The global economic order is in disarray

The lamentations of the prestigious conservative economic weekly continue Economist. The May 9 edition devotes research, ink and plenty of frustration to verifying what they describe as the “slow collapse of the liberal international order” that has prevailed for 40 years.

The string of complaints begins with the crippling of the World Trade Organization (WTO), which until recently was considered the stable bearer and protector of business globalization. For the past 5 years, representations of the great powers have remained deliberately headless, rejecting the “freedom” of governments to open their markets. In the following pages, he breaks down the continuum of “globalizations” that have proliferated in the world, starting with the tariff war between not only China and the US, but now the European Union (EU) and China. , they predict, will worsen in the coming months. The European Union is set to impose higher tariffs to stop the destructive presence of Chinese electric cars, which are more efficient and cheaper than Europe’s heavy industry. For its part, the United Kingdom government blocked Chinese businessmen from buying a chip factory and, swallowing the rhetoric of the free market, they have decided to sell it to less North American investors, clearly for “national security”. Competition. As if that wasn’t enough, candidate Trump has announced that he will raise tariffs on Chinese goods from 25 to 60%, threatening to “drown” Americans in blood if he doesn’t win the election. Without backing down, Biden has raised import tariffs on Chinese cars to 100%. Free trade no longer attracts votes. Today “Made in America” does just that.

For a “worse” global increase in state regulatory and control regimes for foreign investment, The Economist It includes, with sober resignation, graphics depicting the collapse of global trade, cross-border capital withdrawals and trade in services. Tired of this collapse of the liberal global order, the weekly lists two other measures of this inevitable disaster: First, the rapid divergence of prices of the same commodity in different countries. The long-sought utopia of a single planetary market with one stamp price is being crushed by the reality of a world fragmented by regionalized markets and geopolitical loyalties, in which each country politically imposes a price differential. The second is the greening of “industrial policies,” that is, state subsidies to build private or state enterprises on national soil to guarantee national “sovereignty” and “autonomy” in these areas.

Curiously, the IMF has published a study on this “tragedy” of the rise of “economic nationalism”. Revenue of industry policy in data.2024. The rhetoric of “efficient allocation of market resources” now appears to be limited to the unwary, and in the face of the inevitable, the IMF makes recommendations for “efficient” subsidies. In 1990, industrial policy interventions did not reach 70, and were limited to peripheral countries, by 2023, more than 2,500 industrial policy interventions had taken place in the world, a linguistic gem of the IMF. , “discrimination” against foreign interests. Worse, these measures are not driven by marginal countries, consumed by unbridled populism, but by bastions of modern capitalism, the US, Europe and China, which now compete for subsidies with so-called “emerging economies”. ” Ultimately, the IMF leans toward a kind of hybrid global order in which protectionism and selective subsidies to industry are combined with liberalization of wage relations and “friendly” foreign investment.

But not only are the major economic institutions protecting the old liberal world order ensuring its slow fossilization, but so are the Western political elites emerging to justify this new wave of sovereignty. It wasn’t a lapsed communist who put free trade “into hell,” but President Biden as he addressed the January 25, 2023 speech before American trade unionists in Springfield. And this is Jack Sullivan, America’s National Security Adviser. A visit to the United States in November 2023 received Argentina’s president-elect Miley, who a few weeks earlier presented a “US industrial strategy” to guarantee its “national security.” I wonder what Miley, as learned from Murray Rothbard, would have done to American strategic technologies in those areas when confronted with a staunch defender of “the little yard and the tall fence,” i.e. the protectionist. Intelligence includes artificial intelligence, microprocessors, quantum computing and so-called green energies.

European politicians, staunch defenders of economic liberalism, are now changing their clothes and accepting the claim of sovereignty, lest they go down in history. It was an ideological shift forced by economic inferiority relative to China. In a long speech at the Sorbonne on April 25, French President Macron outlined the end of the globalist order and a return to the politics of borders. It buys its energy and fertilizers from Russia, manufactures them in China, and outsources its security to the United States.

“Since the two major international powers have decided to stop respecting trade rules, we must abandon the ‘innocence’ of open-border trade policies,” Macron said. In order for Europe not to die, he proposes, we must be “sovereign.” To do this, European “defense capacity” must be increased, including nuclear and “a war economy” rearmament. NATO Secretary General J. As Stoltenberg had already advanced, markets did not bring harmony; “Arms are the only way to peace.”

At the same time, Macron argues that an industrial policy “made in Europe” should be promoted. This bad word 7 years ago, today takes on strategic importance for the French president. And it goes hand in hand with securing “subsidies” to strategic firms and “eliminating free competition” in key manufacturing sectors. Faced with cheap foreign products, Macron insists at the Sorbonne that “we must protect our producers” and “not succumb to de-industrialisation”. To counter this outburst of liberal protectionism, it proposes to protect its European farmers from “unfair” external competition and a “coup of public investment” to boost the continental economy. And hard line is not a problem for him. Tariffs must be raised, Macron comments to the horrified view of free trade defenders. “Border Taxes” on Imports, “Taxes on Financial Transactions”, “Taxes on Multinational Enterprises”. Even ECLAC, previously directed by Alicia Barcinas, could not have said it better. If there is any doubt about this resurgence of economic nationalism, Macron is responsible for dispelling them by announcing restrictions on “non-European” investments in sensitive sectors. No wonder Economist Drowning in a sea of ​​tears in the irreversible collapse of the old world order. It certainly doesn’t go back to the time of the North Americans New deal Roosevelt, or Charles de Gaulle’s Fifth Republic; But neoliberal globalism will pave the way for territorial sovereignty, selective liberalism, and waves of subsidies and greater fiscal deficits.

However, in the political arena there is never a shortage of idiosyncrasies like Miley and Andean Mileys, who evoke the global and free market “West” not only in its fiery rhetorical significance. They are the depressing grotesqueries of a colonial interest that aims to drive their countries into an enclave or dual economy: a paradise for a few extractive companies of export raw materials, amid a sea of ​​precarious services. These are exotic fossils that today are happily observed by an increasingly sovereign and protectionist “West”, which is distracted by its beautiful logical juggling. VintageIn memory of the lost golden age of globalization.