peaceful and prosperous world based on the twin foundationsrnof free trade in money and goods, and mandatory dispute settlementrnmechanisms. These would bind nations together,rnmaking war impossible, while achieving the blessings of economicrnspecialization and growth. Run by professional lawyersrnand economists, the New World Order would be a Utopia benefitingrnmankind and promoting peace, growth, and prosperity.rnOr so they thought.rnAs the Asian crisis unfolded over the past year, Karl Marxrnmust have been laughing in his grave. Unlike the economicrnapologists for the New World Economic Order, he forecastrnlong ago that the free trade panacea would produce chaos andrnthe collapse of capitalism. Speaking in Brussels in 1848, he arguedrnthat the free trade system was “destructive.” “It breaks uprnold nationalities and pushes the antagonism of the proletariatrnand the bourgeoisie to the extreme point. In a word, the freerntrade system hastens the social revolution.” Hoping to overthrowrnthe capitalist system, Marx himself endorsed free trade.rnOf course, Marx’s rigid, dialectical analysis contained manyrnflaws. Based on the European experience, it over-emphasizedrnclass antagonism between workers and employers. It neglectedrnother sources of conflict such as race, ethnicity, and nationalism.rnPerspicacious as he was, Marx could not foresee that rapidrnadvances in technology would so improve communicationsrnand transportation that global corporations would succeed inrntransforming and extending the capitalist system in a globalrneconomy.rnNonetheless, Marx—far better than most modern economicrntheorists—grasped the dark side of the free trade order. He understoodrnthat unregulated capitalism produced, along withrngreat efficiency and dynamic growth, disruptions and dislocations.rnThis volatility presented unique opportunities for revolutionariesrnlike himself to mobilize the disaffected. In his ownrnway, he thus anticipated some of the fundamental problems ofrnan open global economy in which vast multinational corporationsrnand speculators shift plants, jobs, and money from countryrnto country to arbitrage differences in labor costs and interestrnrates. In the New World Economic Order, unskilled labor becomesrna fungible, disposable commodity subject to the whimsrnof corporate managers obsessed with the need to boost shareholderrnvalue and to satisfy huge investment funds. Stakeholders-rnworkers, families, communities, and nations —have diminishedrnstanding.rnThree significant lessons emerge from the Asian financialrncrisis. First, like the protectionists and isolationists of the interwarrnperiod who carried nationalism to excess, the incrementalrneconomic internationalists have created an unnecessary glut ofrnglobalism. Ordinary people do want the freedom to travelrnabroad, sample other cultures, and buy foreign goods, if theyrnchoose. But they have little desire to abandon nationalrnsovereignty, relinquish their own culture, integrate markets,rnand harmonize standards simply for the convenience of rooflessrntraders, speculators, and multinational corporations. This is thernmessage from Canada, where citizens want to preserve theirrndistinctive culture from assault by American media giants; fromrnGermany, where the public is skeptical of a single Europeanrncurrency; and from Southeast Asia, where leaders like PrimernMinister Mahathir of Malaysia play to nationalistic sentimentsrnin denouncing the disruptive actions of foreign speculators.rnEven some international economists are coming to recognizernthat globalization has gone too far. Dani Rodrik of HarvardrnUniversity notes that globalization can lead to social disintegration.rnHe concedes that the efficiency benefits of further reductionsrnin existing tiade barriers are “unlikely to be large.” Hernadmits that “the dirty little secret of international economics isrnthat a tiny bit of protection reduces efficiency only a tiny bit.”rnBlaming a “Wall Street-Treasury complex” for pushing itsrnagenda of unregulated capital mobility, Jagdish Bhagwati ofrnColumbia University notes that this form of free trade is inherentiyrncrisis prone.rnA second lesson is that the open global system is no Utopia.rnAlong with beneficial gains from wider markets and greater efficiencyrncome asymmetrical burdens and pernicious consequences.rnFor well-paid and well-educated bureaucrats whornwork for the IMF and help manage the system, the global economyrnmay seem a win-win situation. The global bureaucratsrnhave considerable job security; the international lawyers prosperrnin good times and bad; the IMF endures from one crisis tornthe next, helping to preserve the system. But for common peoplernvulnerable to boom-and-bust cycles, the economic gainsrncome with substantial down-side losses and social disruption.rnFor the American people, the hidden burdens of global leadershiprnare especially heavy. Losses include suppressed real economicrngrowth and incomes, as well as social dislocations ofrnworkers, families, and communities. America’s persistent current-rnaccount deficit, which has exceeded $1.5 tiillion in the lastrn15 years, is a future vulnerability. More dollars now circulaternoutside the United States than within. Over the long term, thernglut of dollars may become a measure of weakness far morernthan a symbol of strength. It is possible to imagine a situationrnin the early 21st century when the overvalued dollar ignites arnflight to safety. Investors may prefer to diversify their reservesrnwith the new European currency, or a new Asian regional currency,rnor even scamper back to gold.rnFinally, the Asian crisis offers a broader lesson regarding thernrelevance of the state in an era of market economics. True,rnsome laissez-faire enthusiasts interpret recent events as demonstratingrnthe triumph of free markets over Asian-style crony capitalismrnand regulated markets. Business Week has asserted thatrn”Asians have confused corruption and cronyism with capitalismrnand ‘Asian values’ for too long.” It was time “for Asia torntransform its autocratic, command-and-control societies intorndemocratic, flexible, market-driven economies.” The WallrnStreet journal offers a similar interpretation. But many Asiansrnhave second thoughts about the march to globalism. They noternthat the economies least touched by the conflagration —Chinarnand India—control capital flows. Their conclusion: governmentsrncan, and must, regulate capital markets. As a result, Chinarnis likely to move slowly in pressing its claim for membershiprnin the World Trade Organization and in deregulating its economyrnto the whims of the global market. In Southeast Asia,rncountries talk of regional clearing arrangements to facilitaterntrade in local currencies rather than the dollar.rnLooking back at the present period from the vantage point ofrnanother generation, the great irony may be a simple one. Economicrninternationalists, who relentlessly pressed for creation ofrnan international economic order during the half-centuty afterrnWorld War II, may awaken to discover that the real enemy ofrnpeace and prosperity was not a revival of 1930’s-style protectionismrnbut an open, volatile, and unregulated system that invitedrnthe excesses of cowboy capitalism. Without effective nationalrnbuffers, global markets became a transmission belt forrndisruptive forces. In effect, the economic internationalists metrnthe enemy and discovered, as Pogo did, that “they is us.”