• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Describe the liberal world order. Has it beeneffective?

Extracts from this document...


Describe the liberal world order. Has it been effective? 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, and with this the liberal world order came to an end. According to Mises a liberal world order required four main areas of economic activity to be true. The first of these stated by Mises was a free market for labour, in other words, the level of wages and conditions should be set by the employers, after negotiation with the employees, rather than being controlled by the government. ...read more.


The second economic constraint set out by Mises was that there should be a market economy, whereby the forces in the market should be left to work freely, that supply and demand should be left to determine price rather than the government regulating this. Thirdly, free trade is seen as an essential aspect of a liberal world order, he stated that it must be free to import and export between countries, with out control by governments. Finally, there must be a free market monetary system in place, in that the government must not control either the value or the flow of money in the economy Mises also argued that, if a country's domestic economic activity was to be fully privatised, this would mean that the economic activity in that country would effectively be free from political influences, as it would not be the government controlling it. He argued that the way to attain peace and prosperity was not by governing and controlling, but rather by limiting the level of governance, and that society would naturally sort itself out. This idea was also agreed by Ricardo: "Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. The pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilised world." In order for the liberal world order to come about; first one nation must hold the responsibility of setting up the liberal world order and also for maintaining it. The United States has been responsible for creating a large amount of the liberal world economy, after the Second World War, the United States recognised that it was the leading power in the world. ...read more.


The United States has been responsible for creating a large amount of the liberal world economy, after the Second World War, the United States recognised that it was the leading power in the world. It set up various institutions in order to regulate the liberal world economy; the International Monetary Fund and the World Bank were set up to help nations who needed help, rather than borrowing from other countries directly. The United States also set up the General agreement of Tariffs and Trade Unfortunately, it can be said that the liberal world order has not experienced a great deal of success. It requires a dominant power to act completely altruistically in setting up such an economic platform, without looking for an individual gain, rather, looking to benefit all members of the order. It is necessary to have one dominant power to look over the order as in the absence of such power, a completely open world economy with free trade throughout would prove too difficult to maintain. If this were the case, states would again look to benefit themselves alone, and would become self-interested and protectionist. This is because in the short term states may feel that they would benefit more if they were 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. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Is there a trade-off between prosperity and violence? If so, what is it? If ...

    As has been hinted at, "in the process of development"..."coercion alters in nature" so that "rather than providing a means for engaging in costly acts of redistribution, it becomes a means for promoting the creation of wealth" (Bates, R, 2001, pg.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    more-or-less radical change in the way in which the world economy is governed, which sometimes travels under the label of "global governance". Globalisation and Social Democracy is not street-theatre on the fringe; rather its champions are establishment figures - senior politicians, leading officials in international organisations (particularly within the UN

  1. How Accurate Is It To Describe The Government Between 1822-30 As Liberal Tories?

    All their supposed new ideas were also nothing new. They were all ideas that had been thought up years ago, from the years of Pitt. These ideas were postponed due to war or economic crisis, and the new Cabinet simply set the ball rolling again.

  2. By the mid nineteenth century, Britain had been the world's strongest economic power for ...

    However, to begin the task of assessing the role of the entrepreneur, a conclusive image of what exactly constitutes entrepreneurship has to be undertaken. There has never been, nor do I think, ever will be, a standard definition of an entrepreneur.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work