The World Doesn’t Work That Way Anymore

The fixation with Ukraine essentially is but a gloss pasted over the realities of a global order in decomposition.

The First World War signalled the end to a mercantilist order that had evolved under the aegis of European powers. One hundred years later, a very different economic order was in place (neoliberal cosmopolitanism). Believed by its architects to be universal and everlasting, globalisation transfixed the world for an extended moment, but then started the subsidence from its zenith – precisely at the moment the West was giving vent to its triumphalism at the fall of the Berlin Wall. NATO – as the order’s regulatory system – addressed its attendant ‘identity crisis’ by pushing for eastward expansion toward Russia’s western borders, disregarding the guarantees it had given, and Moscow’s virulent objections.

This radical alienation of Russia triggered its pivot to China. Europe and the U.S. however, declined to consider issues of due ‘balance’ within global structures, and simply glossed over the realities of a world order in momentous metamorphosis: with the steady decline of the U.S. already apparent; with a European faux ‘unity’ that masked its own inherent imbalances; and in the context of a hyper-financialised economic structure which lethally sucked out the juice from the real economy.

The present war in Ukraine therefore simply is an adjunct – the accelerant to this existing process of ‘liberal order’ decomposition. It is not its centre. Fundamentally geo-strategic in their origin, the explosive dynamics to today’s disintegration can be seen as blowback from the mismatch from diverse peoples’ looking now to solutions tailored to suit their non-western civilisations, and from the western insistence on its ‘one size fits all’ Order. Ukraine thus is a symptom, but is not per se, the deeper disorder itself.

Tom Luongo has remarked – in connection with the ‘messy’, confusing events of today – that that which he fears most, is so many people analysing the intersection of geopolitics, markets and ideology, and doing so with such striking complacency. “There is a stunning amount of normalcy bias in the punditocracy, too much ‘cooler heads will prevail’ and not enough ‘everyone’s got a plan until they’re punched in the mouth’”.

What Luongo’s retort doesn’t fully explain is the shrillness, the outrage, with which any doubting of the accredited ‘punditocracy’ of the moment is met. Plainly, there is a deeper fear stalking the lower depths of western psyche that is not being made fully explicit.

Wolfgang Münchau, formerly at the Financial Times, now authoring EuroIntelligence, describes how such a canonised Zeitgeist implicitly has imprisoned Europe in a cage of adverse dynamics which threaten its economy, its autonomy, its globalism and its being.

Münchau relates how both the pandemic and Ukraine had taught him that it was one thing to proclaim an interconnected globalism ‘as cliché’, but “It is quite another to observe what actually happens on the ground when those connections get torn apart … Western sanctions were based on a formally correct, but misleading premise – one that I believed myself – at least up to a point: That Russia is more dependent on us than we are on Russia … Russia however is a provider of primary and secondary commodities, on which the world has become dependent. But when the largest exporter of those commodities disappears, the rest of the world experiences physical shortages and rising prices”. He continues:

“Did we think this through? Did the foreign ministries that drew up the sanctions discuss at any point what we would do if Russia were to blockade the Black Sea and not allow Ukrainian wheat to leave the ports?… Or, did we think we can adequately address a global starvation crisis by pointing the finger at Putin”?

“The lockdown taught us a lot about our vulnerability to supply chain shocks. It has reminded Europeans that there have only two routes to ship goods en masse to Asia and back: either by container, or by rail through Russia. We had no plan for a pandemic, no plan for a war, and no plan for when both are happening at the same time. The containers are stuck in Shanghai. The railways closed because of the war …

“I am not sure the west is ready to confront the consequences of its actions: persistent inflation, reduced industrial output, lower growth, and higher unemployment. To me, economic sanctions look like the last hurrah of a dysfunctional concept known as The West. The Ukraine war is a catalyst of massive de-globalisation”.

Münchau’s response is that unless we cut a deal with Putin, with the removal of sanctions as a component, he sees “a danger of the world becoming subject to two trading blocs: the west and the rest. Supply chains will be reorganised to stay within them. Russia’s energy, wheat, metals, and rare earths will still be consumed, but not here – We [just] keep with the Big Macs”.

So again, ‘one’ searches for an answer: Why are the Euro-élites so shrill, so passionate in their support for Ukraine? And risk heart-attack from the sheer vehemence of their hatred for Putin? After all, most Europeans and Americans until this year knew next-to-nought about Ukraine.

We know the answer: the deeper fear is that all the landmarks to liberal life – for reasons they do not understand – are about to be forever swept away. And that Putin is doing it. How will ‘we’ navigate life, bereft of landmarks? What will become of us? We thought the liberal way-of-being was ineluctable. Another value-system? Impossible!

So, for Europeans, the endgame in Ukraine crucially must reaffirm European self-identity (even at the cost of its citizens’ economic well-being). Such wars historically, mostly have ended with a dirty diplomatic settlement. That ‘end’ probably would be enough for the EU leadership to spin a ‘win’.

And there was a big EU diplomatic drive to persuade Putin to do a deal, only last week.

But (paraphrasing and elaborating Münchau), it is one thing to proclaim the desirability of a negotiated ceasefire ‘as cliché’. “It is quite another to observe what actually happens on the ground when blood is being spilled to put facts on the ground …”.

Western diplomatic initiatives are premised on Russia needing a ‘way out’, more than does Europe need one. But is that true?

Paraphrasing Münchau again: “Did we think this through? Did the foreign ministries that drew up the plans to train and arm a Ukrainian insurgency in Donbas in the hope of weakening Russia – discuss at any point what effect their war and their expressed contempt for Russia might have on Russian public opinion? Or what ‘we’ would do if Russia simply opted instead to put facts on the ground until it finished its project … Or did we even address the possibility of Kiev losing, and what that would mean for a Europe loaded to the gills with sanctions that then would never end?”.

The hope for a negotiated settlement has given way to a more sombre mood in Europe. Putin was uncompromising in the talks with European leaders. The realisation is dawning in Paris and Berlin that a fudged settlement is not something that benefits Putin, nor is one that he can afford. The Russian public mood will not easily accept that its soldiers’ blood was spent in some vain exercise, ending in a ‘dirty’ compromise – only to have the West resuscitate a new Ukraine insurgency against the Donbas again, in a year or two.

The EU leaders must be sensing their predicament: They may have ‘missed the boat’ for getting a political ‘fix’. But they have not ‘missed the boat’ in respect to inflation, economic contraction, and of social crisis at home. These ships are heading in their direction, at full steam. Did the EU foreign ministries reflect on this eventuality, or were they carried along by euphoria and the credentialed narrative issuing out from the Baltics and Poland of ‘Bad Man Putin’?

Here is the point: The fixation with Ukraine essentially is but a gloss pasted over the realities of a global order in decomposition. The latter is the source of the wider disorder. Ukraine is but one small piece on the chess board, and its outcome will not fundamentally change that ‘reality’. Even a ‘win’ in Ukraine would not grant ‘immortality’ to the neoliberal rules-based order.

The noxious fumes emanating from the global financial system are wholly unconnected to Ukraine – but are that much more significant for they go to the heart of the ‘disorder’ within the western ‘liberal order’. Perhaps it is this primordial unspoken fear that accounts for the shrillness and rancour directed at any deviation from sanctioned Ukraine messaging?

And Luongo’s normalcy bias in discourse is never more in evidence (Ukraine aside), than when addressing the strange self-selectivity of Anglo-American thinking about their neoliberal economic order.

The Anglo-American system of politics and economics, James Fallows a former White House speechwriter has noted, like any system, rests on certain principles and beliefs. “But rather than acting as if these are the best principles, or the ones their societies prefer, Britons and Americans often act as if these were the only possible principles: And that no one, except in error, could choose any others. Political economics becomes an essentially religious question, subject to the standard drawback of any religion—the failure to understand why people outside the faith might act as they do”.

“To make this more specific: Today’s Anglo-American world view rests on the shoulders of three men. One is Isaac Newton, the father of modern science. One is Jean-Jacques Rousseau, the father of liberal political theory. (If we want to keep this purely Anglo-American, John Locke can serve in his place.) And one is Adam Smith, the father of laissez-faire economics.

“From these founding titans come the principles by which advanced society, in the Anglo-American view, is supposed to work … And it is supposed to recognize that the most prosperous future for the greatest number of people comes from the free workings of the market.

“In the non-Anglophone world, Adam Smith is merely one of several theorists who had important ideas about organizing economies. The Enlightenment philosophers however were not the only ones to think about how the world should be organized. During the eighteenth and nineteenth centuries the Germans were also active—to say nothing of the theorists at work in Tokugawa Japan, late imperial China, czarist Russia, and elsewhere.

“The Germans deserve emphasis—more than the Japanese, the Chinese, the Russians, and so on because many of their philosophies endure. These did not take root in England or America, but they were carefully studied, adapted, and applied in parts of Europe and Asia, notably Japan. In place of Rousseau and Locke the Germans offered Hegel. In place of Adam Smith… they had Friedrich List.”

The Anglo-American approach is founded on the hypothesis of the sheer unpredictability and unplannability of economics. Technologies change; tastes change; political and human circumstances change. And because life is so fluid, this means that any attempts at central planning are virtually doomed to fail. The best way to “plan” therefore, is to leave the adaptation to the people who have their own money at stake. If each individual does what is best for him or her, the result will be – serendipitously – what is best for the nation as a whole.

Although List did not use this term, the German school was sceptical about serendipity, and more concerned with ‘market failures’. These are the cases in which normal market forces produce a clearly undesirable result. List argued that societies did not automatically move from farming to small crafts to major industries just because millions of small merchants were making decisions for themselves. If every person put his money where the return was greatest, the money might not automatically go where it would do the nation the most good.

For it to do so required a plan, a push, an exercise of central power. List drew heavily on the history of his times—in which the British government deliberately encouraged British manufacturing and the fledgling American government deliberately discouraged foreign competitors.

The Anglo-American approach assumes that the ultimate measure of a society is its level of consumption. In the long run, List argued, a society’s well-being and its overall wealth are determined not by what the society can buy, but by what it can make (i.e. value coming from the real, self-sufficient economy). The German school argued that emphasizing consumption would eventually be self-defeating. It would bias the system away from wealth creation, and ultimately make it impossible to consume as much, or to employ so many.

List was prescient. He was right. This is the flaw now so clearly exposed in the Anglo model. One aggravated by subsequent massive financialisation that has led to a structure dominated by an ephemeral, derivative super-sphere that drained the West of its wealth-creating real economy, couriering its remains and its supply-lines ‘offshore’. Self-reliance has eroded, and the shrinking base of wealth creation supports an ever-smaller proportion of the population in adequately paid employment.

It is no longer ‘fit for purpose’ and is in crisis. That is widely understood at the upper reaches of the system. To acknowledge this however, would seem to go against the past two centuries of economics, narrated as one long progression toward Anglo-Saxon rationality and good sense. It lies at the root of the Anglo ‘story’.

Yet, financial crisis might upend that story entirely.

How so? Well, the liberal order rests on three pillars – on three interlocking, co-constituting pillars: Newton’s ‘laws’ were projected to lend the Anglo economic model its (dubious) claim to being founded in hard empirical laws – as if it were physics. Rousseau, Locke, and their followers elevated individualism as a political principle, and from Smith came the logic-core to the Anglo-American system: If each individual does what is best for him or her, the result will be what is best for the nation as a whole.

The most important thing about these pillars is their moral equivalence, as well as their interlocking connection. Knock out one pillar as invalid, and the whole edifice known as ‘European values’ comes adrift. Only through being locked together does it possess coherency.

And the unspoken fear amongst these western élites is that during this extended period of Anglo supremacy… there has always been an alternative school of thought to theirs. List was not concerned with the morality of consumption. Instead, he was interested in both strategic and material well-being. In strategic terms, nations ended up being dependent or sovereign according to their ability to make things for themselves.

And last week Putin told Scholtz and Macron that the crises (including food shortages) that they faced, stemmed from their own erroneous economic structures and policies. Putin might have quoted List’s amorphism:

The tree which bears the fruit is of greater value than the fruit itself… The prosperity of a nation is not… greater in the proportion in which it has amassed more wealth (i.e., values of exchange), but in the proportion in which it has more developed its powers of production.

Messrs Scholtz and Macron probably did not like the message one bit. They can see the pivot being yanked out from western neoliberal hegemony.

The World Doesn’t Work That Way Anymore