global governance: after the g8

"World Leaders Meet For G8 Summit at Lough Erne", by Matt Cardy (Getty Images) – Jun 18, 2013.

A global polity does not exist. Nor is such a polity likely to emerge in the near future. Global governance must be built, instead, on the basis of the agreements reached by national politicians representing national interests.

How should our world be governed? The answer affects the lives and livelihoods of every person – indeed, of many of the creatures – on the planet. By now, humanity’s global footprint is so large, the cross-border spillovers of its activities so pervasive and the need for the provision of global public goods so pressing that the question has to be addressed. 

A global polity does not exist. Nor is such a polity likely to emerge in the near future. Global governance must be built, instead, on the basis of the agreements reached by national politicians representing national interests. The question, then, is how to structure the process that generates and enforces such agreements, be they on how to respond to a conflict that is taking place today or on how to manage common resources, such as the oceans or the atmosphere, over centuries.

In practice, the solution has been a mixture of formal treaties, enduring institutions and informal gatherings of leaders and other policymakers. This combination seems likely to endure. Among these solutions, unofficial gatherings of leaders and senior ministers plays a particularly important role.

Yet the weight placed on such informal gatherings, of which the group of eight (Canada, France, Germany, Italy, Japan, Russia, the UK and US) is an important example, raises important questions about the balance to be struck between legitimacy and effectiveness. Legitimacy depends on how inclusive and representative the grouping in question is. Meanwhile, effectiveness depends not only on the homogeneity and size of the group, but also on its ability to implement what has been agreed.

The G8, it is clear, is neither legitimate nor, for most purposes, effective. Its members do still generate about half of world nominal gross domestic product, but they contain a mere 13 per cent of the world’s population. The incorporation of Russia in the 1990s made the G8 a little more legitimate, but far less homogeneous, than the old G7. The latter at least contained the world’s largest, high-income democracies. But Russia is neither high income nor a democracy.

The G8 is still able to be reasonably effective on a few issues: development assistance and financial regulation are examples, since its members play a huge role in these activities. But a group that excludes the world’s second largest economy and its two most populous countries is both illegitimate and, in crucial respects, ineffective. The need to move to summits of the Group of 20, in the autumn of 2008, demonstrated that the G8 is now grossly unfit for most purposes.

The G20 is an improvement in important respects. Its composition makes it far more representative of the world. Its members, who include (apart from the G8) Argentina, Australia, Brazil, China, the European Union, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea and Turkey, also account for more than 80 per cent of world GDP and two-thirds of the world’s population. Being more representative of the world as a whole, it is more legitimate.

Yet, like the G8, the G20’s members are self-selected and so cannot bind those who are not participants. That necessarily limits its effectiveness. So, too, does the group’s heterogeneity and size. Indeed, the G20 often looks to be the worst of both worlds: too heterogeneous and large to be effective and still too unrepresentative, in both its composition and method of selection, to be legitimate.

So what is to be done, to make global governance work better? Should a body like the G20 be made more formal by constructing a constituency arrangement, as is done in the International Monetary Fund and World Bank? Should the G20 even be merged with the boards of those institutions? How should such bodies relate to the United Nations? 

In considering how to reform such institutions, it is necessary to recognize two further considerations.

The first is that the principles on which a voice in global affairs should be allocated are inescapably unclear. Should it be allocated in accordance with the principle of sovereign equality, with the number of people in each country, or with the relative power of states? All have drawbacks. Sovereign equality has its limits: China and the Maldives are not equivalent. Yet so, too, does population: large states would then always overrule small ones. Power matters, as well. But power alone can, too easily, turn into a renewed imperialism.

The second question is what should be the role of non-governmental organisations, not just activists, but also businesses, charities and other non-state actors? How is their voice to be heard without overwhelming that of those properly elected and those less able to make their voices heard.

The big point, however, is clear: humanity is reaching a critical point in its history. Its activities are global, as is their impact. But governance remains local and national. Solving this dilemma to everybody’s satisfaction is surely impossible. But progress has to be made towards solutions that are more legitimate and effective than they are today.

The G8 is now an anachronism. The G20 is very far from a fully legitimate and effective replacement. So what now follows? Let the debate begin. Few can be more important.

Martin Wolf CBE, Chief Economics Commentator - The Financial Times, for Zamyn 

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