New Labour* on Restoring Faith in Globalization

You will have noticed that I have placed an asterisk after New Labour. For, today's mea culpa on the shortcomings of New Labour in hindsight are largely courtesy of Lord Mandelson--formerly the EU trade commissioner and the de facto prime minister during the last days of the ill-fated Gordon Brown. This I got wind of while watching the BBC's Newsnight programme. With jobs still scarce in the north of the UK, there is much at stake in political economy terms.

Mandelson has been collaborating with the left-centre Institute of Public Policy Research (IPPR) to investigate how real the perceived de-industrialization of Britain has been, particularly in terms of eliminating manufacturing jobs and its effects on communities in higher latitudes of the UK. To summarize his thoughts from the BBC feature: there was too much emphasis on financial services, not enough emphasis on engineering and manufacturing and, oh yeah, a lack of industrial policy. (He calls it "industrial activism.")

So, one of the British arch-globalizers has now come to a modified, almost corporatist view of globalization. While he still believes in the opportunities opened up by free markets, free trade, and what else have you, he does not view industrial policy as being necessarily incompatible. Call it the Frenchification of New Labour after the fact. Alike the current government, he thus calls for an emphasis for government to school more in science, technology, engineering, and mathematics (STEM) that are crucial in obtaining the ever-vaunted competitive advantage over the UK's peers.

From the IPPR website comes this preview. Let's begin with the familiar progressives'-lost-faith-in-globalization narrative:

Globalisation was the dominant economic discourse of the 1990s and 2000s, as international trade increased rapidly (facilitated in part by successful WTO negotiations), global capital became more mobile, regions such as the EU pursued economic and monetary union, and new technology significantly reduced transport and communication costs.

But in recent years, faith in economic globalisation has seemed to falter. The global financial and economic crises of 2008–09 not only demonstrated the perils of economic integration, but also led to a collapse in world trade, and (in some countries) a policy retreat from free trade and open markets as governments sought to protect domestic industries.

Free trade and open markets have always been subject to debate among progressives. There is a general economic consensus that a broadly liberal approach to international trade is good for growth and for development in poorer countries – and the experience of China over the last two decades has underlined this conclusion. But there is also uneasiness about the unequal distribution of the benefits of globalisation, the fact that it can create losers as well as winners, and the problem of finding a good mechanism for re-distributing from the latter to the former. There has also been considerable debate about the implications of the unequal economic and political power of rich and poor countries, the distributional impacts of trade within countries, and about the policy frameworks required to ensure that trade is consistent with objectives including human rights, decent work and environmental protection.

It is therefore timely renew commitment to free trade and open markets, in economic, policy and political terms. Globalisation has to be supported but it needs to be re-thought for a new economic and political era.

This is particularly important in the UK. The UK is an open economy, a centre of global capital, firmly integrated into a much larger economic bloc in the EU, and a key player in global economic governance institutions. In these circumstances economic policy must be seen as a ‘cross-border’ issue, but too often economic policy discussions are cast in purely domestic terms. New thinking is needed in the UK economic policy debate about globalisation.

What are the new questions that need answering, then?

This work will seek to answer five key questions:

- Why should progressives support free trade and globalisation?
- How can trade and open markets deliver maximum economic benefits for the world’s poorest countries, and help them to deliver sustainable development for their people?
- How do domestic policy frameworks in developed countries (including industrial policy, fiscal policy, labour market regulation, skills and education, and immigration) need to change to ensure both that developed economies can remain competitive and that trade delivers on progressive values at home?
- How do global and European economic institutions need to change to respond to the changing balance of economic and political power between regions and countries in order to deliver solutions to global economic challenges including trade liberalisation and global imbalances?
- How can the case for a free trade and open markets be made in a new economic and political era?

You can say that it's boilerplate global governance material, but hey, better late than never, right? Moreover, there's always the possibility of his party's current leadership reverting to pre-New Labour stances that were well to the left of where it is now. While New Labour had its failings, the more immediate danger is of disowning it while lurching violently back to the days when they played "The Red Flag" at the conclusion of party conferences and suchlike. That and many other things Mandelson got rid of--things current leader "Red" Ed Miliband should take heed.

In short, is globalization a faulty concept in itself, or has its execution been botched? I, of course, believe the latter and prefer to think Lord Mandelson does too.