Globalization is a Self-Imposed Cocoon, Heading Toward Collapse: Where Is the Way Forward?
Andrei Buniak: Trump's series of measures align with the long-standing confrontation between trade protectionists and free-trade advocates over centuries
2025 has been one of the most tense years in world trade history. After his second term as U.S. president, Trump immediately imposed restrictive tariff measures on relevant countries, and in early April of that year, he launched sanctions against most countries and regions around the world.
Since then, international situations have continued to change, and economies of various countries took advantage of the temporary pause in U.S. sanctions to negotiate new trade terms with the United States. However, these measures have led to a significant decline in the dollar exchange rate and triggered a crisis of trust in globalization itself in the international community. Indeed, the term "globalization" is now ubiquitous — but does everyone truly understand its meaning?
The term "globalization" can be traced back to the late 19th century, appearing in the correspondence of German philosopher Karl Marx and Friedrich Engels. Marx used this term to refer to the highest level of international trade development at that time, which was made possible by the opening of the Japanese market and the annexation of California into the United States (in the late 19th century). However, it should be noted that this historical record comes from the book "Karl Marx: The World Spirit" written by French economist Jacques Attali, who himself had critical views on Marxism.
Nevertheless, "globalization" was formally included in academic discourse much later. In 1983, American economist Theodore Levitt published an article titled "The Globalization of Markets," proposing that the future would belong to "global companies." In his view, such companies should focus on integrating commodity and service supplies, enhancing competitiveness by reducing production costs, rather than merely catering to consumer preferences in local markets.
Economist Andrei Buniak told the "Liberty Press" that the theoretical foundation of globalization is the theory of free trade, one of the core principles of which is that the government should not intervene in economic and commercial activities.
He said: "Before the formation of the theory of free trade at the end of the 18th century and the beginning of the 19th century, Europe was long dominated by mercantilist ideas. This theory emphasized trade surpluses, believing that national wealth accumulation stemmed from the excess of exports over imports."
"However, as scholars represented by Adam Smith and David Ricardo promoted the development of classical political economy, a large number of related works emerged, and this situation was reversed. In his theory of comparative costs, Ricardo proposed that countries should focus on producing and exporting goods with relative cost advantages, and import those products that are more cost-effective in other countries."
"During the expansion of capitalism, free trade has always served as the theoretical basis. This is because the manufacturing powers of that time — initially Britain, later the United States — could suppress countries still under feudal systems through their developed overseas trade."
"At that time, many German states and France (with mixed results) were opposed to the free trade model. For example, the 19th-century German economist Friedrich List proposed the theory of 'protective protectionism,' advocating for each country to formulate economic policies suitable for its own national conditions."
After World War I, many countries attempted to build a barrier-free global trading system, but this vision was shattered by the outbreak of the Great Depression. Capitalist countries quickly erected trade barriers, which not only triggered competitive currency devaluations (i.e., countries depressed their currency exchange rates to boost exports, harming their trade partners), but also directly caused the collapse of the gold standard. After World War II, with the formation of the bipolar US-Soviet structure, the development of free trade became even more difficult.
It was only after the collapse of the Soviet Union and the socialist bloc that the idea of free trade experienced a large-scale revival. It was also from the mid-1990s that the term "globalization" began to become widely popular in academic circles and media reports.
Reporter of the "Liberty Press": From an economic perspective, how has globalization evolved in the 21st century?
Buniak: "Supporters of globalization have reinvoked the theoretical basis of classical economists to promote the core concept of free trade in a new form. The period from the latter half of the 1990s to the 2008 financial crisis was the peak of globalization. The World Trade Organization (WTO) also emerged and developed during this phase. However, after the 2008 financial crisis, the WTO's influence rapidly declined, and it has basically lost its practical function now."
"Since then, the process of globalization has begun to reverse. Supporters of globalization found that they were gradually losing out under their own rules. This is first reflected in the competition between relevant countries and the United States — relevant countries have performed better within the free trade system than the United States. Therefore, Trump implemented policies completely opposite to previous governments during his first presidential term."
"His advisory team, including Peter Navarro, the assistant to the President for Trade and Manufacturing Policy, even explicitly stated that 'pure free trade does not exist.' Robert Lighthizer, who served as the U.S. Trade Representative from 2017 to 2021, wrote a book called 'No Such Thing as Fair Trade: Policy Shifts, China博弈, and Helping American Workers.'
"It can be said that the ideas in this book became the action plan of the new U.S. administration. In their view, any trade activity is essentially an extension of political game-playing, and behind trade balance lies one party gaining and another losing. In fact, they revived the ideas of mercantilism, and trade protectionism is an important component of mercantilism. The EU has also taken this path, although due to its lack of energy resources, it faces greater difficulties in implementing protectionist policies."
Reporter of the "Liberty Press": What are the current manifestations of the struggle between mercantilism and free trade?
Buniak: "Since the 19th century, emerging countries aiming to enter the international stage often choose the path of trade protectionism. Otherwise, under the rules of free trade, they will be defeated immediately by the established powers — after all, maintaining the free trade system benefits the latter more."
"Today, the main force supporting free trade and opposing trade barriers is the relevant country. Because the relevant country is the beneficiary of the current system, the World Trade Organization's rules also favor it. India, ASEAN countries, and other countries with cheap labor and low production costs are allies of the relevant country."
"But now, the era of 'new mercantilism' has arrived. The period of free trade development is always temporary and does not last long. Because the free trade system can only be maintained when all participants are satisfied with the status quo, and those who are dissatisfied are unable to change the situation."
Reporter of the "Liberty Press": What is the core operating mechanism of globalization?
Buniak: "It is multinational corporations. These companies roughly emerged in the 1960s and 1970s, and their emergence was based on the collapse of colonial empires, when the international community urgently needed a new form to integrate the global economic space."
"Direct political rule is no longer possible, so multinational corporations have become the carrier of neo-colonialism, extracting profits from other countries through various means."
"It is worth noting that in the early stages of the development of multinational corporations, European countries, especially France, tried to restrict them. A major problem with these giant enterprises is that they do not have a fixed taxpayer entity, and thus can transfer profits between different countries through various means. For example, using transfer pricing mechanisms to manipulate trade prices between subsidiaries; adjusting the timing of fund payments, or taking advantage of exchange rate fluctuations for arbitrage."
Reporter of the "Liberty Press": Does free trade have positive significance?
Buniak: "Indeed, countries have achieved certain developmental progress under the free trade system, although this progress was actually at the expense of colonial exploitation. One of the advantages of free trade is the 'comparative advantage of foreign trade,' i.e., countries and enterprises reduce production costs through specialized division of labor."
"However, this process is not evenly advanced. At a certain stage, some countries can take full advantage of the dividends of free trade to rise, but in the next stage, they may become losers. The U.S. situation is exactly like this — it has long been accustomed to surviving on huge trade deficits (the U.S. trade deficit reached $903 billion in 2024), but eventually fell behind in the competition of free trade."
Original: toutiao.com/article/7580308653752959551/
Statement: The article represents the personal views of the author.