From System, to Society, to State: Trade Policy Options in the Post-crisis Era

• In Event: Lightning Round: Graduate Student Research: Ideas, Institutions, Coalitions & Movements

Abstract

The international financial crisis in 2008 hit many countries hard and caused significant changes in the international economic system: many developed countries changed from being the promoters of free trade to being the perpetrators of protectionism, while developing countries, especially those with emerging economies, changed from being passive participants of globalization to being the defenders of free trade. Why did such a big difference and divergence in trade policies between developed and developing countries arise after the 2008 financial crisis? Based on this phenomenon, this paper attempts to propose an integrated perspective based on systemic, social, and national paths to logically link political and economic factors at the international and domestic levels, and use the system-level perspective as the starting point of this logical path to provide a framework for foreign trade policy choices that are generated "from the outside in" and ultimately produced by the state. Taking the power and wealth structures of countries at the system level as the starting point, this paper points out that the cost-benefit changes in the supply of international public goods under the hegemonic system lead to different policy stances of hegemonic countries and emerging countries; on the other hand, the international division of labor system based on global value chains expands the choice space of capital and increases the lag of labor market adjustment, which makes capital factors form a bargaining advantage over labor factors. At the social level, the owners of capital and labor factors compete around the orientation of trade policy. At the national level, the logic of trade policy adaptation in a country is a balance between serving the interests of capital and responding to the reverse social movement. An integrated perspective based on system, society, and state is conducive to understanding the positions and roles of developed and developing countries in the process of shaping the new economic order.

Author

• Dancheng Li, Tsinghua University