WHO DECIDES WHAT NEW GLOBAL ECONOMY?
If the new Bretton Woods conference is held in Washington next month or December to establish the new global economic and financial architecture, who should attend and what should be the items on the agenda?
If it is to win global acceptance and not be seen as a stitch-up by the current (now much humbled) global power-brokers, it is crucial that it represents all the main key economic groupings across the world – not just the US, EU, Japan, China, India and Russia, but representatives speaking for other key blocs including Latin America (Brazil), Africa (South Africa), and southern Asia. The WTO talks collapsed because developing countries refused to accept a trading system they perceived (rightly) as strongly tilted in favour of the Western industrial powers. A new global agreement has to be negotiated; it cannot be imposed by a tiny global elite like the war victors in 1944.
Its agenda obviously has to be focused on the broken system of financial markets, but must also go much wider. On markets it must establish a framework of international supervision which effectively regulates credit derivatives, securitisation, capital adequacy ratios, credit creation, credit rating agencies, offshore operations, transparency in accountancy and auditing, and risk management by international authorities with adequate powers to intervene decisively wherever necessary. In effect, the conference has to determine new parameters for the operation of economic and financial markets – neither so lightly regulated that they self-destruct as in the last year, nor so tightly regulated that the dynamism and innovativeness of markets is unduly restricted.
But the conference reach must go much wider than banking operations. It must reflect the multi-polarity that has now superseded the hegemonic power of the US since 1945 and particularly since 1989. The IMF, WTO and the World Bank must be replaced by different institutions that reflect the new realities, not a capitalism engineered to ensure the continued dominance of the richest nations that ran it.
Two other fundamental changes are necessary before a new global settlement can be reached. One is new trading rules that replace the so-called Washington Consensus (in fact unilaterally imposed) that lays down such a lopsidedly unfair system in favour of Western multinationals against developing economies with infant industries. IMF structural adjustment plans for so many struggling Third World economies imposed deregulation, privatisation and unequal tariffs, while structural adjustment plans for the West turn out to mean re-regulation, nationalisation and vast largesse. A re-ordered trading system must end the inbuilt subordination of poor commodity producers to rich industrial countries and close the ballooning global inequality that unfettered markets have generated in the last three decades.
The other fundamental change required is to design a new world order that is sustainable within the limits of the planetary eco-system. The combination of diminishing resource availability (most notably oil and water), unsupportable population growth and slowly intensifying climate change urgently demand an economic dynamic that contains, not exacerbates, these pressures. Even without the financial collapse, the days of no-holds-barred competitiveness had already run up against the impassable barrier of mounting environmental and climactic degradation. This world conference is a once-in-a-lifetime opportunity to shift the economic drive towards a more co-operative globalisation, particularly in developing a renewables-driven economy in place of energy wars over diminishing fossil fuels availability.
(This comment first appeared in the Guardian on Commentisfree on 21 (October).

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