At first glance, the global economy appears reassuringly resilient. The United States has grown despite the escalation of its trade war with China. Germany has endured the loss of Russian gas supplies without suffering economic disaster. The war in the Middle East has not led to any oil crisis. The Houthi rebels and their missiles have barely affected the global flow of goods. As a percentage of global GDP, trade has recovered from the pandemic and is expected to grow vigorously this year.

However, if we look deeper, what we see is fragility. The order that has governed the world economy since World War II has been eroding for years. Today it is close to collapse. A worrying number of triggers could lead to a descent into chaos, a chaos where might is right and war is once again the resort of the great powers. Even if conflict never comes, the effect of a breakdown of norms on the economy could be swift and brutal.

The disintegration of the old order is visible everywhere. Sanctions are used four times more than in the 1990s; The United States has recently imposed “secondary” sanctions on entities that support the Russian military. A subsidy war is underway as countries try to copy China and the United States’ massive public support for green manufacturing. Although the dollar remains dominant and emerging economies are more resilient, global capital flows are beginning to fragment.

The institutions that safeguarded the old system have disappeared or are rapidly losing credibility. The World Trade Organization turns 30 next year, but it will have been stagnant for more than five years due to American negligence. The IMF is mired in an identity crisis, caught between the implementation of a green policy and the need to guarantee financial stability. The United Nations Security Council is paralyzed. And, increasingly, supranational courts such as the International Court of Justice are used as weapons by warring parties. Last month, some American politicians (including Senate Republican leader Mitch McConnell) threatened the International Criminal Court with sanctions if it issued arrest warrants against the leaders of Israel, which is also accused of genocide by South Africa before the International Court of Justice.

Until now, fragmentation and decline have taxed the global economy in a stealthy way: noticeable, but only if you know where to look. Unfortunately, history shows that the occurrence of deeper and more chaotic landslides is not impossible, and they are susceptible to hitting suddenly once the decline has begun. The First World War ended a golden age of globalization that many at the time assumed would last forever. In the early 1930s, following the onset of the Depression and the Smoot-Hawley tariffs, U.S. imports plummeted 40% in just two years. In August 1971, Richard Nixon unexpectedly suspended the convertibility of dollars into gold; Just 19 months later, the Bretton Woods system of fixed exchange rates collapsed.

Today, a similar bankruptcy seems very imaginable. The return of Donald Trump to the White House, with his zero-sum vision of the world, would deepen the erosion of institutions and norms. Fear of a second wave of cheap Chinese imports could accelerate it. An open war between the United States and China over Taiwan, or between the West and Russia, could lead to absolute collapse.

In many of those scenarios, the loss will be deeper than many think. It is current to criticize unbridled globalization as the cause of inequality, the global financial crisis and the lack of interest in the climate. However, the achievements of the 1990s and 2000s (the height of liberal capitalism) are unmatched in history. Hundreds of millions of people escaped poverty in China as the country integrated into the global economy. The infant mortality rate worldwide is less than half what it was in 1990. The percentage of the world population killed by state conflicts reached 0.0002% in 2005, a minimum level after the world war; in 1972 it was almost 40 times greater. The latest research shows that the era of the “Washington consensus,” which current leaders aspire to replace, was a time in which poor countries began to enjoy growth that allowed them to close the gap with the rich world.

The decline of the system threatens to slow that progress or even reverse it. Once broken, it is unlikely to be replaced by new rules. Instead, world affairs will descend into their natural state of chaos, where banditry and violence are favored. Without trust and an institutional framework for cooperation, countries will find it harder to meet the challenges of the 21st century, from containing an arms race in artificial intelligence to collaborating in space. The problems will be addressed by groups of like-minded countries. The dynamic can work, but it will more often involve coercion and resentment, as with European carbon tariffs or China’s fight with the IMF. When cooperation gives way to intimidation, countries have less reason to keep the peace.

In the eyes of the Chinese Communist Party, Vladimir Putin or other cynics, a system in which might is right would not represent anything new. From their perspective, the liberal order is seen not as the application of noble ideals, but as an exercise of raw American power, a power that is now in relative decline.

It is true that the system established after the Second World War achieved a fit between the internationalist principles of the United States and its strategic interests. However, the liberal order also brought great benefits to the rest of the world. Many of the world’s poor are already suffering from the IMF’s inability to resolve the sovereign debt crisis that followed the Covid-19 pandemic. Middle-income countries such as India and Indonesia, hoping to make their way to wealth, are now seizing the opportunities created by the fragmentation of the old order, but will ultimately depend on the global economy remaining integrated and predictable. And the prosperity of much of the developed world, especially small, open economies like Britain and South Korea, depends entirely on trade. Bolstered by strong growth in the United States, the global economy may seem like it can survive anything thrown at it. Can not.

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Translation: Juan Gabriel López Guix