Why the 'Rules-Based Order' Needs a Reality Check: Beyond Trump

Understanding the Shift in Global Governance

As the world's power dynamics shift, it's becoming exceedingly clear that the 'rules-based order' promoted by institutions like the World Economic Forum (WEF) is facing extinction. Donald Trump, during his recent appearance at Davos, inadvertently spotlighted this critical issue—an order that no longer benefits even its creators in the US and Europe. His rhetoric reveals the deep chasm between traditional structures and the aspirations of a rapidly changing global landscape.

The Davos Dilemma: What it Represents

When Trump speaks, the apprehension among global elite is palpable. His protectionist stance, dismissal of climate science, and overt mistrust of multilateral organizations challenge the very essence of the liberal international order that has defined global interactions since the Second World War. In a world increasingly polarized by nationalism and skepticism of global institutions, Davos is left grappling with its relevance and the future of collective governance.

“The liberal rules-based order has been just another way of describing US hegemony.”

Davos, with its lofty ambitions and strategic discussions, has long been criticized. The question lingers: does it still matter? Emmanuel Macron aptly pointed out the shift towards a “world without rules,” capturing the irony of an era that was largely fashioned by US interests. The protective measures that once safeguarded a stable order are now being questioned, leading many to wonder if it's time for a critical re-evaluation.

Historical Context: The Foundations of the Liberal Order

To understand today's turmoil, we must delve into the historical context of the institutions that form this 'rules-based order'. Initiatives like the International Monetary Fund (IMF) and World Bank were designed during a time when US power was at its zenith. Today, these organizations represent a bygone era, struggling to adapt to a reality marked by emerging economies such as China, India, and Brazil, which are increasingly demanding a seat at the table—and for good reason.

Failures of the Current Economic Architecture

The institutional frameworks that enforce these rules are catching up with reality. The economic architecture that once thrived is now viewed as outdated. Increasingly, developing nations reject agreements that offer them minimal benefits, as seen with the stagnation in global trade deals over the past 30 years.

Challenges of Inequality and Internal Threats

The very fabric of this order is woven with contradictions. While liberal democracy historically led to economic progress, the current landscape reveals a disheartening trend: the rich continue to amass wealth, while those in the middle and lower income brackets struggle to keep up. The gap has never been wider, especially in Trump's America, where labor's share of national income sits at its lowest.

What Comes Next?

The pressing question remains: what will replace this system? While a more functional international order is necessary, it requires a paradigm shift rather than mere leadership changes. This means adopting strategies that foster inclusive economic growth, meaningful public investment, and financial assistance to vulnerable nations. Additionally, significant reforms to the United Nations, IMF, World Bank, and World Trade Organization will be pivotal in shaping a new landscape.

The Path Forward: No Room for Complacency

It's tempting to believe that we will be in a better position once Trump exits the White House. Yet this assumption overlooks fundamental structural issues that fueled the decline of the rules-based order. As articulated by influential leaders at the Davos summit, such as Mark Carney, the old order is not simply going to re-emerge; the world has irrevocably changed.

As we strive for a future that accommodates diverse perspectives and more equitable governance, the challenges are daunting. We stand at a pivotal juncture where we must commit to establishing a system that truly reflects the realities of our times instead of clinging to an increasingly irrelevant past.