2. Global Governance and the Liberal Order

Liberal International Economic Order (LIEO) (characteristics)

• Also sometimes “rule based order”

• International set of rules, norms, and institutions, whose proponents see it as based on a commitment to

  • Political liberalism ( Western-style democracy, human rights, etc.)

  • Economic liberalism (free trade, open markets)

  • Liberal internationalism (respect for state borders, inter-state cooperation, multilateral institutions)

  • Application of same rules to every state

• Institutions: UN, IMF, World Bank, GATT/WTO

• Goal: prevent another Great Depression/World War through interdependence

• Political Liberalism, Economic Liberalism, Liberal Internationalism combined in postwar U.S. hegemony to create LIEO

Liberal International Economic Order (LIEO) (Key Phases)

• LIEO (1945-2025)

• Embedded liberalism/developmentalism (1945-71)

• Cold War (1947-91)

• New International Division of Labor (late 1960s-ongoing)

• Neoliberalism (1970s-2010s?)

Liberal International Economic Order (LIEO)

• Established by Western states after World War II

• Under undisputed US leadership/dominance, or “hegemony”

  • Combination of coercion and consent

  • US economic and dollar dominance

  • Cultural influence

  • Setting rules and norms

  • Global US military presence

• “In short, American military hegemony has been used repeatedly to open markets and expand a pro-market form of socio-economic hegemony to other parts of the world.” (Sparke, 245)

Political Liberalism

• Western-style democracy, human rights, etc.

• Individual rights, rule of law

Economic Liberalism

• Free trade, open markets

• markets allocate resources efficiently; minimal government interference

Liberal Internationalism

• respect for state borders, inter-state cooperation, multilateral institutions

• Belief that open markets + democracy = peace

Dominant western Economic Paradigms

• 19th c. Laissez-faire liberalism

  • View that states should stay out of economy

• 1945-1971 Embedded liberalism (Keynesianism)

  • View that states must help manage economy

  • Rise of social safety net, public education, home loan subsidies etc.

  • Promotion of international trade

  • Limits on financial flows

• 1970s-2010s? Neo-liberalism

  • Recommitment to “free market” – with government role in supporting/protecting markets

  • Critique of welfare state and taxes, calls for “small” government

  • Certain ideas about “freedom

• LIEO

United Nations (UN) - 1945

• Established after WWII

• Aims: to promote international cooperation, peace, and security

• Now, 193 member states (2 observer states)

UN Security Council

• 5 permanent members — U.S., U.K., France, Russia, China (veto power)

• 10 rotating members

• Aim: maintain peace and security; can authorize military action, sanctions, and peacekeeping missions

• (Illustrates global power inequality even within “liberal” institutions.)

UN General Assembly (UNGA)

All UN member states – one vote each

• Non-binding resolutions only

• Global forum for discussion, policy-making, symbolic performance

• (Illustrates global power inequality even within “liberal” institutions.)

World Trade Organization (WTO)

General Agreement on Tariffs and Trade (GATT) (1947) → World Trade Organization (WTO) (1995)

• One country, one vote (166 members)

• Same rules (mostly) apply to all members

• Designed to

  • Liberalize international trade

  • Enforce free trade rules

  • Arbitrate trade disputes

•  Regulates global trade rules

International Monetary Fund (IMF) - 1944

• Provides loans to countries in financial trouble, monitors economies

• 191 members

• Voting power based on size of financial contribution

• stabalizes currencies; lends during financial crises (often with austerity conditions)

World Bank - 1944

• Gives low-interest loans, grants, and technical assistance to

fund development and reduce poverty in poor countries

• 189 member countries

• Voting power based on size of financial contribution

US Hegemony

• Combination of coercion and consent

• US economic and dollar dominance

• Cultural influence

• Setting rules and norms

• Global US military presence

U.S. dominance in shaping the global economy after 1945 — through both military and financial power.

• Relates to Hopewell: U.S. now undermines the very system it built.

  • U.S. Hegemony in decline through self-inflicted damage: by abandoning its commitment to multilateral trade and rule enforcement, the United States is undermining the liberal economic order it once led, leaving the world vulnerable to chaos, rivalry, and protectionism.

Embedded Liberalism (Keynesianism)

• 1945-1971

• View that states must help manage economy

• Rise of social safety net, public education, home loan subsidies etc.

• Promotion of international trade

• Limits on financial flows