In Our Lifetime: Long-run Growth and Polarisation Since Financial Liberalisation

This paper was presented at the Historical Materialism conference on 7-9 December 2006 and assessed the current state of the world economy.

Using publicly-available data from the IMF and from the World Bank it assessed two claims that the world economy is growing faster, and becoming less unequal, under globalisation.

Defining ‘globalisation’ as the period of intensive financial deregulation and privatisation which began in 1980, this data allows us to compare ‘before’ and ‘after’ globalisation, and to compare the present stage of the world economy with the past twenty years.

It found that the economy had, since globalisation, been growing at approximately half the rate it was before, and that this trend showed no sign of reversing. To the contrary, the 2000 recession turned out to have been one of the most serious since 1974. The paper prophetically pointed out that the recovery from that recession as faltering, geographically uneven, and as dominated by imbalances between the USA and the rest of the world.

The paper also found that inequality under globalisation, measured as the ratio of GDP per capita in the ‘advanced’ countries to those in the rest of the world, increased by a factor between two and three times under globalisation, and this ratio too, showed no sign of reversing.