The alarmists have a point. The Liberal International Order (LIO) has many enemies. One is populism, the insurgency against the institutions of representative democracy, flanked by the revolt against fourth estate—the “fake news” media. Donald Trump, the Populist-in-Chief, wants to outflank Congress by invoking emergency powers. He blasts out his tweets to speak directly to the masses. Communing with the great unwashed has been a classic of populism since ancient Rome; today, it ranges across the Western world from Stockton to Stockholm.
Another foe is surging nationalism. Its targets are immigration and the free movement of goods and capital, a mainstay of the LIO.
And the populists are forging ahead. In Europe; they sit in every parliament except Spain’s and Britain’s. They govern in Poland, Hungary, and Italy. Strutting onstage as savior, Brazil’s Jair Bolsonaro has captured the presidency in a free election.
But more is at stake than the LIO. Add the ComDem—the Community of the Democracies—to the list of endangered species. Authoritarianism seems to be on a roll as well. In Russia and China, Putin and Xi are amassing ever more personal power. In the aftermath of the Arab Spring, the despots are back from Damascus to Cairo. Hundreds of thousands have died, and millions have fled. A killer president rules the Philippines.
So say good-bye not only to the LIO, but also the liberal state and constitutionalism that define the ComDem? These trends are certainly worrisome. But reality is, as always, more complex.
The LIO is a Western invention that has spread across the world. It is anchored in global institutions like the World Trade Organization, the World Bank, and the International Monetary Fund. The WTO is well-nigh universal, encompassing 164 members, from totalitarian China to ultra-democratic Switzerland.
The ComDem, the core of the LIO, is more exclusive. This is the Atlantic world and its outliers, from India via Oceania to Israel. A large chunk of the world’s population remains outside: Russia, China, the ex-Soviet Republics, Africa, the Middle East, Cuba, Nicaragua and Venezuela.
The LIO is under stress. The mightiest challenge comes from the United States and China, the world’s two giants. They wield their clout to skew the terms of trade in their favor—the U.S. blatantly with trade wars, China more subtly with the appropriation of intellectual property, massive subsidies for state-owned enterprises, and barriers to market entry.
The threat to the LIO is the shift from a non-zero-sum to a zero-sum game, from “we all win” to “your losses are my gains.” As economists have argued forever, victory in trade wars is an illusion. Punitive tariffs merely serve the interests of privileged producers like the steel manufacturers in the United States. They can raises prices while the nation as a whole loses real income. When other nations retaliate, exports fall and jobs vanish.
The ComDem is also under siege. Populism and nationalism feed polarization, radicalization and xenophobia, favoring strongmen of the Right and the Left. These forces undermine the liberal state. Worse, they spill over into the LIO that was founded and nurtured by liberal states. After all, it takes liberal states to uphold the Liberal International Order.
For the evidence, go back in history. Fascists and communists have despised such an order. Universalism is not in their DNA. They seek control over their citizens and their intercourse with the outside. Today’s authoritarians cherish not interdependence, but power. They like foreign investment, but loathe freedom for ideas and people. Thus, Beijing obsessively controls the internet while expanding surveillance over 1.3 billion people.
The Arab autocracies have never integrated into the world economy. They haven’t even opened their economies to one another. Inter-Arab trade accounts for 9 percent of total trade. For the European Union, the ratio is 62 percent.
At first blush, China looks like the great exception. It trades with the entire world.1 Yet at home, the regime has the last word, telling its people, “Enrich yourselves, but leave the driving to us.” Conversely, take the United Kingdom. The LIO of the 19th century was “Made in Britain.” This liberal state believed in freedom at home and abroad—for trade, capital and navigation. This is no accident; a free economy demands freedom beyond borders. By contrast, the absolutists of the 17th and 18th centuries insisted on royal monopolies and state manufactures, mercantilism, and protectionism.
Today, Hungary’s Viktor Orban crows: “The era of the liberal state is over.” The 2019 Report of Freedom House warned that 2018 marked “the 13th consecutive year of decline in global freedom.” Former Secretary of State Madeline Albright has fumed about a new “era of fascism.”
But the facts do not bear out Chicken Little. So let’s give Pollyanna a chance.
For one, the new nationalism is different from the old. Beyond Russia and China, it does not seek to expand and subjugate. It is not aggressive, but defensive. It does not clamor for empire, but snarls “leave us alone!” Imperialism is made from nastier stuff.
Second, let’s set aside the dramatic headlines and look at the long run. Are Putin and Xi really the harbingers of tyranny triumphant? They are not the avant-garde of history, but old hat. Russia and China have always been despotisms. So have the Arab states. Cuba was a dictatorship under Battista and then under Castro. Nicaragua, oppression merely changed from Somoza on the Right to the Sandinistas on the Left.
Nor is Erdogan’s Turkey a sign of things to come. Modern Turkey was never a solid democracy. It was founded by an autocrat, Kemal Attatürk, in 1923. After 1960, the military routinely grabbed power up until 1997. So the would-be sultan is not an omen, but the old normal. In the Middle East and in Africa, violence and repression are also a dreary continuity.
For perspective, consult Samuel Huntington’s The Third Wave of Democratization. Democracy comes in waves, he shows. The first one rose in the early 19th century, the second after World War II. The most recent one rise started in Iberia in the Seventies, rolled east to Taiwan, South Korea, and the Philippines, then splashed back to Eastern Europe in the Nineties. Democracy is like a balloon. It soars and sinks, contracts and expands. It is a jagged curve, but in the long term, it slopes upward.
Today, the number of democracies has grown to 122, the largest number of all time. Nearly 70 percent of countries are democracies if we apply the minimalist criterion of “genuinely contested elections.” Adding “fundamental rights” and “checks on government” yields a slow rise from 1975 to the present.
Nowhere has an established democracy collapsed, not even in Poland or Hungary. Conversely, where is Croatia’s operetta dictator Franjo Tudjman? He is gone, as is Serbia’s Slobodan Milosevic. Last May, ten million Iraqis went to the polls in a competitive election marred by little violence, and this after decades of war and the advance of ISIS to the gates of Baghdad.
Poland gets top billing in the authoritarian revival. Yet in May 2018, 50,000 demonstrators marched through Warsaw. By year’s end, he opposition swept the cities, capturing local power. If general elections were held today, it would be do widzenia to Kaczynski. In the New York Times, a Polish scholar noted: “With its large population, Poland is a swing state that can turn the tide across Eastern Europe.”
True, illiberal parties have entered into almost all parliaments of the EU. On the other hand, their democratic rivals in the EU have retained 80 percent of the votes. Compare that figure to the triumph of Fascism and Bolshevism in the interwar years. None of the conditions favoring their rise is present in Europe today: the fall of empires from Berlin to St. Petersburg, the humiliation of Germany and Austria, their built-in revanchism, the Great Depression. Unlike the Weimar Republic, which had no democratic roots, the Federal Republic has flourished for 70 years.
Such a rosy perspective raises the question: What has unleashed the forces of illiberalism? A major cause is the loss of control over borders and million-fold migration. The trend can be turned, if Europe manages to reconcile two vexing paradoxes.
On the one hand, the liberal principle of open borders threatens the liberal state, as the rise of extremist tendencies shows. On the other, the liberal state has to resort to illiberal means by drawing its walls higher to defang populism and secure the domestic liberal order.
This is the price, but if Europe continues to narrow the stream of uncontrolled immigration, it may leave the neo-nationalists high and dry. The Weimar analogy is misleading. Communists and Nazis pocketed a majority of the votes in the 1932 elections. In today’s Germany, the democratic parties haul in 87 percent.
In the 1920s and 1930s, we did not know what towering tariffs, brutal austerity measures, and competitive devaluations would wreak. They brought on the collapse of world trade and the triumph of totalitarianism. Pluralist democracies are better learners than systems where The Truth is decreed from above. The crisis of 2008 did not degenerate into a depression precisely because central banks remembered the past, pouring trillions of liquidity into the economy.
To boot, Europe’s institutions are a lot stronger than the infant democracies of the interwar period. A mighty welfare state has reduced class differences, protecting the victims of globalization from the misery of the 1930s.
Alas, a large question mark remains. The United States used to be the housekeeper of the LIO. As the mightiest player, it can now inflict the gravest danger on the LIO, emboldening nationalists and protectionists everywhere. As goes the U.S., so goes the world.
This contribution is based on a talk the author gave at MIT’s Seminar XXI.
1. Integration into the global market seems to be shrinking. Chinese exports as share of GDP have dropped from 35 to 18 percent in the last decade, imports from 27 to 18 percent.