65. Globalisation has lost legitimacy in its homelands.2

1. 1. After a sustained period of market reform thesituation was dramatically different; theUS and Europe were in a boom (the latter having moved to even closer integration via a single currency); the USSR was long dead, Russia had achieved a reasonable equilibrium after chaos and East Europe was on the fast track to growth; Africa and much of Latin America had longovercome the. stagnation of the 1970s and 1980s; China was in the reckoning for global superpower; India had woken from its long economic slumber and growing at near double digits; the rest of South Asia was not far behind; and East Asia continued to be dynamic.

2. 2. That was until September 2008 when the spectacular collapse of Lehman Brothers and the subsequent near collapse of the global financial system changed the narrative. There were obvious questions in the US and UK (also Europe) about whether the free market revolution had gone too far too fast without adequate regulatory oversight.

3. 3. But the legitimacy of global capitalism began to be questioned a couple of years later when it became apparent that government bailouts of large banks and finance companies—presented as a necessity for a recovery of growth—had led to very limited changes in the practices, executive pay and risk-taking behaviour of global finance. At the same time, governments, which had financed large bailouts of the private sector came under acute fiscal stress, triggering a second phase of the crisis in 2010–11 when a set of countries in Southern Europe (referred to disparagingly as the PIGS) face serious sovereign debt crises.

4. What led to the loss of confidence in Capitalism

5. 4,Ironically enough, the backlash against what was a crisis essentially triggered by global finance and exacerbated by overspending governments ended up targeting the free movement of goods (open trade) and the free movements of people (liberal immigration policies)—a combination of both in the US and the latter in the UK. And to add to the irony, a crisis in capitalism was exploited not by parties on the left of the political spectrum, but on the hard right.