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In an era of disorder, open trade is at risk
Action needed to shore up the global commons – and less powerful countries must take the initiative.
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Supply chains have shown a lack of robustness and resilience, says the writer.
PHOTO: AFP
Martin Wolf
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(FINANCIAL TIMES) - We have now moved into a third epoch in the history of the post-war global economic order. The first went from the late 1940s to the 1970s and was characterised by liberalisation, principally among the high-income countries closely allied to the United States in the context of the Cold War. From the 1980s and especially after the fall of the Soviet Union, more radical forms of economic liberalism, known as "neoliberalism", spread across the world. The creation of the World Trade Organisation (WTO) in 1995 and the accession of China in 2001 were high water marks of this second era.
We are now moving into a new era of world disorder, marked by domestic mistakes and global friction. Domestically, there has been a failure, particularly in the US, to adopt policies that cushion the adjustments to economic change and provide security and opportunity for those adversely affected. The rhetorical ploys of nationalism and xenophobia have instead focused anger on "unfair" competitors, especially China. In the US, the idea of strategic competition with China has also become increasingly bipartisan, while China itself has become more repressive and inward-looking. With the war in Ukraine, these divisions have deepened.
