Confronting a More Dangerous World

In the wake of the fall of the Soviet Union and the rise of the United States as the world’s sole superpower, political scientist Francis Fukuyama wrote a daring essay. Fukuyama declared the dissolution of the Soviet Empire as marking the “end of history”. Essentially, his essay was that Western liberal democracy, and the free market economic system, had conquered all other competing ideologies and would become so entrenched and ubiquitous as to be unassailable.

For sake of clarity, throughout this article, when I use the terms “liberal” or “liberal democratic” or “Western liberal democracy”, I am referring to a system of open markets, open communication, open movement, and open government that have formed the basic consensus of good governance and economic management since the fall of the Soviet Union.

(Besides, ‘libertarian’ is just a neologism we had to adopt after the label of ‘liberal’ was stolen by the left and made a pejorative by the right. Now that ‘liberal’ is a dirty word to both camps, we might as well reclaim what is rightfully ours.)

Obviously, countries in the post-Soviet liberal consensus, have ascribed to these principles with differing levels of devotion; but the underlying notions of “liberal democracy” tend to guide the politics of both left and right in the Western world – even in leftist bastions like France. Or, at least, they did until recently.

The End of the End of History

Political scientists, economists, and democratic leaders around the world reveled in Fukuyama’s proposals, certain that the lagging nations of the world would eventually accept the inevitable.

The world would become inexorably and permanently more interconnected, with markets becoming ever more intertwined. Political parties would forever reflect a centrist worldview that never deviated far from the central vision. International institutions would be immortal fixtures of the new order, that would reflect and amplify the system; and eventually all countries would feel compelled to subscribe to the consensus.

Oh, how wrong they were!

The “global consensus” begat complacency. As the leaders of the free world sat comfortably in the belief that the existence of Western liberal democracy was secure, they failed to address the rising threats outside its dominion. China was supposed to gradually democratize as its population became more prosperous. Surely, the people would pressure the Communist government into adopting the liberal order enjoyed by the rest of the world.

Instead, we have seen a prosperous and strengthening China further empower its authoritarian regime; while at the same time flexing its military and economic muscles within its sphere of influence. A rising China was supposed to buy into the international institutional order and become its co-guarantor with the incumbent superpower – America. Instead, China is creating its own competing institutions, like the Asian Infrastructure Investment Bank, creating a parallel institutional framework to what is already established.

Russia, too, has proved a mounting threat to the world order. Just a few years ago, Western leaders were loath to consider Russia as anything other than a has-been power, one that could not upset the balance of power or the inexorable march of liberal democracy.

In 2012, Barack Obama (as well as many on the left) laughed off warnings from Mitt Romney about the growing Russian geopolitical threat, saying that “The Cold War’s been over for 20 years”. No one is laughing now.

From its invasion of Crimea and destabilization of Ukraine, to its propping up of Bashar al-Assad’s brutal regime in Syria, Vladimir Putin’s Russia has been challenging the norms and rules that Western leaders so naively believed had become immutable laws of reality. Alas, the rules-based liberal world order, first devised in the aftermath of the Second World War, has gone from triumphant to despairing in just a couple decades.

Fault for the failure of this most peaceful, most prosperous world order ever maintained lies at the feet of the Western nations that built it. The external threats only arose because the United States and Europe failed to integrate their erstwhile rivals and rising powers into the order they had built. Russia and China, the chief external threats to the current order, are two poignant and distinct examples of this failure.

Russia: From Democrat to Oligarch to Tsar

After the Soviet collapse, the United States, Europe, and their allies pushed the new Russian Federation to undertake a gold-rush of privatization that allowed a small group of individuals to obtain control of vast swathes of the economy. These oligarchs melded economic power with political power to destroy competition and effectively strangle the nascent Russian free market.

When Vladimir Putin came on the scene, he leveraged, and ultimately dominated the oligarchs to create a centralized authoritarian state answerable only to him. Now Putin has set himself on a course to increase Russia’s geopolitical power, extend its sphere of influence, and challenge the Western world order.

The rise of Putin and the collapse of Russia’s short-lived liberal democracy could have been avoided if chauvinism had not blinded the triumphant powers of the Cold War. It may seem like a strange attitude for a libertarian to take, but the totally unregulated dissolution of the state-owned economic system was a mistake. When a society has no experience of private ownership or democratic values, simply making it a free-for-all (in which the already well-connected and unscrupulous can seize political and economic power) is a terrible idea – gradualism was what was needed.

However, the certainty displayed by the liberal world order, on the cusp of an immanent historical victory, prevented anyone from considering a gradual approach to privatization. The result, has been tragedy for the Russian people, who witness the daily erosion of their economy and civil liberties; a tragedy for the rules-based world order, which faces an ever growing assault from Putin’s Russia.

China: A 21st Century Thucydides Trap

China’s rise and challenge to the current world order is also a failure in the thinking of Western leaders, but a failure of a different kind. This failure is particularly American in character.

As China’s power and influence increased, it began to put pressure on the institutional and security frameworks of its neighbors abroad; frameworks devised, and underpinned by the United States.

The US Navy patrols Asia’s waters, and American military bases dot the region. In fact, most of the countries in China’s sphere of influence are US allies or clients: Taiwan, South Korea, Australia, Japan, and many others, share deep economic and security ties with each other and with the United States. China’s leaders fear encirclement, and many have concluded that the United States does not want China to have its fair share of regional power. This has resulted in growing strain on the bilateral relationship and escalating regional tensions.

This is hardly a new problem. The question of how an incumbent hegemon should react to a rising potential rival has vexed scholars and leaders for millennia. The Greek historian Thucydides outlined the problem in the 5th century BC, when a dominant Sparta faced a rising Athens. Fear led to military build-up, efforts at containment, and ultimately a war that was ruinous for both sides. This “Thucydides Trap” has been noted by historians in numerous contexts throughout history.

The answer, to the dilemma of “Thucydides trap,” seemed simple to Western leaders: By creating a framework of international economic and political institutions (that bounded discourse, set up a rules-based order, and adjudicated disputes) countries could reasonably believe that the nature of the world order would continue even in the absence of a hegemonic guarantor. Thus by following the rules and normalizing the roles of these institutions, the United States might sacrifice some of its ability for independent action in the short-run, in exchange for a long-term guarantee of a stable world order built with American ideals in mind. A strong world order with universal, or near-universal buy-in, could survive the rise of  China or any other power, and would not rely on the overwhelming might of the United States to defend it.

Unfortunately, the value of that trade-off (though understood intellectually by America’s political leaders) never won practical acceptance. The result has been to allow China, as it rises, to follow in the path of the incumbent superpower. A path that will threaten the power and relevance, and perhaps even the survival, of these institutions.

Institutional Failure

Sitting alone as the world’s sole remaining superpower, it was much easier (and geopolitically expedient) for the United States to act as an effective guarantor of the liberal world order while never fully buying into it, or committing to it. Examples of this sort of behavior are numerous, but one of particular note is America’s attitude toward the United Nations Convention on the Law of the Sea (UNCLOS).

UNCLOS governs the international rules of seafaring, and outlines the territorial claims of countries; the United States is one of the only nations that is not a signatory to the treaty. Russia and China signed it in the 1990s. Yet, even though it is not a signatory, the US Navy acts as the guarantor of the treaty’s provisions. It polices the high seas, and has pressured countries (when territorial disputes emerge) to go to the treaty-established arbitration system for recourse.

This policy of enforcing the rules everyone has agreed to without signing up to them has been a hallmark of American foreign activities for years; and it worked fairly well while the rest of the world was in awe of American military might.

Now, as regional powers (like Russia) flex their muscles in their geopolitical neighborhoods, and as nascent superpower China expands its regional and global reach; that strategy looks terribly short-sighted.

Because the United States never worked to copper-fasten the institutional order beyond its own immediate needs, that order is left vulnerable, and can potentially be swept aside by rising powers. America’s own refusal to sign up to the rules can be highlighted by many, as “reason” to withdraw from whichever international institutions they find constricting to their geo-strategic aims.

An institutional order could have been built to outlast American hegemony, but the hegemon refused to constrain itself. Now the entire world order is threatened, and might not survive.

The Challenge from Within

As if all these external threats to the rules-based world order were not enough, another existential threat has arisen within the very countries that currently uphold it. This internal threat is the rising power of populism and nativist nationalism.

Across Europe’s liberal democracies, and in the United States, there has been a massive upsurge of nativism. Though it’s hardly unexpected for groundswell movements in disparate countries, this nativism manifests in various forms while maintaining the general contours. From Donald Trump in the United States and Marine Le Pen in France, to the 5Star Movement in Italy; populists have been calling for curbs on immigration, the restoring of trade barriers, and a desire to move away from (or outright reject) the international institutions that make up  the web linking our interconnected liberal democratic world order.

The anger that fuels these populist movements is hardly unjustified.

Indeed, the coziness of the established elites is something almost every libertarian despises with a passion. People are angry at the failure of their leaders to reform their economic structures, and they are angry at leaders they feel are out of touch with the concerns of ordinary people. They are not wrong about that, but the answer is not to build walls and raise tariffs. The answer, is to cut away the structural problems that make doing business a bigger hassle every year. The answer is to embrace more wholeheartedly the true liberalism that fuels growth. Individual liberty, social and economic, is the way forward.

As the true heirs of the liberal legacy, it is up to us to fight for these values. That means jettisoning some of the comfortable rhetoric libertarians have often relied upon, such as ditching international institutions and withdrawing from military alliances like NATO. Such actions will not make the world or America safer – it would serve only to erode a world order that has been marked by astounding success in maintaining peace, stability, and freedom.

In place of institutions governed by rules, we may find ourselves once again facing a geopolitical map governed by the raw forces of realpolitik.

We must learn the lessons of history – the recent backsliding into regressive ideologies is proof that history does not end – and that progress is not inevitable. The arc of the moral universe does not curve anywhere on its own. It only curves when we bend it ourselves.

This post was written by John Engle.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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John Engle

John Engle is a merchant banker and author living in the Chicago area. His company, Almington Capital, invests in both early-stage venture capital and in public equities. His writing has been featured in a number of academic journals, as well as the blogs of the Heartland Institute, Grassroot Institute, and Tenth Amendment Center. A graduate of Trinity College Dublin, Ireland and the University of Oxford, John’s first book, Trinity Student Pranks: A History of Mischief and Mayhem, was published in September 2013.

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