Max Jeganathan
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It’s not just the economy, stupid.
The recent growth of global “de-risking” and “de-coupling” has a moral dimension.
Deglobalisation is the new black and it’s accessorised with ethics.
On his trip to China, Treasurer Jim Chalmers will talk about lobster, foreign investment and critical minerals processing, but he’ll be tiptoeing around a few elephants in the room. A hot-mic recently picked up our Prime Minister’s chat with an American official about the problem of Chinese influence in the Pacific.
At this week’s Quad meeting another one recorded President Joe Biden declaring that China is “testing us”. Some have blamed the hot mics and the journalists, but they’re simply revealing the tectonic plates of the new global order that are sliding into place.
A report by the International Monetary Fund found more than 2500 recent policies – implemented by mainly advanced economies – were geared towards resilience and national security. Free and democratic nations are nervous about the influence of less democratic and less free nations.
Australian export dependence on China has dropped from 40 per cent to 25 per cent. Global government measures that restrict trade have outnumbered those that encourage trade, by 300 per cent over the past six years.
Admittedly, this recalibration is guided by the same old Machiavellian playbook that has dominated international politics for centuries.
However, geopolitical divisions are increasingly fuelled by disagreements over civilisational values, not merely economic interests.
After the Berlin Wall came down, globalisation exploded. Countries made what they were good at making cheaply and sold it to a growing global middle class.
The Japanese and Chinese got cheaper Aussie beef.
The Americans got cheaper BMWs.
The Europeans got cheaper clothes.
And Australians got cheaper, well … everything. The average Australian family was around $3900 per year better off as a result of easier trade.
In 1996, pro-globalisation economist Thomas Friedman correctly observed that no two countries with McDonald’s restaurants had ever fought a war against each other. It was a victory lap for homo economicus – the idea of people as self-interested rational actors.
Then in December 2001, as the world was catching its breath after the 9/11 attacks, China quietly ascended to full membership of the World Trade Organisation.
In 2006, Brazil, Russia, India and China formed a diplomatic club (South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates are now members, too). The Iraq and Afghanistan wars, oil price shocks, the global financial crisis, escalating trade wars and Russia’s invasion of Ukraine followed.
These events and others have fuelled the schism between nations that emerged from the North Atlantic and Latin Christendom (including the US, UK, EU, Canada and Australia) and those that grew out of the ancient civilisations of the orient, the middle east and central Asia (Russia, China, Saudi Arabia and Iran).
In a symbolic marker of globalisation’s limits (and a rebuttal of Friedman) McDonald’s pulled out of Russia in mid-2022. It marked an important post-Cold War lesson. We needed more than Happy Meals to further the ideals of human equality, the rule of law and the freedoms of thought, speech and association.
Criticisms that deglobalisation is regressive misses the point. Homo economicus isn’t dead, but he’s not alone. There is an ethical dimension to reality that transcends fast food and fast fashion.
There are turbulent moral waters to be navigated that go beyond our economic models. We may be reasoners but we are also Homo ethicus – moral reasoners.
Up until now, the global middle class has relied on Middle Eastern oil; Australia has relied on Chinese solar panels, batteries and EVs; and the Europeans have relied on Russian gas.
Notably, any moral concerns were quietly held in abeyance for decades, confirming that when it comes to international affairs, self-interest reigns supreme. However, more recently, nations have framed their interests in ethical as well as economic terms.
Nike, Apple, Google, Microsoft and Hewlett Packard have begun “friend-shoring” – looking to entrust their supply chains to nations that share their ideals. Governments have joined in. America’s Inflation Reduction Act, Australia’s future made in Australia policy and AUKUS are cloaked with economic and military robes, but have moral motivations as well.
Australian Treasury secretary Stephen Kennedy recently warned against “exposing our economy and our country to excessive risk.” Foreign Minister Penny Wong defined Australia’s national interest as including our “interest in universal principles.”
The project of economic globalisation assumed accompanying moral uniformity. It didn’t happen. We tried to build a world on self-interest and rationality but it wasn’t enough. As ever, we need to add ethics to our economics and moral reasoning to our reasoning.
Max Jeganathan is a senior research fellow at the Centre for Public Christianity. He served as an adviser in the Rudd-Gillard governments and is undertaking a PhD on the ethical foundations of liberalism.
This article was first published in the Canberra Times.
