The "Little Whirlpool" in the tide of globalization

Institutional economics believes that the system has a formal system and an informal system. The informal system includes customs, beliefs, and ideology. History has proven that these informal institutions have a very significant impact on the economy. "Popularism" is undoubtedly an important trend of thought that has affected many countries and even affected globalization in recent years. 2016 was an unusual year, Trump was elected president of the United States, and the United Kingdom was "departed" through a referendum. This is the embodiment of the will of the people. It is also undoubtedly the end of the Cold War between the East and the West in the early 1990s. The "reaction" of the new technological revolution is a landmark event in the rise of populism in the new era.

Both populism and globalization have a short history, and it is necessary for us to review history.

Historically, globalization has been more than 500 years since Columbus discovered the New World in 1492. In the history of more than 500 years of globalization, there have been more than 400 years of expression in colonialism. In the era of gunboats, violence was used to gradually pull every part of the world into the global division of labor, and finally two world wars broke out. Fundamentally speaking, these two wars are caused by the competition among the leading countries of globalization for resources and the re-determination of interests. After the Second World War, the confrontation between the two camps of East and West, which lasted for nearly half a century, formed. Globalization is only two and a half, self-contained "globalization." One is the capitalist camp, marked by the "GATT"; the other is the socialist camp, marked by "intercommunication." The establishment of these two world wars and the two camps is a major setback for globalization. In contrast, the rise of populism in recent years is only a "small whirlpool."

The little whirlpool in the tide of history must also be taken seriously.

This has two superposition effects. One effect is the relatively impaired class in the process of globalization. It can be said that over the past 40 years, the most common common trends in the world have been economic liberalization, globalization (an extension of domestic liberalization) and the development of information technology. Although this period is one of the fastest economic growth periods in human history, the distribution of growth results is uneven across different countries and between different groups in the same country. Since capital mobility is higher than labor, economic liberalization and globalization mean that capital can be optimally allocated on a global scale, the return on capital relative to labor will rise, and the income gap between capital owners and ordinary workers will Significantly expanded. The second is the relatively damaged in the process of informationization. Informatization means that knowledge becomes an important factor of production, the return of education will rise, and the income gap between high-quality labor and low-quality labor will also widen. These two losers tend to be the same, so they form a superposition effect.

Interestingly, the rise of "populism" is precisely from developed countries in Europe and America. These countries have been the most important leaders of globalization for centuries. That is to say, in the process of globalization, quite a large number of people in these countries feel that their interests have been damaged. On the contrary, emerging countries are the biggest beneficiaries of globalization, although the different classes of these countries benefit different degrees. So I agree with Schwab, executive chairman of the World Economic Forum in Davos: "We must make globalization more fair, but when we talk about globalization, we should not only look at it from a Western perspective, but It should be viewed from a global perspective.” “In the past 20 to 30 years, globalization has been a part of many good things, especially for developing countries. For example, globalization has created hundreds of millions of jobs. , especially in Asia. Therefore, we should not condemn globalization, but should make it work better."

Let globalization work better, mainly in international and domestic aspects:

The first is the international aspect. Globalization has made capital, people, and culture cross-border, and the relationship between the state and the state has never been closer. After the First World War, the countries painened their thoughts and revealed the idealism of world peace in the first place. They decided to set up a supranational institution to maintain world peace from theory to practice. In the Paris Peace Conference on January 28, 1919, through the drafting of the International League, it was decided to draft the "International League Covenant" with the drafting committee headed by US President Wilson. On the day of the official entry into force of the Treaty of Versailles on January 10, 1920, the League of Nations was formally established. Although the League of Nations was established, the power of the League of Nations is very limited, and its ability is naturally very limited. It is impossible to stop the ongoing war of the jungle. Nevertheless, the "National League" is an important practice of the concept of a peaceful international society. It is the first valuable experiment to establish a global supranational organization.

It is also the lesson learned from the power of the League of Nations. Therefore, the United Nations established after the Second World War has much more power than the League of Nations and can even send "peacekeeping troops." The power of the United Nations has increased more than that of the League of Nations, which means that its member states have transferred more national sovereignty. In the era of globalization, the sovereignty of sovereign states to the United Nations, the "World Health Organization", the "World Trade Organization", the "World Bank", the "International Monetary Fund" and other supranational institutions is to ease the contradictions, frictions and conflicts between countries. Necessary conditions. Nearly seventy years after the end of the Second World War, no world wars occurred. Some local wars were effectively stopped and restricted. The United Nations and other supranational institutions did play an important role. However, the power structure of the United Nations is, after all, a reflection of the world pattern after the end of World War II. After nearly 40 years of deep development of globalization, the original structure is obviously not applicable. How to adjust is a challenge for all countries.

Second, the domestic aspect, countries have common points, but also have more differences. What is common is how to improve domestic state governance and how to compensate the relatively damaged class in the process of globalization and informationization to a certain extent. The difference is that the countries and countries have specific conditions. As far as China is concerned, reform and opening up and accession to the WTO are facing fierce criticism. Until now, they are still incessant and sometimes even strong. Therefore, while the domestic interest adjustment, so that the relatively damaged class of globalization and informatization has received a certain degree of compensation, it should also adhere to the basic theory of "reform and opening up" in the ideological field. China's reform and opening up are closely linked. Without openness, there can be no reform. Openness means adhering to the orientation of globalization.

Globalization is to insist on the smooth flow of goods, and people are also "flowing." There has been a lot of opposition to this. As early as the 1970s and 1980s, the development of American populism formed a wave of Chinese exclusion. On May 6, 1882, the Chinese Exclusion Act was signed.

Li Hongzhang, the governor of Zhili and the minister of Beiyang, has been paying attention to the issue of American labor in those decades. In 1879, when Li Hongzhang received the former US President Grant in Tianjin, the issue of American labor in China was an important topic of conversation. Later, when he met with the US politicians and the media, Li Hongzhang still took the initiative to talk about this issue. After the Sino-Japanese War, Li Hongzhang was once idle and scattered, and visited dozens of countries in Europe and America. During his visit to the United States, whether he was in talks with the political leaders or interviewed by the media, he repeatedly talked about this issue and safeguarded the rights and interests of Chinese workers. "The Lost Chinese History in the West" made a detailed collection and translation of the news reports of the European and American newspapers and magazines on Li Hongzhang's visit at the time. One of them was particularly worthy of attention. The Salt Lake Herald of September 2, 1896, reported on Li Hongzhang’s speech during a meeting with New York newspaper representatives in New York: "The Governor said that the Chinese Exclusion Act is the most unfair. A law, because political economists have acknowledged that competition helps the market to remain healthy forever, whether it is the labor market or the commodity market. Currently, the bill is subject to the Democratic party, the Irish party, and the working class. The influence of the party. They want to monopolize the labor market. Because Chinese laborers are their strong competitors, they are expelled. This is like you bring a lot of goods, daily necessities to China, and sell at a lower price than European countries. We are expelling you from the market. Is this fair? The Governor said that he would disregard his status as a senior Chinese official, assuming he is a cosmopolitan, and then simply talk about the interests of the United States. Then, it will be cheaper. Labor is expelled from the market, or cheap goods are turned to buy goods with lower quality but higher prices. Is it right? Is this a good policy for your democratic economy? The Governor said that you claim that your country represents the best example of modern civilization and is proud of it. You are proud of your liberation and proud of your freedom. But in this matter, there is no liberation of labor and no freedom of the labor market."

These remarks, opinions and attitudes are in great harmony with the already symbolized "Li Hongzhang".

More notably, in this short speech in 1896, Li Hongzhang talked about free markets, world markets, free movement of labor, the flow of goods, monopoly, prices, and administrative interventions in the market. In today’s globalized world, these are still problems that plague countries. The impact of cheap labor and cheap products in other countries is an important issue facing the United States today. Trump, who has no political experience, can be elected to the US president, which has a lot to do with it. This short speech shows that Li Hongzhang was able to ask questions and treat problems so deeply, thanks to the theoretical analysis framework he used. The free circulation of goods, the freedom of labor and the labor market, these concepts and basic theoretical frameworks come from Adam Smith's liberal economic theory.

As is known to all, Adam Smith's "The Rich" was translated from October 1896 to the end of January 1901 and published in 1901-1902. Before Yan Fu began to translate "The Former Rich", why did Li Hongzhang use Adam Smith's theory to analyze and explain the free trade and labor migration in Sino-US relations, that is, the freedom of the labor market? A reasonable explanation is that his most modern economic theory and knowledge comes from his English secretary Luo Fenglu. Luo Fenglu and Yan Futong were both from Fujian. The two graduated together from the Fuzhou Ship Administration School. They also went to study in the UK together in 1877, and returned to China at the same time (a half year difference). After returning to China in 1880, Luo entered the Li Hongzhang curtain and served as the English secretary, diplomatic adviser and translator of Li. Relevant reports and memories show that he had a good understanding of social Darwinism and Adam Smith's economic theory in the 1880s when he talked with foreign politicians and media people before and after Li Hongzhang's talks. It should be Luo Fenglu, who told Li Hongzhang the theory of classical economics, and used this theory as a refutation of the "populist" of the United States at the time marked by "exclusion of China" and achieved the effect of the shield of the spear.

Today’s problem has actually been encountered more than 100 years ago.

History shows that the process of globalization for more than 500 years of course has a huge failure, but it is an unstoppable trend. While globalization brings enormous benefits, it will also have serious problems. It is necessary to solve these serious and specific problems in the process of globalization, rather than against globalization. The recent rise of populism has precisely exposed and reflected the problems and illnesses of globalization, which require diagnosis and treatment to make it work better.

(This article is the author’s speech at the 2nd Yesanpo China Economic Forum on September 23, which has been reviewed by myself)

(Editor: He Yihua HN110)