The World´s New Disorder

These thoughts grew out of reading two articles that approach the new political moment from almost opposite directions: Yascha Mounk’s TheBest-Case Scenario for the Trump Presidency and Simon Kuper’s How to Avert Catastrophe.

Mounk’s warning against certainty is persuasive. Confident predictions of disaster can be just as simplistic as reflexive optimism. Political systems are complicated, institutions are resilient in ways we do not always anticipate, and events have an irritating tendency to refuse the scripts we write for them.

But Kuper makes the opposite point equally difficult to dismiss: societies are often remarkably bad at recognizing catastrophe before it arrives.

The problem may be that we are much better at imagining continuity than rupture. We expect tomorrow to resemble yesterday, perhaps with different actors and somewhat different policies. We are less comfortable imagining that the rules themselves might change.

The disorder I fear is not merely economic. Trade, military power, alliances, finance, and political influence have become parts of the same tightly connected system.

Globalization has advanced too far to be treated as though it were merely a policy preference that individual governments can switch on or off. Production, finance, trade, communications, investment, and supply chains now cross borders so deeply that countries can inflict damage on one another without firing a shot.

That interdependence has usually been treated as a stabilizing force. There is a reason for that. Prosperous countries make good customers. Open markets create incentives to preserve relationships. It is generally more profitable to trade with another country than to destabilize it.

But interdependence cuts both ways.

The same networks that allow goods, capital and technology to move efficiently can also become instruments of pressure. A country that depends heavily on foreign markets, financing, suppliers or investors is not merely connected to the rest of the world. It is exposed to it.

For decades, the system has worked partly because its major participants accepted a basic bargain: compete aggressively, but remain inside a broadly shared economic framework.

What happens if that bargain begins to break down?

If the United States turns toward economic nationalism, pressures allies, threatens trading partners and treats access to its market as a weapon, other countries will not simply absorb the pressure indefinitely. They will look for leverage of their own. They may retaliate through tariffs, regulation, investment restrictions, currency policy, supply chains or alternative trading arrangements.

That is where the danger lies.

Globalization is not the opposite of liberal capitalism. In many respects, it is one of its consequences. Capital searches for markets, firms search for efficiencies, consumers search for cheaper goods and investors search for returns. Once those networks exist, political leaders cannot easily dismantle them without creating costs that travel in both directions.

A trade confrontation with China or Russia would therefore not resemble an old-fashioned contest in which one country simply closes its borders and waits for the other to surrender. Different political and economic systems have different vulnerabilities. More centralized governments may be able to direct capital, restrict ownership or absorb domestic pain in ways that more open economies cannot easily imitate. Open economies, meanwhile, possess their own advantages in innovation, capital formation and alliances.

The result would not necessarily be a clear winner.

It could instead be a world discovering, rather painfully, how much leverage everyone has acquired over everyone else.

And perhaps that is the real disorder ahead: not the end of globalization, but globalization without the political assumptions that made it relatively manageable.