[Choi Junyoung's World+] The End of Globalization and a New Beginning

The Collapse of the Soviet Union in 1991 Marked the End of the Cold War
U.S. Neoliberalism Became the Universal Ideology
Rise of European Far-Right and Trump
A New Era of Change in the Global Order

A year is coming to an end. The year 2024 feels like one filled with an unusually large amount of events. Elections were held in several countries, resulting in many changes. Wars that seemed close to ending continue, and more regions are becoming unstable. The world has taken a troubling path, and rather than hope, gloom and anxiety fill people's hearts.

Living beings, including humans, have a lifespan. Life struggles to survive, but the indifferent passage of time shows no mercy. Like living beings, the orders and systems created by humans also have lifespans. Looking back over the past century, the lifespan of international order appears to be roughly 40 years. The Cold War between the United States and the Soviet Union, which began in earnest in 1947 shortly after the end of World War II, ended with the collapse of the Soviet Union in 1991. It lasted 44 years. China's reform and opening-up, which started around 1978 amid the aftermath of the Cultural Revolution, also lasted about 40 years. Although China still claims to continue reform and opening-up, it became clear that since the trade dispute with the United States intensified in 2018, it has taken a different course.

From this perspective, the era we live in now has lasted 33 years since the end of the Cold War in 1991. This period can be named in various ways, but considering the main trends, it can be called the era of globalization. The world being interconnected and moving closely together seems natural. However, upon reflection, globalization is not natural. The idea that it is most efficient and cheapest to bring raw materials and parts from the opposite side of the globe, process them into products, and then send them back across the globe differs from common sense. Such a system, which contradicts common sense, is historically rare. Globalization emerges when three elements coexist simultaneously: human thought, smooth information flow, and stable and inexpensive logistics. If even one of these pillars supporting globalization collapses, globalization comes to an end.

The first globalization occurred from the late 19th century to the early 20th century. The aftermath of the Napoleonic Wars was resolved, the gold standard was introduced, and free trade based on comparative advantage replaced mercantilism. Telegraph cables were laid under the Atlantic Ocean, connecting the world in real time, and steamships and the Suez Canal made maritime logistics stable and inexpensive. People, who had been tied to specific regions and lands, began moving in search of opportunities. It was a time when passports and visas were not required. The story of Marco in "Mom's Search for Thirty Thousand Ri," an adventure about a child searching for his mother who left poor Naples, Italy, to earn money in the prosperous Argentina flowing with milk and honey, is set in this era. The first globalization, which everyone felt satisfied with and was confident that the future would be brighter than today, abruptly ended with the outbreak of World War I in 1914. No one benefited from the collapse of the globalization system, but it happened.

The second globalization began cautiously after World War II, centered on the United States, Europe, and parts of Asia. In 1944, as World War II was ending, the United States made a groundbreaking proposal to the Allied representatives gathered in Bretton Woods. The proposal was that if everyone lowered tariffs and refrained from manipulating exchange rates after the war, the United States would open its market, the only remaining purchasing power market. This proposal, based on the recognition that demanding huge reparations from defeated countries would only bring further instability and war, changed the world. A new system centered on the dollar linked to gold emerged. Free trade through seas secured by the U.S. Navy allowed the rapid reconstruction of war-torn Europe and Japan, and fixed exchange rates pegged to the dollar increased predictability.

Unlike the globalization of the late 19th century, this era's globalization did not allow free movement of capital and people. Only goods were allowed to move freely. The golden age of postwar reconstruction, which lasted for 20 years, collapsed in the early 1970s. The United States declared it would no longer convert dollars to gold, and the previously cheap oil prices increased fourfold in a single day. Inflation arrived, and the United States, which had led the world, was defeated and withdrew from Vietnam.

In the early 1980s, President Reagan sought to revive the United States, which was collapsing amid defeat and inflation, by dismantling the New Deal system that had persisted since the 1930s and emphasizing the market. The government, which had acted as the visible hand, moved back to the role of referee behind the scenes. Amid this period of change and collapse, the United States escaped crisis, and the Soviet Union collapsed. The era of the third globalization, which we are familiar with and take for granted, began in earnest.

Neoliberalism, the ideology of the sole hegemon without competitors, was accepted as a universal doctrine. The internet began to tightly bind the world as one. Massive container ships once again drastically reduced maritime logistics costs, completing globalization. In this flattened world, companies and individuals had far more opportunities than in the past. Markets expanded, and labor supply increased. The era when prices rose as the economy improved came to an end.

Since the 1960s, the Republic of Korea actively utilized the expanding door of opportunity called globalization. While most newly independent countries adopted a passive industrialization strategy of import substitution, Korea challenged the export of manufactured goods, which had been considered the exclusive domain of advanced countries. Combining blood, sweat, will, and luck, the economy grew. Around the end of the Cold War, Korean companies boldly entered many regions, including China, which had previously been neglected. Despite many trials and errors, they were able to secure a foothold and leap forward alongside the growth of these countries. Companies quickly decided and executed large-scale investments to secure markets. They built factories on a scale capable of achieving economies of scale aimed at the global market, not just targeting specific countries. Korean companies and Korea made the best use of the wave of globalization that began anew after the Cold War, and as a result, we became a genuine advanced country.

However, this flow, which seemed natural and stable, is gradually changing. Many countries and people who felt they lost out in the era of globalization began demanding change, which manifested as the rise of far-right parties in Europe and the emergence of Trump in the United States. This change is not a one-time event. The world order has begun to change again, and the familiar is disappearing. Whether good or bad, the world has started to change, and there is no going back. At the end of 2024, rather than vaguely hoping for a return to the past, we are facing a new era with fear. The time has come to forget the happy memories of the past, accept the reality before us, and struggle once again.

Choi Jun-young, Specialist at Law Firm Yulchon (Global Law & Policy)