1. Global Governance or World Order

2. Global Governance: ways to manage common affairs
The Commission of Global Governance’s definition:
“Golobal governance is the sum of the many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accomodated and cooperative action may be taken. It includes formal as well as informal arrangements that people and individuals have agreed to or perceive to be in their interest”

3. Global governance is not a global government; it is not a single world order; it is not a top-down, hierarchical structure of authorities, rules and mechanisms, formal and informal, existing at a variety of levels in the world today.
Pieces of GG: arrangements and activities to deal with issues and problems.
They include international rules of law, norms or “soft law”, and structures such as formal international intergovernmental organizations (IGO’s) and arrangements.

4. Global governance: cooperative problem-solving arrangements
Since the 1990’s popularity of this concept
Liberals claim that global governance has become a prominent feature of global politics since the 1990’s as a responce and an attempt to shape the process of globalization
An important aspect of global governance has been the growth in the number and importance of IO’s
Liberals claim that since the WWII states demonstrated a capacity to solve their common problems through different arrangements, such as IO’s, norms and rules. To support this claim usually the examples of the EU and the Washington Consensus institutions are being used

5. Liberal claim
Liberals claims that the international system has developed into an international society
Hedley Bull: from international anarchy to an anarchical society
Although anarchical, it has certain rules and based on certain norms

6. The Bretton Woods System
IMF, 1947
The International Bank for Reconstruction and Development (IBRD), better known as the World Bank, 1946
General Agreement on Tariffs and Trade (GATT), 1948
World Trade Organization (WTO) in 1995

7. IMF To provide global economic stability To promote free trade
To oversee the international monetary system
To maintain stable exchange rate
To provide finance in times of instability to countries in crisis
All currencies were fixed to the value of the US dollar
The US dollar was convertible to gold at a rate of 35 dollar per ounce

8. World Bank
Provide loans for countries in need of reconstruction and development
The Marshall Plan was more effective in the post-war reconstruction
The World Bank’s main area of activity is aiding and assisting development

9. GATT To promote free trade by bringing down tarrif barriers
and non-tarrif barriers
by promoting rules of free trade among nations

10. From classical liberalism to Keynesianism
The Bretton Woods system was constructed to promote an open and competative international economy
However, since we have IO’s at the center of this system, which aims is not only to promote, but also to oversee this system and stabilize it in times of crisis,
it means that creators didn’t believe in classical liberal economic theory
according to which markets are perfect and there is no need of regulation

11. Keynesianism: regulated market economy
Markets are not perfect
In times of fluctuations there is a need of governmental involvement in economy
Governments intervene by expanding spending, regulating taxation and lowering interest rates
Thus governments promote growth and keep unemployment low
Not Keynes, but the USA was constructor of the Bretton Woods
Don’t forget that in the final analysis Keynesianism is an economic theory which backs free market economy (but with some portion of regulation)

12. The USA as a constructor of the Bretton Woods
After the war the US needed to sustain domestic growth levels
High welfare standards could only be provided by international trade
There was a need to promote open trade, stability in international economic system, reconstruction and development
Europe and Asia had to be open=free from influence of the Soviet Union
Security Strategy: to prevent any single power’s domination in Europe and Asia
Just like there was a need to promote international free trade for a growing British economy in the 18th century
Theories follow practices

13. “Structural power of the US” (Robert Cox)
Dollar as the world currency
The global predominance of American financial markets
US control of the IMF
The US is predominant in the other international economic institutions, the World Bank and the World Trade Organization

14. “Golden Age” of the world economy: 1950’s, 1960’s
OECD member states growth rates: 4-5% a year
What was the contribution of the Bretton Woods to this growth is not clear
National Keynesianism’s contribution, stimulation of domestic growth
The growth was stimulated by high and permanent military expenditure
The international economic stability was provided by American hegemony

15. Turmoil in the 1970’s
“Stagflation”: economic stagnation and rising unemployment
In 1971 the US abandoned the system of fixed exchange rates
In this context leaders of the major industrialized countries started to meet on a regular basis
By 1975, the Group of 7 was formed (G-7)
An attempt of creation of a “New International Economic Order” failed (alternative world order in favor of developing countries)

16. From Keynesianism to market fundamentalism
Change of IMF and World Bank roles and policies
Liberalization of financial capital: most Western countries removed control over the movement of currency in and out of their borders.
The result: a vast and ever-growing supply of capital that could move freely
The 1980’s: emergence of market fundamentalism
The 1990’s: the Washington Consensus

17. Changing role of the IMF
It was created to oversee the international monetary system by granting loans to countries experiencing temporary balance-of-payments deficit
In the case of severe balance-of-payments instability currencies could be devalued
But generally the background of stability should be fixed exchange rates
The 1970’s: from fixed exchanged rates to floating exchanged rates
The IMF focused on lending to the developing world

18. Development and IO’s The change in the World Bank’ role
Subordinate position to the IMF’s leading role
From an alliance-based system to an integrated system
Promotion of borrowing in the Third World , debt crisis
G-7 decided to ensure the repayment
From an import-substitution model to an export-oriented model
From regulation to de-regulation
Not development, but growth

19. Structural adjustment
A reduction in government expenditures through the removal of subsidies
The privatization of government-owned industries and services
The removal of restrictions on the way of free trade
The deregulation of economy
The promotion of foreign investment
The devaluation of exchange rate in order to encourage exports and reduce imports

20. Liberalization
Privatization
Deregulation and fiscal discipline

21. Structural power of the IMF
Conditionality
Reviewer of macroeconomic situation
At stake are WB money and other creditors’ money

22. The Washington Consensus and an expansion of liberal international economy
1989
1991
Transformation and transition
Managing of crises
2008 crisis
The rise of the rest