The Liberal World Order

The Liberal World Order

The liberal world order is as much an economic idea, as it is a

political one. The liberal world order is very much based on the rule

of law. Such things are apparent in a liberal world order such as

individual liberties, private property and free trade.

According to Ludwig von Mises, a liberal world order was inseparable

from liberal economic policies:

“A nation’s policy forms an integral whole. Foreign policy and

domestic policy are closely linked together, they condition each

other. Economic nationalism is the corollary of the present-day

domestic policies of government interference with business and of

national planning, as free trade was the complement of domestic

economic freedom.”1

Thus, according to Mises, a liberal world order could only arise when

governments operated a laissez-faire approach to the running of the

economy. During the liberal world order at the beginning of the 20th

Century, it was true to say that most of the governments of Europe

were either constitutional monarchies, or democracies, and the

universal concept of the rule of law was endorsed practically all

over.

However the liberal world order dramatically came to an end at the

start of the First World War, as a result of nations requiring to

raise funds for the war effort. Naturally governments took over the

running of their economies, and rapidly industries were controlled

through regulation and even re-nationalisation. In order to protect

these industries, trade barriers were put into place. Taxes also rose

in order to fund the war, and thus the governments no longer pledged

to a laissez-faire economic outlook...

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... to look out simply for their own well-being

and would again adopt their protectionist stances, destroying the

liberal world order.

This problem can be explained with simple economics, a liberal

international order is in essence a public good, in that if created,

would be available to all, and thus all would be able to benefit from

it. For that reason, no nation is willing to bear the cost of such an

effort if everyone will be able to benefit. It would be more

beneficial for that nation if they waited for another nation to set it

up, and then simply jump onto the bandwagon at no cost.

As a result it can be said that the success of the Liberal World Order

has been limited due to the difficulty of its implementation. At

present, World Politics can still be said to be predominantly realist

based in its definition.