Sol Price School, University of Southern California
October 4th 2018
How best can we meet the global economic and security challenges of our time
I want to begin by thanking the Dean of the Sol Price School, Jack Knott, for his invitation to spend some time here as a so-called ‘distinguished fellow’ and to give this lecture.
In considering how best to address my subject I have been greatly assisted by the clarity offered last week by President Donald Trump when he took up the rather surprising role of Chairman of the United Nations Security Council during the General Assembly in New York. He said there that the "ideology of globalism" had run its course, and the US under his leadership was pursuing a "doctrine of patriotism".
I am tempted to rely on Samuel Johnson’s famous remark in April 1775 that ‘Patriotism is the last refuge of the scoundrel’, the scoundrel then in question being the former British Prime Minister, William Pitt.
But I think that Trump’s formulation nicely crystallizes the challenges facing politics across the world today of ‘Globalism’ or ‘Patriotism’. I will argue that these are false opposites and hope today to suggest ways in which we should be addressing the relationship between them.
I want to begin with some obvious points of history.
Following the disastrous economic slump of the 1930s, the growth of the European totalitarian states, notably Germany and Russia but also others, and then the catastrophic though ultimately victorious Second World which led to dominant American power across the world there was an almost universal consensus that steps had to be taken to prevent that process happening again, notably in the economic, social and international security fields.
On the economic front this meant governments across the world adopting the counter-cyclical macro-economic management approach identified with the Cambridge economist, John Maynard Keynes, reinforced by the Marshall plan in Europe.
On social policy it led to the foundation of a wide variety of health and welfare systems. These took different forms in different countries but all of them sought to avoid the failures of 1919 and to eliminate the widespread destitution and despair which were an immediate cause of the troubled 1930s and 1940s.
And in the international security field the need for effective international institutions was agreed in place of the failed League of Nations and so the United Nations was founded at San Francisco here in California on October 24th 1945.
These three key dimensions - economic, social and international security – underpinned the most successful evolution of prosperity and social justice in the history of the world. These have all developed in different ways over the 60/70 years that followed and there were very many significant and positive modifications along the way. However the overall model sustained itself and broadly speaking retained the confidence of the world.
And this model did even better when we consider the political development of the global economy over these years. The post-1945 democratic, economic and social model has been the ambition which has driven enormous change over that time:-
Fascist or militaristic Greece Spain and Portugal have been succeeded by democracy;
Apartheid South Africa has been succeeded by democracy;
Colonialist Southern Africa has been replaced by democracy;
Latin and Central American dictatorship has been replaced by democracy;
The whole of totalitarian Central and Eastern Europe has been succeed by democracy;
In South-East Asia too forms of democracy have replaced dictatorship;
And Russia and China comprehensively changed their systems of government.
I perfectly well understand that we have seen no such progress in the Middle East, that in many parts of the world massive problems remain and there are still significant issues which remain to be addressed. And also that in some areas that I mention some aspects of the new democracies are under threat.
However, it remains the case that these were absolutely enormous changes in one generation and changes in the right direction. They prove that change for the good can happen, and moreover that it can happen without enormous violence or bloodshed.
But side by side with these successes we have also seen the steady expansion of world trade and destruction of tariffs and protections, so-called “globalization”, which has led large parts of our populations to lose faith in the capacity of this post-war system to meet the problems they experience, whether economic, social, or international in nature.
Whatever the economic successes of “globalization” in the round, it did not answer widespread concerns of individuals and communities about economic desolation in some geographical areas, such as the US rust belt and the former coal and steel communities in the UK, France and elsewhere. Nor did it address worries about control of the immigration which was a significant side-effect of globalization. Those who believed that they had lost out from that very process of globalization turned towards those political leaders who spoke out against the status quo rather than just going along with it.
Thus tens of millions of people moved, and are continuing to do so, away from the economic and social model which had served so well for decades and they voted accordingly. They turned away from that post-war settlement towards the challenges represented by BREXIT in the UK, Donald Trump here in the US and similar movements in a number of other countries.
To me this experience of marginalization is the core reason for the BREXIT vote in the UK in the referendum of June 2016. The EU itself was not the central reason for the vote though, as I explain in a moment, it was certainly part of it. The deeper experience of the economic consequences of globalization was at the core. And for those who wonder why the referendum was ever held, the same explanation is central. The traditional Conservatives were losing support to their challengers in UKIP, who articulated these concerns, in particular about immigration, and the Conservative leader was trying to minimize Conservative losses to them, which had been substantial in a number of elections.
The challenge posed by those opposed to globalization to the post-war system is existential. But a central part of my argument today is that the main responsibility for this state of affairs lies less with Trump and the BREXIT supporters than with those of us who did hold the economic and political power but did not use it well enough to address the concerns that those people had before they fell for the snake-oil offers put forward by the new ‘nativist populists’ as they have been called.
After all BREXIT and Trump only exploited a failure by the governing “establishment”. It was that governing “establishment which had failed to reinvigorate the very institutions and system which had the responsibility for dealing with these issues. And that is why I maintain that the challenge which the centre of political now has to meet is not simply to oppose what BREXIT and Trump mean but to recreate for the future a national and international system of governance which can meet the concerns reflected in those votes.
Change since 1945
Though I said earlier that the post-1945 doctrines have all developed in different ways over the following years, and that there were lots of modifications along the way, the fundamental question is whether we changed enough - so that our government systems could follow through the principles established in 1945 – on the economy, on social policy and on international security - in order to cope with the vast and fundamental changes which have taken place in all aspects of our lives.
We need to start by understanding the changes that have been taking place. Thepace of change has been enormous and is accelerating and it is worth considering the nature of the economic, social and international security changes.
Our economies changed so that capital could move at lightning speed around the world, a process shadowed by rapid movement of people migrating across the world. These changes seriously weakened our ability to monitor, and if necessary regulate, the workings of the world’s financial markets in order to ensure that the system operates in the world’s overall economic interest. A stable state of affairs has still not been truly established in a long-term and rigorous way, despite the immense and damaging shock of the 2008 financial crash. Some commentators are of the view that the tensions in the existing economic system are such that a further 2008 can certainly not be excluded which would of course be devastating.
At the same time world economic activity has moved eastwards and southwards as those economies, notably China and Japan, have become increasingly powerful and significant. It is thus no surprise that the economic G5 has become the G6, then the G7 and G8 and now the G20 as efforts have been made to bring economic governance nearer to economic reality, though we are still a very long way from finding an effective economic governance regime.
The whole economics of the world has been transformed even more deeply by accelerating technological change. The first industrial revolution (using water and steam power to mechanize production and the second (using electric power to create mass production) were followed after 1945 by the third (using electronics and information technology to automate production) which has transformed the production of both goods and services. But we are now moving to a fourth industrial revolution characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in almost every country.
The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, autonomous vehicles, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.
Among the many implications of this accelerating process of economic and technological change is the transformation of entire systems of production, management, and, importantly, governance. In addition it highlights the critical importance of higher quality education and training and spotlights the further decline of traditional communities.
These economic changes have been mirrored by enormous social change. These include the enfranchisement of women, though still with a long way to go, the acceptance of more liberal approaches to style of lives, redefinitions of conventional family structures, including responsibility for caring throughout life and an often increased state role. And the generally good news of an ageing society brings enormous implications for security and independence.
Cities have become even more significant as large numbers migrate from rural to urban areas across the world. More generally migration has transformed the ethnic and demographic make-up of communities so that Islam and other faiths have a more significant role to play than was the case before 1945.
As with the economic changes, the changes in traditional societies are deep, profound, and accelerating rapidly across the world, whilst the communications revolution means that the whole world is looking at this in real time.
This process of social and economic change threatens the security and self-confidence of communities. This is what in political terms has the potential to mobilise hundreds of millions of people behind the dishonest fantasy that the world can be stopped and they can get off.
As with the economy and society, the whole international security landscape has been transformed and new challenges created.
First and foremost we have moved from the bipolar US-Soviet Cold War world of 1945-89 to the uni-polar world from 1989 to about 2006 when the US was the single world power. In my opinion the mid-term congressional elections in the second George W Bush term, responding to the tribulations of Afghanistan and Iraq, led to a zero-polar world where the United States no longer seeks to determine events in large parts of the world - a trend carried through by both Obama and Trump. Perhaps this zero-polar world can more accurately be seen as a multi-polar world whose many risks and difficulties are steadily becoming more difficult to resolve.
Those uncertainties pose a whole series of new challenges, including the rise of other powers, such as China and Iran,the spread of nuclear weapons and other WMD, which of course underpin current tensions around Iran and North Korea. And a direct consequence of this uncertainty is the growth of terrorism as a threat and creating enormous damage in many parts of the world, also including consequences such as migration away from disaster areas.
And new international security challenges have emerged, such as the impact of climate change, the inability to create stability in the Western Balkans, the responses to the Arab Spring and the creation of so-called “frozen conflicts” across the former Soviet empire such as those in Nagorno Karabakh, Abkhazia and South Ossetia. New nationalisms have emerged in places like Catalonia and Scotland and of course the conflicts in Palestine and Middle East remain as deeply serious as they ever were for the last 70 years.
So faced with this new assertiveness, we have not been able to create international institutions which are able to handle these challenges. It is worth recalling that the proximate cause for the Iraq war was the refusal of Saddam Hussein to honour the resolutions of the United Nations, so perfectly illustrating the challenges of building an international system whose writ can run.
Weakness of international institutions
So in all of these areas, where change has been immensely rapid, what should have been done and what should now be done?
We don’t have some kind of world government which could try and create an orderly and secure world context within which this process of accelerating change can be managed.
Instead we have in place a whole cats cradle of international institutions, with the UN at their centre, which were established to deal with a whole range of these international challenges:-
In the economic field, they include the International Monetary Fund, the World Bank, the World Trade Organisation, and the International Labour Organisation, as well as the Food and Agriculture Organisation, the World Intellectual Property Organisation, the International Fund for Agricultural Development and the UN Industrial Development Organisation (UNIDO).
There is a range of organisations to regulate communications, such as the International Civil Aviation Organisation, the International Maritime Organisation, the International Telecommunications Union, the Universal Postal Union and the World Meteorological Organisation.
These have included some important successes, but also important failures, for example in relation to the 2008 crash, as referred to earlier.
And an important regional economic experiment, the eurozone has so far had a rocky path. I would say more success than failure though many would disagree.
In the social policy field the 1948-1951 Convention on Human Rights, the Refugee Convention and Law of the Sea remain important, though outdated in some important respects and needing modernisation to reflect the ways in which the world has changed since they were first signed. And the International Organisation of Migration plays an increasingly important role as does the Schengen zone in the EU. UNRWA makes valiant efforts to cope with the appallingly difficult challenges of refugee movement throughout the world.
Education and culture are addressed by the UNESCO and the World Tourism Organisation whilst the World Health Organisations plays a big role in that field.
And the more recently articulated concerns about the environment and climate change have led to the UN Conference on Environment and Development (UNCED) and theFramework Convention through big discussions in Kyoto, Copenhagen, Cancun and Paris.
The most important organisation in the field of security is of course the United Nations Security Council with important peacekeeping responsibilities, for example with UNIFIL in the Lebanon though some of these are shared with the EU and NATO, for example in former Yugoslavia. Its judgements about the legality of military action are of immense importance, but controversial and sometimes cumbersome.
Important weapons control agreements such as the Comprehensive Nuclear Test Ban Treaty or the Organisation for the Prohibition of Chemical Weapons are under constant pressure. The International Atomic Energy Agency remains centrally important but with difficulties carrying out its remit.
The Middle East and tensions around Russia’s relationship with its neighbours remain difficult to influence in a positive direction. And there are string of almost comic post-colonial hangovers, such as Gibraltar, St Helena, Diego Garcia, Antarctic and the Falkland Islands, all of which have the potential to create conflict.
Of course during the Cold War, until 1991, the ability of the Security Council to act was frozen by the requirement of consensus, which has broadly continued to be the case afterwards.
Its contribution has been marked more by impotence than by the ability for internationally authorised intervention, military or otherwise, to resolve difficult, or potentially difficult, conflict situations.
There have been important parallel institutions, notably NATO and the European Union. NATO has been able to contribute to security in certain situations such as the former Yugoslavia, but has some difficulty defining its role. The EU was exceptionally important in securing an end to the Franco-German conflict which had marked European history for nearly a century through appalling conflict. It then helped to extend democracy, first in Southern Europe in the 1970s and 1980s and than in central and eastern Europe after 1990. But for the last 20 years it has been unable to make decisive interventions, even in issues of critical significance such as controlling migration into Europe, and securing the external Schengen border of the continent. The efforts to develop a common foreign policy have been stuttering so that the EU has been unable to exercise very significant and visible influence. Other institutions like OSCE have made a contribution at the margin, but not centrally.
There have been confusions between the different organisations UN, NATO, EU, OSCE which have led, for example in the Western Balkans, to overlaps of responsibility, silo thinking, and confusion. The different organisations have had different mandates, different approaches and different contributions.
In the complex potpourri of organisations and initiatives that I have described, and which has been the international system as it has developed since 1945, there have, since the mid 1990s, been few apparent and obvious successes in dealing with the security challenges of change. Though I would argue that there has been some success, the overall message to our populations has been more of irrelevance, impotence and marginalisation in the face of very real challenges such as terrorism.
In all of these areas – economic, social and international security the answer is of course not to pull out or to weaken these international institutional arrangements. It is to strengthen them and make the system work better. That is our challenge.
That is also the case about the European Union which has big achievements to its name but which has become stalled. The response is not to withdraw but it is to make the EU work better, in fields such as Immigration, management of the Eurozone and climate change, as well as defending the democracy and human rights that it played such a big role in establishing.
The Choice we face
So this is the context in which I return to the choice posed by President Trump.
He stated at the UN that the choice is Patriotism or Globalism. Or more accurately, a strategy of ‘America First’ or let’s work together to solve the problems which we face.
I do not believe that Go It Alone is an option for the US, the UK or anyone else?
It is true that in many ways conventional politics has failed to solve the problems and to address the challenges which preoccupy those who have been most damaged by the globalisation revolution.
And it is true that the cats cradle of international organisations which I have described has not done enough to address the challenges of change that our world has to deal with and have lost the confidence of tens of millions of people.
And it is true that these important failures have encouraged a sense of impotence in millions of people about their own ability to control the world in which they live. Which is why the key slogan in the 2016 BREXIT vote in the UK was ‘take back control’.
And it is true that this state of affairs has promoted a sense of nationalism and hostility to international collaboration which is very damaging.
It has encouraged a ‘Stop the World I want to Get Off’ state of mind which really does believe that we should not get involved with ‘faraway countries of which we know little’.
And it is true that a whole set of political movements from the extremes have been able to thrive in this climate, whether the Tea Party and Donald Trump here in the US, Marine Le Pen, Alternative fur Deutschland and the Swedish Democrats in continental Europe, BREXIT and Jeremy Corbyn in the UK. And I would add Syriza in Greece, Podemos in Spain and Bernie Sanders in the US.
I understand the feelings which lead people to support the oppositionist views which these people represent. Such oppositionism is indeed the depressing spirit of the times.
But the truth is that this form of isolationism and protectionism offers nothing. It recalls the “Socialism in one Country” which defined Stalin’s battle against Trotsky and led to decline for three generations. It was proposed by Tony Benn’s ‘Alternative Economic Strategy’ in the UK and by the early Francois Mitterrand Presidency in France, before being dropped or reversed by the acid test of reality.
And in the same way the US ‘America First’ isolationism of Donald Trump or even of George W Bush before 9/11 offers no answers.
The isolationist approach does not work.
Look at the comparison today between the economic welfare of those in EU member Poland and those across the border in Ukraine.
Understand that innovation and efficiency in this world of ever more rapid change is the route to economic development.
Go It Alone is a short-term populist slogan which offers no solutions and means that the problems which our world faces will never be properly addressed.
There is no possibility of insulation from the rest of the world. So if we are to address the problems that we face we have to engage and not walk away.
The challenge is to workto make our international system work better and more effectively, not to retire into our shells.
I conclude by setting out some thoughts as to how this can best be done and the role which Public Policy organisations like the Sol Price School can play.
Getting the international system to work
Getting the international system to work effectively is the only way to address the rapidly changing world which I have set out earlier and also to reduce the appalling risks which competing nationalisms can create and whose consequences we have seen so tragically in the past.
This approach is however much tougher than the simplistic and seductive campaigns just to opt out. It is more difficult to gain political support for this approach.
The international approach requires clear policy measures to address the challenges which exist, practical international policy frameworks and institutions which will apply them, and painstaking construction of the necessary political, professional and cultural alliances to implement such an approach. All of these require commitment not only from governments but also from campaign organisations and the professional policy community.
I suggest that 5 key elements need to be addressed.
a) Build a sense of international purpose
In recent years most countries, including the US and the UK, have seen a sharp reduction in the readiness to engage internationally, at least militarily. The main cause of this was the experiences in Iraq and Afghanistan.
Political and opinion-forming classes are now much clearer about what we ought not to do, rather than what we should do, even in the face of clear evidence of bad situations, and clear breaches of United Nations resolutions.
In the UK the clearest evidence of this was the Parliamentary vote on August 30th2013 not to support action in Syria, despite clear evidence of their use of chemical weapons. The Labour Party wavered and then voted against, some government MPs voted with them and so David Cameron’s government was defeated. He instantly conceded without even considering the possibility of making the argument again at a later point.
As the Economist commented at the time:-
For those who like to believe that Britain is largely a force for good in the world—a vigorous upholder of the rules-based international order, a country with a proud record of being willing to use its resources (whether economic or military) in defence of universal humanitarian values and a stalwart ally—the result of last night’s House of Commons vote on the principle of military action against Syria was both shocking and shaming.
Faced with this irresolution on the part of an essential ally President Obama in turn decided not to proceed and so Syria’s flagrant use of chemical weapons went unchallenged
This vote symbolised with great clarity the unreadiness of the US and the UK, traditionally the most internationally and UN-minded of countries, to take up the challenge of upholding the international order.
So the first step towards an internationalist approach is the need, both in those countries and in other leading members of NATO - and also where at all possible in Russia and China - to rebuild an acceptance that an internationally stable world order requires the main countries to accept again the responsibility of sustaining it.
This is principally an intellectual and political argument which needs to be made increasingly widely and with increased confidence. However its success depends in turn upon a better definition of what international action can be successful.
b) Define what engagement means
There are many forms of potential international engagement. Military action is just one option.
In his April 1999 speech in Chicago Tony Blair outlined a “doctrine of the international community” based on the idea of a “just war”: a war based not on any territorial ambitions but on halting or preventing humanitarian disasters such as genocide or ethnic cleansing. He particularly had in mind Kosovo at that time, where NATO was intervening. But he was also conscious of the shameful international failure to intervene in Rwanda in 1994, as a result of which between half a million and two million people were brutally massacred. And he was also thinking about the evolving situations in Sierra Leone, Afghanistan and Iraq.
He proposed that the international community should judge five major questions by when considering military intervention:
1. Are we sure of our case?
2. Have we exhausted all diplomatic options?
3. Can military action be sensibly and prudently undertaken?
4. Are we properly prepared for the long term?
5. Are national interests involved?
And then if military action is not possible for any of the above, or indeed any other, reasons, should the international community put into effect ‘Soft shoes on the ground’ rather than ‘Boots on the ground’, by using a set of measures such as education, institution buildingand economic trade and aid to fulfil the goals of the international community.
This is particularly relevant following military action where Marshall Plan style approaches should have been applied far more systematically.
The academic work that has been done to consider the various options in this field is not reflected in the practical political and governmental discussions about the best form of action to take. And I urge that more practical work needs to be undertaken.
c) Understand what sanctions can and cannot do
In the absence of the type of systematic analysis which I suggest above, the international community often has recourse to the use of economic or other sanctions. This has the attraction of not involving the risks of military action, whilst making a strong symbolic statement.
However the effectiveness of sanctions varies considerably, for example depending on which countries actually commit to them. They can also have serious consequences for the ordinary population whilst leaving he political elite relatively untouched.
Sanctions can sometimes seem to be little more than kneejerk disapproval, with little real effect. And, as was seen for example with Iraq, sanctions are often openly flouted which brings military action nearer and brings into disrepute the whole UN system.
So this is another area where it is worth giving far more consideration to analysing the role that sanctions can play in the modern world to enforce the will of the international community.
d) Work at International engagement
For any of this to happen, a far more practical approach to the development of international co-operation is needed. This has to go well beyond the normal diplomatic exchanges and their associated think tanks.
It has to reach into the economic, homeland security, domestic policy and general political dimensions of the major nations.
Such dialogues are currently surprisingly limited in nature, and are in fact far less widespread than was the case after 1945. And such discussions have to be very practical in nature, around the kinds of difficult policy challenges which I mentioned earlier. They need to be practical and to reach beyond simple exchanges of ideology.
The result of failures in this field is that European political leaders were able to make almost no practical contribution to what could be done when both Obama and Trump were elected President of the United States. Similarly there has been wholly insufficient attention within the European Union to seeing what its institutions could do to address challenges such as immigration. There is a total lack of consensus across the so-called “west” to dealing with Putin’s adventurist foreign policy.
And the UN financial and economic institutions are showing almost no capacity to address the risks of the moment, let alone consider different forms of economic regulation such as the Tobin tax proposals.
This is not a healthy state of affairs and again there is a contribution that public policy institutes could be making to promote such discussions and interchanges.
e) Internationalist approaches need some wins
The four suggestions above are all quite long-term in nature but do require serious commitment, support and funding to begin to make an impact in thinking.
But perhaps the most important thing of all in the short-term is for the internationalist approach to demonstrate some important wins.
This is difficult for all the reasons set out in this lecture.
The wins have been few and far between. Probably the greatest is the various climate change agreements, although these are clearly not enough to deal with the impending environmental threats, and have also been undermined by the recent response of the United States.
The failures have been far more widespread and have cost enormous numbers of lives.
Of course, for all the reasons I have set out here, successes are difficult to achieve, but without successes the arguments become even more difficult to sustain.
The way to do this is to focus upon real deliverables with real policies and real alternatives. They need energy from governments before and not after disasters.
The list where there is an urgent need for international action is indeed pressing. It includes:-
Further action to prevent the proliferation of nuclear and other weapons of mass destruction, nit least in Iran, Korea and Southern Asia.
Creating stability in North Africa and bringing stability to the Horn of Africa.
Taking the necessary steps to secure international economic stability.
Acting early to ensure that at least some Frozen Conflicts and post-colonial hangovers don’t turn into hot disputes.
Creating a better international framework to secure better governance of migration
Establishing stable international governance systems for Antarctica and outer space
These are of course all difficult but none of them is impossible. Success in any of them would transform confidence in the capacity of international action to address the problems of our world. In all of them good progress could be made even without the wholehearted engagement of the United States.
None of the steps that I suggest in this lecture are at all easy.
But I maintain that they are essential if the world is successfully to address the accelerating challenges which I set out earlier.
‘Globalism’ cannot simply be challenged by ‘nationalism’ or ‘patriotism’. It has to be met by global dialogue which shows that international approaches can succeed. That is what our post-1945 predecessors taught us and it led to unimaginable success. And that is what we have to do now.
My call is for public policy discussions to engage and promote this discussion by engaging academics, policy practitioners, politics and governments on finding the solutions which the world so urgently needs.
Rt Hon Charles Clarke