The Max Watson Lecture: Demise of doctrine: Policy making in the real world

The post-World War 2 economic doctrine that guided the West — international cooperation in line with a global market system of rules largely defined by United States and its allies — has been under growing pressure since the turn of this century. Skepticism in the model was fueled by the global financial crisis triggered in the US and the painfully drawn out Eurocrisis. But recent political events have delivered a bigger shock to the system. This is most striking from the US. On taking office in January 2017, President Trump rejected the major trans-pacific partnership (TPP) trade agreement that embodied not just trade liberalization but also key norms and rules that govern economic relations in market economies. Later came the US decision to leave the Paris Climate accord — which had been fashioned to support cooperative behavior— and most recently the Iran agreement. In Europe, challenges to the doctrine have come from the Brexit decision and messy aftermath together with weakened mandates for government in Germany, uncertainty in Italy and challenges to Western-style rules in Poland and Hungary. How can policy making in the world of today best react to these challenges, and what is the role for the much-maligned experts — in economics and finance — in manoeuvring in this political economy?