The Political Economy of the "Great Decoupling": Strategic Autonomy, Regionalized Supply Chains, and the End of the Neoliberal Global Trade Order

Abstract

The mid-2020s have definitively marked the end of the era of unfettered, efficiency-driven globalization, giving way to a volatile, multi-polar economic system defined by state-directed strategic autonomy. This comprehensive paper investigates the political economy of the "Great Decoupling"—the systemic, state-led restructuring of transnational production networks away from globally integrated supply chains toward geopolitically bounded, regionalized industrial blocs. We argue that this shift represents a profound contradiction within late-stage capitalism: the subordination of the historic imperative for the lowest-cost global production to the modern security imperative of preventing technological and material dependency on geopolitical rivals. By analyzing the massive, state-subsidized re-industrialization efforts in the United States, the European Union, and China, we deconstruct how the weaponization of trade—through export controls, tariffs, and "friend-shoring"—fundamentally reconfigures the global division of labor. The study provides a critical evaluation of the structural costs of this transition, including the permanent embedding of inflationary pressures, the duplication of industrial infrastructure, and the systematic marginalization of developing nations that cannot navigate this bifurcated trade order. We further critique the "techno-nationalist" paradigm, demonstrating how governments utilize the rhetoric of security to facilitate massive corporate subsidies for domestic oligopolies, while simultaneously eroding the few remaining global environmental and labor standards. The paper concludes that while the era of hyper-globalization is over, the emerging order of managed, regionalized trade holds no inherent promise of stability or equity. We propose a radical macroeconomic alternative centered on the localization of essential production, the democratization of trade governance, and the restoration of international cooperation predicated on ecological and social justice rather than competitive industrial supremacy.