Classical realism and the challenge of global economic governance

Abstract

This paper considers the prospects for global economic governance from the perspective of classical realism. It explains why, from this perspective, the American-led liberal international order, is over—and is not coming back. Classical realism anticipates a US renunciation of the orchestration of global governance, one rooted principally in shifts in its purpose, rather than by changes to its relative capabilities. This transformation of American purpose is a consequence of its domestic politics—in particular, the rise in economic inequality, the emergence of plutocracy, and the dysfunctional political polarization stimulated by those trends—a predictable result of a tectonic shift in the culture of capitalism from one associated with the ‘compromise of embedded liberalism’ towards the exaltation of ‘shareholder value’. This yields pessimistic conclusions not only about American foreign policy, which is likely to be more short-sighted, mercurial, and transactionalist, but also regarding the prospects for global economic governance. Realism sees international cooperation as challenging to establish and maintain, given the consequences of anarchy. In the coming years, episodes of cooperation will surely emerge, but they will likely be ad-hoc, mini-lateral, and fragile. Orchestrating ambitious schemes of global economic governance is less likely when a predominant power has lost interest in such things.