4/27/2023 0 Comments Project cyndicate![]() Given the overlap between the two when it comes to trade, governments will most likely adopt a more protectionist approach over the next few years and increasingly embrace reshoring, as well as other industrial policies that promote advanced manufacturing. The future path of the world economy will depend on how these competing policy frameworks play out on their own and against each other. The hyper-realist framework views economic interdependence not as a source of mutual gain but as a weapon that could be wielded to cripple one’s adversaries, as the US did when it used export controls to block Chinese companies from accessing advanced semiconductors and the equipment to manufacture them. This narrative emphasizes the geopolitical rivalry between the United States and China and applies a zero-sum logic to economic relations between major powers. The Bretton Woods regime has shown that policies that support cohesive national economies also help promote international trade and long-term capital flows.Īnother emerging paradigm could be called hyper-realism, after the “realist” school of international relations. By putting these neglected objectives front and center, productivism reasserts domestic political priorities without being inimical to an open world economy. One emerging economic-policy framework, which I have called “ productivism,” emphasizes the role of governments in addressing inequality, public health, and the clean-energy transition. Ultimately, the governments that gave corporations the power to write the narrative were unlikely to persuade that narrative’s authors to support domestic social and environmental agendas.Īs the world abandons hyper-globalization, what will replace it remains highly uncertain. Hyper-globalization, in retreat since the 2008 financial crisis, ultimately failed because it could not overcome its inherent contradictions. And if the results were disappointing, as they turned out to be, the blame lay not with hyper-globalization, but with the absence of complementary and supporting policies in other domains. Simply put, it would be possible to have one’s cake and eat it. But it assumed that these goals could be achieved through policy instruments that did not interfere with free trade and finance. The hyper-globalization narrative neither denied the importance of social equity, environmental protection, and national security, nor contested governments’ responsibility to pursue them. ![]() The economic gains from hyper-globalization, neoliberals believed, would help to end international conflict and strengthen democratic forces around the world, especially in communist countries such as China. The benefits of benign markets were meant to extend beyond economics. It did, however, acknowledge a critical role for governments: to enforce the specific rules that made the world safe for large corporations and big banks. The neoliberal hyper-globalization narrative that became dominant in the 1990s, with its preference for deep economic integration and the free flow of finance, was in many ways a return to the gold-standard narrative of benign and self-adjusting markets. Thanks to capital controls and a permissive international trade regime, countries could create social and economic institutions that suited their individual preferences and needs. The world economy, built on a model of shallow integration, was subservient to the goals of ensuring full domestic employment and establishing equitable societies. The Bretton Woods system also altered the relationship between domestic and global interests. Only a strong welfare state could provide social insurance and support those who fell through the cracks of the market economy. The Bretton Woods regime that emerged after World War II, which relied on Keynesian macroeconomic management to stabilize the global economy, gave the state a much more prominent role. The collapse of the gold standard, together with the Great Depression, put a significant dent in this benign-markets narrative. ![]() Free capital movement, free trade, and sound macroeconomic policies, the thinking went, would achieve the best results for the world economy and individual countries alike. Under the late-nineteenth-century gold standard, the global economy was viewed as a self-adjusting, self-equilibrating system in which stability was best achieved when governments did not interfere. Global narratives have shifted numerous times throughout history.
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