The Politics and Mechanics of Global Economic Governance

The world is changing rapidly around us. New global institutions have arisen and existing ones have been transformed in the attempt to get a handle on systemic risk. There are four trends that are worth noting over the long term that this blog will likely return to regularly.

First, we are witnessing a functionally-driven drive to change the institutional architecture of market regulation at the global level (in addition to the national level). The intent is to overcome the fragmentation of regulatory authority and coordination across countries and economic sectors, particularly in the pursuit of minimising and containing systemic risk to financial and economic systems. We therefore need to keep an eye on institutional developments in global economic governance, on network-based collaboration, and on the linkages between the two.

Second, we are witnessing a push toward more invasive regulation of markets, and financial markets in particular. This extends from central bank intervention to state aid and protectionism to regulatory matters. We therefore need to keep an eye on political developments in global economic governance, with specific reference to how archetypal narratives of state and market evolve across countries and at the international level.These narratives are the conceptual building blocks of institutions and law that lie at the core of global economic governance.

Third, the issues we are grappling with, especially with regard to financial market regulation, apply equally well to countries with established and emerging markets.  This has a significant impact on the decision-makers in national capitals and international organisations when they decide whom to include in talks and on what basis. Where standards were once set exclusively by established market countries, they are now being set with the input of emerging markets. That is a significant change in the way decisions are made.

Fourth, and finally, how will democracies deal with the fact that they must cooperate with dictatorships to make the global economy work? And should they? The age of democratic leadership over the global economy that characterised the second half of the 20th century and the beginning of the 21st is dead. It will never come back. What does that mean for the democratic west?


I look forward to your comments, your suggestions and your evidence-based rebuttals as this blog develops.