From time to time, we liberals must rethink the world. Deglobalization, the rise of economic decoupling, the return of tariffs, and the increasing salience of weaponized interdependence have come to define the current landscape. Where once the dominant terms were efficiency, integration, and mutual gains, now they are geoeconomics, resilience, chokepoints, and decoupling. The vocabulary shift is an indicator and a diagnostic. Rhetorical change of this order reflects structural change in how economic exchange and political power actually relate.
A liberal position adequate to that new reality cannot be built by repeating arguments shaped by an earlier phase of globalization. We must rebuild—analytically and institutionally—for the world that integration, pushed to its limits, has actually produced. The first step is to understand that the liberal international order is not so much under siege from outside as it is being challenged from within—by the very processes it generated. Decoupling, weaponized interdependence, the return of tariffs, the fragmentation of global supply chains: these are not cyclical disruptions to an otherwise sound system. They are the structural outcomes of integration itself, and they demand something that liberals have been reluctant to provide—not a defense of inherited positions, but a genuine reconstruction and recontextualization of first principles.
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When Mutual Gains Bring Strategic Weapons
For several decades, global governance and international political economy rested on a relatively coherent set of conceptual and theoretical foundations. At its core stood the classical doctrine of gains from trade, from Adam Smith and David Ricardo through the twentieth-century neoclassical economics of Paul Samuelson, complemented by theories of progressive economic integration—Jacob Viner’s analysis of trade creation and diversion and Béla Balassa’s stages of integration. David Mitrany’s functionalism added the institutional logic: cooperation deepens, sector by sector, through shared practical needs, gradually eroding the conditions for conflict. Robert Keohane and Joseph Nye formalized the mechanism: complex interdependence raises the costs of disruption and creates structural incentives for cooperation.
Together, these strands converged on a single animating proposition: that efficiency and peace are not competing objectives, but complementary outcomes of the same structural dynamic. The more deeply economies integrate, the more costly conflict becomes. Institutions were designed precisely to lock in that logic.
However, over roughly the past decade, a series of structural developments has brought to the forefront an alternative and increasingly influential way of thinking about global governance and international political economy. China’s rise as a systemic competitor—one that leveraged the liberal order’s infrastructure while resisting its convergence assumptions—exposed the limits of the mutual-gains framework. The COVID-19 pandemic demonstrated that supply chains optimized for efficiency are structurally fragile under shock. And Russia’s weaponization of energy exports to Europe made viscerally clear what Henry Farrell and Abraham Newman had theorized: that interdependence is not only a source of mutual benefit but a terrain of strategic competition—one in which structural position confers the power to coerce, surveil, and punish those who depend on your infrastructure.
The result is a transformed analytical vocabulary. Decoupling, strategic chokepoints, geoeconomics, resilience: these terms are not mere rhetorical novelties. They mark a genuine shift in how economic exchange and political power relate. The question for liberals is no longer whether open exchange generates mutual gains—it does—but how to think about cases where gains are seen and acted upon as asymmetric, where structural position confers coercive leverage, and where the most integrated actors are also the most exposed.
How We Got Here
Economic integration and strategic rivalry are not opposites. They are continuous participants in the same self-transforming process. Understanding that dynamic is the precondition for responding to it.
The first crucial insight comes from Don Lavoie’s work on rivalry within market systems. Rivalry, Lavoie showed, is not a pathology of capitalism or a residue of pre-liberal political arrangements—it is constitutive of the market process itself. Firms often cooperate through prices and contracts precisely because they are simultaneously rivals for resources, customers, and knowledge. Positive-sum and zero-sum dynamics do not alternate; they coexist within the same institutional framework. Once this is recognized at the level of the market process, it becomes impossible to assume that international economic integration—which rescales and ramifies the same dynamics—will progressively dissolve rivalry into cooperation. The rivalry does not disappear. It is transformed, redirected, and re-embedded in new institutional forms.
The second insight follows directly from the first. Rather than treating the current moment as a rupture or a surprise, we should trace its history. We now have reached the latest stage in a four-stage movement spanning the last hundred years or so, in which growing, worldwide economic integration does not abolish strategic rivalry but continuously transforms the terrain on which it operates. The natural starting point is the 1930s, which remains the reference case in international political economy for understanding what happens when the cooperative foundations of the international economic order collapse (Kindleberger, 1986; Ruggie, 1982).
The first stage of the development of the current international economic system thus corresponds to the Great Depression. The world economy devolved into zero-sum competition among relatively separate national economies. Competitive currency devaluations, retaliatory tariffs, the collapse of multilateral trade, and beggar-thy-neighbor spirals of mutually punitive trade measures all contributed directly to the preconditions of the Second World War (Kindleberger, 1986; Hirschman, 1945). This escalatory logic tends toward autarky, protectionism, and eventually conflict. It is the world David Mitrany’s functionalism was explicitly designed to dissolve.
The second stage sought to avoid or contain the harms of the first. Postwar functionalism’s response to mercantilist rivalry was indirect but systematic: Let us bypass the zero-sum logic of power politics, it proposed, by building positive-sum interdependence across practical welfare domains, sector by sector, until the costs of defection exceed the gains from rivalry. The Bretton Woods institutions embodied this logic at the global level: The IMF stabilized the balance-of-payments crises that had fueled interwar beggar-thy-neighbor spirals; the General Agreement on Tariffs and Trade progressively dismantled tariff barriers through reciprocal negotiation; the World Bank channeled reconstruction finance through multilateral rather than bilateral frameworks (Ruggie, 1982). The European Union represents the most ambitious empirical realization of this logic: a formerly war-prone region transformed through progressive functional entanglement, from the Coal and Steel Community to the single market and monetary union, into a zone in which interstate conflict became nearly unthinkable (Haas, 1958). Keohane’s regime theory formalizes the mechanism: iterated interaction, lowered transaction costs, and an extended shadow of the future make reciprocal restraint self-sustaining even without a central enforcer. The underlying wager—that form should follow function, that institutions should grow from shared practical needs rather than national constitutional blueprints—proved remarkably productive (Mitrany, 1943).
With stage three comes the dialectical reversal: the cooperative infrastructure that functionalism built becomes the terrain through which strategic competition re-enters. It now operates from inside the institutions of integration, rather than struggling against them. The institutions of the postwar economic order had concentrated resource flows around specific hubs—SWIFT and dollar-clearing in finance, TSMC and ASML in semiconductors, undersea cables and cloud platforms in digital infrastructure—because concentration is efficient. But hub positions confer structural power: the ability to surveil or deny access to those who depend on the network (Farrell and Newman, 2019). The United States weaponized dollar-clearing against Iran and Russia; China weaponizes supply chain centrality in rare earths and pharmaceuticals; semiconductor export controls transform decades of technological lead into geopolitical leverage. Crucially, this is not integration’s failure—it is integration’s unintended consequence. The logic that built peace armed it. Integration does not abolish rivalry; it infrastructuralizes it.
Stage four is where we currently live. Deep mutual embeddedness generates a structural deterrence logic analogous to the nuclear strategy concept of Mutual Assured Destruction: In international trade, under Mutual Assured Dependence, no major actor can fully weaponize its position without severe self-damage, and all are well aware of that fact. The United States, for example, cannot aggressively sanction without triggering dollar-replacement initiatives; China cannot weaponize its manufacturing centrality without disrupting the export model that sustains its growth. Unlike functionalist peace, Mutual Assured Dependence is structurally fragile: it is only as stable as the mutual vulnerability that sustains it, and actors have persistent incentives to reduce that vulnerability through decoupling, reshoring, and alternative institutional architectures. Each step toward exit erodes the deterrence equilibrium without restoring genuine cooperation, pushing the system toward a new and as yet unresolved configuration.
In brief, these are not discrete phases but a single continuous dynamic: integration generates weaponization, weaponization generates deterrence, deterrence generates decoupling—a spiral that transforms the relationship between interdependence and power without ever finally resolving into a new form. Lavoie’s insight about the entangling of cooperation and rivalry is unsettling precisely because it is structural: the integration of national economies into global networks does not dissolve the cooperation-rivalry coexistence—it rescales and complexifies it (Lavoie, 1985).
Weaponized interdependence and chokepoint leverage are not aberrations introduced from outside a naturally cooperative system. They are expressions, at the level of states and network architectures, of the rivalry that was always structurally present within exchange-based order. No stage of integration permanently resolves the cooperation-rivalry dialectic; each stage transforms it, generating new institutional forms, new leverage points, and new escalation risks.
Implications for the Reconstruction of the Liberal Position
If the argument is correct, then the familiar defensive posture—reaffirming the inherited case for free trade, open markets, and multilateral institutions, as if the world of 1995 were still available to be recovered—is not only strategically inadequate; it’s theoretically incomplete. A position adequate to the dynamics described above cannot be reconstructed by repetition of a static model; it must be rebuilt from foundations, and the reconstruction must be dynamic. I’ll now offer some theses about what that requires, across both the theoretical and practical dimensions that any serious liberal renewal must address.
1. Liberalism must abandon the assumption that deepening integration progressively displaces rivalry—that cooperation is the mature stage and conflict the primitive one. A reconstructed liberal theory must treat rivalry and cooperation as permanently coexistent within any exchange-based system, not as successive phases. Lavoie’s insight about the market process applies globally: the liberal international order is not a space beyond zero-sum dynamics, but one in which they are institutionally embedded and continuously renegotiated.
2. The theory of interdependence must be bifurcated. Interdependence is simultaneously a source of mutual welfare gains and a generator of coercive leverage. Liberal theory has systematically overweighted the first and underweighted the second. A reconstructed framework must conceptualize the conditions under which integration produces solidarity versus the conditions under which it produces chokepoint power (Keohane and Nye, 1977; Farrell and Newman, 2019).
3. Institutions must be theorized as dual-use architectures. The same institutional infrastructure that enables cooperation often enables coercion. We must consider which design choices produce which sets of outcomes, with the expectation that cooperation and coercion may both be enabled. Liberal institutional theory must incorporate this dual-use logic from the outset rather than treating weaponization as an external corruption of otherwise cooperative designs.
4. Rent-seeking and weaponization are structurally related, not accidentally similar. The mercantilist logic of extracting value through positional control and the geoeconomic logic of weaponizing network hubs are expressions of the same underlying dynamic: the conversion of structural advantage into extractive leverage. Liberal theory needs a unified account of how market and international institutions can either discipline this tendency or, when they fail, amplify it.
5. The distinction between productive competition and rent extraction must be made operational in policy. A reconstructed liberal policy agenda must make this distinction actionable.
6. Mutual Assured Dependence requires its own normative theory. The brittle stability produced by deep mutual vulnerability is not the same as liberal peace, and liberal theory has no adequate normative account of it. Reconstructing liberalism requires developing a framework that honestly engages with deterrence-based stability, specifies its limits, and articulates the conditions under which it can be converted into something more genuinely cooperative. A direct corollary is that supply chain resilience is a liberal policy priority, not a protectionist concession.
7. The transatlantic relationship must be institutionally redesigned, not merely reaffirmed. Rhetorical commitment to the liberal order is insufficient. A practical liberal agenda requires building concrete transatlantic frameworks that explicitly address weaponization and resilience challenges. The architecture must match the problem, the transatlantic case may become the starting point and a core of a global approach.
8. Liberal epistemic communities must coordinate strategically, not just intellectually, to develop a practical liberal agenda for the twenty-first century. The fragmentation of liberal networks means that the intellectual reconstruction underway has no adequate institutional transmission mechanism. Practical renewal requires building the infrastructure—transatlantic research networks, shared policy platforms, coordinated public communication able to respond collectively to challenges like those above—through which reconstructed liberal ideas can actually shape debate and institutional design.
Conclusion
A liberalism adequate to this moment cannot be built on nostalgia or on the ritual reaffirmation of inherited principles. Reconstruction is not a departure from the liberal tradition—it is the most honest and important way of remaining within it. But ideas like those outlined above are inert without institutional carriers. Building the organizational infrastructure—the research networks, policy platforms, and channels of public communication—through which reconstructed liberal thinking can actually shape the order it diagnoses is not secondary work. It is the challenge of the moment, and the precondition for everything else.
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