Rude Awakening: Threats to the Global Liberal Order

In the wake of World War II, a number of institutions designed to promote a liberal global economic and geopolitical order were established—the International Monetary Fund, the General Agreement on Tariffs and Trade (forerunner of the World Trade Organization), and the World Bank in the economic sphere, and the United Nations in the geopolitical realm. Although these organizations were far from perfect, their actions promoted rising living standards and political freedoms for all. Liberalism thus reengineered represented a fundamental bet on the supremacy of democracy and the market economy, and spurred the transformation of North America, Western Europe, and Japan into prosperous societies, each with a large and vibrant middle class and a social safety net.

Now, however, this liberal geopolitical and economic order is under attack. The free movement of goods, services, money, people, and information that once formed the recipe for progress under liberalism is blamed by many for rising inequality, mass migrations, and the declining legitimacy of political parties, as well as the fragmentation of global superpower relations. Nationalism, xenophobia, and populism continue to advance at the right and left ends of the political spectrum, eroding the moderate middle ground.

In
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