Journal of Global Trade, Ethics and Law

Vol. 2 No. 1 (2024): Journal of Global Trade, Ethics and Law
Articles

Technological Conditions and the Rise and Fall of the Rules-Based System

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  • Dan Ciuriak
Dan Ciuriak
C.D. Howe Institute
Bio

Published 2024-09-02

Keywords

  • Economic Rents,
  • Industrial Policy,
  • Rules-Based System,
  • Strategic Trade Policy,
  • Technological Change,
  • Uncertainty,
  • WTO
    • ...More
    Less

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How to Cite

Technological Conditions and the Rise and Fall of the Rules-Based System. (2024). Journal of Global Trade, Ethics and Law, 2(1), 1-28. https://doi.org/10.70150/4a5jcv40

Abstract

This paper considers the role played by the evolution of technological conditions in the rise and fall of the rules-based system. I argue that the rules-based system was in fact endogenous to the economic and technological conditions under which it came to be: when industries are competitive, companies are covering their cost of capital, workers are being paid their marginal product, everyone is making a living, no-one is getting obscenely rich, and participation in trade is a win-win proposition. This is approximately the pre-1980s world of limited economic rents, a constant labour share of national incomes and constant returns to scale, as described by the Kaldor facts. The subsequent rise of economic rents induced strategic behaviour which is incompatible with a rules-based allocation of production. Accordingly, the economic doctrines and governance systems developed for the low-rent and low-uncertainty world of the mature industrial economy are not appropriate for today’s rent-rich and highly uncertain world of strategic behaviour and need to be fundamentally reviewed on a first principles basis.

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