Although French voters rejected the far-Right National Rally in last weekend’s election, in giving most of their support to either the RN or the Left, they still repudiated Emmanuel Macron’s liberal internationalism. In doing so, France joined the rising tide against neoliberal globalisation.

France has come late to the party. Until about 15 years ago, the world economy had for decades been steadily liberalising as a so-called Washington Consensus encouraged countries across the world to open their borders to trade, investment and labour migration. As a result, throughout the neoliberal age, which peaked with China’s re-entry to the global trading system after the death of Mao Zedong, trade rose even faster than global GDP and drove economic growth everywhere. Meanwhile, the ageing of Western countries made immigrants ever more vital to Western labour markets.

This all came to a halt with the 2008 financial crisis. While the leaders of Western countries initially tried to restore the primacy of neoliberal globalisation, a growing populist revolt against it had begun. The twin shocks of the 2016 Brexit referendum and Donald Trump’s victory in the US presidential election appeared to symbolise the start of a great reversal.

In the face of this onslaught, Emmanuel Macron launched a rearguard attack in France’s 2017 presidential election, beating the National Front’s Marine Le Pen with an unabashedly liberal and pro-European agenda. Yet his triumph would prove short-lived. Along with growing anxiety about immigration, public sentiment continued to turn against economic liberalism, multilateralism, open borders and, in Europe, continental integration. Today, France joins a lengthening list of European countries where Right-wing populists, some with roots in fascist-era movements, are in power or steadily rising. The far-Right is already in government in Italy, the Netherlands, Finland, Croatia, Hungary, Slovakia and Czechia, while it is still rising in France, Germany, Austria, Belgium and the UK, where Nigel Farage’s Reform Party finally secured a toehold in parliament from which he aims to take over the British Right.

This mood-swing has drifted far beyond Europe. Throughout the West, the open door for trade, investment and immigration is narrowing. While America has not gone so far as to pay neighbouring countries to apprehend migrants, as is the case in Europe, the Biden administration has recognised how potent an issue the border has become in a volatile election year, and has been cutting back sharply on the numbers allowed to enter. In Canada, traditionally a country friendly to newcomers, the government has been pressured to respond to a housing shortage by temporarily capping immigration.

Meanwhile, President Biden has taken to imposing tariffs on imports of Chinese products, and has been casting a more wary eye on investment in industries he considers strategic. Similar protectionist tactics are emerging elsewhere: between 2018 and 2022, the number of restrictive measures across the world increased sixfold. Furthermore, de-risking and friend-shoring became all the rage in the wake of the Covid pandemic, which exposed the fragility of global supply chains. As a result, the common indicators of globalisation have now reversed themselves: after decades of growing faster than the world economy, international trade and foreign direct investment are both now in relative retreat.

Obituaries for the era of neoliberal globalisation are now pretty common. The basic problem neoliberal globalisation always had was that even though it undeniably raised the incomes of Western countries, those gains were unequally spread. Urban professionals gained a lot, whereas unskilled workers were hammered, their industrial towns often turning into wastelands of boarded-up shops and abandoned mills. Meanwhile the urban booms drove up property prices and enriched owners, sucking more and more money out of the pockets of working folk, forcing many to move far out of town where they often suffered from inadequate services. One of the most reliable predictors of support for France’s National Rally is the distance one lives from a train station: the further away, the more likely a vote for the RN.

“One of the most reliable predictors of support for France’s National Rally is the distance one lives from a train station.”

In the short term, de-globalisation seems full of promise. Cutting immigration and making it harder for firms to out-source production will provide relief to the hard-hit workers who have borne the brunt of globalisation’s costs. As we began to see during the Trump presidency, reducing immigration appears to boost the wages of unskilled workers. Yet such policies will further hinder the long-term economic growth of Western countries, already slowing to a crawl. If they curtail immigration, Western countries will soon be unable to keep their ageing population — particularly their retired citizens or those needing health care — in the style to which they’ve grown accustomed. Meanwhile, higher import costs due to the fragmentation of supply chains and rising tariffs will further entrench inflation, which will keep interest rates elevated and crimp investment. Short-term gain will eventually cause long-term pain.

More significantly, these developments will further accelerate the relative decline of the West. That’s because the de-globalisation wave is largely confined to developed countries; in much of the developing world, globalisation remains alive and well. Most notably, China is using its Belt and Road Initiative to deepen its links across the global south, exploiting the gaps left by the retrenchment in Western aid and diplomacy to widen its economic and political space. And whereas Europe is moving towards increasing fragmentation, Africa’s continental free trade agreement is finally finding its feet and boosting trade within the continent, which is expected to raise incomes there.

That said, we are still in the very early stages of this transformation, and the turn against globalisation across the West may yet get reversed. So far, global trade has recovered from the pandemic and doesn’t yet show signs of a sharp reversal. Yet the West’s policy changes will probably start to bite before too long. Already, the trends in foreign direct investment are suggestive of a confident and rising erstwhile periphery: while Western countries are pulling back as a source of outward investment, China is rising.

In fact, Chinese businesses have found a way to get around the walls being thrown up in Western countries. They simply out-source production to countries such as Mexico and Hungary, which enjoy freer access to the markets they wish to penetrate. This can also reduce China’s labour costs since Chinese wages have risen so fast. The impact of China’s mercantilism on the developing world is not yet clear. On one hand, by exporting its industrial capacity, China may snuff out industrial development in recipient societies that are trying to develop their own manufacturing industries. This explains why some developing countries, including Indonesia, Brazil and India, have imposed trade restrictions on China. On the other hand, the scale of Chinese investment is also raising incomes and creating jobs in some countries, which would ultimately expand the market for Chinese exports.

It may be that China’s form of globalisation is a classic imperialist strategy that will enrich the Chinese core at the expense of its new periphery in Africa, Asia and Latin America. Yet it could also be that the Belt and Road Initiative turns into a Chinese version of the Marshall Plan — the post-war American strategy to build a cohesive Western empire by ensuring the recovery and subsequent enrichment of all its closest partners. While China rankles Western countries for running large trade surpluses with them, it notably tends to run deficits with developing countries, meaning that it buys more from them than it sells.

It shouldn’t surprise us if globalisation proves more popular in the developed world. Not only were the benefits of globalisation unevenly spread in Western countries, they were also unevenly spread between developed and developing countries. While Western countries were admittedly the biggest absolute gainers from globalisation, measured in increased income, in relative terms developing countries saw their incomes rise more. So while Western citizens would have probably ended up worse off without globalisation, they wouldn’t have known this; the annual rate of growth they experienced in their incomes didn’t exceed that of the previous decades, and was lower than the “golden age” that followed the Second World War. By contrast, citizens in the developing world, especially in Asia, experienced noticeable improvements to their standards of living.

Now, the West runs the risk of falling further behind in relative terms, and being alienated from a new age of globalisation that will undergird the growing power of China, India and other emerging powers of the former global periphery. Time may reveal that the failure of Western elites to engineer a globalisation that benefited everyone, rather than disproportionately themselves, ultimately ensured the decline of the Western age.

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