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.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/owoOyvP;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.