Conflict, national interest still on the global menu

Nearly two decades ago, American journalist and author Thomas Friedman came up with his Golden Arches Theory of Conflict Prevention: No two countries that had McDonald’s restaurants would go to war. The idea suited the heady post-Cold War 1990s when people thought humanity would turn to post-ideological goals, like ending hunger. It offered the prospect of “homo economicus” replacing its appetite for war with a Big Mac and fries. Alas, war is now back on the menu and McDonald’s is in trouble. Could the age of globalisation be going into reverse?

The safe answer is no. McDonald’s and other United States consumer icons, such as Coca-Cola and Kraft, are certainly stagnating. Their sales at home and abroad have been heading downwards. McDonald’s suffered a big drop in Asian revenues last year after it was found using expired meat in China while a human tooth turned up in a burger in Japan. But tastes are also changing. The king of fast food is now toying with artisanal sandwiches and kale. It calls this “brand recovery”.

But the woes of old-fashioned US consumer icons hardly qualify as a retreat from globalisation. Newer American brands, such as Apple, Uber and Starbucks, are powering ahead.

Mr Friedman also updated his (self-admittedly playful) aphorism to the Dell Theory of Conflict Prevention.

No two countries that are part of the same global supply chain will fight each other: The economic penalty would be simply too high. Unfortunately, events are challenging the updated version as well. Insightful though Mr Friedman is, neither theory has emerged intact from what some call the post-post-Cold War world.

Even when societies turn middle class, conflict is endemic to our species. The return of great power rivalry in the 21st century reminds us that we are not purely economic animals. Were that the case, we would long ago have lowered transaction costs by abolishing nation states and currencies.

The fact that diverse cultures share bad habits and use the same technology should not be over-interpreted. China’s politburo has been dressing in business suits for years. Jihadi fighters wear jeans and surf on their iPhones (doubtless some have a weakness for Chicken McNuggets). They still revile the global hegemon. The presence of hundreds of McDonald’s outlets in Russia did not stop Vladimir Putin last year from annexing Crimea, which also had McDonald’s outlets. The chain has since withdrawn from the peninsula but not from the rest of Ukraine. Nor is the presence of McDonald’s likely to prevent a fifth war between India and Pakistan. Meanwhile, China’s global integration does not seem to have checked its sense of nationalism.

CYBER WARFARE PRESENTS NEW CHALLENGES

Geopolitics is clearly back. There are also signs the global economy is integrating more slowly than before. In some respects it is going in the opposite direction.

In the decades before the 2008 financial meltdown, world trade expanded at roughly twice the pace of global economic growth, according to the Netherlands Bureau of Economic Policy Analysis. Since then trade has slowed to the same pace as growth. Some of this is due to structural factors, chiefly China’s shift from an export-led growth model to one based more on internal consumption.

Technology is also playing a role. Automation enables manufacturers to move closer to customers without incurring high wage bills and exorbitant shipping costs. If 3D printing takes off, that trend will deepen.

But some of the slowdown is also happening by choice. Last week’s election in the United Kingdom followed the most inward-looking campaign in memory. Britain’s internationalism can no longer be taken for granted. Nor should its message be ignored: Britain remains a democratic bellwether. The rise of more nationalistic politics in the West is likely to remain a problem for some time to come.

Incomes in the developing world are catching up with those in the West, in some cases at the expense of the west’s middle class. At least, that is how many voters perceive it.

After decades of agreeing to lower global barriers, we are as likely to put up new ones nowadays. This affects financial regulations, rules on how to govern the Internet, tolerance of immigrants and non-tariff trade barriers. Britain’s largest bank, HSBC, is even thinking of returning its headquarters to Hong Kong.

Meanwhile, that which most connects the world — cyberspace — is turning into its battlefield of choice. Rising powers are no likelier than the old Soviet Union to use nuclear weapons, or to deploy conventional armies, against the US.

But the doctrine of mutually assured destruction has scant relevance to cyber warfare. Deterrence works when the culprit can be identified. Instead of a Cold War, anonymity is fuelling a “cool war”, which gets a little less cool every year. The spread of cyber weapons — and the willingness of China and Russia to deploy them — presents a different kind of challenge to the Golden Arches concept.

The hope was that mutual economic interests would persuade us to lay down our arms. In practice, diverging geopolitical ambitions are pulling in the other direction.

Belligerent players can launch deniable attacks at a trivial economic cost. In a sense, this may be an elevated form of globalisation. But it is a far cry from what we once so cheerfully anticipated. THE FINANCIAL TIMES