The future of our global order

With the future of the global order hanging in the balance, 2019 is set to become a transformative year – where history turns, but with no one yet sure of the outcome.

America and China may now find a way out of their current trade war, but the long-term battle for technological superiority has only just begun. No less dangerous are festering, long-standing disputes between America and North Korea, India and Pakistan, Iran and Saudi Arabia, and Russia and the West – the latter of which is exacerbating unrest in many of the world’s hotspots, not least Ukraine and Syria.
Easing these tensions is essential for global stability and our collective economic prospects. The 2008 financial crisis was resolved as a result of intense international co-operation. With the co-ordination back then giving way to the confrontations of 2019, will any future global downturn see anything like those levels of monetary and fiscal co-operation? Will central banks again co-operate through co-ordinated interest rate cuts and currency swaps? Would the G20 join together to fight protectionism and agree the same kind of fiscal stimulus that 10 years ago restored confidence in the global economy? Would China ever again aid a western recovery with a repeat of its massive stimulus package?
The retreat into nationalism raises further questions about why globalisation – which aimed to break down barriers and open up the world – has brought increased protectionism and why the public now sees it akin to a runaway train
I fear that, as of today, the answer to these questions is a sweeping “no”. Countries would be more likely to blame each other for what’s gone wrong than act together to put things right.
Any consideration of a future downturn shows the world is not only facing cyclical challenges, but structural challenges, too. In particular, the retreat into nationalism which, in turn, raises further questions about why globalisation – which aimed to break down barriers and open up the world – has brought increased protectionism, and why the public now sees it akin to a runaway train that is out of control. In the unipolar age, America preferred to act multilaterally. Now, in the multipolar age, America prefers to act unilaterally. And as America turns away from multilateralism, China is already beginning to reshape geopolitics on its own.
Change is upon us, so what kind of future will we build? Unless the West can find a way of managing our multipolar world in a multilateral way, China, which has already created the Asian Infrastructure Investment Bank and is contemplating an “Asian Monetary Fund”, might accelerate the development of different or parallel structures for international economic decision-making that potentially rival existing international institutions.
We know that in the last few decades, as the centre of gravity of the world economy has started its shift from west to east, the global economy has been changing out of all recognition. Before the crisis, nearly 60 per cent of manufacturing, trade and investment – and indeed total economic activity as a whole – was in the West. Now, 60 per cent is outside the West, with Asia certain to command an even bigger share – up to 40 per cent – in the decades to come. Manufacturing will never again enjoy the same share of employment as in the past or as services do today, and the talk is of “premature deindustrialisation”.
While the world’s middle class – those on the World Bank’s calculation with income above $10 per capita a day – will form a global majority, the shift of income and wealth to the top 1 per cent and from labour to capital makes both inequality and economic insecurity far bigger sources of concern. Furthermore, once homogeneous countries are becoming heterogeneous, raising concerns about cultural identity. And of course, like many other challenges ahead, environmental pollution – which is no respecter of borders – cannot be addressed without cross-border co-operation. Neither can financial instability and the contagion it causes, or the increased use of tax havens, be adequately met and mastered by nation states, even the most powerful ones, acting on their own.
Indeed, all the new 21st-century challenges, from cybersecurity and the “splinternet” to pandemics, are global problems that need global solutions. And I am convinced that if we embrace this truth, then the next step is to reform our 75-year-old international institutions – to make them fit for purpose and better able to respond to the crises ahead. How we manage these changes is the subject I will address in my contribution to Ideas Abu Dhabi.

The writer is UN special envoy for
global education and former
prime minister of the UK

 

The future of our global order

With the future of the global order hanging in the balance, 2019 is set to become a transformative year where history turns, but with no one yet sure of the outcome. America and China may now find a way out of their current trade war, but the long-term battle for technological superiority has only just begun. No less dangerous are festering, long-standing disputes between America and North Korea, India and Pakistan, Iran and Saudi Arabia, and Russia and the West the latter of which is exacerbating unrest in many of the worlds hotspots, not least Ukraine and Syria. Easing these tensions is essential for global stability and our collective economic prospects. The 2008 financial crisis was resolved as a result of intense international co-operation. With the co-ordination back then giving way to the confrontations of 2019, will any future global downturn see anything like those levels of monetary and fiscal co-operation? Will central banks again co-operate through co-ordinated interest rate cuts and currency swaps? Would the G20 join together to fight protectionism and agree the same kind of fiscal stimulus that 10 years ago restored confidence in the global economy? Would China ever again aid a western recovery with a repeat of its massive stimulus package? The retreat into nationalism raises further questions about why globalisation which aimed to break down barriers and open up the world has brought increased protectionism and why the public now sees it akin to a runaway train I fear that, as of today, the answer to these questions is a sweeping no. Countries would be more likely to blame each other for whats gone wrong than act together to put things right. Any consideration of a future downturn shows the world is not only facing cyclical challenges, but structural challenges, too. In particular, the retreat into nationalism which, in turn, raises further questions about why globalisation which aimed to break down barriers and open up the world has brought increased protectionism, and why the public now sees it akin to a runaway train that is out of control. In the unipolar age, America preferred to act multilaterally. Now, in the multipolar age, America prefers to act unilaterally. And as America turns away from multilateralism, China is already beginning to reshape geopolitics on its own. Change is upon us, so what kind of future will we build? Unless the West can find a way of managing our multipolar world in a multilateral way, China, which has already created the Asian Infrastructure Investment Bank and is contemplating an Asian Monetary Fund, might accelerate the development of different or parallel structures for international economic decision-making that potentially rival existing international institutions. We know that in the last few decades, as the centre of gravity of the world economy has started its shift from west to east, the global economy has been changing out of all recognition. Before the crisis, nearly 60 per cent of manufacturing, trade and investment and indeed total economic activity as a whole was in the West. Now, 60 per cent is outside the West, with Asia certain to command an even bigger share up to 40 per cent in the decades to come. Manufacturing will never again enjoy the same share of employment as in the past or as services do today, and the talk is of premature deindustrialisation. While the worlds middle class those on the World Banks calculation with income above $10 per capita a day will form a global majority, the shift of income and wealth to the top 1 per cent and from labour to capital makes both inequality and economic insecurity far bigger sources of concern. Furthermore, once homogeneous countries are becoming heterogeneous, raising concerns about cultural identity. And of course, like many other challenges ahead, environmental pollution which is no respecter of borders cannot be addressed without cross-border co-operation. Neither can financial instability and the contagion it causes, or the increased use of tax havens, be adequately met and mastered by nation states, even the most powerful ones, acting on their own. Indeed, all the new 21st-century challenges, from cybersecurity and the splinternet to pandemics, are global problems that need global solutions. And I am convinced that if we embrace this truth, then the next step is to reform our 75-year-old international institutions to make them fit for purpose and better able to respond to the crises ahead. How we manage these changes is the subject I will address in my contribution to Ideas Abu Dhabi. The writer is UN special envoy for global education and former prime minister of the UK