Global Economic Constitutionalism and the Future of Global Trade

Abstract

The global trade order that has been in place since the end of the Second World War is now in crisis. Populism has broken out around the world. It is embraced by powerful forces in the United States and Europe, and it is at the root of Brexit and other challenges to the established international economic order.

The crisis in trade and the pushback against globalization is often blamed on misguided theories of economic nationalism but that is only a symptom, not the source of the crisis. Changes in the nature of the global constitutional order and the domestic markets of the participating States are the reason why the global trade order is in crisis. This Article identifies these changes and proposes structural reforms to address the needs of the 21st century globalized markets.

We proceed in four parts. We begin by articulating the concept of a global economic constitution. We then review the history of successive iterations of the global economic constitution, starting with the Industrial Revolution and continuing through the rise of today’s globalized, integrated markets. In that historical context, we analyze the factors that explain the current crisis of legitimacy of the international economic order and that require a transition to a new global economic order. Those include: the rise of a new class of disadvantaged members of the middle class, whom we call the “chronically excluded”; fundamental changes in the global supply chain; the rise of a global middle class competing for existing opportunities, which exceeds 3 billion members and which disproportionately grows in emerging markets; changes in the nature of work, the corporation, and the scope and effectiveness of the governmental regulation.

In the fourth and final part, we propose policy and institutional reforms, accounting for those changes. Our proposals address both domestic and international trade policy and institutions, and include fundamental changes to the way the State provides for the economic welfare and security of its citizens. These proposals will, we argue, usher in a new global economic constitution, one that restores the legitimacy of the global economic order.

Keywords: Global Trade