The liberal international trading order (LITO) in an era of shifting capabilities

Abstract

Abstract There is much debate about the impending collapse of the liberal international order. It is provoked by the shifts in material and military capabilities from emerging peer and near-peer competitors, some of whom were not part of the original grand bargain and others that are in a stronger position to renegotiate the bargain. As one critical element of the liberal international order, we ask, during power shifts: is the liberal international trading order (LITO) durable and resilient? When and why will the LITO collapse? Does the relative decline of the hegemon alone explain these outcomes? In advancing a second-image reversed plus argument, we highlight how a shift in the nature of the foreign commercial orientation of peer and near-peer contenders can alter the domestic balance of power of two broad and logrolled coalitions competing to capture the state and thus affect whether the erstwhile leader defends, renegotiates, or abandons the trading order it created. To better understand these forces, we examine two paradigmatic cases: Britain in the 1930s and the United States in the 2000s.