The WhatsApp World Order: Learning to Live with the New Global Political Economy

2. How and Why the Economic Order Changed

What is broadly understood as today’s global order substantively dates back to establishment of the post-second-world-war institutions including the General Agreement on Tariffs and Trade in 1947. Yet details were not set in stone beyond the centrality of Europe and North America, and there have been many changes in the form and players of the global economy since:

In one sense this is a story that moves from scarcity to plenty. A few countries slowly developing their integration while growing the numbers of products available to consumers through trade has transformed into an inter-connected world offering an unprecedented range of goods and services.

Such chronology does not however properly demonstrate the extent of the transformation over the last thirty years, or why this has led to such discontent. This requires a deeper analysis of a number of inter-locking developments:

• Technology is in particular the key driver, ability to transmit information instantaneously around the world transforming the world of work and much else in just a few years;
• Politics and in particularly the move from direct state provision to regulated markets and standards provides the environment for a transformation to take place;
• Trade in turn expands dramatically as extensive supply chains are constructed and new offerings made between businesses and direct from them to customers internationally;
• Players in turn change, with emerging economies, multinational companies, and networks of experts growing in importance compared to G7 governments;
• Rules and the world order struggle to keep up, in particular at multilateral level.

From these overlapping developments have emerged today’s challenges and the crises of confidence in dealing with them at governmental and societal level particularly in Europe and North America. How this inter-connected world unfolded is examined further below, before Section 3 considers in more detail where we are now.

2.1 Technology

Trade in the immediate post-war period was expensive. Standardisation of the shipping container is widely held to have transformed global goods trade from the 1970s[2], lowering costs and increasing predictability. A 1996 paper found that “Since the 1950s… Freight rates for bulk products have decreased 65–70% due to improved maritime technology.”[3]

Lower transportation costs were matched by phenomenal increases in manufacturing productivity. For example, in 2011 an American Enterprise Institute blog recorded that “the average American factory worker today produces more output in an hour than his or her counterpart produced working almost a ten-hour day in 1947 – and that’s why we’re producing record levels of output with fewer workers.”[4] Such gains have continued.

Transformed communications from the early 1990s built upon these trends to create global markets for goods. Prior to this point international information dissemination was generally expensive and unreliable, and computer systems fundamentally based on mainframes at single sites. Factories were therefore the hubs of production, turning raw materials into finished products, and also containing various service functions such as design, finance, and servicing. Sales were largely domestic.

New technology allowing instantaneous transfer of almost unlimited quantities of information facilitated the break-up of this model into numerous constituent parts which could be located almost anywhere in the world, exemplified by the roll-out of the SAP R/3 Enterprise Resource Planning (ERP) system in 1992[5]. Accompanied by just-in-time deliveries internationally this led to the creation of global supply chains which became an established part of the trade world by the 2000s.

All businesses were forced to change their operating models to stay competitive, many repeatedly. That some have been returning to the idea of major factories as more competitive does not change the fact of alternatives that was not the case prior to 1990.

Global roll-out and then dramatic speed increases in the internet also facilitated entirely new business models initially of direct business-to-consumer services like Amazon established in 1994 and eBay in 1995, followed by many names which have become similarly established such as YouTube (2005) and Spotify (2006). Google revolutionised internet searches from 1998 and the first Apple iPhone bringing connectivity widely into the public pocket was launched in 2007.

More hidden were the many advances in business-to-business solutions such as just in time deliveries and Customer Relationship Management systems. WhatsApp further revolutionised international communication from 2009, and faster internet speeds have increasingly allowed global markets in services as well as goods, including education, finance, and consultancy.

What was particular notable about this change was its rapidity and comprehensiveness, but equally the limited impact in terms of productivity.[6] Almost all aspects of life including shopping, workplaces, and leisure activities were transformed at speed in a way that simply didn’t happen for example after the first telephone call in 1876. Most people’s primary communication device is one that barely existed 20 years ago. Everything may have just happened too quickly.

Almost all of this activity was driven by the private sector, even if reliant on various government investments. Globalisation was therefore primarily led by technology, a trend likely to continue with AI and quantum. Evolution in government attitudes did however help facilitate change. 

2.2 Politics

Europe and North America broadly shared approaches to government handling of the political economy from the 1940s. An initial state-interventionist phase broke up from the end of the 1960s, replaced by a clash between this and economic freedom, and from the 1990s a new “third way” consensus balancing predominantly private economies with government regulation, subsidies and other intervention as required.[7]

Though details differ between countries, this hybrid model was broadly accepted by developed countries as the default by the time that the Cold War ended. Equally other economies such as India were also moving in this direction by the early 1990s.[8] Combined with technology developments this meant a huge expansion in goods and services supply from ending public monopolies.

Regulations changed over time from focus on fair markets to be a major way in which governments sought to achieve broad economic, social, environmental, and other aims. This can be illustrated by the comparison of a relatively light-touch environment for social media (Twitter launched in 2006) as compared to the extensive discussions around Artificial Intelligence that we see today.

Moving to a more extensive, paternalist and risk-averse regulatory model partly reflected the demographic shift in people living longer, with many of those who were part of the generation rebuilding economies after the war enjoying long retirements. Societies became considerably healthier than was the case previously, in part as a result of the regulatory interventions. This though came at a direct cost in terms of health services and social care as well as an indirect one in terms of a growing cohort of voters for whom economic growth was not of particular concern.

Along the way the fall in manufacturing jobs meant declining traditional social class-based parties, leading to today’s greater fragmentation in particular between centrists and populists. Deindustrialisation has been a fact of life since the 1970s[9], but became a greater focus externally due to the belief this was at least partly caused by the rise of China, and internally as many former manufacturing areas lost their attachment to traditional left-of-centre parties.

With new political challenges such as climate change growing in importance, and domestic social cohesion also becoming a major focus for example as town centres were affected by internet shopping, governments are increasingly active across many fields despite directly providing fewer services. Indeed, outsourcing provision of various public services was another trend that started in the 1980s[10], and was widely adopted by companies.

Trade policy also became steadily more open. While imports are always a source of some suspicion, recognition of the importance of supply side measures to reduce inflation led to liberalisation on top of the tariff reduction that happened since the formation of the GATT. Bilateral, plurilateral and multilateral agreements to further eliminate tariffs and other obvious trade barriers became common from the 1990s. Openness to inward investment also increased as capital controls eased, equally not without suspicion.

All of this though was typically coupled with some continued restrictions, whether tariffs on agricultural goods or nationalistic public procurement policies. Indeed, the range of topics included in trade agreements rose dramatically from the 2000s, and many are now considered defensive interests influenced by a greater populist strain in politics that could be seen from the 2010s. This has had a significant impact on global trade politics.

2.3 Trade

There are many measures of the growth in world trade as inter-connectivity developed. One of the clearest is that until 1992 trade had never been more than 40% of global GDP, and it has never been less subsequently[11], being mostly within the range of 50-60% since 2000. This was significantly driven by the creation of global value chains mentioned above.[12]

Global trade was therefore already growing significantly prior to the rebranding of the General Agreement on Tariffs and Trade to the World Trade Organisation from 1 January 1995. This culmination to the long and complex Uruguay Round of negotiations brought market access commitments on services, and broad agreements on non-tariff barriers and intellectual property. As important as the actual commitments was a renewed belief among members that trade was mutually beneficial, backed up with a new binding dispute settlement system to prevent abuse.

The rise in bilateral trade agreements improving access beyond WTO commitments also slightly predates it, being evident from 1992 and continuing steadily since then.[13] These however typically did more to further reduce tariffs than offer much on services, typically more affected by domestic regulations than international commitments. Regional integration is a partial exception, for example through the EU Single Market which from 1992 created the world’s largest zone without overt trade barriers particularly as new members joined.

Domestic commitment and a framework of international rules were clearly sufficient to support significant growth in world trade sustained even through downturns around the global financial crisis and the Covid pandemic. Much of the growth particularly came in the form of intra-company trade[14] within the supply chains that may constitute up to 80% of the total[15].

Corporate decisions were primarily driven by the ultimate aim of being able to supply products more cheaply to consumers, but companies also needed to make sure that their whole chain of production would be resilient and meet regulatory and consumer demands such as traceability or sustainability. A thriving services sector helped this to be achieved, to the extent that the availability of final goods too has never been higher, showing domestic production is not in fact inevitably more secure.

There have been many other trends in trade since the 1990s. Direct sales between business and consumers dramatically expanded particularly since the PC and then smartphone became ubiquitous. This trend is largely ignored by trade rules, but has been facilitated particularly by technology and payment providers. Direct booking has also revolutionised sectors such as travel and tourism. Some items previously sold mostly as goods are now more typically services, such as music.

Recent years have seen the growth in the share of trade in services above 25%[16], with faster internet speeds one significant contributor. Sporting competitions such as IPL cricket and Formula One emphasised the global nature of markets, all adding up to a trade picture vastly different to that of the early 1990s. At the same time there has been a more obvious backlash against trade most obviously from President Trump blaming this for the loss of manufacturing jobs while largely ignoring the growing trade in ideas.[17]

2.4 Players

Europe and the US typically accounted for around 50% of global imports and exports until 2008. Within a few years this had dropped to around 40%. Asia now accounts for a majority of new car sales.[18] Over the last ten years the sales of new electric vehicles have become higher in China than in Europe and the US combined.[19]

China’s development story from the 1980s has been a remarkable one, starting as a low-cost manufacturer of basic goods, followed by companies proving adept at producing electronic goods meeting high regulatory standards at lower costs than competitors. A further leap in the 2000s saw domestic producers’ partner with western technology companies such as Apple to move up the value chain[20], and more recently they became globally competitive innovators in their own right[21].

Other economies have also grown in particular ways, notably south-east Asian economies seeking to replicate China’s success, and Brazil as an agricultural super-power. Notwithstanding this last example, the economic centre of gravity appeared to be moving east towards a broad region containing half the world’s population.

Typical US and EU thinking alleges that China’s rise was about subsidies just as Brazil’s was due to deforestation. While Chinese state economic intervention is significant[22] this is not the whole story, with desire, efficiency, a growing domestic market, and economies of scale clearly also important.

One recent study of electric vehicles suggests indeed that vertical integration in Chinese companies has delivered significant benefits[23] compared ironically to the devolved chains that benefitted western companies from the 1990s. This then would demonstrate the importance of continued innovation to remain competitive.

China’s rise in the world economy coincided with a further increase in corporate concentration in developed economies. One study shows that “the top 1% of firms typically accounted for around 50% of economy-wide sales in the 1950s; by the 2010s, this figure had risen to approximately 80%. The patterns are remarkably similar across the U.S. and other countries.”[24] Using a different methodology an OECD study finds concentration in European output continuing since 2000.[25]

These leading companies became in many cases global economic players in their own right over the last 30 years, whether one thinks of technology giants such as Apple and Microsoft, car companies, or those in chemicals, pharmaceuticals, accounting, or financial services. Scale to handle new global markets was clearly a factor, as may be the growth of regulatory burdens of which they are best equipped to overcome. In many cases these global companies acquired innovative challengers, and fund very high research and development around new models as well as extensive lobbying budgets that smaller players would simply not be able to meet.

For governments this has meant over the last thirty years an increasingly important negotiation with international firms rather than the more traditional bargaining with national champions and business representative organisations. In particular their decisions to invest or withdraw nationally or locally becomes something governments must try to influence to meet their goals of growth and jobs.

Meeting their requests for new trade agreements is perhaps easier.[26] At the same time the difficulties faced by challenger companies are also likely to be contributing to a general decline of economic dynamism since 2008, a trap few governments seem to recognise.

2.5 Rules and the World Order

GATT and then the WTO provided a broad framework for world trade, but international trade law was never completely binding even with fully functional dispute settlement, hence long-running disagreements such as between the US and EU over food regulations.[27] WTO membership could be considered more of a signal of support for trade in general, with the partial recent exception of the US. This has become more widespread, since 128 countries were founder members of the WTO, 38 have joined subsequently, and 22 are in accession processes.[28]

Sitting behind the WTO rules has been an extraordinary rise in trade agreements, national regulations and international standards. There are for example over 26,000 international voluntary standards maintained by ISO, stretching to over one million pages of text.[29] There are 176 national bodies in that organisation, 182 countries represented in the World Organisation for Animal Health and 188 in Codex Alimentarius that covers international food safety standards.

Global cooperation supporting best practices has developed in virtually every field facilitated by easier and cheaper global communication. This also assisted the creation of global supply chains, and in turn standards were reinforced by the experiences of companies in a virtuous cycle.

Groups of experts in a topic coming together has indeed been one of the hidden facets of the world order that has developed over the last 30 years. This is another way in which large companies have benefitted by being better placed to employ experts as well as implement the rules and standards then agreed.

Notably also this international process has continued to advance even while the WTO has been unable to agree on new rules in areas such as climate and e-commerce. This however means rules are in danger of multiplying and fragmenting, particularly given geopolitical tensions.

Deeper regional integration also accelerated with approaching 450 bilateral or plurilateral trade agreements, all meaning more rules. Examples included the foundation of the ASEAN Economic Community in 2015 and implementation of the African Continental Free Trade Area in 2021, drawing on previous examples such as the deepening of European integration and the formation of NAFTA in 1995.

One other significant global development was the establishment of the G20 Finance Ministers track in 1999. This has driven global cooperation[30] more than the leader level meetings that followed.

G20 meetings were also arguably a model for many other country groupings that now meet regularly such as the BRICs of Brazil, Russia, India, and China, ironically initially based on a Goldman Sachs research paper.[31] This example though could also be seen as an early example of US and European services companies facilitating the new economy disliked by their leaders.

At national level there has also been a steady rise in the quantity of regulations. A regulatory state based on trusted domestic institutions interacting with international counterparts has come to be the norm. This subject is poorly studied but some quantitative evidence is available from the US[32] and the EU[33].

Rising numbers of regulations reflects politicians seeing this as largely cost-free for individual measures if not cumulatively. Though typically national they also increasingly address international elements, such for example as tracing property ownership through offshore companies or tackling a global issue like climate change.

All of this extensive wiring supported the creation of genuinely global markets. This is likely to continue with developments such as AI and new payment systems to name but two.

At the same time, it also meant huge burdens were placed on companies and other organisations by an overall rules framework much harder to understand than that of controlled national economies that largely prevailed until the 1980s. Such is the start of the understanding today’s international political economy.

[1] While post-war Soviet-style communism was an extreme example of state dominated supply that ended around 1990, many other countries also had extensive state monopolies

[2] See The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson

[3] https://www.sciencedirect.com/science/article/abs/pii/S0301420796000165

[4] https://www.aei.org/carpe-diem/phenomenal-gains-in-manufacturing-productivity/#:~:text=Today’s%20factory%20workers%20produce%20more,worker%20productivity%20has%20been%20accelerating.

[5] See for example https://www.emerald.com/ijpdlm/article-abstract/30/3-4/296/391019/Supply-chain-re-engineering-using-enterprise?redirectedFrom=fulltext

[6] https://crossroads.ideasoneurope.eu/2025/02/17/the-new-solow-paradox-responsible-innovation-and-productivity-in-the-eu-digital-age/

[7] See for example https://www.wto.org/english/tratop_e/serv_e/symp_mar02_uk_com_e.pdf

[8] https://kingcenter.stanford.edu/publications/working-paper/india-crisis-reforms-and-growth-nineties

[9] See https://www.cato.org/commentary/busting-manufacturing-jobs-myths

[10] https://www.theguardian.com/society/microsite/outsourcing_/story/0,13230,933819,00.html

[11] https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS

[12] https://www.nber.org/system/files/working_papers/w28115/w28115.pdf

[13] https://www.wto.org/english/tratop_e/region_e/region_e.htm

[14] https://www.oecd.org/content/dam/oecd/en/publications/reports/2011/06/intra-firm-trade_g17a1fcc/5kg9p39lrwnn-en.pdf

[15] https://unctad.org/press-material/80-trade-takes-place-value-chains-linked-transnational-corporations-unctad-report

[16] https://berl.co.nz/economic-insights/services-largely-invisible-part-trade

[17] https://ecipe.org/publications/from-factories-to-ideas/

[18] https://www.acea.auto/figure/passenger-car-registrations-around-world-share-per-region/

[19] https://www.iea.org/reports/global-ev-outlook-2025/trends-in-electric-car-markets-2

[20] “Apple in China” by Patrick McGee

[21] “Breakneck” by Dan Wang

[22] https://cepr.org/voxeu/columns/two-decades-chinese-industrial-subsidies

[23] https://rhg.com/research/why-are-chinese-evs-so-cheap/

[24] https://corpgov.law.harvard.edu/2026/03/02/business-concentration-around-the-world-1900-2020/

[25] https://www.oecd.org/en/publications/industry-concentration-in-europe_c4c371fb-en.html

[26] https://conconi.ulb.be/BCP.pdf

[27] https://www.congress.gov/crs-product/R40449

[28] https://www.wto.org/english/blogs_e/ddg_xiangchen_zhang_e/blog_xz_29apr25_e.htm

[29] https://www.iso.org/iso-in-figures.html

[30] https://www.g20.utoronto.ca/ministerials.html

[31] https://www.goldmansachs.com/our-firm/history/moments/2001-brics

[32] https://www.mercatus.org/research/working-papers/regdata

[33] https://www.epicenternetwork.eu/briefings/eu-regulatory-volume-has-doubled-since-the-treaty-lisbon/

3. The New Networked Order

In 1996 Jagdish Bhagwati coined the term the “spaghetti bowl phenomenon” for the proliferation of trade agreements leading to discrimination in market access.[1] This has multiplied many times over in the 30 years since, and with subsequent technology developing one could now see the world as all of our collected WhatsApp groups brought together.

For today’s world is one of multiple, interlocking, ever-changing networks. These may be chains of production or of research, national, regional, or global. They are operating according to a plethora of rules and voluntary guidelines at numerous different levels. Government leaders and officials are meanwhile meeting regularly in a wide variety of different operating or expert groups.

All of this starts from the simple ability to transmit almost any amount of information instantaneously around the globe. From payments for foods and services, a refreshed design for a car, to a live feed of the latest big match, this is a world of inter-connection that simply did not exist 30 years ago, backed up by much cheaper physical travel whether for goods or people.

This cumulatively creates an almost incomprehensibly complex global economy to individuals and governments alike, one that nobody appears to control but where the largest companies or countries have far more options. Unsurprising then is the backlash to the idea of the world as flat[2], by all of those struggling with changes, which may be the majority.

Policy designed for an analogue age is certainly not going to work in this digital era. One can however understand the appeal of simple answers when faced with modern complexity. Finding better ways is the reason why greater understanding of the moment is required, and this section considers three of the main elements of the modern political economy, namely global markets, how the nation state can react to these, and individuals stuck in an age of uncertainty.

3.1 Global Markets and Dependencies

Such is the ease with which data and products move internationally that markets for goods and services should now be considered global by default. There is a level of tariffs or restrictions that can stop them, with high US tariffs for example heavily restricting direct imports from China.[3] Most countries are however reluctant to deprive their citizens in this way, especially given the many opportunities they may have for circumvention.

Technology has enabled ever-finer specialisation meaning modern production is far more complex than 30 years ago. Resulting supply chains are designed by major companies to be flexible, resilient, and cost-effective as far as possible, because that is how profits are maximised, but will contain many inter-dependencies.

In many respects the modern company specialises in logistics, assisted by an extensive services industry searching for the optimal balance between the elements. This involves many considerations such as for example different contract suppliers, flexible labour contracts, and careful examination of different trends and rulesets alongside risk management.

Country dependencies on supplies from other countries and on the major companies responsible for most of their supplies are thus inevitable, just as companies will also rely on others. This is normal given one of the main purposes of trade is to allow for greater prosperity through establishing such networks, but becomes problematic when threats are made to supplies.

Thus, for example pharmaceutical companies asking the UK government to raise prices in its health service otherwise risk disinvestment[4] are a threat like China’s withholding critical mineral supplies[5]. There is no easy answer if trust breaks down given the improbability of abundant affordable supply of all components, a reason why international trust is so important.

All production involves vulnerabilities that are likely to increase with the number of goods and services available more than where production is located. Indeed, many new and under-considered threats apply to domestic supply, such as the connectivity of various systems like power and other utilities to the internet. One could for example wonder about the total cost to the UK of a cyber-hack that left British Library systems needing to be almost completely replaced.[6]

There never was full visibility of supply chains as they pertain to a country or industry as a whole, but increasing demands for traceability may improve this situation, as may the power of quantum and AI. Nonetheless companies and governments will always struggle to understand the whole picture. Raw materials are the most obvious vulnerability, but also the one where it is hardest to build up alternatives not least given their usage may change over time.

Complete appreciation of all the rules affecting supply chains is similarly problematic, though large companies are likely to have extensive compliance functions not available to smaller counterparts. In the case of internationally delivered services there is probably a lot of trade that is simply assumed legal in the absence of any way to check to the contrary for something delivered remotely.

This federalisation of the world economy is barely conceptualised, and it is understandable to think of a world economy out of control, as it is to a degree. For this reason it is also unrealistic to speak of single large countries gaining complete domestic control, as both US and Chinese leaders have suggested they want, and which the EU seems to be moving towards. All must have dependencies for production and indeed economic growth to continue in such an inter-connected age, and ongoing innovation will mean their companies seeking to learn from what is happening elsewhere.

All of this inter-dependency is also why weaponisation of trade could be so globally damaging. There are literally thousands of potential vulnerabilities in everyone’s economy, with food, raw materials, information security, and pharmaceuticals among the most problematic. Even starting down this path through consideration of economic security risks ongoing escalation causing disruption and reducing growth across the board. For example, the supply chain for semiconductors contains specialist single suppliers in a number of countries.

US and European reluctance to accept the rise of a China governed in a very different way makes all of this even more difficult. There is little prospect of new rules when the stated priority of those who were predominant in creating the existing ones is to withdraw when they are no longer winning, and China has folklore memories of dependence weaponised by the western powers in the 19^th century to influence its own actions. Inter-dependency and mistrust are a terrible mix not least when misunderstanding, denial, and carelessness are added.

For the time being large companies through their supply chains are largely maintaining an economy that is far more global than it is national. This does however come at their price for running the system, which may be both in terms of direct subsidies and indirect effects such as reduced overall growth through lack of competition. Governments therefore face a major struggle in understanding their best role to achieve policy objectives, not least with the pressure to demonstrate being in control.

3.2 National Governments and International Trade

Global markets dominated by multinational companies present obvious problems for national governments. Attracting and maintaining their investment will have a positive effect of growth and national competitiveness, but is then in danger of perpetuating an economy biased against challenger companies. Similarly, regulating to meet social demands may be popular with citizens but may come at the cost of creating more barriers to businesses of all sizes but particularly the smallest.

Such an economic model is proving to be generally resilient even to dramatic government action. Even if Brexit has cost the estimated 4% in economic terms[7] this is not necessarily evident in daily life. Similarly, US tariffs imposed under Trump have not significantly weakened US goods trade. In both cases advocates claim vindication, but it is more likely to be the result of mature supply chains. Large corporate lobbying efforts to seek to avoid the worst courses of action have helped.

Traditionally countries signed trade deals and invested in infrastructure and skills as signals to major companies that they are open for business. In an age of global markets there is evidence of diminishing returns for the first of these at least for developed countries.[8] Small reductions in tariffs will make little difference where the majority of trade is conducted within supply chains, although it is unlikely to be harmful, and even limited regulatory alignment will be helpful.

Government concern about their lack of economic control is now leading in the opposite direction, towards exerting more control over trade in the name of enhancing resilience. Yet such economic security actions have the potential to be costly and damaging to international relations without delivering the expected benefits, as seen particularly from President Trump’s repeated coercions.

Even an apparently less harmful action like stockpiling supplies of some products is fraught with danger, implying that governments rather than companies should be in charge of this activity, and implying value judgements into who should be supplied. This is of course the exact opposite of the idea that sits behind the GATT and WTO that trade should not be managed in a discriminatory manner, for fear that trade conflicts will lead to broader ones not least in a multi-polar world.

There are of course reasons for governments to encourage particular sectors, national security or otherwise, whether through subsidies or controls, and this has always been part of the global economic order. Claims otherwise that governments stopped doing this in the 1990s around the formation of the WTO are historically inaccurate, with a good example being the subsidies given by the EU and US for civil aircraft, leading to a series of WTO disputes that were never fully settled.[9]

What this should not mean are naïve attempts to seek to overrule markets such as by bringing back manufacturing jobs, a policy that has failed to deliver any noticeable result pursued by the US since 2016. Similarly, there are dangers of incumbents seeking subsidies in the name of economic security, or trying to restrict trade claiming unfairness as with restrictions on de minimis exemptions. The latter measure in particular will hit thousands of small businesses due to poor targeting.[10]

Arguably the lack of government control over their national economies is a particular problem in democratic societies, and not one easily resolved in today’s global order. Finding positive alternatives that deliver clear results as an alternative to more visible restrictions is a major challenge, as is dealing with the weaponising action of others while also maintaining open economies.

3.3 An Age of Uncertainty

“You live inside a factory. We all do. And you are also a worker inside the factory. As are we all…. We have all optimized the flow of goods into our homes and lives”.[11] These lines bring a certain stark clarity to the reason why public confidence in today’s global economy may be low.

An age of global markets and limited government controls is also one of insecurity for individuals notwithstanding endless regulatory activity. Whether they have steady jobs with major companies or work through the gig economy there is for many a sense of vulnerability, of being at the mercy of algorithms that mean uncertainty and potentially complete upheaval at any time. Indeed, fear may explain the innumerable gatherings of experts in the modern world, as nobody wants to miss out.

Coupled with an ageing society this seems to be leading to the demand for ever greater government intervention to protect individuals against risk, whether through regulation or the tax system. Traditional welfare systems are like WTO rules not set up to protect in the age of the algorithm.

Insecurity however also has the effect though of setting individuals against the sorts of developments that could help generate economic growth, of the new infrastructure or businesses that a country will need. Related is almost certainly the demand to find someone to blame whether that be immigrants, religious or ethnic minorities, major corporates, or the very rich.

Dislocation at a time of change is entirely unsurprising. One can go back to Charlie Chaplin’s 1936 film “Modern Times” for a comedic exploration of the vulnerability brought by the industrial revolution.[12]

Change is not just confined to work and the rise of the algorithm. Almost every facet of life is changed by the inter-connectivity revolution and rise of global markets, from the English football fans priced out of their now international teams to those decrying the decline of reading or national broadcasters in the face of enhanced competition. Meanwhile, making appointments frequently involves online systems in which it is difficult to contact individuals if anything goes wrong.

AI is likely to intensify all of these issues, creating more change for those already weary of what they have lived through in particular when growth has been slowing down in so many countries. Governments proclaiming the great opportunity of AI are in danger of misdiagnosing the appetite leading to a backlash that is already being seen particularly against the energy requirements for data centres. There is little sign of attempts to find political trade-offs even to this one question.

Votes for populism can easily be seen as people simply voting against progress in a way that has also been seen in previous periods of change. They also however reflect governments failing to create a better narrative of the current moment in which they understand how individuals are feeling. That there are also cost of living pressures probably exacerbates the problem notwithstanding general prosperity in many countries, potentially meaning a vicious cycle where greater regulations, minimum wages, and trade controls lead to the higher prices intensifying anger further.

Political party structures that have failed to move on from a form of industrial production now some way in the past adds to the sense of domestic turmoil. Politics does not seem to have the answers notwithstanding the good intent of many of those involved, leading to demands for “strongmen” leaders with at least better communications but who are most likely to have few answers and focus on their favoured scapegoats as excuses.

Finding better domestic politics is another part of the difficult challenges posed by developments of the last thirty years. Delivering answers is however proving to be a difficult process.

[1] https://scholarship.law.columbia.edu/faculty_scholarship/3574/

[2] “The World is Flat” by Thomas Friedman

[3] https://www.piie.com/blogs/realtime-economics/2026/trump-china-trade-wars-five-takeaways-us-imports-2025

[4] https://www.fiercepharma.com/pharma/lilly-presses-uk-deal-would-see-higher-nhs-prices-exchange-resumed-investments-ft

[5] https://www.asd-europe.org/news-media/news-events/news/supply-chain-concerns-rise-as-china-tightens-rare-earth-controls/

[6] https://www.theguardian.com/books/2024/jan/15/british-library-cyber-attack-staff-users-analysis

[7] https://obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/#assumptions

[8] https://ecipe.org/publications/free-trade-agreements-have-limited-impact/

[9] https://www.bbc.co.uk/news/business-57484209

[10] https://startups.co.uk/news/uk-de-minimis-reforms/

[11] Christopher Mims “Arriving Today”

[12] https://www.charliechaplin.com/en/films/4-The-Circus/articles/11-Modern-Times-Synopsis

4. Conclusion and Policy Recommendations

Times of change are often associated with the kind of conflicts and uncertainty seen today, and few have been as intense as the one that started in the 1990s and looks likely to continue for some time to come. Denial as to what is happening or who is to blame is only exacerbating problems, confusion amplified by the extraordinary theories and simplistic answers predominant in the social media whose expansion and potential negative impact is another part of the technology story.

Discontent comes despite today’s world also being one of unprecedented prosperity and choice. Individual life has been transformed by the ubiquity of the PC, smartphone, and fast connectivity. This gives rise to an ongoing unresolved debate about the disconnect between economic realities and evident unhappiness, for which as detailed above there are many potential causes.

What is clear is that the last 30 years has seen the rise of China, further concentration of corporate power, ever greater manufacturing productivity, fragmentation of rules, and economic systems almost running themselves, all of which started from the ability to transmit information anywhere instantaneously. From this has developed a web of complexity that is today’s international political economy, one which resists any straightforward explanation or political fixes.

Governments need to accept and communicate the current state as the normal one in the first instance, given the absence of an easy way to change the inter-connected reality. This isn’t necessarily the operation of the world that they would have chosen, but they equally cannot bring back mass-employment factories or US / EU hegemony over world trade rules.

Those and many other things have passed, to be replaced by an emergent order still being discovered. At the very least this is a transition period that may last for some time.

Accepting today’s global economy also means being aware that dependencies are an inevitable corollary to expanded supply, as well as the founding rationale for global economic rules supporting even the largest countries. Weaponisation is thus damaging to all and even economic security actions must be carefully considered.

What may seem to be innocuous measures to bolster independence may actually set off a spiral of reactions that ends up having the opposite effect. Protection in an inter-connected world is best achieved therefore through trust and widely followed global rules.

Particularly challenging is that the largest powers are the most likely to break rules and pressure others, rather than seeing part of their responsibility as maintaining order. This applies equally to the US under Trump and China with extensive market manipulation, with even the EU prepared to act in coercive manner or as an unelected global regulator to benefit its companies.

Instability is inevitable for as long as this situation continues, since these are the players also most able to withstand counter-measures. We are also well past the point that China’s rise could be stopped, and even discussing that possibility incentivises further weaponisation to no realistic gain.

Trade conflicts seem almost inevitable for some years to come if trust is not restored, with countries at best protecting their interests while simultaneously trying to defuse tensions where possible. Coalitions of the willing may help not least in restating support for core WTO principles, but trade superpowers will want their own way while the medium powers lack strength on their own.

Where the smaller countries could help is developing a new generation of rules for today’s goods and services trade to include for example renewed prohibitions on weaponisation and examination of reciprocal commitments for countries becoming wealthier. These must however involve taking commitments that restrict their own policy space, something currently resisted as seen in digital trade agreements with broad exceptions.

Ultimately stabilising this global order is going to depend on agreement between the US, Europe, and China, with Brazil and India two other powerful players that will probably be involved. This is not likely to happen while any of them believe they can be better off acting alone, or that others are inexorably cheating.

This will require a level of belief in mutual benefit which may take many years or major conflict to happen given that it runs counter to so much of their prevailing domestic politics. Some rebalancing of commitments is also likely to be required, for example to balance US services or Chinese manufacturing strengths.

In the mean-time it is likely that non-state actors will be maintaining some sort of order in reality, as opposed to the fraying one of global rules, though at the cost of economic dynamism. This has so far been sufficient to make up for the absence of superpower consent, but the development of AI is going to present another challenge as well as opportunities which will need to be handled with extreme care.

Information and infrastructure security are as important as food security in this new world, and governments must consider carefully how to best use limited resources when they cannot and will not control all the networks that affect them. Europe in particular should not panic, the attraction of a stable rule of law and trusted institutions remains something to be cherished, as the centrepiece of an attractive market where companies want to succeed. This means also rejecting hasty changes to legislation in the name of protection, and demands from powerful incumbents for their own survival.

Global markets mean companies and consumers seeking diversity of supply and demand, and this should be at the heart of economic security efforts. Where there is a need to restrict imports including for diverse supply this should be targeted carefully rather than abolishing trade facilitating measures.

As well as protecting supply, countries should individually lean into their areas of economic strength to be best positioned within global networks. This will in any case be working with the flow of companies who are also trying to make decisions on where best to operate.

Notwithstanding their important role in the current economy, companies must be allowed to fail. Competition is what drove European economic success particularly in the 1990s, and what has been at the heart of China’s move up the value chain in recent years.

This needs to be supported in particular by reconsidering pathways through regulation to ensure that small companies are able to compete with those that can afford large compliance teams. Protections are essential but the cumulative burden needs to be addressed as well as the constant changing of individual measures, and evolving regulatory thinking on how to demonstrate compliance should be part of this.

Given that there will be more change, governments need to help people adapt as this happens through communication as much as practical measures. Economies and jobs do adjust, and harking back to a mythical past may actually prevent this happening effectively. Indeed, in general leaders need to think about how they can facilitate acceptance of today’s world, for that rather will also be the path to successful transition and far better economic security and political stability.

What is required after an understanding of the current situation is a rediscovery of politics as the arena for making domestic choices about resource allocation. Tensions are inevitable between growth and protection, generations, companies large and small, and so on. There are no “correct” technocratic decisions to these challenges, rather there is a need for politicians making the case for specific preferences. In doing so they would also be helping to socialise the realistic choices.

A networked “WhatsApp” world economy has delivered turbulence and yet also abundance, both fuelled by technology. Understanding and trusting this new world is essential to governments and political leaders finding their way once more, an inevitably risky process but ultimately the only one that will bring greater stability.