Global Governance or World Order
Global Governance: ways to manage common affairsThe Commission of Global Governance’s
definition:“Golobal governance is the sum of the many
ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accomodated and cooperative action may be taken. It includes formal as well as informal arrangements that people and individuals have agreed to or perceive to be in their interest”
Global governance is not a global government; it is not a single world order; it is not a top-down, hierarchical structure of authorities, rules and mechanisms, formal and informal, existing at a variety of levels in the world today.
Pieces of GG: arrangements and activities to deal with issues and problems.
They include international rules of law, norms or “soft law”, and structures such as formal international intergovernmental organizations (IGO’s) and arrangements.
Global governance: cooperative problem-solving arrangementsSince the 1990’s popularity of this conceptLiberals claim that global governance has become a
prominent feature of global politics since the 1990’s as a responce and an attempt to shape the process of globalization
An important aspect of global governance has been the growth in the number and importance of IO’s
Liberals claim that since the WWII states demonstrated a capacity to solve their common problems through different arrangements, such as IO’s, norms and rules. To support this claim usually the examples of the EU and the Washington Consensus institutions are being used
Liberal claimLiberals claims that the international system
has developed into an international societyHedley Bull: from international anarchy to an
anarchical societyAlthough anarchical, it has certain rules and
based on certain norms
The Bretton Woods SystemIMF, 1947The International Bank for Reconstruction
and Development (IBRD), better known as the World Bank, 1946
General Agreement on Tariffs and Trade (GATT), 1948
World Trade Organization (WTO) in 1995
IMFTo provide global economic stabilityTo promote free tradeTo oversee the international monetary systemTo maintain stable exchange rateTo provide finance in times of instability to
countries in crisisAll currencies were fixed to the value of the
US dollarThe US dollar was convertible to gold at a
rate of 35 dollar per ounce
World BankProvide loans for countries in need of
reconstruction and developmentThe Marshall Plan was more effective in the
post-war reconstructionThe World Bank’s main area of activity is
aiding and assisting development
GATTTo promote free tradeby bringing down tarrif barriersand non-tarrif barriersby promoting rules of free trade among
nations
From classical liberalism to Keynesianism The Bretton Woods system was constructed
to promote an open and competative international economy
However, since we have IO’s at the center of this system, which aims is not only to promote, but also to oversee this system and stabilize it in times of crisis,
it means that creators didn’t believe in classical liberal economic theory
according to which markets are perfect and there is no need of regulation
Keynesianism: regulated market economyMarkets are not perfectIn times of fluctuations there is a need of
governmental involvement in economyGovernments intervene by expanding spending,
regulating taxation and lowering interest ratesThus governments promote growth and keep
unemployment lowNot Keynes, but the USA was constructor of the
Bretton WoodsDon’t forget that in the final analysis Keynesianism is
an economic theory which backs free market economy (but with some portion of regulation)
The USA as a constructor of the Bretton WoodsAfter the war the US needed to sustain domestic growth
levelsHigh welfare standards could only be provided by
international tradeThere was a need to promote open trade, stability in
international economic system, reconstruction and development
Europe and Asia had to be open=free from influence of the Soviet Union
Security Strategy: to prevent any single power’s domination in Europe and Asia
Just like there was a need to promote international free trade for a growing British economy in the 18th century
Theories follow practices
“Structural power of the US” (Robert Cox)Dollar as the world currencyThe global predominance of American
financial marketsUS control of the IMFThe US is predominant in the other
international economic institutions, the World Bank and the World Trade Organization
“Golden Age” of the world economy: 1950’s, 1960’sOECD member states growth rates: 4-5% a
yearWhat was the contribution of the Bretton
Woods to this growth is not clearNational Keynesianism’s contribution,
stimulation of domestic growthThe growth was stimulated by high and
permanent military expenditureThe international economic stability was
provided by American hegemony
Turmoil in the 1970’s“Stagflation”: economic stagnation and rising
unemploymentIn 1971 the US abandoned the system of
fixed exchange ratesIn this context leaders of the major
industrialized countries started to meet on a regular basis
By 1975, the Group of 7 was formed (G-7) An attempt of creation of a “New
International Economic Order” failed (alternative world order in favor of developing countries)
From Keynesianism to market fundamentalismChange of IMF and World Bank roles and
policiesLiberalization of financial capital: most
Western countries removed control over the movement of currency in and out of their borders.
The result: a vast and ever-growing supply of capital that could move freely
The 1980’s: emergence of market fundamentalism
The 1990’s: the Washington Consensus
Changing role of the IMFIt was created to oversee the international
monetary system by granting loans to countries experiencing temporary balance-of-payments deficit
In the case of severe balance-of-payments instability currencies could be devalued
But generally the background of stability should be fixed exchange rates
The 1970’s: from fixed exchanged rates to floating exchanged rates
The IMF focused on lending to the developing world
Development and IO’sThe change in the World Bank’ roleSubordinate position to the IMF’s leading roleFrom an alliance-based system to an integrated
systemPromotion of borrowing in the Third World , debt
crisisG-7 decided to ensure the repaymentFrom an import-substitution model to an export-
oriented modelFrom regulation to de-regulationNot development, but growth
Structural adjustment A reduction in government expenditures
through the removal of subsidiesThe privatization of government-owned
industries and servicesThe removal of restrictions on the way of free
tradeThe deregulation of economyThe promotion of foreign investmentThe devaluation of exchange rate in order to
encourage exports and reduce imports
Liberalization PrivatizationDeregulation and fiscal discipline
Structural power of the IMFConditionalityReviewer of macroeconomic situationAt stake are WB money and other creditors’
money
The Washington Consensus and an expansion of liberal international economy19891991Transformation and transitionManaging of crises2008 crisisThe rise of the rest
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