How a decade of populism and impunity unravelled the post-Cold War world order

Two anniversaries confront us. The first is the 10th anniversary of November 2016, when Donald Trump’s first election – along with the Brexit referendum a few months earlier – marked a decisive rupture in the post-Cold War world order.

The second, which passed last week, was 7 October 2023. That date not only demonstrated humanity’s enduring capacity for barbarism, but something arguably more disturbing: Israel’s response to Hamas’ massacre has laid bare just how profoundly the supposedly “civilised” world order has broken down.

When historians look back on this post-Cold War period, they are likely to reflect that there were several discrete periods. The first was from 1989 and the fall of the Berlin Wall until the accession of China to the WTO.

This was a kind of neoliberal spring; the triumphant age of globalisation, liberal democracy and Francis Fukuyama’s End of History. The genocides and wars in Central Africa and the Balkans were inconvenient reminders that history had, indeed, not got the memorandum.

History returned with China’s emergence as the world’s manufacturing powerhouse and, increasingly, its creditor. An unsustainable economic imbalance emerged as Chinese savings financed Western consumption, particularly in America.

Exotic debt instruments

The resulting capital glut was recycled through increasingly exotic instruments and into ever more dubious mortgages. It all collapsed with the fall of Lehman Brothers in 2008.

The response was, in hindsight, catastrophically short-sighted. Banks that had mispriced this risk and created the crisis were rescued, while the liabilities were shifted to taxpayers. Governments socialised the losses of capitalism while leaving the profits untouched.

In the US and in Britain, the consequence was years of economic insecurity, stagnant real wages and austerity. In Europe, the fiscal straitjacket of the Eurozone transformed a financial crisis into a sovereign debt crisis. Citizens were forced to bear the brunt of excesses they had neither been responsible for nor profited from.

Something had to give.

All exploded in 2016 when electorates spectacularly announced their disenchantment with the status quo, by voting for Brexit and then Donald Trump. This marked the end of the neoliberal honeymoon and the beginning of what might have been termed by historian Eric Hobsbawm as “the Age of Populism”.

The message was clear; voters in some of the world’s wealthiest democracies no longer cared about the rest of the world, and certainly not about exporting their much vaunted “universal values”. Increasingly they even seemed uninterested in protecting those values at home.

What mattered was protecting their own diminishing prosperity. If that required dismantling the institutions that had underpinned decades of stability and growth, then so be it.

The enemy

The enemy was simultaneously the foreigner supposedly coming to steal one’s livelihood and the venal metropolitan “liberal” elite. The contradictions were irrelevant. Populism never requires intellectual coherence, only enemies.

This was relatively harmless until 2023. The tectonic fissure on which it was to shatter was inevitable. It was always going to be the fault line between Israel and Palestine; the very creation of the state of Israel was a consequence of the original sin of modern European civilisation.

The country simply would not exist had it not been for a genocide perpetrated in the heart of Europe. It is the crucible of Western guilt.

So bad for the unlucky Palestinians who were the eventual losers in this convenient expungement of collective remorse. And, after decades of occupation, dispossession and crimes against humanity, three years ago Hamas moved (with the Israeli’s prime minister being forewarned). And what a cataclysmic eruption it was.

How would Israel, the ultimate manifestation of postwar Western guilt and violence, react? If this had happened 30 years earlier, in the warm afterglow of the fall of the Berlin Wall and Nelson Mandela, it might have been very different.

The golden age

Instead, we had entered the “f**k you” world, the Age of Impunity. Values, morals - such outdated concepts as consequences - were no longer relevant. Instead, the furious reaction was simple; all your eyes, all your teeth, all your children. As was repeatedly told to the world by Israeli politicians: no one is innocent in Gaza. We are fighting human animals.

Of course, the end effect was all too predictable. Yet another genocide, as so brilliantly and consummately shown by the now Nobel laureate Navi Pillay, of whom all South Africans should be so proud (despite what some former writers in this publication might argue).

The global order, which had been tested during the Cold War but held, and which had declined over the past 30 years but survived – had now officially collapsed. Geopolitically, the populists had savaged whatever was left of the multilateral system. Economically it was being disassembled piecemeal by a combination of desperate American protectionism, the tech robber barons with their technofeudalist empires, and the Chinese export machine that had torn the heart out of western manufacturing.

The irony is exquisite. Western politicians who promised national sovereignty are presiding over the ultimate vassalage of these countries to big tech, China and a US which has so departed from its so-called moral high ground it is now in the de facto Middle Ages, threatening to livestream executions.

Two-speed economy

As to the economic effects, this is now becoming apparent. We increasingly inhabit a two-speed economy; there is big tech/AI, and then everyone else. Global equity markets are at all-time highs, but much of their performance is concentrated in half a dozen tech companies; stripping out the effects of AI, Bloomberg data show global stocks down almost 7% since August.

Sans AI-driven exuberance, the picture of corporate profitability, household purchasing power and economic dynamism is far less impressive.

Sovereign borrowing costs are rising as the debt-fuelled economies of the West start to exhaust their creditors; the generosity of Chinese and Japanese savers is no longer enough. As for the final straw? The Middle East, once again. The conflagration unleashed by 7 October, resulting in a rogue Israel starting forever wars and pulling the US into direct conflict with Iran, has now pushed energy prices to unsustainable levels. Ten years on from the beginning of the Age of Populism the entire economic system is poised to crack.

The global financial crisis destroyed confidence in the neoliberal economic order. Populism destroyed confidence in the political order. And Gaza has eviscerated any belief or confidence in a moral order.

The terrorists who stormed southern Israel three years ago understood this better than most. This was how to push the entire Western edifice over the edge.

Wherever they are now, they may yet have the last laugh. DM