Britains referendum to exit from the European Union represented more than just the beginning of the disintegration of the 28-nation union. The shock wave that reverberated across the world sent a message of pushback against globalization or, more specifically, pushback against the globalization of Americanization. The International Monetary Funds influence over European Union policies is viewed as driven by Washington, as is the OECDs intrusion into private banking. The perception goes right down to the erosion of local businesses by American multinational interests, as exemplified by the persuasive spread of U.S. companies, from McDonalds to Monsanto. As for sentiment, people across Europe are really fed up. And it took the British to be the first, to finally stand up.
From the late 1980s onward, globalization was the buzzword on everybodys lips. It became the mantra of the World Economic Forum. Nobody dared criticize globalization. It meant Internet and freedom and all that. But nobody questioned that it also meant the gutting of city, town and village culture; the imposition of retail shopping mall uniformity upon a Europe proud of its diversity; and the invasion of all private online communication by data retrievers combing through tradeable information and by government just behaving like spooks.
Couched in the images of Bill Clinton walking Tony Blair as his pet poodle (just as Angela Merkel is Barack Obamas hatchet woman today), the capitals of Europe seemed to be obeying the Washington Consensus on everything. What the IMF and the World Bank told Brussels to do, it did. Everyone followed. Then we had the financial meltdown of 2008, and some capitals of Europe woke up. The IMF and the World Bank insisted Europe follow their formulas, which failed, as they have consistently done so in the developing world. By 2011 the Arab Spring had spread to European summer, and the streets of every capital were clogged with protesters, which inspired the Occupy movement. Many of the protesters simply wanted back their community, culture, agriculture and way of life. It is that identity that the globalization of Americanization took away. And it is that identity that Brits voted to take back on June 23.
From the perspective of the Washington Consensus, globalization of Americanization was intended to be a good thing. The liberalization of capital and exchange markets, combined with a debt-based cycle of consumption, represented prosperity and was best achieved through one uniform global order that would be easy to manage, manipulate and control. Brexit voted against this order. The pound plummeted to its lowest level since 1985, and the Dow Jones industrial average lost more than 600 points in one day, falling to its lowest level since 2011. Were markets reacting to the unknown or marking the end of an era? Certainly after Obamas warnings against Brexit, the vote reflects a slap in Washingtons face, more specifically, its imperial enterprise.
Unifying planetary systems into one neat order simply does not work, especially on a Continent such as Europe, which is so diverse in culture and community, and where many nations like Spain have their own regions seeking independence because of cultural differences. The idea of converting everybody into a single system is simply not practical. The systems that were offered to the world in the aftermath of World War II and became the main statement of the Washington Consensus formulas such as the World Bank, the IMF and the World Trade Organization have consistently failed to achieve global financial and political stability. European Central Bank monetary policies are influenced by these institutions, if not just an extension of that existing order.
What we see now is a global movement away from monolithic globalization and toward diversified localization. The Brexit vote is a key threshold that draws global attention to a process that stretches back to the violent protests against the WTO in Seattle in 1999. Communities were fed up with an agenda that favored multinational companies over local business and led to the aggrandizement of wealth among a few and the impoverishment of the rest. This is by no means a formula for global stability, but rather one for revolution. This is exactly what the Brexit vote was about. The British people said loud and clear that they have had enough.
There is no doubt that in the wake of that vote, people are looking at other models. The emergence of South-South cooperation through new institutions such as the Asian Infrastructure Investment Bank and the New Development Bank represents Chinas growing involvement in markets in which European colonial interests once had a measured advantage. It emphasizes development through infrastructure investment and bases regional cooperation on specific interests, rather than trying to incorporate everything into one global system; such an approach may just make a lot more sense. When the AIIB was formed, the Obama administration warned and even threatened the U.K. not to participate in this new financial architecture. But British mercantile pragmatism rejected ideology, and the U.K. joined. When that happened, it was already a signal indicating the direction the Brexit vote would be taking.
The identity with the community is more powerful than any overarching theory or ideology. That was really the bottom line of Adam Smiths own theory, which everyone forgets today. Smith wrote about the invisible hand only once, and that was specifically in the context of putting money into ones own community out of ones own self-interest, not taking capital and putting it elsewhere. Independence of local decision making needs to respect and adhere to local identity. That was the message of Brexit.
It is not about globalization, but about diversified localization. That is the lesson that the ideologists in Washington and Brussels have forgotten. But the people in the U.K. showed on June 23 that they didnt forget. They want their community and sense of their identity back. The Brexit vote represents the Waterloo of the Washington Consensus and the rolling back of 25 years of ideologically driven Americanization. And its just the beginning.
Laurence Brahm is an international lawyer, mediator and economist and has served as senior adviser to Chinas Ministry of Environmental Protection.