3

See recent path-breaking work by Akerlof, Snower, and Shiller on the formation and impact of narratives: George A. Akerlof and Dennis J. Snower. “Bread and Bullets.” Journal of Economic Behavior & Organization 126-B (June 2016): pp. 58-71; Robert J.

Narrative Economics : How Stories Go Viral & Drive Major Economic Events (Princeton: Princeton University Press, 2019).

threat to the us-led liberal international order (LIO). It supports core pillars of that order, such as the Bretton Woods institutions, the WTO, the un and the new Paris Agreement. It seeks safety and time for the evolution of its own governance system and is currently undergoing a period of political hardening, but is not bent on overthrowing democracy. and is currently undergoing a period of political hardening threat components exist alongside large areas of mutual interest. No country, not even the us or china, can achieve its domestic priorities without co-operation of the other and of a stable global system. It is essential to separate domestic narratives from actual behavior and avoid unnecessary death spirals. to a large extent, both the us and china are hurting their own interests and those of the world during the global covid-19 crisis. And these losses are in large part generated by amplified reactions to the words and narratives of the other side.

second, it is essential for all sides to be aware of highly sensitive domestic constraints on the other. the best multilateral agreements strengthen all leaders in front of their domestic constituencies. By addressing one or two core domestic priorities, it is possible to gain co-operation on a slew of other issues.

third, all countries must realize how toxic and dangerous territorial issues have become, because they interact with core national narratives and feed domestic social media frenzies. At this time when humanity collectively has not yet mastered the emotional consequences of social media, it would be wise for all leaders to freeze minor territorial issues and let them recede in the background, pulling back forces and focusing on more critical interests.

fourth, all countries should seek multilateral approaches to resolve conflict. In a larger regional setting or a setting such as the G20, it is easier to tone down domestic narratives and focus on facts and common actions. In Asia, all middle powers should seek to enliven common institutions such as APEC and ASEAN forums. they should signal to both the us and china that they don’t buy the death spiral option and want to work toward common interests, with strong signals that we are getting near a cliff and should stop before it is too late.

finally, once we understand that the current escalation of conflicts and inability to address common global challenges such as the covid-19 crisis are linked to parallel domestic narratives amplified by social media, it becomes possible to devise a strategy. I call this counter-cyclical signaling. carefully crafted reassuring signals to the other side that are compatible with their national narrative can have oversize effects on dispersing toxic strategic interactions.

In summary, it is wrong to take bottom-line approaches and react on the assumption of overriding domestic frames, whatever the consequences down the line. Moving toward security conflict, decoupling and all-out confrontation is a recipe for disaster for every country on earth. during great power transitions and periods of complex transitions, leaders can fall into the fallacy that gambling with conflict is easier and domestically safer than struggling with painful co-operation. this is what the leaders of Germany, france, Britain, Russia and Austria-hungary alike thought in 1914, and every single one paid dearly for it by sparking the first World War. the solution today lies in reforming institutions in a way that addresses novel challenges for all. to get there, we must understand the new power of narratives and develop effective counter-signaling toward new global narratives.

yves tiberghien is a Professor of Political science and director Emeritus of the institute of asian research at the university of british Columbia. he also co-chairs the Vision 20.