The US led liberal world order: where is it headed?

(I had started writing this in late 2021, but never finished the last 5%. I decided to put in a few hours this Sunday, almost four years later, to complete it)

In an earlier post, I looked at how world orders changed over the last 400 years, and how we entered the US led unipolar liberal world order after the collapse of the Soviet Union. Here, I am trying to analyze where it is headed.

The basics framework of the liberal world order rests on the following tenets:

1. Individual rights, including freedom of speech and freedom of religion; and "no taxation without representation".
2. Separation of church and state: the state not establishing a religion and not favoring one religion over another. 
3. Free enterprise: the rights of a business to set prices (without collusion) and to invest according to their interests. This also implicitly promised "free movement of goods, capital, and labor" and free trade among nations. 
4. Minority and civil rights and the commitment to the universal declaration of human rights. 

Although the philosophical principles of this order were laid early in the 17th and 18th century, and gave birth to the revolutionary republics like the US and France, it wasn't until 1945 that it became the accepted principle of the nations west of the iron curtain. Well, the UK still had the Church of England, but it slowly turned into a social organization, not a religious one. And when the iron curtain fell in the collapse of 1989-1991, the world assumed that the liberal order had triumphed. Francis Fukuyama declared the End of History. The US and the West thought that by the wave of a magic wand, the rest of the world will become copies of the western democracies. They thought that even the people of communist China, after tasting capitalism, will clamor for democracy. Well, that didn't happen.

That triumph, and the inability of the Western nations and leaders to understand the underpinnings of their successful system, their military, economic, and political over-reaches had sowed the seeds of the challenges that the liberal world order faces now. This was accompanied by two "once in 500-year” events (a) the return of China and India to their pre-existing position (pre-1805) in the global economic order, and (b) the internet.

The US and NATO led-unipolar world, the rise of India and China, the birth and growth of the internet, and a border-free, single-currency European Union brought about a few over-reaches of the system.

1. Earlier, the ideas and news that used to become mainstream were vetted through a hierarchical system. It was hard for a rogue idea to become mainstream. The internet and social media changed that. Freedom of speech does not guarantee freedom from falsehood, so it became easier to pursue polarized politics backed by questionable claims under the guise of "free speech". The internet and freedom of speech also enabled religious radicalization and indoctrination.
2. Secularism extended into godlessness, or denial of religion. Although every bit of early liberal writing derived the individual's rights from the divine, over time, the western liberals, bit by bit, drove religion out of public discourse. 
3. Inconsistent application of the free enterprise tenet led to the belief that the system is designed to socialize the risks, a lack of skin in the game. The bailouts and the bonuses handed to the very people who triggered the 2008 financial crisis was further evidence of the collusion between business and government. "The system is rigged", some said.
4. Immigration and manufacturing in low-wage countries helped keep inflation in check, but it came at social and economic costs. The middle class in the liberal economies stopped feeling financially secure. It is hard to pursue a global free trade regime with countries with one-tenth the labor costs, and still expect the same standard of living. 
5. Civil liberties over-extended to social justice, and then to woke-ism and cancel culture to a point where even traditionally liberal publications like the Economist, or traditional liberal commentators like Bill Maher have started pushing back.
6. Globalization of the liberal world order took a few new forms. 
• The Washington DC fantasy that it had a god-given duty to impose democracy around the world, and it had a right to depose dictators it didn't like, but only the ones without nuclear weapons (Saddam, Ghaddafi). There was no Soviet Union to balance misadventures, and China was still too weak. The experiments to build liberal democracies in Iraq and Afghanistan, and elsewhere in the Arab world failed.
• The expansion of NATO and the European Union to the Russian border. 
• The urban-financial integration that not only integrated the major US cities (NYC, Boston, DC, Miami, Atlanta, Chicago, Seattle, Los Angeles, San Francisco) and the elite universities into a mono-culture, it also brought European and Asian cities (London, Paris, Berlin, Zurich, Dubai, Singapore, Hong Kong, Seoul, Taiwan, Tokyo, even Shanghai and Beijing) and universities in the mix. Suddenly, the distinction between the Capitol and the districts of the Hunger Games didn't feel that unreal. 

All of this generated pushback from individuals, communities, and nations who did not benefit from the globalization of the liberal world order.

After the collapse of communism, the liberal world order has been great for the college educated, urban or suburban elite who were able to take advantage of the economic expansion to build a good life. It lifted hundreds of millions of people in Asia out of poverty. But the blue collar workers in the western liberal democracies and the uneducated or the under-educated in rest of the world did end up getting the short end of the deal. And, after the financial crisis of 2008-2009, where they had the right to vote, they expressed their dissatisfaction at the polls. 

(Source: The American Prospect, using data provided by Branko Milanovic)

In June 2016, I was in the UK and watched the Brexit campaign very closely. Two things, a few days before the vote, convinced me that Leave would win. In a radio program, a caller outside London called in to say "how is it that I can't afford a flat in London, but the foreigners who have been here for just a few years can?". The other was when my driver, who was himself a Kosovo-Albanian refuge said "Oh, yes, there are too many refuges here". In my visit to France, our driver-cum-tour-guide in Cannes said "I hope the British leave, and I hope the French also have a leave election so that we can leave too". A friend of mine who worked at an investment bank in London, who, obviously was a Remainer said, "I don't know if I will have the time to go and vote". The Brexit results gave an early indication that Donald Trump had a chance in November. 

Over the years, the populists and nationalists won elections in Italy, Brazil, India, Poland, Hungary, Philippines, and consolidated power in Hungary, Turkey, Russia, and China. Hungary's president openly talked about the emergence of the "illiberal democracy". It was clear that the working class were demanding a system that works for them, through the ballot box. It was also clear that after the great recession, immigration issues (legal and illegal), and the rise of China as a manufacturing hub; the working middle class in the west were not satisfied with their political, economic, and social situation.

The response to the over-reach of the liberal order in the west has been two forms of populism: 

1) Left-wing populism of Bernie Sanders, Elizabeth Warren, AOC, Jeremy Corbyn. They tended to blame capitalism and big businesses for the situation and advocated for a centralized redistributive state. 

2) Right-wing populism, or Trumpism. They tended to blame immigration and free-trade, and wanted to advocate for a "nation first" solution by bringing back manufacturing jobs and closing borders.

The centrist, even where they are, or were in power (like Joe Biden in the US, or Macron in France) lead a fragile coalition of left-wing populists and some center-rightist, but have a hard time getting anything done. 

So, is the liberal world order over? Globally, I think it was over on August 15, 2021 when the US & its allies admitted that they didn't have any more reason to stay in Afghanistan, and left the country to status quo ante, handing it back to the Taliban. This, along with what we have seen in Iraq has demonstrated that liberal democracy isn't universal, and an effort to impose it top-down ignoring national history and politics is futile. The rise of China, the Russian reconquest of Crimea, and the rise of openly illiberal regimes in Hungary and Turkey is showing that there are other ways to govern. I am very skeptical of US willingness of sending their own citizens in another foreign war, be it in Ukraine, or in the South China Sea. The best we can expect is the US selling military equipment, a new lend-lease perhaps, but with more strings attached.

In the US and the west, I think the institutions (local government, courts, police) are still strong enough and will prevent a slide to either outright fascism or communism, but the political system has to re-invent itself to deliver what the voting public wants. Deng Xiaoping famously said, "It doesn't matter if the cat is black or white, as long as it catches mice." Similarly, in the west, the voters will end up saying that ideology doesn't really matter if the political system can deliver progress, peace, and prosperity. 

The first six weeks of the second Trump administration is indication that the United States is not willing to lead and maintain this liberal global world order, unless there is some direct economic benefit to the United States. Marco Rubio, US Secretary of State, in his first interview as Secretary of State, talked about returning back to a multi-polar world. It is still unclear if a new world order will became a new "Great Game" with little to no rules, or if there will be an effort, similar to 1815 (Congress of Vienna) or even 1945 (United Nations) to write down the rules of the game and to secure commitment from the major players to play by the rules.