With the arrival of 2024, several landmark anniversaries have come into focus: the 80th anniversaries of D-Day and the Bretton Woods conference, and the 75th anniversary of NATO’s founding. These historical events provide a vital backdrop to reflect on the postwar order’s triumphs spurred by U.S. leadership. The significant accomplishments include the decisive defeat of fascism, the establishment of robust global financial systems, and economic growth fostered by trade liberalization. However, one must also consider that the architects of the postwar vision aimed for broader global governance, where economic security for working people was paramount.
While trade liberalization played a critical role, the underlying belief was that economic stability was essential for lasting peace—a lesson drawn from the economic hardships and political instability of the 1930s that fueled the rise of autocracies, notably Nazi Germany. This framework was not merely about commerce but was designed to prevent the emergence of conditions leading to global conflict, ensuring a peaceful and prosperous future for all.
Roosevelt’s Vision of Four Freedoms
The Foundation of Economic Security
In Roosevelt’s 1941 State of the Union address, he outlined four essential freedoms: freedom of speech, freedom of worship, freedom from want, and freedom from fear, emphasizing how economic security was foundational for political stability and peace. This vision was holistic, intertwining economic stability with democratic values to prevent the kinds of crises that had led to World War II. The focus on “freedom from want” was particularly significant, as it underscored the need to address the economic grievances that could destabilize societies and governments.
This comprehensive vision was a direct response to the economic turmoil and political extremism witnessed in the previous decade. Roosevelt understood that without addressing economic insecurity, even democracies could succumb to the same authoritarian tendencies that had wreaked havoc across Europe. Thus, his vision aimed to create a global environment where political and economic freedoms could thrive together, ensuring a durable peace reinforced by economic prosperity.
The Role of Economic Stability
The belief in economic stability’s critical role in fostering lasting peace emerged from the profound lessons of the 1930s when economic hardships significantly contributed to political instability and the rise of autocracies, like Nazi Germany. The architects of the postwar order, mindful of this history, aimed to build frameworks that could prevent such destabilizing conditions from recurring. Their goal was not just about winning wars but winning the peace by creating an environment supportive of economic security and political stability.
Roosevelt’s vision of the four freedoms extended beyond the immediate postwar recovery, serving as a blueprint for a globally integrated economic order that would prevent the resurgence of such destructive ideologies. Ensuring economic security was seen as a way to inoculate societies against the potent mix of economic despair and political radicalization. By embedding these principles in global governance structures, the architects hoped to build a resilient international community capable of withstanding future economic shocks and political challenges.
Bretton Woods and the International Trade Organization (ITO)
Establishing Global Financial Systems
The Bretton Woods conference was a historic gathering that resulted in the creation of the World Bank and the International Monetary Fund (IMF). These institutions were designed specifically to provide financial stability and support economic growth, necessary steps to rebuild war-torn economies and prevent economic collapse like that of the 1930s. The World Bank focused on reconstruction and development, providing long-term loans for rebuilding infrastructure, while the IMF aimed to ensure financial stability through short-term financial assistance to countries facing balance-of-payments problems.
These institutions played a crucial role in fostering international economic cooperation and facilitating the recovery of global economies. They were not merely stopgap solutions but permanent fixtures in the postwar economic landscape intended to avert the recurrence of the economic crises that had previously led to war and conflict. By stabilizing economies and fostering growth, the World Bank and IMF contributed significantly to creating a more stable, interconnected world economy.
A Comprehensive Framework for Trade
Negotiations for the International Trade Organization (ITO) in 1946 aimed to establish a comprehensive international framework that included fair labor standards, environmental protections, and policies to foster full employment. The ITO’s charter covered extensive economic and social issues, intending to prevent countries from adopting policies that could export unemployment or destabilize global markets. It sought to create a balanced and inclusive global trading system that supported sustainable development.
The comprehensive vision for the ITO was ambitious, aiming to build on the principles of economic cooperation and integration established at Bretton Woods. By incorporating fair labor standards and environmental protections, the ITO sought to ensure that trade would foster not just economic growth but also social development and environmental sustainability. However, despite substantial international support, the ITO faced significant political challenges that ultimately prevented it from becoming a reality, leading to the emergence of the narrower General Agreement on Tariffs and Trade (GATT).
Demise of the ITO and Rise of Neoliberalism
Political Opposition and Lobbying
Despite its promise, the ITO Charter never took effect due to intense political opposition and lobbying by big business interests. These stakeholders feared the potential regulatory constraints and the comprehensive nature of the ITO’s proposals. As a result, GATT, which focused narrowly on tariff reductions, emerged as the primary framework governing international trade. This marked a significant shift from the broader vision of economic security and stability that had been so integral to the postwar order.
GATT’s narrower focus on tariff reductions prioritized the lowering of barriers to trade over broader economic and social issues. While it succeeded in promoting trade liberalization and economic growth, it failed to address the concerns of labor standards, environmental protections, and full employment—key elements of the original postwar vision. This shift represented a move away from a holistic approach to economic governance to one that emphasized market access and trade liberalization as standalone objectives.
The Shift Toward Neoliberalism
By the 1980s, the liberal vision that defined the immediate postwar period had devolved into a neoliberal pursuit of deregulation, epitomized by the policies of the Reagan administration. This new approach emphasized free markets, minimal government intervention, and deregulation, aiming to maximize economic efficiency and growth. However, these policies neglected the protections and safeguards envisioned by Roosevelt, leading to increased inequality and economic dislocation for working people.
Neoliberalism prioritized market efficiency over social equity, often resulting in policies that favored capital over labor. While this led to significant economic growth and innovation, it also contributed to rising income inequality and economic instability for many working people. The deregulation of financial markets and industries led to economic booms, but also to busts, such as the financial crises of the late 2000s. This shift represented a departure from the balanced approach to economic governance that had characterized the immediate postwar period, revealing the limitations and challenges of a laissez-faire economic model.
Contemporary Challenges and Biden’s Trade Policy
Reviving the Postwar Vision
The Biden administration is seeking to revive the postwar vision of shared prosperity by emphasizing targeted investments, worker empowerment, and competition. President Biden’s economic agenda aims to build the economy “from the middle out and the bottom up,” echoing Roosevelt’s ideals. This approach focuses on correcting the historical missteps of neoliberalism and ensuring that the benefits of trade and economic growth are more evenly distributed across society.
Biden’s trade policy seeks to incorporate fair labor standards, environmental protections, and policies that promote inclusive growth and economic security. By prioritizing these elements, the administration aims to create a more equitable and sustainable economic model. This shift represents a return to a more balanced approach to economic governance, one that recognizes the interdependence of social equity and economic efficiency. It aims to rebuild the middle class by ensuring that trade policies support domestic job creation and fair competition.
Addressing Economic Inequality
Economic inequality has become a growing concern, exacerbated by decades of neoliberal policies that have concentrated wealth and opportunities in the hands of a few. Figures like Pope Francis and economists such as Angus Deaton have raised questions about the benefits of free trade and globalization for working people. They have highlighted how these policies often lead to job losses, wage stagnation, and economic insecurity for many.
The Biden administration’s policies are designed to address these concerns by prioritizing inclusive growth and economic security. By focusing on targeted investments in infrastructure, education, and green energy, the administration aims to create high-quality jobs and promote sustainable economic growth. Additionally, Biden’s trade policy seeks to ensure that the benefits of globalization are more widely shared, addressing the root causes of economic inequality and fostering a more inclusive and equitable economy.
Shift in European Perspective
Calls for Radical Changes
There has been a growing recognition among European leaders and policymakers of the need for radical changes in response to the failures of neoliberal globalization. Figures such as former Italian Prime Minister Mario Draghi have called for trade policies prioritizing inclusive growth and economic security. This shift reflects a broader understanding of the need to address the economic and social challenges that have arisen from decades of market liberalization and deregulation.
European leaders are increasingly advocating for policies that promote sustainable development, fair labor standards, and social protections. This shift in perspective aligns with the Biden administration’s approach, emphasizing the need for a balanced and inclusive approach to economic governance. By focusing on policies that genuinely benefit working people, European and American leaders hope to build a more equitable and resilient global economy capable of addressing current and future challenges.
The Importance of Industrial Policy
There is a renewed understanding of the importance of industrial policy in ensuring that domestic industries can compete in a fairer global economy. The Biden administration’s investment agenda aims to counteract the adverse effects of Chinese state intervention and support American workers. By prioritizing strategic investments in key industries, the administration seeks to strengthen domestic manufacturing, promote innovation, and create high-quality jobs.
This approach is designed to ensure that American workers and industries can compete on a level playing field in the global market. By adopting a more strategic and proactive industrial policy, the administration aims to address the structural challenges facing the U.S. economy and promote sustainable long-term growth. This renewed focus on industrial policy represents a departure from the hands-off approach of neoliberalism, reflecting a broader commitment to building a more resilient and equitable economic system.
Key Findings and Conclusions
Historical Lessons
The experiences of the 1930s and the immediate postwar period underscore the critical importance of economic security for political stability. Full employment, fair labor standards, and environmental protections are essential components of a durable peace. These lessons remain relevant today as we navigate the challenges of a rapidly changing global economy. The focus on economic security and inclusive growth, central to Roosevelt’s vision, provides a valuable framework for addressing contemporary issues.
By prioritizing these elements in trade policy, the Biden administration aims to create a more stable and equitable global economic order. This approach acknowledges the interdependence of economic and political stability, recognizing that sustainable development requires a balance between market efficiency and social equity. By learning from historical precedents, policymakers can build a more resilient and inclusive economic system capable of withstanding current and future challenges.
Failures of Neoliberalism
The shift toward neoliberalism in the late 20th century undermined the original vision of shared prosperity that characterized the postwar order. Deregulation and laissez-faire policies led to increased inequality, economic instability, and growing political discontent. These challenges highlight the limitations of a purely market-driven approach to economic governance. By neglecting the protections and safeguards envisioned by Roosevelt, neoliberalism failed to deliver on its promises of broad-based prosperity.
The current administration’s focus on targeted investments, worker rights, and fair competition seeks to address these historical missteps. By adopting a more balanced approach to economic policy, the administration aims to create a more equitable and sustainable economic model. This shift represents a recognition of the need to move beyond neoliberal orthodoxy and embrace policies that genuinely benefit working people and promote long-term stability.
Current Policy Directions
The Biden administration’s trade policy seeks to correct these historical missteps by focusing on targeted investments, empowering workers, and fostering fair competition. This approach aims to rebuild the middle class and ensure that the benefits of trade and economic growth are more evenly distributed across society. By incorporating fair labor standards, environmental protections, and policies that promote inclusive growth, the administration seeks to create a more equitable and sustainable economic model.
This renewed focus on inclusive growth represents a return to the balanced approach to economic governance that characterized the immediate postwar period. By recognizing the interdependence of social equity and economic efficiency, the administration aims to build a more resilient and equitable global economy. This approach acknowledges the lessons of history and seeks to create a more stable and inclusive economic system capable of addressing current and future challenges.
Challenges Ahead
Implementing a fair competition agenda after decades of deregulation is complex and requires coordinated domestic investments, strategic use of tariffs, and international cooperation. The Biden administration faces significant challenges in building a more equitable and sustainable economic model. However, by prioritizing targeted investments, empowering workers, and fostering fair competition, the administration aims to create a more inclusive and resilient global economy.
The success of this approach requires not only domestic policy changes but also international cooperation to address the structural challenges facing the global economy. By working with international partners, the administration seeks to build a more stable and inclusive economic system capable of withstanding current and future challenges. This coordinated effort represents a recognition of the need for a balanced approach to economic governance that prioritizes both economic efficiency and social equity.
The analysis synthesizes these themes into a cohesive narrative, emphasizing the need for trade policy to align with broader economic goals that promote democracy, economic security, and shared prosperity. Achieving Roosevelt’s vision of freedom from want necessitated a departure from neoliberal orthodoxy and a return to policies that genuinely benefited working people.