TheMarketForIdeas

After the first 100 days of US President Donald Trump’s second term, which saw the most serious escalation of the US-China conflict and the greatest financial instability in recent history, some observations can be made about the changing international economic order. If the trends of this period continue, the rules-based world order will be replaced by one based on power relations.

In this short period of time, all components of the post-war international order have come under violent attack – not only free trade, but also the rule of law, human rights, democracy, self-determination of peoples, multilateral cooperation between countries, and the humanitarian and environmental responsibilities of states.

History has, of course, witnessed shifts in the balance of power between countries. In the last two centuries, for example, four world orders have emerged and disappeared. The first two – the balance of power established at the beginning of the 19th century, after the Napoleonic Wars, and the system created by the Treaty of Versailles, after the First World War – ended with the outbreak of the Second World War. The post-war international order was then established, supported as a hegemon by the USA and enforced through the UN and other international institutions (IMF, World Bank, OECD, FAO, GATT/WTO, EU); after 1990, with the collapse of the USSR and the dissolution of the Warsaw Pact, what US President George H. Bush called the “new world order” emerged.

Today, as the balance of power between economic, political and military powers shifts from West to East and a new mercantilism manifests itself, the “Washington consensus”, achieved after the fall of communism, is no longer supported anywhere in the world – not even in Washington. Globalization is now rejected by millions as a threat to the sovereignty of nation states, and the path to the well-being of peoples is no longer considered to be free trade, but its opposite: protectionism.

Trump’s tactic was to take advantage of the profound changes that, when he came to power, were already reshaping world geopolitics: first, the gap between the expected benefits of globalization and what it has brought to people’s daily lives; thus, he became the world’s greatest anti-globalist. Also, noting that the messages transmitted on social networks influence behaviour, Trump resurrected the “theory of great men of history”, formulated in the 19th century by the Scottish historian and philosopher Th. Carlyle. Although discredited today, this theory still persists in the popular understanding of how great personalities make the world progress; Putin, Xi, Erdoğan, and Kim Jong-un have all confirmed to Trump that populist dictators can impose their vision of the world.

The problem, however, is Trump’s unpredictability. The dominant note of the first 100 days of his second term is general chaos. While it is possible that the United States will return, sooner or later, to normal governance, this prospect no longer constitutes a plausible benchmark for the economic, political, and military decisions of the rest of the world, friend or foe. On the contrary, given that, by escalating the conflict, both the United States and China are assuming ever greater risks, the question that arises is whether there will be a future of “one world, two systems”, or whether the disorders and violence of the last two centuries will reappear – and whether there is any chance of building a new, stable, and sustainable world order.

Recent events in the US and around the world make it clear that the international economic order that emerged after the fall of communism cannot be restored. An era of protectionism and transition has begun, from a unipolar world, in which the US was the dominant economic, political and military power, to one in which there are multiple centres of power and decision-making. But because the world has become increasingly interconnected, it is much more vulnerable to crises – from pandemics and climate emergencies to financial contagion. In addition, some countries have discovered that they can use interdependence as a competitive weapon and use the vulnerabilities it creates to their own advantage.

As a result, a new world order, based on values, is needed to guide economic policies and decisions. Such an order could be achieved by updating the “Atlantic Charter” (1941) and the “UN Charter” (1945), in line with the realities of the 21st century. This document should first of all contain a new commitment to cooperation from the states of the world. Those countries that believe in international law, peace, justice and solidarity must join forces to find global solutions to global problems, which cannot be solved by nation states separately or acting exclusively within the framework of bilateral agreements. Second, the aforementioned document should provide for concrete and immediate actions in areas where solutions are not possible at the national level: security, climate, public health, trade flows and humanitarian aid. There is also a need for a reform of international institutions, as well as practical collaboration between those willing to cooperate – a hard core of global political will. Finally, the aforementioned document must allow for dialogue even with sceptical world leaders like Trump, recognizing the need for reciprocity and fair burden-sharing; however, since many countries are heavily indebted, it is necessary to find innovative and equitable ways to mobilize funds to finance these goals.

The lesson of the last two centuries is that a sustainable world order must be built on principles, not on opportunistic calculations or narrow national interests. The “Atlantic Charter” – a document inspired by American President Franklin D. Roosevelt – was based on certain principles, which enshrined the fundamental rights of peoples: self-determination, renunciation of the use of force, access and participation, throughout the world, in trade and raw materials necessary for the prosperity of all states. Even if none of these principles is, for the time being, supported by the Trump administration, all is not lost: recent political events in the USA show that many American citizens oppose isolationism.

Unfortunately, despite the valiant efforts of some European leaders, no one can guarantee that Ukraine will not be dismembered and its resources divided up, thus encouraging autocracies around the world to do as Putin has done.

However, it is possible to define moral criteria that can guide the construction of a new world order. Morality is a way in which society enforces cooperation, allowing for large-scale production, exchange, and international cohesion. The idea that morality is economically functional is deeply rooted in historical perspective: as human societies have become more complex, cooperation has proven essential for survival, and moral systems have emerged to enforce prosocial behaviour.

The danger of a return to the global anarchy of the 1930s is real; but through collective action by the world’s countries, the fifth world order of the modern era can be built.