is a graduate teaching assistant in politics and international studies at the University of Cambridge and a teaching associate at Gonville and Caius College, Cambridge.
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.[…]
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