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Our Unbalanced World

The search for a new Managing Director of the IMF provides a keen reminder of how unjust today's international institutions are. Created in the postwar world of 1945, they reflect realities that have long ceased to exist.

The organization and allocation of power in the UN, the IMF, the World Bank, and the G7 meetings reflects a global equilibrium that disappeared long ago. After WWII Germany and Japan were the defeated aggressors, the Soviet Union posed a major threat, and China was engulfed in a civil war that would bring Mao's Communists to power. Much of the so-called Third World was either recently independent, or remained colonies; all of it was very poor.

There were 74 independent countries in the world in 1945; today there are 193. Outside of China, Cuba, and North Korea communism is popular only in West European cafés and a few American college campuses. Germany is reunited and much of the Third World is growing faster than the First World, with computer software built in Bangalore and American graduate programs, including business schools, receiving thousands of application from smart Chinese students.

The whole world has turned upside down, and yet France and Britain, for example, retain permanent seats on the UN Security Council. This made sense in 1945; it does not today. Why France and Britain and not Germany or Japan, two much larger economies? Or India and Brazil, two huge countries?