The purpose of this initiative is to engage thought leaders from all regions in a candid, ongoing conversation on the institutions that should govern the international political economy in an era defined by two powerful if somewhat contradictory impulses. The first is a growing determination by many states and publics to pull back from—and regain control over—globalization, to better advance their domestically defined preferences, ranging from industrial policies to national security goals, social welfare aims, and ecological objectives (among others). The second is a swelling call to update existing or create entirely new multilateral frameworks to increase the voice and weight of developing nations and to better address development needs and unprecedented cross-border challenges like climate change, pandemic disease, and financial instability, including through the provision of global public goods.
Our immodest aspiration is to help nurture a new, broadly shared narrative of global economic governance appropriate to this post-neoliberal era, one that contributes to the emergence of a more equitable, inclusive, sustainable, and resilient world economy. The Carnegie Endowment’s Working Group on Reimagining Global Economic Governance is made possible by a generous grant from the Hewlett Foundation.
Our first meeting, on May 18, 2023, is intended to give working group members the opportunity to discuss, challenge, and help sharpen or reframe the assumptions and organizing questions that animate our initiative, drawing on their unique disciplinary, professional, and national perspectives. Are we asking the right questions? Are we missing something fundamental? How can we ensure that our collective efforts add to, rather than simply replicate, what others are already doing or have already done?
Beyond this initial gathering, we will meet virtually at least six more times through June 2024, as well as in at least two in-person workshops (including one in Africa). Each subsequent virtual meeting will begin with a short briefing on a pressing topic from a working group member or invited speaker. We also plan to commission, publish, and disseminate papers from working group participants, subject to mutual agreement. Finally, to maximize policy impact, we intend to host a parallel series of public events and webinars.
Background
Constructing a more equitable, inclusive, resilient, and sustainable world economy is among the most important and daunting tasks confronting humanity. Although unfettered market capitalism has created great wealth, it has also exacerbated economic inequality in many countries, proven susceptible to repeated shocks and crises, and generated massive environmental externalities, most obviously climate change and biodiversity loss. These dynamics are unsustainable politically, societally, and environmentally.
Reforming the global economic system requires moving beyond neoliberal nostrums of market fundamentalism. It demands new, creative thinking and sustained transnational dialogue about the current state of globalization and the animating ideas and multilateral institutions that should inform and govern the world economy in a turbulent era racked by populist politics, geopolitical rivalry, stalled development, lackluster growth, yawning inequality, surging indebtedness, technological disruption, and a planetary-scale ecological emergency. The Carnegie Endowment seeks to advance this conversation by nurturing a community of thinkers that can bridge current international divides, foster mutual understanding, and ideally reach agreement on reform priorities for global economic governance.
The time is ripe for such a dialogue. Global economic governance since World War II can be divided, roughly speaking, into two broad periods. The first, created at Bretton Woods, was a managed multilateral order that reflected a “compromise of embedded liberalism” (in the words of the late international relations theorist and practitioner John Ruggie). It sought to reconcile a general commitment to market liberalization with the pursuit of domestic social welfare goals, such as full employment. The second, dating from the early 1980s, was a pell-mell era of hyper-globalization characterized by the freeing of financial capital and the minimization of government restraints on the market. Support for that neoliberal order, which informed the so-called Washington Consensus, hit its apogee just prior to the Global Financial Crisis (2008) and has since been in decline, accelerated by the disruptions of the COVID-19 pandemic and the war in Ukraine. The pivotal question today is: what is the next major narrative for the world economy, and how should it inform global economic governance?
The critique of neoliberal globalization is well known and longstanding: It has often failed to deliver sustained growth while increasing inequality, hollowing out community, exacerbating economic and social instability, and despoiling the environment. In reaction to these and other perceived failings, governments and citizens in many countries are now clawing back national autonomy and reasserting control over the terms of their integration into the world economy. National intervention into markets is becoming the norm rather than the exception, signaling a more strategic approach to—although not necessarily a wholesale rejection of—globalization. At the same time, a flurry of recent proposals advocates modifying existing or creating entirely new multilateral arrangements to advance global objectives, including to promote development, cope with systemic shocks, mitigate and adapt to climate change, govern and leverage disruptive technologies, and increase the influence of emerging economies and low-income economies.
In short, we’re at a pivotal and potentially transformative juncture. A new approach to political economy could be in the making—one that envisions a greater role for the state in the market, cares about labor as much as capital, recognizes the risks as well as rewards of cutting-edge technologies, and seeks to reconcile the pursuit of growth with ecological imperatives. For would-be reformers, a core dilemma is how to reconcile the domestic and international sides of this equation, by updating multilateral institutions to help mitigate the negative spillovers of national policy choices, cushion societies from systemic shocks, and advance the interests of all countries and populations. In other words, can we envision a new paradigm of global economic governance that better accommodates and respects diverse national preferences and circumstances and promotes adherence to shared rules, advances development, and delivers global public goods? This is the question that animates our project.
An essential first step in this inquiry is genuine transnational dialogue about the principles and purposes that should inform global economic governance and the shortcomings of existing arrangements in advancing these. Participants in the Carnegie Working Group on Reimagining Global Economic Governance will be invited to articulate their own narratives of globalization, assess the state and shortcomings of the world economy, and propose new multilateral institutions that might allow countries to better manage the terms of global interdependence and generate international public goods (e.g., financial stability, pandemic preparedness, technology transfer, food security, and climate adaptation finance).
Among the big-picture questions we hope to address are:
- What should the primary purpose(s) of global economic governance be? (That is, global governance for what?). Where do perspectives on this question diverge or converge?
- How are existing institutions of global economic governance now performing in advancing these aims, including in the trade, investment, finance, monetary, climate, development, technology, energy, labor, health, migration, and other relevant spheres?
- What reforms or innovations are required to bring global economic governance closer in line with the purposes identified by working group participants—and to break down silos across interconnected issue areas (e.g., trade and health, or climate)?
- Where should existing multilateral arrangements be altered or loosened to reflect diverse preferences and strengthen democratic legitimacy? Where should they be bolstered, adapted, or reinvented to cope with global challenges?
- Given the evident desire of national governments for more flexibility in policy choices, as well as the proliferation of shared transnational threats, what is the minimally viable order to which global economic governance should aspire?
- What are the prospects for—and most promising strategies to advance—renewed global economic governance in a world of turbulent domestic politics, intense economic competition, and surging geopolitical rivalry?
Longer-Term Questions
As the Working Group proceeds, we will continue to refine the focus and scope of our initiative, as well as identify promising topics for discussion. The range of potential issues for us to explore is vast. A few that come to mind include:
- Are we in a “new Bretton Woods moment”, as UN Secretary-General Guterres and IMF Managing-Director Kristalina Georgieva suggest? If we held a similar conference today, what would be the main priorities, and who would be the major players at the table?
- What are the primary obstacles to the reform of global economic governance? What are the prospects for overcoming these hurdles?
- What can we learn from past historical efforts to promote new, policy-relevant intellectual paradigms like the concept of “sustainable development” (or indeed the triumph of Keynesianism). What were the ingredients for success, and are they replicable?
- What have we learned from the constellation of recent crises (e.g., COVID-19, fallout from war in Ukraine) about the global economy’s vulnerability to shocks and the design priorities for building resilient multilateral institutions?
- Is the notion of a “grand bargain” on global economic governance between the Global North and South plausible? Does this framing make sense? How can international institutions be adapted to enhance the weight and voice of developing nations?
- What are the strengths and weaknesses of recent, prominent reform proposals, such as the Bridgetown Agenda, the World Bank’s Evolution Roadmap?
- How should the rules governing the global trading system, embodied the WTO, be adapted to a post-neoliberal era?
- Is reform of global economic governance even possible in the context of U.S.-China strategic rivalry? What can be accomplished in today’s geopolitical environment?
- What is the future of global economic governance in a world of “contested multilateralism”? Is the proliferation of parallel multilateral (and regional) institutions a source of strength or a matter of concern?
- How should the major institutions of global economic governance be transformed to adapt to the climate crises? How do attitudes on this question break down globally?
- How should global economic governance respond to the advent of AI and other transformative technologies, to ensure both their responsible use and benefit-sharing?
We look forward to discussing these and other issues in the months ahead.
