The world is in a shroud of thick mist. At the time the Cold War ended, people around the world widely expected that globalization would make progress, the U.N.-centered order of peace would be maintained and market-economy-based global high growth would materialize. However, the ensuing reality has shown that the unifying force of the world order is reeling from United States’ declining national power and that the global economic situation has become persistently unstable due to the economic stagnation and financial crisis in the U.S. and Europe.

Globalization has the potential to enhance mutual reliance, expand markets and, through heightened competition, facilitate growth in the world economy. But it can also result in the synchronization of business fluctuations and the expansion of the fluctuation range. Additionally, America’s trade and budget deficits, which have amplified the global imbalance, have led the world into a global depression. Higher rates of world economic growth naturally causes rises in the demand for and the prices of natural resources, including energy, making global warming more serious. The responses of countries to these developments tend to intensify the conflicts of interest among them.

Globalization also has the potential to make level the world’s economic structure. It is because newly emerging countries aspire for economic growth and enterprises that seek for global business transactions locate their operations in the markets where they can find favorable conditions regarding wages and costs. The evidence of this is that East Asian countries such as China and India have achieved rapid economic growth, boosting their standing in the world.

If economic leveling advances, the power structure of the world will become multipolar. In fact, the relative economic positions of the U.S., Europe and Japan have declined while those of China, India and Brazil have risen greatly. In a development apparently symbolizing this trend, the more traditional powerhouse G-8 countries are finding it difficult to solve on their own the world’s cardinal problems concerning financial stability and global warming. Instead the G-20 nations have taken over the central stage.

The trend toward a multipolar world structure will help increase the number of players taking part in the work to formulate and maintain order, thus making it difficult to make agreements. The latest round of negotiations launched by the World Trade Organization has given up on achieving the desired accord after nearly 10 years. A confrontation of major emissions-emitting countries persists over the post-Kyoto Protocol framework to combat global warming. To overcome the global recession and renew confidence in the world financial system, major countries need to restore financial and monetary discipline, and share the pain in the process of policy coordination. The G-20 for its part has continued discussions but has failed to achieve sufficient results. Furthermore, the perpetual state of confrontation between Democrats and Republicans in Washington has prevented the U.S. from rehabilitating its finances, the European Union is experiencing difficulties in working out a financial support scheme, and the governing structure of the eurozone’s problem countries remains confused.

These developments teach us that globalization must evolve on the basis of disciplined international cooperation and policy management. We need to tackle reform of global governance carefully and seriously without getting intoxicated by a sweet dream of globalization.

Under the multipolar structure, it will be difficult to depend only on one particular country to maintain the world order. If that is the case, respective countries — in their effort to maintain the so-called public goods such as politics, security, economics, finances and environmental protection — must cooperate to settle principal problems by pooling their knowledge and skills, and endeavor to find points of agreement by giving priority to global interests over their own interests.

The problem is that politicians of major countries are strongly inclined to lean toward populism instead of making serious efforts to persuade their people to accept the necessary costs. The key countries of the old order would have taken responsible action for the sake of global interests. When national power decreases, countries tend to become less responsible for global interests and instead place priority on domestic interests. Regrettably, many politicians presently seem preoccupied with winning in domestic elections and clinging to power.

The world is full of dangerous factors and a major political and economic tsunami might occur at any time. Now is the time for politicians to understand the crisis in a comprehensive manner and make a practical decision refrain from engaging in populism. If this effort should fail, the world might be hit by a great depression. But the responsibility does not rest only with politicians. Business people and intellectuals need to pool their wisdom and knowledge, and come up with creative proposals to solve problems.

The world is in need of a “new economy.” The traditional measures for economic expansion such as interest rate reduction and fiscal spending augmentation do not appear effective in efforts to repair the world economy. It is imperative to take structural reform measures systematically and flexibly, such as deregulation reforms, tax and finance reforms, technological innovations, social system reforms and integrated energy management. The TPP (Trans-Pacific Partnership) might provide part of the solution.

Globalization is an ideal system for helping the international community achieve progress, but it could also wreak havoc in the international community if politicians’ governing abilities are lacking. The success or failure of globalization depends on the humble and wise actions by politicians supported by the creative knowledge of the people.

Shinji Fukukawa, formerly vice minister of the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry) and president of Dentsu Research Institute, is currently chairman of the Machine Industry Memorial Foundation.

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