During the coming decade, the world economy will confront a crisis. This forecast may sound rash, but the past half century revealed that disasters occur regularly. In recent times, policymakers have faced not just the COVID-19 pandemic and its economic trauma but also various eurozone crises. These dramas followed the global financial crisis of 2008 and the consequent recession, which were in turn preceded by the shock of 9/11. Before the terrorist attacks of that day, the world had coped with the Internet boom and bust at the turn of the millennium; the exchange-rate and debt travails of Russia, East Asia, and Latin America in the late 1990s; painful economic adjustments at the end of the Cold War; developing-country defaults in the 1980s following the petrodollar lending splurge of the 1970s; and stagflation. Crises have been the historical norm, not the exception.
The next exigency could stem from many sources. Financial markets may stumble during the transition from an era of government spending and debt, backed by a flood of monetary liquidity, to a period of less fiscal largess and higher interest rates. Interactions among wildlife, livestock, other domestic animals, and humans will probably result in the spread of more zoonotic viruses. Someday, a cyberattack will shut down critical infrastructure. Disruptive technologies are vying to transform traditional business models through new platforms and decentralized systems. The world is in the early stages of a vast and likely discontinuous energy transition that will match the Industrial Revolution in its hard-to-anticipate effects. The risk of war looms. Even old-fashioned natural disasters may destabilize societies.
Whatever its origins, the next crisis will strike an economic system already under strain. People around the world are frustrated and restless. Leaders everywhere, attentive to domestic politics, are turning toward national industrial policies and hardening their borders. Geopolitical competition has bred mistrust among major economies, and the world seems to be fragmenting into regions pulled by economic gravity toward local poles of power.
The legacy institutions of earlier economic orders are struggling to adjust to these changes. The International Monetary Fund (IMF) and the World Bank have to add climate and pandemic policies to their development missions. The World Trade Organization has been unable to modernize its rules through negotiations, and the United States has paralyzed the WTO dispute-settlement system by blocking appointees to appeals panels.
Whatever its origins, the next crisis will strike an economic system already under strain.
Today’s fashion demands junking the old. It yearns for big, bold change. In the United States, the Biden administration decided the moment was ripe for a new New Deal. Internationally, the cognoscenti deposed the old “Washington consensus” in favor of a new geoeconomics. Planners at the United Nations, the RAND Corporation, and the World Economic Forum have heralded new economic orders.
But would-be architects of fresh designs have a mistaken understanding of both economic behavior and effective policymaking. Economic systems develop through constant change, often precipitated by unpredictable and sporadic events. They are more likely to resemble evolutionary and ever-mutating processes than planned orders guided by governments. Policymakers should therefore adapt continually adjusting systems to new circumstances instead of inventing novel structures designed to suit the latest theories.
The economic diplomacy of the 2020s should aim to achieve resilience and foster adaptation. These concepts diverge from the geopolitical ideal of stability and balance, as well as from the hopeful vision of refashioning the world in an ideal image. Economic diplomacy should accept the reality of perpetual dynamism, which differs from the expectation of perpetual conflict and the dream of perpetual peace.
U.S. economic statecraft needs to guide the principal multilateral economic institutions—the IMF, the World Bank, and the WTO—to adapt to a diverse mix of actors, states, and international challenges. The multilateral method of the 2020s must operate across a variety of public and private networks: regional, subnational, national, transnational, and global. Ironically, even though the United States led the creation of the major international organizations, Washington rarely reflects on their practical uses and devotes little effort to their renewal. They have persevered through past disasters, adjusting their mandates to help manage whatever crises have arisen. They have fostered prosperity for decades, and if properly revived, they can continue to do so for decades to come.
In the late 1800s and early 1900s, political economists such as Thorstein Veblen and Joseph Schumpeter argued that economic behavior reflects complex motivations, emotions, events, cultures, histories, and technological changes. They believed that an evolutionary worldview based on biological science would help people better understand the resulting economic activity, including periodic shocks, crises, and revolutions in entrepreneurship. Schumpeter argued that the process led to “creative destruction,” in which new economic innovations and organizations replace older, outdated ones.
Instead, academic economists turned to mathematical models to translate behavior into systems of equations that produce equilibriums. Shocks—such as those that led to the Great Depression—might occur, but economists focused on intervening to restore stability. Proponents of “rational expectations” and “efficient markets” took the idea of rational equilibriums to its logical conclusion, arguing that although individuals might act irrationally, the market, in aggregate, would behave as if everyone were rational. Socialists, in turn, tried instead to direct markets through government planning and state ownership.
Yet during the 1970s, even as theories of rational and efficient markets were winning adherents, Charles Kindleberger, an economic historian, offered a counterpoint. Kindleberger contended that irrational behavior was an important feature of economic systems and that crises occurred with “biologic regularity.” He complemented this insight with the study of international interdependence and institutional behavior, drawing on his practical experience working on the Marshall Plan. That combination led Kindleberger to argue that the world needed systemic leadership that would press for cooperative solutions to achieve global public goods, especially during crises. The task of the leading economic power, according to Kindleberger, was to create and adapt to changing circumstances international regimes that would encourage and execute such adjustments. He synthesized an evolutionary economic outlook with ideas about how governments could act in concert to counter cross-border economic collapses. One of Kindleberger’s students, Robert Shiller, a winner of the Nobel Prize in Economics and the author of Irrational Exuberance, has researched behavioral economics, a psychological branch of biological thinking. Indeed, Shiller’s recent work draws from epidemiology to study the contagion effects of economic events—a fitting complement to thinking about pandemics.
The application of evolutionary economics should not be an excuse for policy complacency. Nor should it suggest a revival of social Darwinism. To the contrary, policymakers need to adapt systems and institutions to changes and disruptions. But rather than replace the paradigms of the prior order, they must make continual functional fixes that help both national and transnational actors handle shocks and adjust.
The penchant for devising new international economic orders traces to Bretton Woods folklore. According to the appealing tale, a farsighted band of Americans, with some input from poorer but learned Britons, recognized the failures of the international economic system after World War I, in particular the Great Depression. In 1944, even as World War II still raged, the Bretton Woods visionaries laid the institutional foundations for a new international economic architecture. They established the IMF and the World Bank (officially, the International Bank for Reconstruction and Development) to manage exchange rates, support payment and capital flows, finance reconstruction, and encourage investment for development. They drew up plans for an international trade organization to facilitate commerce, but the negotiations collapsed over differences concerning the scope of regulations and controls.
The economic statesmen involved deserve respect. In facing vexing problems, they tried to learn from past mistakes. They sought to build the institutional pillars for a prosperous, peaceful international economy. They wanted to avoid the divisive and ultimately destructive policies of blocs and autarky.
Nevertheless—as the economist Benn Steil, a skillful historian of Bretton Woods, has pointed out—the architects of the conference drafted plans based on faulty assumptions. They supposed that the United States and the Soviet Union would cooperate, that Germany would be “pastoralized” after its economic dismantlement, that the British Empire would safely recede, and that the IMF’s modest balance-of-payments assistance would rebuild global trade. By 1947, each of those assumptions had proved incorrect. As a result, Europe faced economic and political collapse, and the world economy remained moribund.
Within a few years of the conference, another group of economic leaders, led by U.S. Secretary of State George Marshall and U.S. Assistant Secretary of State William Clayton, had to devise a new approach. They produced the Marshall Plan, encouraged the integration of Western European economies (including a new Federal Republic of Germany), and negotiated the General Agreement on Tariffs and Trade (GATT) to lower tariffs and foster common rules. The Marshall Plan enabled the Western European countries to rebuild their economies in cooperation with one another. The reduction in trade barriers led to global opportunities for growth and export-led development.
BENDING, NOT BREAKING
Yet the post–World War II economic system had to keep changing. The fixed exchange rates of Bretton Woods lasted until 1971, when the United States eliminated the dollar-gold link. For a few years, the major economies tried to reestablish fixed exchange rates at different levels. But the search for a structured order of currencies gave way to another system, this time of flexible, floating exchange rates.
The transition to floating rates was long and difficult, especially because sharp changes in monetary and energy policies triggered vast shifts of capital. France and Germany, for different reasons, eventually decided to return to fixed exchange rates and then, later, to devise a shared currency as part of their drive to unite Europe. Many emerging markets suffered exchange-rate and debt crises. Some developing countries wanted to avoid currency and price volatility, so they built up big dollar reserves and resorted to “dirty floats,” allowing their currencies to fluctuate, but only within a certain range. But overall, flexible exchange rates freed governments to determine national macroeconomic policies without the fixed constraint of protecting the value of their currencies; they relied instead on markets to adjust each currency’s relative price.
To avoid political pressures for trade protection, the United States decided in the second half of the 1980s to foster cooperation among the finance ministers and central bankers of the G-7 countries to manage imbalances in trade flows and between exchange rates. As developing economies became more important and the G-7 lost influence, the G-20 became a more useful forum. For example, the 2009 G-20 summit, in London, organized a timely fiscal and financial regulatory response to the global financial crisis. Now, the influence of the G-20 has faded because of its size, differences among the parties, and bureaucratization.
The world’s legacy institutions have not been the principal problem.
The IMF and the World Bank adapted to meet changed circumstances, as well. The IMF focused on macroeconomic reforms—fiscal and monetary policies—and became the financial firefighter for economies facing balance-of-payments and debt crises. It branched out into structural economic reforms, especially for states in transition to market economies. The IMF also served as an expert partner for the G-7 and, later, the G-20 in their efforts to cooperate. Eventually, the IMF assumed the role—along with the Financial Stability Board, which was formed in 2009—of monitoring and advising on the strength of financial institutions.
The World Bank, in turn, adjusted to changes in development experience and thinking. At first, it largely existed to provide capital for reconstruction in the postwar period in Europe and Japan, as well as for infrastructure in developing countries. But over time, it shifted to helping fund antipoverty programs, advising on structural reforms, offering crisis support and debt restructuring, promoting private-sector development, providing public goods, assisting fragile and insecure states, supporting the United Nations’ Millennium Development Goals and Sustainable Development Goals, and sharing experience with middle-income economies. The World Bank then even shifted back to infrastructure development through new financing vehicles.
The GATT grew from 23 members to 164. The participants negotiated eight trade rounds, cutting tariffs, expanding the topics covered, and adding rules. The Uruguay Round, completed in 1994, transformed the GATT into the WTO, which established a disciplined dispute-settlement system and, supposedly, an ongoing agenda of negotiations. The WTO offers the principal example of a multilateral body that has agreed-on rules, backed by a process to settle disputes. The system preserves members’ sovereign rights to reject WTO decisions while authorizing counterparties to negotiate compensation or withdraw comparable trade benefits. The rules, backed by a neutral tribunal, have encouraged economies to lower barriers to trade.
Over the course of the 78 years since the creation of the Bretton Woods institutions, would-be architects have regularly proffered new international economic orders. Practical realities, however, have resulted in experiences that look more like those of the leaders of 1947—who recognized that the Bretton Woods system was not working as hoped. As the global economic system evolved, including through shocks and crises, policymakers experimented. Rather than search for a new constructed stability, pragmatic officials accepted that they had to continually navigate through dynamic conditions. The legacy institutions have not been the principal problem; people can adapt them to new needs. The system ossifies when leaders fail to adjust to the next phase of uncertainty.
The most successful U.S. leaders anticipated—or at least recognized—shifting challenges. They adapted existing networks and institutions, or supplemented them with new ones, to solve novel problems. Leadership, they discovered, often required a mix of using old systems in new ways and devising innovative functional fixes. Schumpeter might have called it “the creative destruction of multilateralism.”
Policymakers today can mine the U.S. experience for lessons about how to build and maintain successful adaptive systems. The first, and most important, lesson is that systems need the flexibility to adjust to changes in technology, finance, and business models. Private sectors are continually innovating. Entrepreneurs’ experiments spark transformations. But disruptions also create costly adjustments.
Ironically, many U.S. foreign policy leaders have overlooked the United States’ innovative strengths. In the 1970s, President Richard Nixon and his adviser Henry Kissinger mapped out a new multilateralism to help manage what they perceived as the United States’ economic decline. Nixon designed his dramatic economic moves of August 1971, when he abandoned the dollar-gold link, to rebalance international economic responsibilities, just as the Nixon Doctrine called for sharing the burdens of security more equally. But in the 1980s, President Ronald Reagan and Secretary of State George Shultz had a more optimistic outlook about the U.S. economy’s ability to renew itself. Accordingly, in the aftermath of Nixon’s break with the fixed exchange rate tied to gold, Shultz favored flexible exchange rates instead of resetting currency prices at new levels. He believed markets had to be free to adjust.
Adaptive systems also recognize power shifts, whether driven by economics, technologies, demographics, or military strength. After World War II, the United States promoted recoveries in Europe and Japan. During the 1970s and 1980s, U.S. policy had to adapt to the larger size and influence of both. In the 1980s and 1990s, the United States began to recognize the continental opportunities—and risks—of changes in Mexico. Working with Canada, Washington created a new North American partnership, with the North American Free Trade Agreement as the cornerstone.
In recent decades, the United States has had to adapt to the growing influence—and problems—of emerging markets. China’s rising power has become Washington’s greatest external preoccupation, although the United States has yet to develop a clear concept of a system that can peacefully accommodate both countries. Americans recognize that India will be a place of power in the years ahead, but they have been slow to appreciate the changing economic patterns across Southeast Asia. The demographics of Africa loom over the future.
The final lesson from the U.S. experience is that successful adaptive systems have to be grounded in political support at home. From 1947 until today, presidents have kept a close eye on public support and built partnerships with Congress as they have developed foreign policies. Polls suggest that Americans recognize the value of global interconnections, but public backing for international commitments ebbs and flows. Dramatic events can seize voters’ attention, but their focus eventually turns to other issues. Successful political leadership has helped citizens perceive that domestic and international interests are different sides of the same coin. The U.S. government needs to help its citizens adapt to change without stifling innovation.
ANTICIPATION AND ADAPTATION
Policymakers find it hard to predict events, but they can and should anticipate developments. They should consider a number of evolving features of today’s global economy. First, the world is in the midst of a historic fiscal-monetary experiment. Since the global financial crisis, major central banks have vastly expanded money and credit. In response to the pandemic, major economies, especially in the developed world, have spent trillions of dollars while relying on monetary policies to buy even more government securities. Even without hazarding judgments about future inflation, pockets of excess, balance-sheet and macroeconomic risks, and the standing of the U.S. dollar, policymakers need to prepare for large, sharp shifts in expectations about economic conditions, in the valuations of assets, and in financial flows across countries and markets.
The finance ministers and central bankers of major economies need a small, informal forum where they can regularly monitor macroeconomic and financial conditions, share perspectives, and, when necessary, act in concert. To avoid jousts over leadership, the IMF could organize quarterly sessions among the principal actors in the global financial system, those whose currencies are in the Special Drawing Rights (SDRs), an international reserve asset created by the IMF: China, Japan, the United Kingdom, the United States, and the eurozone countries (and the European Central Bank). When the next crisis hits, these economies will need to cooperate.
The IMF, as host and neutral ground, should offer independent outlooks. The managing director of the IMF could serve as an economic diplomat, quietly suggesting cooperative steps. The G-7, the G-20, and the wider IMF membership would continue their work, contributing to and expanding the reach of the core SDR group.
Such a forum might also build habits of cooperation and a sense of shared responsibility. That ethos could help these actors devise approaches to problems such as developing countries’ debts. Many poorer economies now rely on Beijing as their lender of first resort, but China’s lack of debt transparency inhibits improvements for all parties, including China itself. As the reserve-currency countries experiment with digital currencies and payment systems, the group could also consider questions of interoperability, confidence, and security. Although political constraints may limit or preclude cooperation, this forum could at least identify options for constructive action.
Many poorer economies rely on Beijing for loans.
Economic stability isn’t threatened just by fiscal policy and markets. As the COVID-19 pandemic has shown, external, noneconomic forces, such as diseases, can quickly create global economic crises, and the world is still learning how to prevent, recognize, and respond to dangerous viruses and other risks to biological security. The frequency and costs of viral disease outbreaks have been increasing as interactions among wildlife, livestock, other domestic animals, and people have expanded rapidly. Transportation networks accelerate global transmission. South Asia, Southeast Asia, and sub-Saharan Africa are especially intense hot spots. The slow pace of vaccination in developing countries creates opportunities for more variants, which might then roll across the world in ruinous waves. The economic effects of disease have hit the poorest people the hardest.
The UN agencies charged with strengthening the provision of global public goods—such as the World Health Organization (WHO)—do not have the resources or the authority to match their mandates. The nation-states that compose their governing boards make (or veto) the real decisions. Each body has its own peculiar political culture. The multilateral economic institutions should add their expertise, resources, and convening power to assist these agencies. Even though most of the same governments participate in the United Nations and the multilateral economic organizations, each body draws from different ministries, power centers, and advocates.
For example, as the finance ministries of the world struggled with the global financial crisis in 2008, food prices surged in developing countries. The World Bank customized support for the UN humanitarian agencies that handle food and agriculture and worked with the WTO and the G-20 to resist export bans and boost transparency in order to avoid panic and hoarding. When the economist Chad Bown reviewed the transparency initiative over a decade later, he concluded that the better information networks were still helping counter price spikes and export controls that could exacerbate food price problems.
COVID-19 has demonstrated that the WHO does not have the field capacity to counter a global pandemic. In the first decade of this century, the organization supported the creation of GAVI, the Vaccine Alliance—a public-private partnership with the Gates Foundation, UNICEF, pharmaceutical companies, and the World Bank that helps develop vaccines in poor countries. COVAX, GAVI’s initiative to fight COVID-19, has stumbled, but so have many national projects. The UN Economic Commission for Africa and the African Export-Import Bank adapted rapidly to coordinate vaccine providers, encourage African production of vaccines, build on national delivery systems, and find fast finance.
A new pandemic is just one way that nature could spark an economic shock.
A new international biological security agreement could enhance this institutional and financial cooperation. Both health and veterinary authorities need to gather and share better and more timely information about zoonotic viruses. Research funding could enable health authorities to map the DNA sequences of potentially dangerous diseases. The World Bank and the U.S. Agency for International Development should work with the WHO to ensure strong connections all along the vaccine delivery chain, especially through the health-care systems of poor countries. The U.S. President’s Emergency Plan for AIDS Relief, or PEPFAR, which the United States devised to suppress the HIV/AIDS pandemic in Africa almost 20 years ago, offers an obvious but inexplicably untapped model.
But a disease outbreak is just one way that nature could help spark an economic shock. Climate change is prompting new environmental and carbon policies that will change energy markets and costs during a lengthy era of transition away from fossil fuels. Huge structural shifts in energy sources, production, transmission, and pricing will create disconnects. Some major developing economies, already struggling with COVID-19, will object adamantly to paying for the transition. The world economy will face sizable adaptation costs, as well.
The World Bank raised money for the new Climate Investment Funds in 2008. The CIF experimented with climate initiatives for developing countries in technologies, resilience, energy access, and forestation. The original $8.5 billion leveraged total investments of roughly $70 billion. As a practical matter, developed-country donors were willing to entrust the World Bank and its regional counterparts with innovative trust funds (and evaluation processes), but they were not ready to just write checks to developing countries.
The UN pressed for its own funding arm, leading to the creation of the Green Climate Fund. Over the course of a decade, the GCF has struggled to gain scale and confidence. Meanwhile, the World Bank’s CIF has been sidelined. Developing countries are complaining that higher-income states are not fulfilling their pledges to help fund the transition to low- or no-carbon energy. The United States and its partners need practical adaptations to overcome this impasse; they should be building on a successful record.
The new International Sustainability Standards Board, created by the International Financial Reporting Standards Foundation, can help. It will draft climate disclosure criteria that should offer investors in 130 countries reliable, comparative environmental data. Investors, customers, and regulators are pressing companies to detail carbon net-zero commitments and energy transition plans. Almost 100 financial supervisors and the IMF are incorporating climate risks in their financial assessments of banks, other lenders, and countries. Taken together, these developments are creating the data infrastructure needed for carbon credit markets. The World Bank should connect development projects to institutional investors through new, large, liquid carbon finance markets, where carbon financial products will be tracked and traded like other commodities.
Energy markets are not the only sector that could disrupt the global economy or that would benefit from new monitoring and oversight. In the coming years, digital and data transfers will increasingly underpin the world economy. Even before the pandemic, growth in the trade of manufactured goods had slowed notably, but trade in services had jumped. Digital connectivity is enabling even more wide-ranging and numerous gains in services, and the pandemic economy has accelerated this trend. But the rules and standards for exchanges of data and digital products are ill defined. Conflicts will become more common. Cyberattacks will shut down vital information systems.
The United States has traditionally led in encouraging new international rules and standards, in part because U.S. firms have been in the forefront of cutting-edge activities. But today, economic and technological processes race ahead with little multilateral guidance. Washington should be preparing new rules for the digital trade, working first with like-minded partners. The rules should ease the transfer of digital services and data across borders, while giving countries the freedom to judge their own needs for security, safety, and privacy.
But implementing these new, U.S.-made rules across the world will prove tricky. The United States is continuously clashing with the planet’s second-largest economy: China. Both have been undermining the international economic system that enabled the former’s unparalleled power and the latter’s historic rise. Both have shown little inclination to sponsor systemic reforms.
The global economy is unlikely to evolve soundly if the U.S. and China are in conflict.
Washington will need to decide whether it can conceive of working practically with Beijing on topics of mutual interest. At times, U.S. policy now attempts to limit, contain, decouple the U.S. economy from, or penalize China’s economy. On other occasions, Washington demands that China purchase more U.S. exports and treat U.S. companies better—steps that would further integration. Sometimes, the United States wants China to adhere to rules, whether international or Washington’s, but other times, the United States acts as if China is too big, bullying, or untrustworthy to function reliably within a system of rules at all. U.S. policies also have to account for the preferences of U.S. allies and partners, who cannot envisage containment of, or a full decoupling from, China.
When Kindleberger analyzed the causes of the Great Depression, he pointed to the absence of a leading country that would act on the basis of systemic as well as national interests. In the 1930s, the United Kingdom had the experience but no longer the capacity to lead; the United States had the potential but not the disposition or experience. Kindleberger also warned that an abdication of or conflict over leadership would lead to stalemate and economic hardship. He would have eyed today’s U.S.-Chinese tensions with worry.
The United States will probably find its way toward a mixed approach with China: some combination of exclusion, participation, and perhaps even cooperation. In doing so, the United States will need to decide whether, as a general matter, it prefers to explore adaptive methods with China or to resist Chinese participation. The world economy is unlikely to evolve soundly and resiliently if the two biggest economies are in conflict.
The plight of the WTO typifies the challenge of adapting multilateral institutions to changing circumstances in an era when national governments find political posturing more tempting than negotiating useful, albeit imperfect, cooperative regimes. Globalization’s opponents have objected to the WTO’s rules even as they have demanded new international rules for their favored causes. Others have insisted that WTO rules should account for their preferences—with or without a negotiating process. Even though the United States has won the vast majority of the WTO cases it has brought—and used the leverage of litigation to gain results in other situations—some U.S. interests have objected to losing any cases at all. The U.S. government has blamed the WTO’s Appellate Body for adverse rulings and paralyzed the system by blocking appointments. So far, the Biden administration has joined the chorus complaining about the WTO instead of working to improve the organization.
The forces of globalization have not retreated. Consider the challenges of climate change, biological security, migration, and financial and data flows. But the governance of globalization has been fraying and fragmenting, and people across the world appear disconnected. These conditions explain the appeal of creating new, sweeping economic systems. But they won’t work.
Since the Great Depression, U.S. economic diplomacy has been most successful when officials have combined a sense of direction about an open, cooperative, mutually beneficial international economic system with a spirit of problem solving. Americans have adapted to a variety of forces and events through pragmatic adjustments. They have recognized implicitly that the world economy operates more like an evolutionary organism than a rational model, whether purely capitalist or socialist. The goal has been to foster economic resilience.
Resilient systems do not avoid risks; indeed, risk-taking produces economic progress. The principal aim of a resilient, adaptive system is to prevent tipping points or downward spirals that could lead to its extinction. Multilateral economic institutions and regimes can help national governments and private participants withstand blows and adapt. They can forecast developments, encourage cooperation, provide buffers, recommend redundancies, mobilize resources, offer expertise and continuous learning, encourage negotiations, and help manage conflicts. But they adapt incrementally and need the support of their member governments. Multilateral institutions should now extend their economic and development missions to encompass transnational challenges in partnership with specialized UN agencies for health, the environment, migration and refugees, and food and agriculture. They also can contribute to the economic, governance, and legal foundations for security in states and regions torn by conflict.
The world economy operates more like an evolutionary organism than a rational model.
As the economist Markus Brunnermeier has observed, resilient and adaptive economic systems are natural complements to free and open societies. Such systems flourish with transparency, open information, and solutions achieved through the combined efforts of many private and independent actors. Free-flowing information creates feedback loops that speed adjustment. Authoritarian countries, by contrast, deal with crises by seeking to suppress disruptions. They opt for controls, as Beijing has done with COVID-19. Open societies and economic systems appear shaky when shocked but are more likely to rebound through adaptations. The United States, the United Kingdom, and the European Union developed world-class vaccines and treatments; they are likely to weather future pandemic waves through a combination of high-quality vaccines, natural immunity, and treatments. China will have to choose between strict controls and adapting to virus waves that must pass through its population. An overreliance on suppression will lead to China’s isolation.
The United States has been most successful when it has mobilized international coalitions that enabled other participants to pursue both national and systemic interests with Washington. The country will not become safer by retreating behind walls and borders, nor will it succeed by tearing down the existing order and pursuing chimeras. Washington needs to rediscover its ability to adapt pragmatically to dynamic conditions. As Helmut Schmidt, the West German chancellor, said in the late 1970s, “Those who have visions should see a doctor.”
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