Debate in International Political Economy

Pro/Con 1: Debate in International Political Economy

MGMT 6353

Geopolitical Change Threatens the New World Order

Vs

The Liberal Order Remains Robust

Pro

The effects of the financial crisis of 2008 have created widespread change in the structure of the global economy. This volatility has challenged the strength of the liberal order and its future has come to be a point of contention for analyst. The report in chapter one, “Geopolitical Change Threatens the New World Order” details two viewpoints that subscribe to different beliefs about the future of global markets as it relates to this subject. Each viewpoint is supported by various claims as I will detail in the following paragraphs.

The first position was of Mathew Burrows and Jennifer Harris in their research writing: Geopolitical Change Threatens the Liberal Order.  They argue that change in the distribution of power will cause the hegemonious order that is prevalent in today’s markets to look much different by the Year 2025. Rapid growth in China, India, Brazil and Russia is bringing about multipolarity in the global economy as these states are not closely connected to the United States and conjunctively the unilateral trade and the liberal order that has dominated the global trade since World War II. The authors believe that more autocratic states will ultimately overthrow the system currently in place as they gain more power following the economic crisis of 2008. The United States traditional partner would struggle to maintain their powerful positions within the global economy due to their aging populations. The United States less dominant position would not however be coupled with the absence of a relevant position, as it would still be looked upon to shoulder much of the burden as it does currently.

The authors believe that the financial crisis will be a game changer on the geopolitical scene. Prior to the financial crisis, global liquidity allowed for an era of free money. Once the crisis came about the resulting adverse affects caused a contraction in global trade, in turn making it difficult for the US consumer to fuel growth in Chinas economy. This occurrence is said to require China to look to penetrate its domestic markets for its growth.  This does not support the traditional growth model that has been in place by the Chinese as export driven growth has been its primary focus. Unfortunately export driven growth models have proven unsuccessful and the expectation of the author is that the same will continue.

States have become a more relevant factor in economic affairs in authoritative and democratic societies alike. Governments have funded bailouts and taken measures to stimulate their respective economies. If this turns out to be a permanent dynamic then heightened political stakes will be the result. This may result in increased protectionism and hamper the liberal order led by the US today.

The report projects that the United States will remain a powerful member in the global economy but in the year 2025 the gap will have narrowed, mainly due to the rise of China and India, military strategies will also give way to more balance as the technological edges are blunted in the realms of Cyber and space.