Gary Weaver is a co-author
As the G-20 Meeting in Washington proved, it is finally becoming apparent
that our world has crossed a point of no return. Invited by the departing
Bush Administration prodded by the peripatetic President of France, all
understood that no immediate and lasting decisions could be made in this
exploratory meeting because of the absence of President-elect Obama. By
setting April 30 for the next G-20, the group diluted President Sarkozy's
sense of urgency. Between now and then, working teams are to prepare
recommendations for G-20 action.
But time is short and, surely, 2009 could prove to be a year of equal
significance with 1945 when the existing United Nations system of
international organizations was launched.
Following the end of the Cold War the deep division separating stagnant
centrally planned economies in the East from the more advanced laissez-
faire ones in the West gave way to the dominance of free market principles
on a global scale. Post-Soviet Russia and, more significantly, China led
the way. Adam Smith was back in vogue marginalizing a bankrupt Karl Marx.
Milton Friedman Chicago School economics held center stage and guided
International Monetary Fund policies and programs around the world.
Globalization became practically synonymous with a permanent,
free-floating and essentially unregulated (by national governments) global
village -- trusting that economic interdependence and fast economic growth
accompanied by "trickle down" effects would benefit everybody -- rich and
poor, developed and developing countries alike
For some years it worked quite well -- at least on the economic side of
things. Unprecedented growth rates were achieved by the so-called emerging
economies, while the advanced countries continued on paths of solid growth
and relatively low unemployment.
But, ultimately, there was a price to be paid: The gap between rich and
poor widened alarmingly within countries (even wealthy ones) and reached
explosive proportions in the less developed countries of the global South.
Also, public goods such as environmental protection, infrastructure
projects supporting job creation, public health and education, and
unemployment benefits lagged.
In 2008 it all came to a head with the global financial crisis that has
governments, markets, and the general populace reeling, caught by surprise
by its speedy onset, global reach, severity and projected longevity. On
both sides of the Atlantic, in Russia, China, Japan, India, Australia and
elsewhere, governments went into high interventionist gear. John Maynard
Keynes, the great bridge builder between laissez-faire and interventionist
policies, was resurrected and his ideas are being implemented even by
unfettered free enterprise true believers in the US.
Globalization clearly extends to economic and financial crisis, as well as
to sustained growth and development. The global crunch that so suddenly
engulfed us all is dramatic evidence of the irreversible
interconnectedness of the world economy.
Luckily, after a few missteps in Europe and in the first Paulson plan, the
futility of resorting to narrow actions became apparent. The world's
public financial and economic authorities are now moving in parallel
toward increased governmental intervention within states (e.g. forced
mergers and selective national investments in banks). But we are also
hearing demands voiced by European leaders such as French
President Sarkozy and British Prime Minister Gordon Brown for radical
reform of the global system of economic institutions, including the World
Bank, the International Monetary Fund and the World Trade Organization.
In effect, the G-20 have launched a broad discussion of whether we can
square the circle by abandoning laissez-faire for dramatically increased
accountability and transparency, through simultaneous, coordinated
regulation and intervention by both national governments and international
Such a return to Keynesian guidelines and policies requires patient but
also determined international consultation, and it is significant that the
convened G-20 includes China, India, Russia and Brazil, whose large and
growing economies and substantial reserves are viewed even by the US as
indispensable to forging concerted actions. It also sends a real and clear
message that territorial disputes and hard-power-driven policies in an
ideologically divided world are becoming less and less relevant at a time
when the entire planet is threatened by economic, financial, and
These interwoven challenges will serve as the central test of the incoming
Obama Administration. The new US president will have a unique opportunity
to apply his obvious leadership skills to leverage the current reserve of
general American and global goodwill, avoiding the hegemonic daydreams of
The G-20 and the new US administration's objective must be to refashion
for dramatically changed times the post-World War II international
institutions that inevitably reflected the power distribution of 1945.
Transcending the old divisions and ideological hatreds will have a huge
symbolic as well as real value. But more importantly, the new cultural and
religious fault lines separating the world will also have to be bridged.
Instead of the clash among civilizations, the G-20 needs to mobilize broad
global cooperation in support of universal economic as well as political
We believe the world is witnessing the birth of what we call
"state-centric globalization." We expect greater and more coordinated
public institutional intervention in national and individual decisions and
activities. This will impact individual and national freedom of action and
raise the perennial question of "who will regulate the regulators"?
In the age of the Internet and electronic interdependence, there is a huge
opportunity for civil society -- including non-profit and non-governmental
organizations, free and uncensored media, regional and global blogs, and a
multitude of ad hoc as well as continuing communities of interest to act
as pluralist watch dogs over the neo-Keynesian policies and practices that
are already emerging. A world of multiple and matching centers of
oversight will continue protecting us against the excesses of all forms of
unchecked and unbalanced power.
In one word, what will be needed is even more democracy.