Globalization and the twin scourges of illiberalism and inequality
Syed Mansoob Murshed
At the beginning of the new millennium, development studies almost single- mindedly focused on the objective of poverty reduction. There were those who emphasized good governance, and democratic values1. This coincided with the so-called ‘third wave’ of democratization following the end of the cold war (Huntington 1993), and gradually more and more nations across the planet became wedded to the idea of multi-party elections. Others in development studies were, as ever, more concerned with enhancing material well-being, the chief vehicle for doing so being economic growth. It was believed that economic growth constituted the principal avenue via which sustainable poverty reduction can be attained in low-income developing countries. Redistribution without enlarging the cake only served to make the already poor more equal. Thus, growth is a necessary condition for poverty reduction in low-income countries. Growth would always diminish poverty as long as some of the benefits of growth trickle down to the poor, even if its principal beneficiaries are the wealthy.
Truly pro-poor growth, however, such as in the notion advocated by Kakwani and Pernia (2000) suggested that growth to be truly pro-poor it must disproportionately benefit the poorer segments of society; thus requiring an improvement in the distribution of income.2 In the past two decades there has been considerable success in reducing poverty in the developing world as economic growth rates gathered pace, but this has been at the expense of rising inequality; see Jayadev, Lahoti and Reddy (2015). In the global North, inequality has also risen considerably, along with the rise in precarious employment (Standing 2011). Furthermore, the last two decades have marked an era of prolonged real wage compression in developed economies, particularly since the financial crisis of 2008. The combined effects of wage compression and precarious employment
(particularly in the two large English speaking nations, the USA and the UK) has meant that the spectre of poverty has once again returned to haunt Western economies, and non-contractual precarious employment or self-employment has transformed vast swathes of the labour force into something akin to the daily wage labour in the global South.
A degree of economic inequality is inevitable in any society, reflecting the price paid for the incentivization of risk and work effort, but inequality which perpetuates discriminatory practices against certain groups in society and prevents the under-privileged from rising by the fruits of their own effort is described as inequality of opportunity. This form of inequality is both undesirable and economically inefficient (Stiglitz 2012; Roemer 1998). The rise in inequality is a globally ubiquitous phenomenon, as is the growing tide of precarious work; attention needs to be paid to these phenomena, shifting our gaze away from a sole focus on poverty reduction. The next section examines these trends in the context of globalization.
This brings us to developments on the democratic front which ultimately governs the environment within which policy is formulated and implemented. Thus, economics and politics are inseparable. Multi-party electoral competition is now an almost universal periodic ritual, albeit subject to manipulation and violence in many cases. The fall of the Berlin Wall in 1989 created expectations, for a long wave of liberalism, but the past decade has seen the rise of populism and authoritarianism, which increasingly flout the liberal principles of a liberal-democracy, despite permitting regular elections. It is the liberal aspect of liberal-democracy that has been undermined. There appears to be a global trend towards illiberal democracies (Zakariah 1997), and this tendency also requires our attention. Indeed, as Rodrik (2017) indicates, there is no good reason to expect democracy and liberalism to necessarily cohabit, and in our globalized world they seem to be increasingly becoming strange bedfellows. I consider these developments in the third section of this chapter. The important point to bear in mind is that the twin phenomena considered in the chapter are inter-related, as there is a causal link running between the rising inequality and the surge in support for illiberal populism. The final section of the chapter offers a synthesis and concludes with a cautionary note directed against viewing de-globalization as a universal panacea for populism and inequality.