Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

9902220346f86f680e38be05_pa3667c.jpg

New Rules for the Global Economy

The ultimate paradox of globalization is that it works best when it is not pushed too far. That paradox must be reflected in new global economic arrangements that are based on democratic deliberation where it really occurs – within national states.

CAMBRIDGE – Suppose that the world’s leading policymakers were to meet again in Bretton Woods, New Hamp­shire, to design a new global economic order. They would natu­rally be preoccupied with today’s problems: the eurozone crisis, global recovery, financial regulation, international macroeconomic imbal­ances, and so on. But addressing these issues would require the assembled leaders to rise above them and consider the soundness of global economic arrangements overall.

Here are seven commonsense principles of global economic governance that they might agree on. (I discuss them in more detail in my new book, The Globalization Paradox.)

1. Markets must be deeply embedded in systems of governance. The idea that markets are self-regulating received a mortal blow in the recent financial crisis and should be buried once and for all. Markets require other social institutions to support them. They rely on courts, legal frameworks, and regulators to set and enforce rules. They depend on the stabilizing functions that central banks and countercyclical fiscal policy provide. They need the political buy-in that redistributive taxation, safety nets, and social insurance help generate. And all of this is true of global markets as well.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/owoOyvP;
  1. solana114_FADEL SENNAAFP via Getty Images_libyaprotestflag Fadel Senna/AFP via Getty Images

    Relieving Libya’s Agony

    Javier Solana

    The credibility of all external actors in the Libyan conflict is now at stake. The main domestic players will lower their maximalist pretensions only when their foreign supporters do the same, ending hypocrisy once and for all and making a sincere effort to find room for consensus.

    4

Edit Newsletter Preferences