Determining whether the economy is based on the notion of rules or rule.
Donald Trump has been listening carefully to his national security advisor, H.R. McMaster, who unilaterally decided last week that geopolitics is a plural noun, as reported by The Daily Devil’s Dictionary. One of the key points McMaster made concerned what he termed as Chinese “economic aggression.” He characterized it as a threat that is “challenging the rules-based economic order that helped lift hundreds of millions of people out of poverty.”
Given what we know about both the financial chaos that produced the crash of 2008, and the geopolitical chaos that has produced perennial wars across broad swaths of the Eurasia and Africa since 2001 — two dramatic developments that bookended the eight years of George W. Bush’s administration — we are left wondering not only which “rules-based economic order” McMaster may be referring to, but also what the presumed rules are on which it is based.
Here is today’s 3D definition:
In accordance with the arbitrary will of a person in a position of authority who imagines that the logic believed to underlie that person’s or institution’s power is a set of rules all reasonable people spontaneously accept and adhere to
Many people believe that one of the privileges of rulers is to define the rules. That may seem straightforward, but history — a concept McMaster seems not to have mastered — singularly complicates the issue. When speaking about behavioral systems, such as the economy, the “rules” (as opposed to laws) exist largely as tacit guidelines and accepted behavioral patterns that tend to remain relatively stable over time despite being constantly adjusted to changing conditions in the environment.
That is precisely the role of history, which may be thought of as the sum of all human interactions over a period of time. Consequently, only dictators find themselves truly in a position to define and apply the rules. Leaders can attempt, through dialogue, to interpret the existing rules and, in some cases, add to them through various forms of negotiation and persuasion. Their attempt implies a general respect for the current set of rules.
Unlike laws, rules of an economy or a culture are unwritten and cannot be enforced, except by arbitrary interventions such as military action. We shouldn’t find it surprising that former Lieutenant General McMaster fails to appreciate the distinction. Notice that he doesn’t speak of a rules-based economy, which capitalist orthodoxy believes to be governed by an invisible hand, but of an economic order. For a military officer like McMaster, the notion of order has a particularly rigid meaning.
The rules he appears to respect may, therefore, either be the object of an understood consensus or imaginary. He may have been thinking of the standard Republican dogma of trickle-down economics or the classic law of supply and demand, but most likely the idea he has in mind is the notion of a free market economy. But if the free market economy does have implicit behavioral rules (determined by the supposed law of self-interest), the global economic order manifestly does not, because each sovereign nation can write its own laws and define its own rules.
US governments always tend to believe that their rules are the only valid ones, on which everyone should align, but there is no reason other than imperialistic hubris to suppose that China, Russia, India and any number of less powerful nations consider those rules to constitute an economic order.
McMaster didn’t invent the idea of “rules-based economic order.” It’s been in the background since the Bretton Woods agreement in 1944, which focused on monetary management, especially with respect to Western currencies. It lies behind George H.W. Bush’s “new world order” following the first Gulf War. Every new world order, since Woodrow Wilson, has been promoted as a given of contemporary historical reality by those whose interests it serves. One commentator on McMaster’s speech cites “Russia and China who seek to upend the rules-based world order which the United States has led since 1945.” In the 19th century “Britannia ruled the waves.” At the end of the 20th and the beginning of the 21st, the US rules the “order.”
The term itself, “rules-based economic order,” as used by McMaster, derives from the first report by the Brent Scowcroft Center on International Security in 2015, entitled, Shaping the Asia-Pacific Future: Strengthening the Institutional Architecture for an Open, Rules-Based Economic Order.
In other words, the rules for the entire world, though no one has explicitly formulated them, have been imagined, promoted and enforced principally by the US, as leader of a world economy dominated by the dollar, initially supported by gold but released from that burden under Richard Nixon. One institute calls the rules-based order a “Made in America Idea.” At the same time, McMaster promises to counter the threats from Russia and China with “competitive engagement,” theoretically a violation of the “rules-based order” he wishes to defend.
It won’t be the first time a US government has both defined the rules for others and chosen to violate them when “national interest” is at stake.
*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]
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