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Global Governance or World Order

Global Governance or World Order. Global Governance : ways to manage common affairs. The Commission of Global Governance’s definition :

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Global Governance or World Order

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  1. Global GovernanceorWorldOrder

  2. Global Governance: waystomanagecommonaffairs • TheCommission of Global Governance’sdefinition: • “Golobalgovernance is thesum of themanywaysindividualsandinstitutions, publicandprivate, managetheircommonaffairs. It is a continuingprocessthroughwhichconflictingordiverseinterestsmay be accomodatedandcooperativeactionmay be taken. Itincludesformal as well as informalarrangementsthatpeopleandindividualshaveagreedtoorperceiveto be in theirinterest”

  3. Global governance is not a global government; it is not a singleworldorder; it is not a top-down, hierarchicalstructure of authorities, rulesandmechanisms, formalandinformal, existing at a variety of levels in theworldtoday. • Pieces of GG: arrangementsandactivitiestodealwithissuesandproblems. • Theyincludeinternationalrules of law, normsor “softlaw”, andstructuressuch as formalinternationalintergovernmentalorganizations (IGO’s) andarrangements.

  4. Global governance: cooperative problem-solvingarrangements • Since the 1990’s popularity of thisconcept • Liberalsclaimthat global governance has become a prominentfeature of global politics since the 1990’s as a responceand an attempttoshapetheprocess of globalization • An importantaspect of global governance has beenthegrowth in thenumberandimportance of IO’s • Liberalsclaimthat since the WWII statesdemonstrated a capacitytosolvetheircommonproblemsthroughdifferentarrangements, such as IO’s, normsandrules. Tosupportthisclaimusuallytheexamples of the EU andthe Washington Consensusinstitutionsarebeingused

  5. Liberal claim • Liberalsclaimsthattheinternationalsystem has developedinto an internationalsociety • HedleyBull: frominternationalanarchyto an anarchicalsociety • Althoughanarchical, it has certainrulesandbased on certainnorms

  6. TheBrettonWoodsSystem • IMF, 1947 • TheInternational Bank forReconstructionandDevelopment (IBRD), betterknown as theWorld Bank, 1946 • General Agreement on TariffsandTrade (GATT), 1948 • WorldTradeOrganization (WTO) in 1995

  7. IMF • Toprovide global economicstability • Topromotefreetrade • Tooverseetheinternationalmonetarysystem • Tomaintainstableexchange rate • Toprovidefinance in times of instabilitytocountries in crisis • Allcurrencieswerefixedtothevalue of the US dollar • The US dollarwasconvertibletogold at a rate of 35 dollarperounce

  8. World Bank • Provideloansforcountries in need of reconstructionanddevelopment • The Marshall Plan wasmoreeffective in the post-warreconstruction • TheWorldBank’smainarea of activity is aidingandassistingdevelopment

  9. GATT • Topromotefreetrade • bybringingdowntarrifbarriers • andnon-tarrifbarriers • bypromotingrules of freetradeamongnations

  10. FromclassicalliberalismtoKeynesianism • TheBrettonWoodssystemwasconstructedtopromote an openandcompetativeinternationaleconomy • However, since wehaveIO’s at thecenter of thissystem, whichaims is not onlytopromote, but alsotooverseethissystemand stabilize it in times of crisis, • it meansthatcreatorsdidn’tbelieve in classical liberal economictheory • accordingtowhichmarketsareperfectandthere is no need of regulation

  11. Keynesianism: regulated market economy • Marketsare not perfect • Intimes of fluctuationsthere is a need of governmentalinvolvement in economy • Governmentsintervenebyexpandingspending, regulatingtaxationandloweringinterestrates • Thusgovernmentspromotegrowthandkeepunemploymentlow • Not Keynes, but the USA wasconstructor of theBrettonWoods • Don’tforgetthat in the final analysisKeynesianism is an economictheorywhichbacksfree market economy (but withsomeportion of regulation)

  12. The USA as a constructor of theBrettonWoods • Afterthewarthe US neededtosustaindomesticgrowthlevels • Highwelfarestandardscouldonly be providedbyinternationaltrade • Therewas a needtopromoteopentrade, stability in internationaleconomicsystem, reconstructionanddevelopment • EuropeandAsia had to be open=freefrominfluence of theSovietUnion • SecurityStrategy: topreventanysinglepower’sdomination in EuropeandAsia • Justliketherewas a needtopromoteinternationalfreetradefor a growingBritisheconomy in the 18th century • Theoriesfollowpractices

  13. “Structuralpower of the US” (Robert Cox) • Dollar as theworldcurrency • The global predominance of Americanfinancialmarkets • US control of the IMF • The US is predominant in theotherinternationaleconomicinstitutions, theWorld Bank andtheWorldTradeOrganization

  14. “Golden Age” of theworldeconomy: 1950’s, 1960’s • OECD memberstatesgrowthrates: 4-5% a year • Whatwasthecontribution of theBrettonWoodstothisgrowth is not clear • NationalKeynesianism’scontribution, stimulation of domesticgrowth • Thegrowthwasstimulatedbyhighandpermanentmilitaryexpenditure • TheinternationaleconomicstabilitywasprovidedbyAmericanhegemony

  15. Turmoil in the 1970’s • “Stagflation”: economicstagnationandrisingunemployment • In 1971 the US abandonedthesystem of fixedexchangerates • Inthiscontextleaders of themajorindustrializedcountriesstartedtomeet on a regularbasis • By 1975, theGroup of 7 wasformed (G-7) • An attempt of creation of a “New InternationalEconomicOrder” failed (alternativeworldorder in favor of developingcountries)

  16. FromKeynesianismto market fundamentalism • Change of IMF andWorld Bank rolesandpolicies • Liberalization of financialcapital: most Western countriesremovedcontroloverthemovement of currency in andout of theirborders. • Theresult: a vastand ever-growingsupply of capitalthatcouldmovefreely • The 1980’s: emergence of market fundamentalism • The 1990’s: the Washington Consensus

  17. Changing role of the IMF • Itwascreatedtooverseetheinternationalmonetarysystembygrantingloanstocountriesexperiencingtemporarybalance-of-paymentsdeficit • Inthecase of severe balance-of-paymentsinstabilitycurrenciescould be devalued • But generallythe background of stabilityshould be fixedexchangerates • The 1970’s: fromfixedexchangedratestofloatingexchangedrates • The IMF focused on lendingtothedevelopingworld

  18. DevelopmentandIO’s • Thechange in theWorld Bank’ role • SubordinatepositiontotheIMF’sleading role • From an alliance-basedsystemto an integratedsystem • Promotion of borrowing in theThirdWorld , debtcrisis • G-7 decidedtoensuretherepayment • From an import-substitution model to an export-oriented model • Fromregulationto de-regulation • Not development, but growth

  19. Structuraladjustment • A reduction in governmentexpendituresthroughtheremoval of subsidies • Theprivatization of government-ownedindustriesandservices • Theremoval of restrictions on theway of freetrade • Thederegulation of economy • Thepromotion of foreigninvestment • Thedevaluation of exchange rate in ordertoencourageexportsandreduceimports

  20. Liberalization • Privatization • Deregulationandfiscaldiscipline

  21. Structuralpower of the IMF • Conditionality • Reviewer of macroeconomicsituation • At stakeare WB moneyandothercreditors’ money

  22. The Washington Consensusand an expansion of liberal internationaleconomy • 1989 • 1991 • Transformationandtransition • Managing of crises • 2008 crisis • Therise of the rest

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