Another Lost Decade?

Another Lost Decade?

Introducing the Spring 2021 special section, Global Economic Disorder.

Illustration by Molly Crabapple

The global economy suffered an unprecedented shock during the COVID-19 pandemic. According to the International Labour Organization, the number of work hours lost in 2020 was the equivalent of 255 million jobs, four times greater than losses during the crisis in 2009. Poor workers, especially those not able to work remotely, were hit especially hard. According to the United Nations, world gross product fell by an estimated 4.3 percent in 2020—the sharpest contraction of output since the Great Depression, and more than double the output drop of 1.7 percent in 2009, during the Great Recession. The International Monetary Fund now estimates that global trade contracted by 9.6 percent in 2020 thanks to the pandemic.

The problem is not just the pandemic. The world economy has been faltering for more than a decade. Before the pandemic, the World Bank was already lowering its global growth projections for the next ten years. Tensions due to deteriorating relations between China and the United States slowed global trade beginning in 2018. The pandemic is exacerbating troubling trends, raising the prospect of a lost decade atop another lost decade.

Advocates of neoliberal globalization promised flexibility, efficiency, and competitiveness, but countries in all parts of the world are becoming increasingly sluggish and fractured. In a famous 2016 report, even the IMF cast doubt on whether the liberalization of capital flows across national borders actually produced any benefits that could offset the upsurges in inequality that it caused. In his essay for this special section, Tim Barker interrogates the implications of the stagnation and deindustrialization occurring not only in the rust belts of wealthy countries but also throughout the Global South. If overcapacity exists in all major manufacturing industries, what development path is there for poor countries? Can small countries rely on domestic demand to drive their economies? Is there a services-led path to development? While there have been some advances in rethinking the neoliberal development agenda—capital controls, industrial policy, and labor rights are no longer considered off limits—Barker issues a bracing challenge to development economists searching for policy and institutional solutions in the decades ahead.

China’s rapid economic growth has brought many people out of poverty. But there are deep fissures behind the impressive GDP figures. China’s rise is built on a factory system that relies on hundreds of millions of exploited workers who have migrated from China’s rural regions. After decades of wage suppression and political repression, they face an uncertain future. In an interview, Jenny Chan talks about Apple—the iconic twenty-first-century multinational corporation—its contractor Foxconn, and the Chinese workers who are “dying for an iPhone” (the title of Chan’s book with Mark Selden and Pun Ngai).

Fred Block’s The Origins of International Economic Disorder, published forty-four years ago, was a pioneering study of how private economic power structured the global economy. Since the late 1970s, that power has grown far deeper and wider. In a clarifying essay, Block charts how oligarchic wealth has not only led to political and economic dysfunction but distorted the very data we use to make sense of the world economy.

The world’s wealthy countries are spending trillions of dollars to shore up the income of their workers and to rescue their corporations. But what about the workers who toil in those corporations’ global supply chains? Penelope Kyritsis and Genevieve LeBaron have surveyed nearly 400 textile workers in nine countries since the beginning of the pandemic. As the Center for Global Workers’ Rights put it, apparel brands are “leveraging desperation” by firing workers, not paying for completed work, or demanding price cuts from struggling manufacturers. The result is widespread hunger among garment workers. Kyritsis and LeBaron call for consumer pressure to support of workers’ demands for fair treatment and rules to support unionization and a rebalancing of power within supply chains.

In the 1990s the United States was messianic in its pursuit of a corporate-friendly model of globalization, emphasizing trade liberalization, deregulation, and privatization. These policies were supposed to deliver higher living standards and spread democracy. The result was basically the opposite. Walden Bello examines the declining legitimacy of the IMF, the World Bank, and the World Trade Organization. These institutions supported the private rights of multinational capital while imposing structural adjustment and austerity on the Global South. Bello argues that hints of an alternative to this global regime are emerging in the East Asian countries that prospered under the multilateral order only by disregarding its neoliberal prescriptions.

We dig deeper into the uneven effects of economic policy in an unequal world in a roundtable discussion of the politics of a global Green New Deal, moderated by Kate Aronoff and featuring Richard Kozul-Wright, Asad Rehman, Thea Riofrancos, and Olúfẹ́mi O. Táíwò. They highlight the parallels between the pandemic and the threat of (and response to) climate change. The technologies needed to respond to both are largely controlled by private companies in wealthy countries. But if profit and national security interests determine how and where life-saving technologies are deployed, the result will be death and destruction. The way out of climate catastrophe lies in going beyond energy policies to change the structure of global
economic relations.

Finally, Anakwa Dwamena casts doubt on development plans in Kenya and Ethiopia that are premised on scaling up from sweatshops. Ethiopia attempts to attract foreign capital for its apparel industry by trumpeting the world’s lowest wages as its comparative advantage. But the promise of mass employment has yet to materialize, and in the meantime less than one in ten Ethiopian garment workers earn a living wage. The sweatshop development model offers little for African workers. Only by putting the well-being of workers first, and by building on the existing strengths and skills of domestic economic production, will these countries build industrial sectors that make a meaningful difference in people’s lives.

We’re living through years of great upheaval. New central banking mechanisms emerged after the 2008 collapse to shore up public debts and financial exchange, and the centers of economic power have begun to shift. But precious little has changed to meet the needs of the vast majority in our moment. The old multilateral institutions limp along, while the planet heats up, pandemics spread, inequality grows, corporations roam the globe in search of lower wages, and nationalists push their visions of a zero-sum economic order. But the current rules and institutions are not unchangeable. The intellectual visions in this section offer alternatives for the waves of change when they come.

Mark Levinson is chief economist of the Service Employees International Union and Dissent’s book review editor.

Julia Ott is Associate Professor in the History of Capitalism and the director of the Robert L. Heilbroner Center for Capitalism Studies at the New School. She is the author of When Wall Street Met Main Street: The Quest for an Investors’ Democracy (Harvard University Press, 2011). Ott co-edits Columbia Studies in the History of U.S. Capitalism for Columbia University Press.