The world is experiencing a resurgence of mercantilism. On the one hand, China has been so successful as a developmental state that the USA, as the liberal hegemon, is defaulting to mercantilist strategies to fortify its structural advantage. On the other hand, the USA has been so successful in weaponizing interdependence that other states are adjusting their own strategies. Both tendencies threaten to disrupt the international political economy and engulf the international system in relentless great power competition. Historically, there has been a tug-of-war between the positive-sum logic of free trade and the zero-sum logic of economic and technological nationalism. The resurgence of mercantilism calls for a careful analysis of the historical record, with view to proposing governance innovations for the fourth industrial revolution.

The resurgent East-West conflict also has repercussions for the Global South, where Eastern powers have gained a strategic advantage. It seems that, currently, Chinese and, to a lesser extent, Russian offers are more welcome in the Global South than US and European offers. Accordingly, we see Southern states tilting towards Eastern rather than Western powers, although this is mitigated by their strategic reluctance to align with either side.