The world crisis: global financial governance: principles of reform

Abstract

It is now increasingly acknowledged that complex global processes, from the financial to the ecological, connect the fate of communities across the world. Yet the problem-solving capacity of the existing system of global institutions is in many areas not effective, accountable, or fast enough to resolve current global dilemmas. What has recently been called the paradox of our times refers to the fact that the collective issues we must grapple with are of growing extensity and intensity, and yet the means for addressing them are weak and incomplete.1 There are a variety of reasons for the persistence of these problems, but at the most basic level the persistence of this paradox remains an issue of governance. One significant problem in this regard is that a growing number of issues span both the domestic and the international domains. The institutional fragmentation and competition between states can lead to these global issues being addressed in an ad hoc and dissonant manner. A second problem is that even when the global dimension of a problem is acknowledged, there is no clear division of labour among the myriad of international institutions that seek to address them: their functions often overlap, their mandates conflict, and their objectives often become blurred. A third problem is that the existing system of global governance suffers from severe deficits of accountability and inclusion. This problem is especially relevant in regard to how less economically powerful states and, hence, their entire populations, are marginalised or excluded from decisionmaking. This paper describes the current global economic crisis as intimately related to a problem of governance, and articulates simple principles by which the reform of governance can be guided. Increased accountability through participatory reform, we argue, helps to underwrite effectiveness