The end of liberal order can plunge the world into chaos

Liberal order has brought economic integration, but this has often been unfavourable in the political aspect. In the post-2008 era, global and regional institutions have encouraged many states to cut public spending, eliminating social programmes and weakening public services and infrastructure.

After World War II, the administrations of presidents Franklin Roosevelt and Harry Truman in the United States led construction of liberal order, a group of international institutions, with the agreement of national states.

The goal was to preserve peace and prosperity in the decades following the destruction of World War II, thereby preventing the spread of communism and fascism. But over the last 30 years of the 20th century, liberal order changed.

It no longer aims at protecting the West from communism and fascism through rising wages, and implementing widespread social programmes. Rather, it became an engine of globalisation, economically integrating the entire world into a recognized system.

And contemporary liberal order does this through two moving elements: capital and work. Visibility of capital allows for shifting assets and businesses to various countries where different set of economic rules exist.

When capital is mobile, capital controls do not prevent individuals and companies from shifting their assets from one economy to another, and trade barriers encourage businesses to operate in fiscal paradises, without facing tariffs.

Liberal order enables the movement of a rapid influx of investments and people from one country to another. These flows facilitate economic growth, and reduce the cost of consumer goods, but they also produce instability. Passing a lot of money very quickly into some particular part of the world creates the “bulbs phenomenon”.

The movement of many people outside a region very quickly produces brain drain. Liberal order exists at three levels:global, regional and national. At the global level, it consists of large international organisations, focusing mainly on regulation of trade, borrowing and investments like the International Monetary Fund (FMN) and the World Bank.

At the regional level, liberal order creates stronger trade relations, through agreements such as the North American Free Trade Agreement (NAFTA), and strengthens organisations such as the European Union. In the EU case, regional institutions also ensure the free movement of people, a common currency and a series of fiscal rules and regulations. At the national level, liberal order is embedded by political parties who are committed to protecting and preserving it.

Over the past 12 years, since the global economic crisis of 2008, liberal order has been surrounded on all sides. On the left, traditional Social Democrats have been weakened, or excluded, by anti-detail parties.

Bernie Sanders disturbed the balances in the US Democratic Party Bay. Jeremy Corbin did the same with the Labour Party in Great Britain. In France, the Socialist Party has moved to a suburb of the political scene by the most radical of La France Insoumise.

Traditional centre-left party in Greece, PASOK, was posted by the most radical Syriza.

On the right, Donald Trump realised a hostile embezzlement of the Republican Party's lead in the US. In Great Britain, the Conservative Party took the country out of the EU. Republicans in France are challenged by Marin Le Pen's National Rally party. While in Germany, für Deutschland's far-right alternative party is now the largest opposition party.

In Italy, the centre-left Democratic Party and the Five Star Movement came together to form a coalition government. All these parties and movements are interested in reviewing or ignoring liberal order. Russia is celebrating the degradation of this order, while China is starting to build alternative institutions.

But that doesn't mean that order is defenseless. Global and regional institutions are capable of causing economic hardship to populations. B And, the IMF and the World Bank, they can deny states access to the necessary funds, threatening them with economic crises if they fail to comply with the rules.

And governments know very well that they will not survive the upcoming elections if these organisations trigger financial chaos in their countries. For example, in 2015, Greece tried to resist the requirements of EU austerity measures, threatening to leave the Eurozone monetary union if Brussels refused to offer more financial support.

But moving away from the eurozone would seriously damage the Greek economy in the short term, and Brussels knew that. The EU called the threat a bluff of Greece, and finally Athens withdrew. Last summer, SYRIZA was defeated by New Democracy, the traditional centre-right party in the country.

Liberal order has brought economic integration, but this has often been unfavourable in the political aspect. In the post-2008 era, global and regional institutions have encouraged many states to cut public spending, eliminating social programmes and weakening public services and infrastructure.

In many countries, standard of living of ordinary voters have stalled in the country, or they have taken steps to follow. Capital mobility enables billionaires and large corporations to quickly move their assets around the world, which means they have a lot of influence on national governments.

If a government raises taxes to support public services, taxed individuals and companies can flee, deprived the country of both tax revenues and jobs and necessary investments. And the subsequent economic recession could cost a government upcoming elections.

To attract new investments, governments are forced to compete with each other over who favours more oligarchs and transnational corporations. That means low taxes and salaries, and few regulations. Governments are not willing to take the risk of capital evasion.

Meanwhile, voters are nostalgic for a time when public services were very good, and when their lives were improving. And instead of directly challenging liberal order, national governments formally direct the charge's finger against this order, and on the other hand they continue to approach it economically.

The most typical example is Trump's movement. He abandoned Barack Obama's Trans-Peace Partnership (TPP) in favour of tariffs, but the aim of the latter is to achieve through “Archbishop”, what Obama aimed to achieve through “carota”: the movement of companies and investments from China towards US Allied economies in the Pacific.

By damaging China and gradually discouraging American companies to do business there, Trump may seem to be rising up against liberal order, when in fact he is exchanging one group of East Asian business partners for another.

In this way, it receives political credits from showing itself as hostile to liberal order, but without taking real action, which would significantly increase the cost of goods and services in the short term.

But this balance is hard to preserve. If a government goes too far against liberal order, it is in danger of suffering. That's what happened to the left-wing SYRIZA and its leader, Alexis Cipras, Greece. His confrontation with the EU was very direct for Brussels to tolerate it.

After Cirpras' blog was exposed, his party was discredited. At the same time, if a government avoids bomb rhetoric and tries to manage expectations, it may seem to pose no longer a threat to liberal order. This is what happened with Theresa May in Great Britain.

As prime minister, Miss May's rhetorical style was not very aggressive and the Brex deal she proposed, there were no major changes in the trade agreements the country had with the EU. This caused the most anti - wing rebellion - The EU in its Conservative Party, replacing it with Boris Johnson.

While nationalists ridicule liberal order, radical Democrats try to make citizens feel involved in decision-making. More importantly, this does not remove control of liberal order. It still deals with economic integration, but it is the state-national one taking over key competencies.

Part of what makes nationalism and radical democracy attractive is that these strategies highlight our national, individual or group distinction. Global political institutions iron out differences, and are making separate decisions for the whole world.

We don't want a standard model. But unfortunately, the liberal order has already given us one. So we face a terrible choice. We can continue to embrace the nationalist strategy to keep liberal order alive, creating the conditions in which it will “death”.

This will bring about the dissolution of the order, damaging economic growth, and causing a major increase in the costs of goods and services. Our living standards will fall dramatically. The state-national will return to the center of the stage, but at the cost of undermining the prosperity we have achieved since World War II.

Or we can embrace radical democratic reforms, and try to convince ourselves that they will empower us, or at least give us a sense of accomplishment.

Taken with cuts from “Aeon.co” World.al