A new world disorder

“The more it changes, the more it stays the same” – Alphonse Karr

Things used to be different. For more than 70 years, the generally accepted position within the United States ruling class was that the country would stand at the apex of a Western order governed by treaties and institutions that advance the general interest of all states involved, the US in particular.

But the global political and economic order is undergoing a historic transition. The disarray in Europe, the failure of the neoliberal economic model and the rapid economic and military rise of East Asia have thrown doubt on accepted wisdom. The Western order today is in unprecedented disorder, and US imperialism is facing some of its greatest challenges.

Donald Trump proposes a direction that is at odds with much of US establishment opinion. Political rivals, commentators and analysts are up in arms at the White House’s aggressive posturing, deprecatory attitude to old alliance partners and protectionist leanings. Yet while Trump’s outlook is remarkable, the history of world order over the last two centuries indicates that there is a certain amount of business as usual. The question today is just how profound a shift the Western order is experiencing.

Earlier world orders and their breakdowns

The multipolar interstate system that arose in 18th and 19th century Europe, as capitalism penetrated every corner of the planet, posed questions that endure in the 21st century. For example, how could trade occur between countries with different national currencies? What charges needed to be levied and by whom, to ensure a functioning international regime of exchange and production? And how could geopolitical conflicts be managed?

The first attempt to create a dispute resolution system among the European powers came with the Concert of Europe, founded at the 1814-15 Congress of Vienna by Austria, Prussia, Russia and the United Kingdom after the defeat of France in the Napoleonic wars. The arrangement had no permanent institutions and relied on the good will of the states involved. It soon fell apart under the pressure of growing economic and political rivalries. During the subsequent period, while there were frictions and occasional outbreaks of war, the principal European powers devoted considerable energies to the acquisition and intensified exploitation of colonies.

Problems of European government became global as Western Europe and parts of North America accumulated immense wealth in the course of the 19th century. A productivity revolution was unleashed and transportation costs fell precipitously with the industrial revolution. But the balance of power between states was also determined by their success or otherwise in establishing colonial empires, which destroyed existing economic systems in Africa, Asia and, earlier, the Americas.

Once the majority of the world had been carved up and a global system of production and trade established, a state without many territorial possessions was at a distinct disadvantage unless it was endowed with abundant natural resources and an abundant domestic supply of labour to feed industrialisation. That posed the question of global re-division, which could occur only through confrontation. That was the situation Germany and, later, Japan faced.

The unification of the German empire’s 25 constituent states occurred only in 1871. Its relatively limited success in the scramble for far-flung colonial acquisitions – at least compared to France and Britain – led it to embrace Friedrich Naumann’s Mitteleuropa strategy and try to take Central and Eastern Europe instead. The German predicament was an aspect of rising tension and then direct conflict between the most powerful states.

Ironically, the laissez faire free economic competition lauded by the new system’s defenders had turned into its opposite: monopoly. Individual businesses grew to a scale transcending national boundaries; international cartels and syndicates developed within and between industries. State revenues were dependent on the success of the companies housed within their borders, and companies became more dependent on brute military force to guarantee their access to the rest of the world. The result was the transformation of economic competition into military conflict. As Russian revolutionary Vladimir Lenin wrote in his 1916 pamphlet Imperialism, the highest stage of capitalism:

“Imperialism … introduce[s] everywhere the striving for domination, not for freedom. Whatever the political system, the result of these tendencies is everywhere reaction and an extreme intensification of antagonisms.”

The colonial era brutalised the peripheral territories; the imperialist conflict of the First World War brought carnage to the heart of capitalist Europe. In the aftermath of the destruction, the League of Nations was founded by Allied powers in another attempt to bring order. But, ultimately, it could not tame the wild drive to war in the imperialist era. As Italian dictator Benito Mussolini reportedly quipped a few years before the Second World War: “The League is very well when sparrows shout, but no good at all when eagles fall out”.

Postwar order and New World Order

Only after the defeat of the Axis powers in World War Two, the Stalinist takeover of Eastern Europe and the emergence of the US as a superpower was a new balance established. The multipolar 19th and early 20th century, which contributed to the instability of the time, gave way to a bipolar Eastern Bloc-Western Bloc order, with a largely powerless Non-Aligned Movement of states caught in the middle.

The Eastern Bloc was made up of coordinated authoritarian, command economies, protected from the West by the so-called Iron Curtain of border controls that limited the movement of people and goods. The Soviet economy grew rapidly, but remained less developed than those of the US, Germany and Britain. Only by concentrating resources on its military capacity could the Eastern Bloc hold out against the West.

The Western order was more flexible, an architecture of treaties and trans- and supra-national institutions designed to promote open markets and bring together the largest possible anti-Soviet alliance. The International Monetary Fund, the World Bank and the North Atlantic Treaty Organization were all established to construct, support and defend the liberal capitalist order against the state-directed development of the East.

Another aspect of this project was Western European conciliation and integration, which began with the Treaty of Paris in 1951 and was extended in successive treaties, such as the Single European Act in 1986 and the Treaty on European Union in 1992.

In practice, the Western order reinforced the power of the US globally and, over time, of Germany within Europe. US hegemony was decisive in maintaining and deepening multilateralism, providing a military umbrella under which Western economies could advance. The states involved also gained by being able to invest less in their own militaries and therefore more in industrial expansion.

The bipolar order did not endure because of the specific institutional arrangements. A base imperial calculation underpinned stability: in the age of nuclear warfare, the competing blocs faced “mutually assured destruction” were they to engage in full frontal conflict.

One of the most important pillars of the Western order was the Bretton Woods exchange-rate system, established in 1944, which linked other currencies to the US dollar, and the dollar to gold. For several decades, this provided a predictable answer to the question of how trade could be facilitated between countries with different national currencies. The pegged exchange rate arrangement collapsed in 1971 when US gold reserves became insufficient to honour the country’s debts, which were rising as the long postwar economic boom entered its twilight and as the country’s disastrous invasion of Vietnam exacted a mounting toll on the balance of payments.

The collapse had far-reaching consequences. Financial speculation in the West, previously constrained under Bretton Woods, was progressively unleashed as a new era of globalisation was orchestrated and neoliberal policies imposed around the world. Writing in 1995, Eric Helleiner noted: “[T]he basis of American hegemony was being shifted from one of direct power over other states to a more market-based or ‘structural’ form of power”.

But the “extreme intensification of antagonisms” that Lenin had noted had the globe wondering about World War Three as a new arms race emerged in the 1980s. The US had calculated that the Soviet economy would exhaust itself in the effort to match its military spending. When the Eastern Bloc imploded in 1989-91, then president George H.W. Bush declared a New World Order. Unipolarity had been reached; Francis Fukuyama famously announced “the end of history”.

There were high hopes that Eastern Europe could be brought into the Western fold and that Russia would be isolated. The National Security Strategy documents issued by consecutive presidents – Bill Clinton, George W. Bush and Barack Obama – pressed the case for an expanded alliance. All spoke of international institutions and obligations, free trade, free markets, democracy and individual rights.

This rhetoric was premised on the reality that the world’s largest global corporations were headquartered in the West and reaped the benefits of open markets, which allowed them to exploit cheap labour, extract natural resources and sell their products around the world. For a time, optimism reigned. Germany reunified. The European Union was established. It and NATO expanded to the east, and the US entered the boom years of the so-called New Economy.

Breakdown of the Western order

The Western order has been shaken to its core in the 21st century.

First was the Bush Republican administration’s embrace of the doctrines of the Project for a New American Century, a neoconservative think tank. The aggressive unilateralism of the White House, backed by the US ruling class, resulted in the murderous 2003 invasion of Iraq, which eventually exposed the limits of US military power. Instead of underlining “American global leadership”, the Middle Eastern adventure undermined it.

Second was the global financial crisis. Just as the earlier promise of 19th century laissez faire was broken by the reality of monopoly capitalism and imperialist war, the neoliberal model of US financial supremacy – the “market-based form of power” – was undone by its own excesses. For years, capital had flowed from the rest of the world into US interest-bearing bonds, which helped underwrite the country’s military expenditure and domestic purchasing power. The US was able to spend more than it earned.

But economic growth was dependent on the ability of financial markets to cost their investments accurately and spread risks. The asset-price collapses from 2007 exposed the vulnerabilities of the debt binge. When the house of cards came crashing down with the mortgage-backed securities crisis, Western economies entered their greatest spiral since the Great Depression. The effects are still being felt, as Bob Davis and Jon Hilsenrath noted in a March Wall Street Journal article “Whatever happened to free trade?”:

“After World War II, trade growth usually far outpaced – and helped drive – overall economic output. Now it is barely keeping up … Between 2011 and 2015, the value of global merchandise exports contracted 10 percent, according to the WTO, the largest drop over a four-year period in post-World War II history …

“Annual movement of capital across borders … fell more than two-thirds, to $3.3 trillion in 2015 from $11.9 trillion in 2007 … The stock of cross-border loans held at banks around the world contracted 21 percent, from $35.5 trillion in 2008 to $28.2 trillion in the third quarter of 2016.”

Third was the ongoing European turmoil in the aftermath of the financial and economic crisis. The rush to eurozone monetary union in 1999 has been exposed as folly: the area is a mess of contradictions, the southern debtor nations are in a parlous state, and the banking system is extremely vulnerable to a new crisis. Integration is faltering. Britain is pulling out of the EU, and right wing nationalist parties across the continent have gained ground, casting doubt on the longer term viability of the project.

Fourth, Russia’s rulers turned sharply against the so-called reform process of the 1990s. Benefiting from an oil and gas price boom under the dictatorial rule of Vladimir Putin, and capitalising on US weakness, the Russian Federation began to reassert itself militarily, invading Georgia in 2008, annexing Crimea in 2014 and intervening in Syria in 2015. While its economy is dwarfed by its rivals’, it is once again a geopolitical player.

Finally, the global economy over the last two decades has reoriented toward East Asia – the most profound shift in the world balance of power since the collapse of the Soviet Union and a significant departure from the European and Western supremacy of the last two centuries. China’s share of world manufacturing has increased from about 3 percent in 1990 to almost one-fifth today. As William I. Robinson, writing at Jacobin magazine notes:

“China became … the new ‘workshop of the world’. Moreover, China leads the way in what is a surge in outward foreign direct investment from countries in the Global South to other parts of the South and to the North. Between 1991 and 2003, China’s foreign direct investment increased tenfold, and then increased 13.7 times from 2004 to 2013, from $45 billion to $613 billion.”

The reorientation is remarkable not only for its speed, but also for its relative peacefulness. The Chinese Communist Party has exercised “soft power”, constructing economic agreements and diplomatic alliances with dozens of countries to gain access to raw materials. But US sabre rattling as China builds bases in the South China Sea and the rapid modernisation and expansion of Beijing’s military power are a reminder that the re-division of the world always carries the threat of confrontation.

Trump and the shifting world order

The overriding assumption of an expanding US-led Western order was the continuing primacy of the US in the broader international political economy. But the calamities of 21st century US imperialism, and the shifts in global economic and military power, cast doubt on its viability. While the US decline is relative, not absolute, the limits of its power and the vulnerabilities of the West are apparent.

Trump is a consequence of the US impasse. He is also a new factor exacerbating the crisis of the Western order. It is striking that he rarely utters the totemic phrases of his predecessors: freedom, democracy, cooperation etc. Instead, he has made no secret of his admiration for Vladimir Putin and his desire to form an alliance with Western Europe’s greatest adversary. All the while, the president berates Germany and other NATO members, demanding payment of hundreds of billions of dollars for their enjoyment of Washington’s military umbrella.

New York Times columnist Roger Cohen wrote in December: “A Putin-Trump alliance at the service of the butcher Assad – combined with the undoing of the military alliances, trade pacts, political integration and legal framework of the postwar order – constitutes [liberal internationalism’s] death knell”.

Perhaps. Trump’s language is one of the greatest departures from established White House rhetoric for some time. But there is logic behind his orientation. The NATO military alliance was established in 1949 to project Western military power against its greatest adversary, the Soviet Union. Russia today may be a resurgent military power, but there is little prospect of it becoming a global power any time soon; it simply does not have the industrial base. The White House knows this. As Lee Sustar wrote at SocialistWorker.org in March:

“[T]o Trump, his adviser Steve Bannon and their inner circle, an alliance with Russia makes ideological, political and military sense. After all, it was the Obama administration that began looking to Russia to impose a settlement in the Syrian civil war.

“The Trump White House wants to build on the relationship with Russia to enable it to focus on China, something Obama’s supposed ‘pivot to Asia’ failed to accomplish. If this means turning a blind eye to Russian intervention in Ukraine and other former states of the ex-USSR, that’s a price the new administration is willing to pay. The fact that Putin’s authoritarianism dovetails so nicely with Trump’s makes matters easier.”

How far is the new administration capable of shifting the broader balance of power and departing from long established alliances?

In the 21st century international order, 19th century questions endure: What are the rules and charges governing international trade? How are they to be enforced in a way that is acceptable to competing states? How are geopolitical conflicts to be resolved? For the US to reconfigure the architecture of Western alliances and treaties would be earth shattering.

Is the world returning to conditions analogous to the beginning of the imperialist era? That is unlikely. There is little prospect of the world again entering an age of multipolarity in the near future. In the imperialist system, however, open war between great powers can never be ruled out. The US-China conflict could also end up in something resembling a new Cold War, with proxy wars fought in Asia and Africa.

It’s not clear at this point, however, how far Trump is prepared to push and how hard his opponents inside the US ruling establishment are prepared to push back. Will he dramatically escalate the international trend to greater protectionism by implementing a border adjustment tax? Can he leave NATO to Europe? How many of his more dramatic pronouncements are simply ambit claims to shift the balance?

Trump is a barefaced liar, but that’s not a significant departure from politics as usual. As former New York governor Mario Cuomo noted: “You campaign in poetry; you govern in prose”. But leaving aside the question of whether the president’s hustings epithets – “Low energy” Jeb Bush, “Little Marco” Rubio, “Lyin’ Ted” Cruz etc. – are comparable to Robert Frost, the restrictions of office and of the world order he inherited are significant. Even if he were sincere, realpolitik often constrains an incumbent.

For example, new defence secretary James Mattis and CIA director Mike Pompeo both line up with establishment opinion on Russia. The US continues to participate in military exercises in Eastern Europe, which the Kremlin claims are the biggest build-up at its border since the Cold War. Will the president’s overtures to Putin be thwarted by the “permanent government” and the military hierarchy?

The health care debacle has shown that the Republican-majority Congress is prepared to thwart the president. There is only so far Trump can go using executive orders; if he can’t legislate, his capacity to rule is narrowed significantly. The remarks of White House spokesperson Stephen Miller in February were widely reported: “Our opponents, the media and the whole world will soon see, as we begin to take further actions, that the powers of the president to protect our country are very substantial and will not be questioned”. But the courts have thus far stymied Trump’s immigration bans.

On the other hand, those who led the US and Europe into its current predicament have no viable strategy to lift the West out of the mire and seriously challenge the rise of China. And despite its limits, there is no question that executive power has expanded significantly over the last century. While there are debates about its extent, the constitution is clear on the president being the executor of federal law and commander in chief of the world’s most formidable military. If Trump deems something a national security emergency, he can decide to lash out and the generals will oblige.

So far, this period has thrown up more questions than it has answers. The fact that the old Western order is crumbling and the president of the United States is cheering it on suggests that we are entering a new world of uncertainty.