Any thoughts on this?The ungoverned globe
The end of the liberal order would unleash chaos; its continuance means unconstrained economic suffering. What to do?
In the aftermath of the Second World War, the administrations of presidents Franklin D Roosevelt and then Harry S Truman in the United States led in the construction of the liberal order – a set of international institutions agreed upon by nation-states. The goal was to sustain peace and prosperity in the decades after the devastation of the war, and in doing so prevent both communism and fascism from spreading. But over the last 30 years of the 20th century, the liberal order changed. It is no longer primarily about protecting the West from communism and fascism by pushing up wages, creating large social programmes, and building strong safety nets. Instead, it has become an engine for globalisation, economically integrating the whole world into a singular system. The liberal order has transformed from a means of defending liberalism into a means of exporting it everywhere.
The contemporary liberal order does this by making two things mobile: capital and labour. Capital mobility enables assets and businesses to move to different locations where different sets of economic rules exist. When capital is mobile, capital controls don’t prevent individuals and firms from moving their assets out of a particular economy, and trade barriers enable businesses to operate offshore without facing imposing tariffs. Labour mobility is about moving workers from place to place, in pursuit of the jobs that are relocated through capital mobility.
The liberal order enables rapid flows of investment and people from place to place. These flows facilitate economic growth and reduce the cost of consumer goods, but they also produce instability. Moving too much money too quickly into any particular part of the world generates bubbles. Taking too much money out too quickly produces credit crunches. Adding too many people to a region too quickly strains its public services and potentially pushes down wages. Taking too many people out of a region too quickly produces brain drain, starving the region of the skills it needs to thrive. The order keeps capital and labour mobile, and maintains the flows. But it doesn’t govern them, and that means the flows can get out of hand and cause trouble.
The liberal order exists on three levels: the global, the regional and the national. At the global level, the order consists of large international organisations that mainly focus on the regulation of trade, borrowing and investment, such as the International Monetary Fund (IMF) and the World Bank. At the regional level, the liberal order creates tighter trade relationships, through agreements such as the North American Free Trade Agreement (NAFTA) – now the United States-Mexico-Canada Agreement (USMCA) – and block organisations such as the European Union (EU). In the case of the EU, the regional institutions also provide free movement of people, a currency union, and a common set of fiscal rules and regulations. At the national level, the liberal order is embodied by the political parties that are committed to defending and maintaining it, including most of the traditional centre-Right, centrist and centre-Left parties.
To put it another way, the liberal order consists of a lot of economic integration, but this economic integration still depends on the continued commitment and participation of nation-states. The institutions that exist at the global and regional level don’t have direct connections to voters. They rely on the ability of the national parties that support the order to remain politically competitive on their home turfs. As the liberal parties weaken, the order weakens.
Voters want the catharsis of antiestablishment rhetoric, but they don’t want to pay the price for antiestablishment policy. Trump – who has always been a good showman – is happy to oblige. He walks a tightrope, appearing to fight the liberal order without actually fighting it.
Trump won’t rip the liberal order apart, but he creates space for the person who will
This balancing act is difficult to maintain. If a government pushes it too far against the liberal order, the order will call its bluff, exposing its lack of willingness to pay the price for genuinely opposing the order. This is what happened to the Left-wing SYRIZA and its leader Alexis Tsipras in Greece. Its confrontation with the EU was too direct for the EU to tolerate, and the EU forced Greece to either accept the economic consequences of withdrawal from the order or acknowledge its lack of willingness to follow through. Once Tsipras’s bluff was exposed, his party was discredited.
At the same time, if a government avoids bombastic rhetoric and tries to manage down expectations, it might not even appear to be a threat to the liberal order in the first place. This is what happened to Theresa May in the UK. As prime minister, May’s rhetorical style wasn’t very aggressive, and the Brexit deal she proposed didn’t make large changes to the UK’s trading arrangements with the EU. This caused the more antiestablishment wing of her Conservative Party to rebel, replacing her with Boris Johnson. Johnson immediately scored an electoral victory running a much more openly antiestablishment campaign, with far more bellicose anti-European rhetoric. Once Johnson won, he implemented a Brexit deal that was nearly indistinguishable from May’s, and the UK’s trading relations with Europe continue largely unchanged for now. Investors know that the relationship is secure for the time being, and Brexit hasn’t yet brought about any major increase in the cost of goods and services. The performance is what matters.
From the point of view of the liberal order, this strategy is suboptimal, and it works only from the premise that the liberal order doesn’t enjoy much legitimacy. It’s a defensive strategy, aimed at maintaining an international order that no longer inspires people of its own accord. The order would prefer to restore its legitimacy and get populations enthusiastic about further integration. By maintaining itself through allowing national governments to performatively mock it, the legitimacy of the liberal order is further corroded. It becomes even less credible and even less inspiring. This means that governments have to go further and further with their performances of defiance to continue to please ever more grouchy voting populations
In this way, the radical democracy strategy becomes an inversion of the nationalist strategy. Both the radical democrats and the nationalists would create a situation in which the nation-state cannot meaningfully be blamed for the consequences of the liberal order. The nationalists accomplish this by blaming the order, performing subversion while continuing to obey. The radical democrats accomplish this by creating new institutions that make the people themselves feel responsible for their own situations. They attempt to ‘responsibilise’ ordinary voters. The nationalist strategy’s weakness is that it maintains the liberal order by condemning it, undermining the very thing it maintains. The radical democrats completely divert attention from the order by making politics about the local level – about you. You become the one responsible for the order, for the flows, and for any instability those flows bring to your community.
These local institutions, however, cannot actually alter the flows. This responsibility is built on lies and misdirection. It functions as an elaborate way of forcing the citizens to internalise the political system’s failures as their own. Radical democrats would give citizens the appearance of direct power without the fact of it, obscuring where the real power lies – with the liberal order. That would suit the order just fine. But radical democracy wouldn’t deal with the substance of the grievances that have led so many voters to grow frustrated. It would enable the order to continue disappointing people by convincing them that they are the ones disappointing themselves.
The other option is to make a genuine effort to build some kind of global polity
Opponents of the liberal order have substantive grievances. Rapid, ungoverned flows of capital and labour destabilise their lives. The nation-state cannot take back control of the flows, and radical democracy provides only an illusion of control. To truly govern the flows, the liberal order itself must be made directly responsible to the people whose lives it affects. As long as the liberal order is organised through global and regional institutions that have no direct links to voting populations, it will be mediated through networks of nation-states. As economic integration increases, those nation-states lose the ability to meaningfully represent their populations in the order’s institutions. The more economic power the liberal order has, the more vestigial the nation-states become. The nation-states attempt to obscure this reality with nationalism and radical democratic reforms, and in doing so they enable themselves and the order to go on, but at a cost of completely stripping the public of any meaningful say. The nation-state continues, but only as a shell of itself, unable to represent anything. The liberal order continues, but with no legitimacy, at best surviving by pitting individuals and groups against each other in local fights with no practical stakes.
So we are faced with a terrible choice. We can continue to embrace the nationalist strategy of keeping the liberal order alive by creating the conditions under which it will die. That will end in the dissolution of the order, collapsing economic growth, with massive increases in the costs of goods and services. Our living standards will be dramatically reduced. The nation-state will make a comeback, but at the cost of the prosperity that we have been building since the Second World War.
Or we can embrace radical democratic reforms, and attempt to convince ourselves that they will empower us, or at least give us the satisfying feeling of empowerment. We can retreat into localism, even as the critical decisions are taken far away from us. We can build a realm of illusions, where the institutions we participate in are not the ones that shape our lives.
Finally, we could try to salvage the order by constructing institutions that enable us to meaningfully govern it. But to do that, we’d have learn to do politics with people who are different from us. Can that be done? Probably not. And that means either the nation-states will kill the liberal order, or they will find a way to disguise it in democratic daydreams. The liberal order might not last much longer.