- “The Liberal International Order is Slowly Coming Apart.” The Economist, May 9, 2025.
- Ash, Timothy Garton. “Brace for Disorder as Great Power Shifts Begin.” Financial Times, May 9, 2025.
- “What Happens When a Hegemon Falls.” The Economist, May 8, 2025.
- Fink, Larry. “It’s Time for the Second Draft of Globalization.” Financial Times, April 22, 2025.
- Tett, Gillian. “The Markets are Silent – That is Worrying.” Financial Times, June 3, 2025.
- Foroohar, Rana. “The Global Economy is Suffering from the Rashomon Effect.” Financial Times, July 7, 2025.
The first three readings contextualize the economic framework of the most current era by several methods. I appreciated The Economist’s “What happens when a hegemon falls” article, which applies a general model of leadership to the economic sphere. It details a reciprocal relationship between the hegemon who enforces open markets, provides countercyclical support, and acts as the lender of the last resort, essentially backstopping the financial-economic system. This model makes sense to me intuitively as the ingredients necessary to generate stable legitimacy for the hegemon. The article also cites Rey who aptly observe worries that the US may pull back from supporting this structure and that there is no viable alternative at present. The key mechanism for backstopping the financial system is identified to be the Fed’s swap lines to other major central banks, which I understand was instituted in 2008. My observation is simply that for any financial system to flourish, it must be credibly backed by a central bank who can backstop the system. Hence, it makes perfect sense to me that in order to maintain leadership of the financial dimension of global leadership, the US cannot step away from 1) role as the lender of last resort which is enabled by 2) healthy deficit and economy.
Tim Ash’s article highlight the multi-dimensional nature of the global order and I think implies military order as the foundation of that order. He also emphasizes its intrinsic political nature as well as its emerging dimensions in technology and its military implications. On the other hand, the Economist’s “The Liberal International Order…” emphasizes the economic dimension of this order and forms a brief appraisal of its achievements. It finds that there is much to appreciate about the past economic era – that while it was in the US interest, it really did do a lot for other countries too and the world has enjoyed broad-based gains in prosperity and convergence of poorer countries. Both articles mention that the current order is fracturing, attributing to it a litany of symptoms (or outcomes), including sanctions, subsidy wars, fragmenting capital flows, international institution paralysis, concern of weaponization of the USD system, military wars, nuclear proliferation, political tension, promulgation of revisionist narratives. I noted that domestic populist movements and resurgence of ethnic-nationalist narratives did not make the list. Perhaps the former can be categorized as domestic and the latter as political-cultural. But I think both can be thought of as offshoots of the broader context. One walks away with the sense that the global order may be amorphous, its boundaries hazy and undefined but at the same time encompassing. Like a patient who finds a sniffle here, an ache there, a suspicious but frightening cough settling in, global watchers fear that these symptoms may very well point to something more devastating diagnosis underneath – like HIV when the immune system stops functioning (pardon the analogy).
The other three articles I read I categorize as reactions by market watchers – and I might add that one of them may go in the more venerable category of a quasi-Farewell Address from an elder statesman.
Gillian Tett’s article contains the stark prior assumption that the core pillars of American economic success are being challenged – though she doesn’t explicitly state them and only references them here. She poses the question of why markets (especially in the US) are so calm and seemingly out of disbelief and lack of alternatives attribute them to sentiment and investor behavior. From her perspective, if calm markets mean either fatigued or flight-and-freeze or wishful thinking by investors, then the implied conclusion must be that of a general concern for the sanity and health of the financially participating population writ large (I am extrapolating a bit here)!
Rana Foroohar’s article takes the same phenomenon and contextualizes it as the “uneasy market stasis” caught between the multiple competing economic narratives. The foremost competition we find in her article is the tension between “America First = America Wins at Everything” narrative touted by the current administration (I hope I am not sounding too partisan here) and other narratives. The two other narratives highlighted in the article are the “Global South Rising” narrative (growing interlinkages between the Global South growing more significant, lessening the dominance of North-South interlinkages) and the “Inequality Breeds Damaging Populism” narrative. Overall, I appreciated Tett and Foroohar’s apt and timely observation as market watchers but missed some of the more comprehensive substance of the former three. But alas – I think it is the style FT is meant to write. I wished that Foroohar expounded more on the different competing narratives out there for she implied that there are many more.
Finally, Larry Fink repeats a generally accepted consensus diagnosis of our current situation and proposes a generally level-headed way forward. However, his words are made weightier by his position as one long at the helm of the private financial system expressed in tones of a concerned grandfather concerning a system and model he intimately knows. He explains that while unequal returns to supercharged growth over the past three decades have resulted in pain and political backlash, a return to economic nationalism cannot deliver satisfaction. He seeks to find a middle ground in open markets with nations “steering” capital with national goals and workers in mind and emphasizes the great potential good that may be achieved by moving towards true financial inclusion and investing pooled capital. In many ways, this proposal seem like a very sound way forward but as with these things, the devil will lie very much in the details. To be honest, his vision is in many ways aligned with the European vision of “strategic autonomy” and the Chinese vision of “dual-circulating economy.” I think people are generally too caught up in the strategic competition to appreciate how similar these proposed solutions are.
