The Pandemic Depression
The Global Economy Will Never Be the Same
A stable world order is a rare thing. When one does arise, it tends to come after a great convulsion that creates both the conditions and the desire for something new. It requires a stable distribution of power and broad acceptance of the rules that govern the conduct of international relations. It also needs skillful statecraft, since an order is made, not born. And no matter how ripe the starting conditions or strong the initial desire, maintaining it demands creative diplomacy, functioning institutions, and effective action to adjust it when circumstances change and buttress it when challenges come.
Eventually, inevitably, even the best-managed order comes to an end. The balance of power underpinning it becomes imbalanced. The institutions supporting it fail to adapt to new conditions. Some countries fall, and others rise, the result of changing capacities, faltering wills, and growing ambitions. Those responsible for upholding the order make mistakes both in what they choose to do and in what they choose not to do.
But if the end of every order is inevitable, the timing and the manner of its ending are not. Nor is what comes in its wake. Orders tend to expire in a prolonged deterioration rather than a sudden collapse. And just as maintaining the order depends on effective statecraft and effective action, good policy and proactive diplomacy can help determine how that deterioration unfolds and what it brings. Yet for that to happen, something else must come first: recognition that the old order is never coming back and that efforts to resurrect it will be in vain. As with any ending, acceptance must come before one can move on.
In the search for parallels to today’s world, scholars and practitioners have looked as far afield as ancient Greece, where the rise of a new power resulted in war between Athens and Sparta, and the period after World War I, when an isolationist United States and much of Europe sat on their hands as Germany and Japan ignored agreements and invaded their neighbors. But the more illuminating parallel to the present is the Concert of Europe in the nineteenth century, the most important and successful effort to build and sustain world order until our own time. From 1815 until the outbreak of World War I a century later, the order established at the Congress of Vienna defined many international relationships and set (even if it often failed to enforce) basic rules for international conduct. It provides a model of how to collectively manage security in a multipolar world.
That order’s demise and what followed offer instructive lessons for today—and an urgent warning. Just because an order is in irreversible decline does not mean that chaos or calamity is inevitable. But if the deterioration is managed poorly, catastrophe could well follow.
The global order of the second half of the twentieth century and the first part of the twenty-first grew out of the wreckage of two world wars. The nineteenth-century order followed an earlier international convulsion: the Napoleonic Wars, which, after the French Revolution and the rise of Napoleon Bonaparte, ravaged Europe for more than a decade. After defeating Napoleon and his armies, the victorious allies—Austria, Prussia, Russia, and the United Kingdom, the great powers of their day—came together in Vienna in 1814 and 1815. At the Congress of Vienna, they set out to ensure that France’s military never again threatened their states and that revolutionary movements never again threatened their monarchies. The victorious powers also made the wise choice to integrate a defeated France, a course very different from the one taken with Germany following World War I and somewhat different from the one chosen with Russia in the wake of the Cold War.
The congress yielded a system known as the Concert of Europe. Although centered in Europe, it constituted the international order of its day given the dominant position of Europe and Europeans in the world. There was a set of shared understandings about relations between states, above all an agreement to rule out invasion of another country or involvement in the internal affairs of another without its permission. A rough military balance dissuaded any state tempted to overthrow the order from trying in the first place (and prevented any state that did try from succeeding). Foreign ministers met (at what came to be called “congresses”) whenever a major issue arose. The concert was conservative in every sense of the word. The Treaty of Vienna had made numerous territorial adjustments and then locked Europe’s borders into place, allowing changes only if all signatories agreed. It also did what it could to back monarchies and encourage others to come to their aid (as France did in Spain in 1823) when they were threatened by popular revolt.
The concert worked not because there was complete agreement among the great powers on every point but because each state had its own reasons for supporting the overall system. Austria was most concerned with resisting the forces of liberalism, which threatened the ruling monarchy. The United Kingdom was focused on staving off a renewed challenge from France while also guarding against a potential threat from Russia (which meant not weakening France so much that it couldn’t help offset the threat from Russia). But there was enough overlap in interests and consensus on first-order questions that the concert prevented war between the major powers of the day.
The concert technically lasted a century, until the eve of World War I. But it had ceased to play a meaningful role long before then. The revolutionary waves that swept Europe in 1830 and 1848 revealed the limits of what members would do to maintain the existing order within states in the face of public pressure. Then, more consequentially, came the Crimean War. Ostensibly fought over the fate of Christians living within the Ottoman Empire, in actuality it was much more about who would control territory as that empire decayed. The conflict pitted France, the United Kingdom, and the Ottoman Empire against Russia. It lasted two and a half years, from 1853 to 1856. It was a costly war that highlighted the limits of the concert’s ability to prevent great-power war; the great-power comity that had made the concert possible no longer existed. Subsequent wars between Austria and Prussia and Prussia and France demonstrated that major-power conflict had returned to the heart of Europe after a long hiatus. Matters seemed to stabilize for a time after that, but this was an illusion. Beneath the surface, German power was rising and empires were rotting. The combination set the stage for World War I and the end of what had been the concert.
What lessons can be drawn from this history? As much as anything else, the rise and fall of major powers determines the viability of the prevailing order, since changes in economic strength, political cohesion, and military power shape what states can and are willing to do beyond their borders. Over the second half of the nineteenth century and the start of the twentieth, a powerful, unified Germany and a modern Japan rose, the Ottoman Empire and tsarist Russia declined, and France and the United Kingdom grew stronger but not strong enough. Those changes upended the balance of power that had been the concert’s foundation; Germany, in particular, came to view the status quo as inconsistent with its interests.
Changes in the technological and political context also affected that underlying balance. Under the concert, popular demands for democratic participation and surges of nationalism threatened the status quo within countries, while new forms of transportation, communication, and armaments transformed politics, economics, and warfare. The conditions that helped give rise to the concert were gradually undone.
Because orders tend to end with a whimper rather than a bang, the process of deterioration is often not evident to decision-makers until it has advanced considerably.
Yet it would be overly deterministic to attribute history to underlying conditions alone. Statecraft still matters. That the concert came into existence and lasted as long as it did underscores that people make a difference. The diplomats who crafted it—Metternich of Austria, Talleyrand of France, Castlereagh of the United Kingdom—were exceptional. The fact that the concert preserved peace despite the gap between two relatively liberal countries, France and the United Kingdom, and their more conservative partners shows that countries with different political systems and preferences can work together to maintain international order. Little that turns out to be good or bad in history is inevitable. The Crimean War might well have been avoided if more capable and careful leaders had been on the scene. It is far from clear that Russian actions warranted a military response by France and the United Kingdom of the nature and on the scale that took place. That the countries did what they did also underscores the power and dangers of nationalism. World War I broke out in no small part because the successors to German Chancellor Otto von Bismarck were unable to discipline the power of the modern German state he did so much to bring about.
Two other lessons stand out. First, it is not just core issues that can cause an order to deteriorate. The concert’s great-power comity ended not because of disagreements over the social and political order within Europe but because of competition on the periphery. And second, because orders tend to end with a whimper rather than a bang, the process of deterioration is often not evident to decision-makers until it has advanced considerably. By the outbreak of World War I, when it became obvious that the Concert of Europe no longer held, it was far too late to save it—or even to manage its dissolution.
The global order built in the aftermath of World War II consisted of two parallel orders for most of its history. One grew out of the Cold War between the United States and the Soviet Union. At its core was a rough balance of military strength in Europe and Asia, backed up by nuclear deterrence. The two sides showed a degree of restraint in their rivalry. “Rollback”—Cold War parlance for what today is called “regime change”—was rejected as both infeasible and reckless. Both sides followed informal rules of the road that included a healthy respect for each other’s backyards and allies. Ultimately, they reached an understanding over the political order within Europe, the principal arena of Cold War competition, and in 1975 codified that mutual understanding in the Helsinki Accords. Even in a divided world, the two power centers agreed on how the competition would be waged; theirs was an order based on means rather than ends. That there were only two power centers made reaching such an agreement easier.
The other post–World War II order was the liberal order that operated alongside the Cold War order. Democracies were the main participants in this effort, which used aid and trade to strengthen ties and fostered respect for the rule of law both within and between countries. The economic dimension of this order was designed to bring about a world (or, more accurately, the non-communist half of it) defined by trade, development, and well-functioning monetary operations. Free trade would be an engine of economic growth and bind countries together so that war would be deemed too costly to wage; the dollar was accepted as the de facto global currency.
The diplomatic dimension of the order gave prominence to the UN. The idea was that a standing global forum could prevent or resolve international disputes. The UN Security Council, with five great-power permanent members and additional seats for a rotating membership, would orchestrate international relations. Yet the order depended just as much on the willingness of the noncommunist world (and U.S. allies in particular) to accept American primacy. As it turns out, they were prepared to do this, as the United States was more often than not viewed as a relatively benign hegemon, one admired as much for what it was at home as for what it did abroad.
Both of these orders served the interests of the United States. The core peace was maintained in both Europe and Asia at a price that a growing U.S. economy could easily afford. Increased international trade and opportunities for investment contributed to U.S. economic growth. Over time, more countries joined the ranks of the democracies. Neither order reflected a perfect consensus; rather, each offered enough agreement so that it was not directly challenged. Where U.S. foreign policy got into trouble—such as in Vietnam and Iraq—it was not because of alliance commitments or considerations of order but because of ill-advised decisions to prosecute costly wars of choice.
Today, both orders have deteriorated. Although the Cold War itself ended long ago, the order it created came apart in a more piecemeal fashion—in part because Western efforts to integrate Russia into the liberal world order achieved little. One sign of the Cold War order’s deterioration was Saddam Hussein’s 1990 invasion of Kuwait, something Moscow likely would have prevented in previous years on the grounds that it was too risky. Although nuclear deterrence still holds, some of the arms control agreements buttressing it have been broken, and others are fraying.
Although Russia has avoided any direct military challenge to NATO, it has nonetheless shown a growing willingness to disrupt the status quo: through its use of force in Georgia in 2008 and Ukraine since 2014, its often indiscriminate military intervention in Syria, and its aggressive use of cyberwarfare to attempt to affect political outcomes in the United States and Europe. All of these represent a rejection of the principal constraints associated with the old order. From a Russian perspective, the same might be said of NATO enlargement, an initiative clearly at odds with Winston Churchill’s dictum “In victory, magnanimity.” Russia also judged the 2003 Iraq war and the 2011 NATO military intervention in Libya, which was undertaken in the name of humanitarianism but quickly evolved into regime change, as acts of bad faith and illegality inconsistent with notions of world order as it understood them.
The liberal order is exhibiting its own signs of deterioration. Authoritarianism is on the rise not just in the obvious places, such as China and Russia, but also in the Philippines, Turkey, and eastern Europe. Global trade has grown, but recent rounds of trade talks have ended without agreement, and the World Trade Organization (WTO) has proved unable to deal with today’s most pressing challenges, including nontariff barriers and the theft of intellectual property. Resentment over the United States’ exploitation of the dollar to impose sanctions is growing, as is concern over the country’s accumulation of debt.
The UN Security Council is of little relevance to most of the world’s conflicts, and international arrangements have failed more broadly to contend with the challenges associated with globalization. The composition of the Security Council bears less and less resemblance to the real distribution of power. The world has put itself on the record as against genocide and has asserted a right to intervene when governments fail to live up to the “responsibility to protect” their citizens, but the talk has not translated into action. The Nuclear Nonproliferation Treaty allows only five states to have nuclear weapons, but there are now nine that do (and many others that could follow suit if they chose to). The EU, by far the most significant regional arrangement, is struggling with Brexit and disputes over migration and sovereignty. And around the world, countries are increasingly resisting U.S. primacy.
Why is all this happening? It is instructive to look back to the gradual demise of the Concert of Europe. Today’s world order has struggled to cope with power shifts: China’s rise, the appearance of several medium powers (Iran and North Korea, in particular) that reject important aspects of the order, and the emergence of nonstate actors (from drug cartels to terrorist networks) that can pose a serious threat to order within and between states.
The technological and political context has changed in important ways, too. Globalization has had destabilizing effects, ranging from climate change to the spread of technology into far more hands than ever before, including a range of groups and people intent on disrupting the order. Nationalism and populism have surged—the result of greater inequality within countries, the dislocation associated with the 2008 financial crisis, job losses caused by trade and technology, increased flows of migrants and refugees, and the power of social media to spread hate.
Meanwhile, effective statecraft is conspicuously lacking. Institutions have failed to adapt. No one today would design a UN Security Council that looked like the current one; yet real reform is impossible, since those who would lose influence block any changes. Efforts to build effective frameworks to deal with the challenges of globalization, including climate change and cyberattacks, have come up short. Mistakes within the EU—namely, the decisions to establish a common currency without creating a common fiscal policy or a banking union and to permit nearly unlimited immigration to Germany—have created a powerful backlash against existing governments, open borders, and the EU itself.
The United States, for its part, has committed costly overreach in trying to remake Afghanistan, invading Iraq, and pursuing regime change in Libya. But it has also taken a step back from maintaining global order and in certain cases has been guilty of costly underreach. In most instances, U.S. reluctance to act has come not over core issues but over peripheral ones that leaders wrote off as not worth the costs involved, such as the strife in Syria, where the United States failed to respond meaningfully when Syria first used chemical weapons or to do more to help anti-regime groups. This reluctance has increased others’ propensity to disregard U.S. concerns and act independently. The Saudi-led military intervention in Yemen is a case in point. Russian actions in Syria and Ukraine should also be seen in this light; it is interesting that Crimea marked the effective end of the Concert of Europe and signaled a dramatic setback in the current order. Doubts about U.S. reliability have multiplied under the Trump administration, thanks to its withdrawal from numerous international pacts and its conditional approach to once inviolable U.S. alliance commitments in Europe and Asia.
Given these changes, resurrecting the old order will be impossible. It would also be insufficient, thanks to the emergence of new challenges. Once this is acknowledged, the long deterioration of the Concert of Europe should serve as a lesson and a warning.
For the United States to heed that warning would mean strengthening certain aspects of the old order and supplementing them with measures that account for changing power dynamics and new global problems. The United States would have to shore up arms control and nonproliferation agreements; strengthen its alliances in Europe and Asia; bolster weak states that cannot contend with terrorists, cartels, and gangs; and counter authoritarian powers’ interference in the democratic process. Yet it should not give up trying to integrate China and Russia into regional and global aspects of the order. Such efforts will necessarily involve a mix of compromise, incentives, and pushback. The judgment that attempts to integrate China and Russia have mostly failed should not be grounds for rejecting future efforts, as the course of the twenty-first century will in no small part reflect how those efforts fare.
The United States also needs to reach out to others to address problems of globalization, especially climate change, trade, and cyber-operations. These will require not resurrecting the old order but building a new one. Efforts to limit, and adapt to, climate change need to be more ambitious. The WTO must be amended to address the sorts of issues raised by China’s appropriation of technology, provision of subsidies to domestic firms, and use of nontariff barriers to trade. Rules of the road are needed to regulate cyberspace. Together, this is tantamount to a call for a modern-day concert. Such a call is ambitious but necessary.
The United States must show restraint and recapture a degree of respect in order to regain its reputation as a benign actor. This will require some sharp departures from the way U.S. foreign policy has been practiced in recent years: to start, no longer carelessly invading other countries and no longer weaponizing U.S. economic policy through the overuse of sanctions and tariffs. But more than anything else, the current reflexive opposition to multilateralism needs to be rethought. It is one thing for a world order to unravel slowly; it is quite another for the country that had a large hand in building it to take the lead in dismantling it.
All of this also requires that the United States get its own house in order—reducing government debt, rebuilding infrastructure, improving public education, investing more in the social safety net, adopting a smart immigration system that allows talented foreigners to come and stay, tackling political dysfunction by making it less difficult to vote, and undoing gerrymandering. The United States cannot effectively promote order abroad if it is divided at home, distracted by domestic problems, and lacking in resources.
The major alternatives to a modernized world order supported by the United States appear unlikely, unappealing, or both. A Chinese-led order, for example, would be an illiberal one, characterized by authoritarian domestic political systems and statist economies that place a premium on maintaining domestic stability. There would be a return to spheres of influence, with China attempting to dominate its region, likely resulting in clashes with other regional powers, such as India, Japan, and Vietnam, which would probably build up their conventional or even nuclear forces.
A new democratic, rules-based order fashioned and led by medium powers in Europe and Asia, as well as Canada, however attractive a concept, would simply lack the military capacity and domestic political will to get very far. A more likely alternative is a world with little order—a world of deeper disarray. Protectionism, nationalism, and populism would gain, and democracy would lose. Conflict within and across borders would become more common, and rivalry between great powers would increase. Cooperation on global challenges would be all but precluded. If this picture sounds familiar, that is because it increasingly corresponds to the world of today.
The deterioration of a world order can set in motion trends that spell catastrophe. World War I broke out some 60 years after the Concert of Europe had for all intents and purposes broken down in Crimea. What we are seeing today resembles the mid-nineteenth century in important ways: the post–World War II, post–Cold War order cannot be restored, but the world is not yet on the edge of a systemic crisis. Now is the time to make sure one never materializes, be it from a breakdown in U.S.-Chinese relations, a clash with Russia, a conflagration in the Middle East, or the cumulative effects of climate change. The good news is that it is far from inevitable that the world will eventually arrive at a catastrophe; the bad news is that it is far from certain that it will not.