The New World Order is in crisis

The clash between the international economy and the political institutions that ostensibly govern it also weakens the sense of common purpose necessary for world order. The economic system has become global, while the political structure of the world remains based on the nation-state. Economic globalization, in its essence, ignores national frontiers. Foreign policy affirms them, even as it seeks to reconcile conflicting national aims or ideals of world order.

This dynamic has produced decades of sustained economic growth punctuated by periodic financial crises of seemingly escalating intensity: in Latin America in the 1980s; in Asia in 1997; in Russia in 1998; in the U.S. in 2001 and again starting in 2007; in Europe after 2010. The winners have few reservations about the system. But the losers—such as those stuck in structural misdesigns, as has been the case with the European Union’s southern tier—seek their remedies by solutions that negate, or at least obstruct, the functioning of the global economic system.

The international order thus faces a paradox: Its prosperity is dependent on the success of globalization, but the process produces a political reaction that often works counter to its aspirations.