-owned companies, privately owned national champion firms, natural resources and sovereign wealth funds to dominate markets for political advantage. This talk of a need for new barriers and of the virtues of state-managed capitalism suggests that Davos — and the global economy — have turned a corner, and that free market capitalism now has new competition…

Continue reading here.>>

Ian Bremmer is president of Eurasia Group and author of the forthcoming book, "The End of the Free Market: Who Wins the War Between States and Corporations?"

 


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