Next Contender: Globalism

The marauding financial crisis slaughtered the GOP and ransacked Reagan’s capitalism. Libertarians have run for the hills, pondering their fate. Will they regroup and form an organized guerrilla resistance, or will they skulk back into town and be assimilated with the rest of us into the next iteration of market theory?

We have learned that our financial systems, in their interdependence, rest on a fragile base, knees knocking with hysteria from the bursting of the mortgage bubble. Indeed, defaults on home loans are at a peak. Yet, at the same time, the actual dollar loss directly attributable to the imprudent loans is not anywhere near the dollar loss to capital markets in the G-20.

As the churn works its way around the world, exposing even greater fragility, the concept of globalism itself will be challenged. At risk is more than wealth, prosperity, and access to mangoes in December. The international cooperation in other matters will feel the strain. For example, the international terrorist black list is maintained and enforced through mutual cooperation. It is expensive to adequately check your customer base for terrorist financiers. As goodwill dissipates in tandem with financial losses, the incentive for countries like Ireland and Singapore to expend resources for the benefit of terrorist target nations will likewise diminish.

As the commodity bubbles burst with global recession and a strangely resurgent dollar, nationalist socialism a la Venezuela and Iran will become more attractive to whichever warlords can benefit from the misery and chaos caused by the meltdown. Warlordism like this will self-perpetuate, and isolationism will become an international norm due to a lack of trust and a breakdown of observing international standards.

Prior to World War I, many believed that the era of European wars was over because of the interconnectedness of markets and the free flow of people and ideas across borders that characterized the 30 years prior to the assassination of Franz Ferdinand. Yet, devastating war did break out, mostly as a result of the vestigial inferior political systems of Germany, Austria-Hungary, and Russia. If the march of democracy is reversed and the world is gripped by a new era of warlordism, not even the allure of global interchange of commercial goods and cultural artifacts will prevent a repeat of the horrors of multinational, intercontinental war.