Globalisation and Corporatism
Following World War II, the American-led world order emphasized free trade and competition. Corporations, particularly those embracing globalization, thrived under this system. The shift from fixed to floating exchange rates in the 1970s facilitated global capital flows, labor, and trade, further empowering corporations and shaping modern capitalism. That system is unravelling today. This article explains its importance, so that readers can grasp the economic value of the system.
9/1/20241 min read
Post World War Two, the American led world order was built on the principle of promoting free trade and competition. The dominant entity of our economy, the corporation, flourished - specifically corporations that understood the economic value of globalisation and successfully tapped into it.
The end of the US dollar peg to gold in 1971, and the ensuing free floating exchange rates, tradable across borders (in 1979 for the UK), were building blocks of modern capitalism that allowed corporates to access capital, labour and trade goods across borders.
Populism today explicitly cite globalisation and corporatism as the cause of our woes, and vocalise policies that impact both. The Make America Great Again movement in the United States began this shift towards protectionism. In Europe the Brexit movement, partially reversed the free-trade and open borders with the European Union.
Politics is in a feverish state in many countries. This piece focuses on how the corporate and globalisation impact our lives, so that if and when their effects are reversed, due to the politics du jour, you know how it will impact you.
We are not blind to the legitimate criticisms of both (corporatism and globalism), but the trouble with reversing systems that make you (and generally everyone) better off, is that their reversal can also make you poorer. That of course feeds more populism, and a vicious cycle then becomes more probable: i.e. more poor policy, and more populism.
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