The Case for a New Bretton Woods. Kevin P. Gallagher

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СКАЧАТЬ growth has occurred it is not shared across the population (World Inequality 2020).

      The third picture is the Weather, Climate, and Catastrophe Index. The twenty-first century has been marked by climate-related natural catastrophes that have posed great economic risks to the world economy, and the risks are rising each year. There has been an increased incidence of floods, droughts, heatwaves, and fires globally that has cost hundreds of billions of dollars on an annual basis. The price tag for these events has been upwards of $6 trillion in this century. Just one event in Dominica in 2017 caused over 200 percent of GDP in economic damage, while the cost for just the first half of 2021 was $298 billion, showing that the climate crisis is bringing major economic costs as we speak.

      Figure 1.2 The Crocodile Graph: Top 2,000 Transnational Corporations’ Profit and Global Labor Income Share (Percentage Point Change of GDP)

      Source: UNCTAD 2017

      Figure 1.3 Economic Losses from Extreme Weather

      Source: Climate, Weather, and Catastrophe Insight 2021

Rewriting the Rules of the International Economic Order

According to the IMF managing director, Kristalina Georgieva, “we face a new Bretton Woods moment” (Georgieva 2020). The Financial Times (April 3, 2020) concurs: in its call for radical reforms to reverse the policy direction of the past four decades and establish a new social contract that works for all, the international dimension is embraced and the parallel with the Bretton Woods moment of 1944 acknowledged. But unlike then, reforms have the actually existing multilateral system to contend with. The global economic order needs a reset that scales back unduly intrusive global rules in some areas and expands the system in others, in order to provide a broader set of global public goods and to align international cooperation with economic, social, and environmental goals that require a better mix of international resources and national policy autonomy.

      With this backdrop in mind, we co-convened a series of roundtables in Geneva and Boston in 2018 and 2019 – including diplomats, experts and scholars, civil society organizations, union representatives, and former and current government officials – to articulate a set of design principles for a new multilateralism. We titled these principles the “Geneva Principles for a Global Green New Deal”:

       Global rules should be calibrated toward the overarching goals of social and economic stability, shared prosperity, and environmental sustainability and be protected against capture by the most powerful players.

       States should share common but differentiated responsibilities in a multilateral system built to advance global public goods and protect the global commons.

       The right of states to policy space to pursue national development strategies should be enshrined in global rules.

       Global regulations should be designed both to strengthen a dynamic international division of labor and to prevent destructive unilateral economic actions that prevent other nations from realizing common goals.

       Global public institutions must be accountable to their full membership, open to a diversity of viewpoints, cognizant of new voices, and have balanced dispute resolution systems.

With a renewed set of national goals and global public goods (outlined in Table 1.1), and guided by the Geneva Principles, this short book draws on the work of the United Nations Conference on Trade and Development (UNCTAD) and the academic literature to make the case that the international economic order needs to be fundamentally reformed to align itself with and support these new goals and ambitions. After this short introduction, Chapter 2 puts the international economic order in its proper historical context, tracing the collapse of the liberal order after World War One, the construction and rise of the embedded liberal order, and the rise and fall of neoliberalism. Chapter 3 focuses on how the neoliberal order has made the international monetary and financial system more unstable and asymmetric. Chapter 4 traces the rise of neoliberalism in the World Trade Organization (WTO) and in the broader trade and investment treaty regime. Chapter 5 discusses the evolution of development banking. These chapters provide a critical analysis of the scale, governance, and performance in each of these areas of the original Bretton Woods order, and offer concrete policies for reform that are guided by the Geneva Principles. Table 1.1 provides an illustrative list of these policies to foreshadow the discussion.

Table 1.1 Policy Instruments for a New Bretton Woods

Renewed national goals and global public goods
Bretton Woods 1.0	Bretton Woods 2.0
National goals
Full employmentStructural transformationCatch-up growthSocial security and welfarePolicy autonomy	Full and decent employmentGreen structural transformation Stable growthEquality and justiceDecarbonizationResiliencePolicy autonomy
Global public goods
Stable monetary and exchange rate systemLender of last resortCounter-cyclical and long-run financeOpen trade during recessionsInternational cooperation	Financial stabilityRelative global equalityCounter-cyclical and long-run financeLender of last resort and debt authorityBalanced tradeStable global climateInternational cooperation

The scale of the challenge of turning a global system away from fossil fuels and outsized financial interests toward mobilizing investment for a just transition to a sustainable future of clean production, economic equality, and social and environmental resilience should not be underestimated. However, on many broad macroeconomic criteria (investment shares, public spending, tax rates, wage and productivity growth, etc.), the challenge is to return to figures that were commonplace in the initial Bretton Woods era, at least in the advanced economies. A more stable international monetary and financial system with adequate liquidity provision and new mechanisms for handling sovereign debt problems would lessen the need for emerging-market and developing countries to accumulate massive foreign exchange reserves and would help lengthen investment horizons. Closing tax loopholes, shifting taxes and tariffs toward fossil fuels, and introducing regulations that steer private finance toward public goals will create plenty of resources to harness the transition through increased fiscal space, development finance institutions and multilateral development Banks (MDBs), and new commercial sector instruments. A much higher degree of coordination is required for the kind of big investment push we see as essential to moving towards real resilience. We suggest that a Global Marshall Plan can provide that push, but СКАЧАТЬ