Globalised Economic World And Regionalised Political Orders Must Harmonise

Yesterday, Britain's prime minister, Gordon Brown, called for a "new global order" to deal with the economic crisis and warned against the protectionist policies that were put in place in the 1930s.

Tackling issues on the global economy, the prime minister said that a "radical step-up in global cooperation" was necessary to prevent the emergence of "financial mercantilism".

On the same day, Timothy F Geithner asserted that "China manipulates its currency". This was indeed unhelpful, to say the least, as Sino-American detente and cooperation is the essence of Brown's statements on creating a new global order.

Just prior to Barack Obama's inauguration, Henry Kissinger wrote the most erudite piece, "The world must forge a new order or retreat to chaos".

In it he analysed the "grave financial and international crises", saying that the financial collapse represents a "major blow to the standing of the United States in the eyes of the world", and that "every country will have to reassess its own contribution to the prevailing crisis. Each will seek to make itself independent, to the greatest possible degree, of the conditions that produced the collapse".

Because of the economic exuberance, he said, a "gap had opened up between the economic and the political organisation of the world." What he meant by this, and this is by far the most pertinent idea in the article, is that while the economic world has been globalised, the political order has not and that "every major country has attempted to solve its immediate problems essentially on its own and to defer common action to a later, less crisis-driven point."

Both America and the UK are in a woeful economic state, with one The Daily Mail editorial pointing out that if the second tranche of the bank bailouts fails to stimulate the economy, the country itself will be bankrupt. One could argue it has been since the Second World War but if Gordon Brown's so-called saving the world policies fail at home, which the financial press largely think it might, it would send an almost doomsday-like message to the world and its markets.

Rescue packages have been set up on a piecemeal, national basis and, for most countries, with unlimited credit guarantees by governments. So far, none of these tactics seem to have reined in the maelstrom from rescuing more industries from bankruptcy.

In part, it was run-away domestic credit that produced the crash in the first place and these measures have not been able to stem the panic since. According to Kissinger, "international order will not come about either in the political or economic field until there emerge general rules toward which countries can orient themselves," and also that "in the end, the political and economic systems can be harmonised in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units. A new Bretton Woods kind of global agreement is by far the preferable outcome."

This underlying threat is perhaps what sparked the euphoria surrounding President Obama's inauguration and the unrealistic and unprecedented expectations put on his new administration. And while that was going on the actors on the world's political stage were "avowing their desire to undertake the transformations imposed on them by the world crisis in collaboration with the United States".

And in all this we cannot forget China, which has witnessed its export markets being mauled, with worries that should its growth rate fall below the 7.5% range, political stability in the country could become a real problem. It thus begs the question of how China and America deal with the crisis.

On the one hand Kissinger is asking that the globalised economic order and the silo-based political order to come tangentially into line. But how can the two systems, wholly different in both architecture and culture, be fused into a union that is able to deal with this depression? And what if protectionism grows in either country and becomes adversarial in nature? That would have long-lasting and devastating long-term consequences on every country the world over.

Kissinger argues that "the Sino-American relationship needs to be taken to a new level", to reshape relations "into a design for a common destiny, much as was done with trans-Atlantic relations in the postwar period".

But can his vision of an international order be permanent? Can it work? Obama's inaugural address sought to build bridges in a vision of hope, but with all the conflicts that are currently dogging the world, will the depression be the healer of these divisions or will it explode into a disastrous new world disorder and war?

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