Macro Economy
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Apr. 2015
wake of globalization has fundamentally reoriented
the global balance of power between North and South,
East and West. These emerging powers have leveraged
market capitalism and information technologies to re-
alize economic and social development at astonishing
speeds and levels—although the total reduction of glob-
al poverty has not prevented rising levels of inequality.
While these new stakeholders have adapted to glo-
balized markets, they are less inclined to accept a glo-
balized political sphere and the erosion of sovereignty
implied by the old or, for that matter, any
international
order. Because they did not write the rules of the game,
there is a sense that the balance of obligations between
‘North’ and ‘South’ no longer applies, thereby under-
mining rules governing international trade and the
environment.
The second development involves the consequences
of the economic crisis that began in 2007 and 2008.
First, by exaggerating the gulf in growth rates between
advanced and emerging actors, it accelerated the “Great
Changeover”. Second, the crisis served to undermine
the legitimacy of the old “western” model. Finally, the
crisis drained nations of the sort of political energy nec-
essary for global governance.
While conventional thought suggests the contrary,
advances in international policy require immense po-
litical energy.
International negotiations are, above all,
negotiations at the domestic and national levels and
necessitate strong domestic political leadership. The
economic and social hardships imposed by times of
crisis often cause public opinions to harden, weaken-
ing governments therefore leading them to neglect the
international scene until domestic situations improve.
They can also translate into populist reactions – of which
the common discourse is to “blame the foreigner.”
Thus international governance has itself entered a
sort of crisis phase, seemingly incapable of adapting
to the new global balance or creating new common
ground on which to cooperate. Indeed, we have wit-
nessed no major advances in global governance since
the inception of the ICC or the conclusion of the Uru-
guay Round, nor any reform of the antiquated UN Se-
curity Council.
We find ourselves in a context of global governance
gridlock, to use David Held’s words; our failure to find
solutions to this gridlock
could well portend numerous
economic, social and cultural hazards for future gener-
ations.
Maximizing utility of existing system
But despite these difficult circumstances, I believe
that there are some avenues that could allow us to
bridge the gap. In order to do so, it is important that
we abandon the idea of a “big bang” in global govern-
ance—the likes of which would only result from a major
global conflict, which I fortunately think we can avoid.
Instead, we should focus on maximizing the utility of
our present system.
This avenue entails the
improvement and increased
reliance on the existing international framework,
namely the triangle formed by the G20, the United
Nations system and specialized international organiza-
tions. Despite its lack of legitimacy, the G20 has the po-
tential to produce a sort of cross-cutting coherence and
impetus for advancing global governance. Although
lacking in efficiency, the UN can lend its legitimacy.
With the support of these first two sides, specialized
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agencies can complete the triangle by providing solu-
tions based on their specific areas of expertise. We have
seen some success in the better implementation of this
triangle: in the domain of
global financial regulation,
when the G20 forged the Financial Stability Board in
2009, and in the general resistance to protectionist
pressures throughout the crisis.
For this approach to work, more efforts must be
made to introduce the tools and benchmarks necessary
to monitor organizational and institutional activities
and to measure their successes, thereby improving
their overall accountability. In this sense, the Millenni-
um Development Goals were an important innovation
in global governance and the new post-2015 generation
of sustainable development
goals should hopefully
build on these successes.
Because relying on the existing global framework
is the best option at present, we should also consider
the potential of incremental advances. This includes,
as suggested by Oxford Martin’s report, a gradual shift
away from consensus-based decisions towards some
model of majority voting within organizations, a great-
er right of initiative for the leaders of international or-
ganizations, and the insertion of sunset clauses in their
mandates in order to ensure their relevance. At the
same time, we must be prepared to accept small start-
ing steps in areas where
our global infrastructure is
sorely lacking, like cyber-security, migration, taxation
and energy.
There are also opportunities for advances in gov-
ernance that are outside of the current framework. For
example, continued regional integration has led to dif-
ferent models of “mini-global governance” in Europe
and these, in their own way, are moving in the same di-
rection, in Asia, Africa and Central America. The crea-
tion of innovative partnerships through the inclusion of
new actors—be they non-governmental organizations,
international companies or megacities—could allow for
a more effective leveraging of resources than through
the UN system alone.
To conclude, I would like to mention one remaining
challenge we must overcome if we are to succeed in
adapting global governance to the needs of the 21st
century: values. The speed
with which globalization
has reoriented economic activity and rebalanced global
power has also served to highlight our disparate “col-
lective preferences”, or value systems. We see this as
trade obstacles transform from policies designed to
protect producers to more subjective, precautionary
measures conceived of to protect consumers from risk.
All governance systems need a foundation of aggregat-
ed collective preferences; this is also true at the global
scale.
Therefore, it is my view that acknowledging and
understanding our ethical differences is a prerequisite
to attempts to find an acceptable point of convergence.
This attempt at acknowledging and understanding is
probably the most valuable
contribution our global sys-
tem could make to improve global economic, political,
and social integration in order to ensure the best possi-
ble future for the generations to come.
Footnotes provided by the author are available on request.
Pascal Lamy
Former Director-General of the WTO
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