Let's preserve the global trade system
Let's preserve the global trade system
All other alternatives are far worse.
The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.
Other books in my “From Poverty to Progress” book series:
Whether coming from the socialist Left or the nationalist Right, the global trade system is blamed for a significant portion of the world’s problems. Some blame the global trade system for oppressing developing countries, while others blame it for unemployment and stagnant wages in wealthy nations.
Let’s not forget, however, all the contributions to global material progress made under our current global trade system. Just as important, the preservation of that system is the best hope for developing nations who desperately want the same standard of living that Westerners take for granted.
While many who claim to speak for developing nations are hostile to this global trade system, it is this system that enabled all the current progress in developing nations over the last three decades. This global trade system lowered the barriers for developing nations to acquire the Five Keys to Progress.
The global trade system enabled any nation in the world to leverage the energy, transportation, and agricultural technologies invented by Industrial societies in the West. Now, even poor countries enjoy the benefits of automobiles, container ships and ports, the internet, skyscrapers, mobile devices, trains, airports, jet airplanes, trucks, highways, synthetic fertilizers, and dozens of other industrial technologies.
This global trade system transformed a world dominated by geopolitical competition between the Great Powers into a world dominated by economic efficiency and global supply chains. Before 1945, the primary focus of rulers was defending themselves against military threats from predatory empires. This meant focusing limited food and energy resources on building military power.
Before 1945, only the United States had the necessary geographic isolation, large population size, and energy and food resources to make economic efficiency the prime goal for its society. In some ways, the current global trade system is an export of the unique conditions that the United States enjoyed throughout its history. This system could not have been possible without Allied victories in World War I and World War II, as European and Asian powers had no interest in participating.
Our current global trade system was established by the United States immediately after World War II. During the Cold War, it was largely restricted to Western nations and Japan. With the collapse of the Soviet Union in 1991, the global trade system expanded to encompass the entire world.
During the Cold War, this global trade system was seriously constrained by the military and ideological power of the Soviet Union. After the Soviet collapse, the security threat from predatory empires was drastically reduced.
Now leaders all over the world can focus on economic efficiency. Food (the first Key to Progress) and energy resources (the fifth Key to Progress) can be focused on building trade-based cities (the second Key to Progress) and world-class export industries (the fourth Key to Progress). Supply chains have expanded to include virtually every country in the world.
The cornerstone of this global trade system has been the unchallenged dominance of the United States Navy on the high seas. The last major naval battle was at Leyte Gulf in 1944 when the U.S. Navy destroyed the last remnants of the Imperial Japanese Navy. That battle inaugurated the current era of Pax Americana on the high seas.
Almost no other power in world history has achieved such a long period of naval dominance over the world’s oceans. Many navies have tried, but except for the British Royal Navy in the 19th Century, they all failed.
Just as importantly, the U.S. Navy chose to use that power to promote peaceful trade on the high seas rather than destroying rival trade. So much has been written about the downside of this global trade system that we have forgotten how bad the alternatives were. Geostrategic competition between the Great Powers with smaller polities as their pawns has dominated much of human history.
This global trade system is based on a few key foundations:
A system of sovereign nation-states facing a much lower military threat from predatory empires. Before 1945, developing nations were dominated by European empires. Then the Soviet Union took their place. Only since 1991 have we had a system of sovereign nation-states and relative global peace.
Military alliances of the democratic powers to keep potential predatory empires, such as Russia and China, in check. With a lower level of military threat, nations could decentralize their political and economic system (the third Key to Progress).
Secure access to commercial shipping on the high seas given by the protection of the United States Navy, which gives:
Access to American consumer markets, the largest economic market on the globe. This relatively free trade enables nations to specialize in certain sectors of the economy. While tariffs have not been eliminated, they are far lower than in previous eras.
Access to agricultural inputs, such as nitrogen, phosphate, and potassium fertilizers, from anywhere in the world. This makes productive agriculture (the first Key to Progress) far easier to achieve.
Access to food imports from anywhere in the world. This lowers the threshold for how productive domestic food production systems need to be.
Access to energy imports from anywhere in the world. This enables nations without domestic fossil fuel resources to adopt widespread use of this critical energy source (the fifth Key to Progress).
Access to other raw material imports from anywhere in the world, and the ability to export value-added manufacturing products to anywhere in the world (the fourth Key to Progress).
The English language as the de facto language of global finance, trade, and economics.
The American dollar as a de facto world currency. About 70 percent of global currencies are in some way tied to the dollar.
The Russian invasion of Ukraine in 2022 and the potential Chinese invasion of Taiwan show that the world of geopolitics has not magically gone away. There are still plenty of authoritarian regimes willing to fill the void if the global trade system collapses.
In this global trade system, the United States plays an indispensable role. No other nation can match its economic and military power. That power is enhanced by NATO and military alliances with Asian nations that fear China. While retreating within its borders might benefit the United States in the short term, it would cause many of the global foundations of progress to collapse.
This collapse would cause widespread political and economic disorder that is likely to lead to another war. It might even lead to an entire series of wars as lesser powers struggle to fill the void. They will only be able to do so by diverting energy, food, and manufacturing resources away from making their people richer towards building powerful military machines.
Inevitably, Russia, China, Iran, Saudi Arabia, Turkey, and perhaps other powers will step in with military force to take advantage of the disorder of an American retreat. Eventually, one of them will seek to dominate a region that Americans perceive as vital to their national interest.
Just as in World War I, World War II, and the Cold War, the United States will inevitably be dragged into another global military conflict. Then, assuming that the US wins that conflict, which is certainly not guaranteed, we will need to construct a new global trade system out of the ashes of the first. It will be far better to maintain the one we currently have.
Contrary to what the Left claims, the true alternative to global capitalism is not a world based on social justice. It is a world of greater poverty, brutal authoritarian regimes, and warring powers that seek to dominate lesser nations. It is a world where governments divert economic resources to military and domestic repression rather than promoting long-term economic growth, education, health care, and pensions.
In the end, however, there is only so much wealthy nations can do to assist developing nations in experiencing the progress that Western nations take for granted. Maintaining economic growth and the global trade system is necessary, but not sufficient. Developing nations must find a way to copy wealthy nations and acquire the Five Keys to Progress.
In my next article, you can learn why our current global trade system, whatever its drawbacks, is the best world order that has ever been.
The above was an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.
Other books in my “From Poverty to Progress” book series:
I also want to thank the British for showing the United States the way to creating a global trade system that enabled nations to copy the foundations of progress.
The Brits did it first!
Spot on. There has never been an era of faster growth for the poorest segment of humanity than the past 30 years. Neoliberalism and global trade were essential for this to blossom. The political tides turning on this are extremely misguided.