The drivers of the past 75 years of growth – globalization and financialization – are dead, and so is everything that depended on them for growth. Here’s what’s poorly understood: globalization and financialization die when they stop expanding.
Just as a shark dies if it stops swimming forward, globalization and financialization die once they stop expanding, because their viability depends on expansion.
Globalization and financialization have been losing momentum for years.
Under the guise of “opening markets,” globalization has stripmined every economy that can’t print a reserve currency and hollowed out economies globally as only globally competitive sectors survive globalization. The net result is that once vibrant, diversified economies have been reduced to fragile monocultures completely dependent on global flows of capital and spending for their survival.
Tourism is a prime example: every region that has seen its local economy crushed by global arbitrage and corporate hegemonies, leaving global tourism as its sole surviving sector, has been devastated by the drop in tourism, which was always contingent on disposable income and credit expanding forever.
Excesses of debt and leverage funneled into risky speculations inevitably end in default.
Financialization manifests as asset bubbles and hyper-consumption as people who never had credit spend up to the credit limits and beyond. Both asset and consumption bubbles pop, pushing the financial sector that feasted off the unsustainable expansion of credit into insolvency.
Food security, to take a basic example, is impossible once globalization has destroyed local agricultural production, and financialization has rewarded factory-farming since Big Ag can borrow capital at scales that only make sense in a world of globalized monoculture agriculture.
Financialization was never sustainable, and neither was the destructive globalization it enabled.
Any system that depended on the ever-expanding exploitation of new resources, debtors and markets could never be anything but fragile.
One of the possible solutions could be deconstruction of globalization, which is seen in the trend of focusing on the support of local business, local producers and local communities. This trend could be greatly assisted by community used digital currencies, which could act as means of payment without the need of using banks and other global third parties.