The Shifting Global Economic Architecture

Decentralizing Authority in Contemporary Global Governance

Jonathan Luckhurst

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN: 9783319631561
• eBook ISBN: 9783319631578
• Topic: Politics & International Relations
• Subtopic: International Business
• Index: Politics & International Relations

This book analyzes the shifting global economic architecture, indicating the decentralizing authority in global economic governance since the Cold War and, especially, following the 2008-09 global financial crisis. The author examines recent adjustments to the organizational framework, contestation of policy principles, norms, and practices, and destabilizing actor hierarchies, particularly in global macroeconomic, trade, and development governance. The study's 'analytical eclecticism' includes a core constructivist IR approach, but also incorporates insights from several international relations theories as well as political and economic theory. The book develops a unique 'analytical matrix', which analyzes effects of strategic, political, and cognitive authority in the organizational, policy, and actor contexts of the global economic architecture. It concludes that, despite concerns about potential fragmentation, decentralizing authority has increased the integration of leading developing states and new actors in contemporary global economic governance.

© The Author(s) 2018

Jonathan LuckhurstThe Shifting Global Economic Architecturehttps://doi.org/10.1007/978-3-319-63157-8_1

Begin Abstract

1. Introduction: The Shifting Global Economic Architecture

Jonathan Luckhurst¹

(1)

University of Guadalajara, Guadalajara, Mexico

End Abstract

This book analyzes the shifting globa l economic architecture, mainly after the Cold War and particularly since the global financial crisis (GFC) of 2008–2009. This constitutes a study of key themes of global governance , international political economy, and international relations . It focuses on recent adjustments to the organizational framework, contestation of policy principles, norms, and practices, and destabilizing actor hierarchies in global economic governance . Some of these were effects of the GFC, while others continued or increased earlier developments.

There have been important authority shifts in the twenty-first-century IR and global governance , especially due to strategic, political, ideational, and normative issues. The influence of policy actors from the leading wealthy countries of the Group of Seven (G7) has declined, relative to those from prominent developing states and some non-state actors. The present study focuses on the consequences of decentralizing authority for global economic governance . It focuses on three key dimensions of authority, namely strategic, political, and cognitive, discussed later in the chapter. These equate the resources or attributes that constitute an actor’s perceived legitimacy to act in a given context of global governance ; thus, these three dimensions establish the authoritativeness of such actors.

Some scholars describe the contemporary con text as ‘post-hegemonic’ (Tussie and Riggirrozi 2015) or a ‘G-zero’ world (Bremmer 2012), the former implying the end of American dominance and the latter an absence of international leadership or political authority. This book challenges such claims, asserting that the notion of ‘hegemony’ exaggerated American economic influence, particularly since the end of the Cold War. Meanwhile, the decentralizing authority in global economic governance, involving broader groups of influential policy actors outside the G7, ha s strengthened it in important ways, rather than constituting a general absence or weakening of authority.

The GFC contributed significantly to the decentralizing strategic, political, and cognitive authority in global economic governance . The latter became more contested, while precrisis conventional wisdom was undermined or displaced in key policy areas. This has led, for example, to greater acceptance of capital controls, new emphasis on macroprudential financial regulation, increased political contestation of the consequences of free-trade agreements, and a sustainable development consensus in place of the old Was hington Consensus. It has had important effects on the organizational architecture, as well as the actors involved. I analyze how the shifting organization, policies, and actors have influenced the global economic architecture.

The Shifting Global Economic Architecture

Recent decades have brought important shifts, especially decentralizing authority in the ‘global economic architecture’, which I use with reference to the organization, policy contexts, and actors involved in global economic governance. The latter phrase requires some clarification; although an increasingly common term in scholarly literature and among public policymakers, there are different understandings of what it signifies (see Acharya 2016, 1–3, 6; Dingwerth and Pattberg 2006). The literature, which is discussed shortly, points to the diversity of definitions.

My own usage of ‘global governance ’ refers to the formal and informal management of cross-border issues with worldwide, or ‘global’, repercussions, involving complex interlinkages between diverse actors and organizational contexts. This incorporates, while modifying, aspects of other useful definitions (cf. Acharya 2016, 6; Dingwerth and Pattberg 2006, 197; Rosenau 1995, 13). The reference to ‘diverse actors’ indicates the role of state and non-state actors; hence, this analysis is not purely state-centric. In addition to states, it examines the influence of civil society, ‘non -governmental’ or civil society organizations (CSOs),¹ multinational companies (MNCs), intergovernmental institutions or organizations (IOs), private standard-setting bodies, scholars and other experts, and any other types of actors that sway global eco nomic governance. This indicates a focus on what Valerie Hudson (2005) refers to as both ‘general’ and ‘specific’, or individual, actors. The study examines the decentralizing authority of actors in economic policy contexts of global governance , analyzing macroeconomic , trade, and economic development issues. This concerns core matters of macroeconomic policymaking, including contestation of economic growth strategies, financial-sector governance, plus fiscal and monetary policy issues; contestation of international trade practices and norms, and its broader effects on the global economic architecture; and the growing sustainable development consensus since the GFC.

One important aspect of this book, which distinguishes it from others, is the focus on the three dimensions of authority noted earlier. My emphasis on ‘authority’ echoes Doris Fuchs’ (2002, 11) assertion that ‘the core of the global governance argument concerns the acquisition of authoritative decision-making capacity.’ The present analysis of this kind of ‘authoritativeness’, tied to perceptions of legitimacy (Hurd 2008, 309; Ruggie 1982, 380), indicates how the decentralizing authority of actors has been crucial for the shifting global economic architecture. I demonstrate these authority effects on the organization, policy contexts, and actors of global economic governance in the above-mentioned issue areas, since the twentieth century and especially from the 1990s until the present.

This analysis was partly motivated by the findings from my previous boo k, G20 Since the Global Crisis, also published by Palgrave Macmillan. Some of the key concepts and themes here were emphasized in that earlier study, such as the three dimensions of authority (Luckhurst 2016, 142–146); the significance of ‘communities of practice’, socialization, repoliticization, and policy contestation (Luckhurst 2016, 65, 123–130, 146–148; see Adler 2008); and the importance of ‘crisis effects’ on international authority, including ideational effects in undermining the influence of erstwhile conventional wisdom (Luckhurst 2016, 64–74; see Hopf 2010, 543; Widmaier et al. 2007). My earlier book emphasized two key shifts in the core principles of global economic governance , which, I believe, had not received sufficient analysis in the scholarly literature on global governance . One was the prioritization of greater inclusivity, particularly through the deeper integration and role of leading developing states in global economic governance. The second new principle involved recognition of the consequences of economic uncertainty, including rejection of the ‘efficient-market’ hypothesis (Fox 2009; Krugman 2009). These both pointed to the decentralizing authority in global economic governance , in organizational and policy settings, plus the integration of new actors. The present book analyzes how these principles have influenced these contexts, indicating their constitutive effects in further decentralizing authority in the global economic architecture.

My analysis of the G20 raised crucial questions about the broader decentralizing authority in the global economic architecture, inspiring the focus for the current book. This present study tests the hypothesis that authority shifts in global economic gover nance have had important consequences, without precluding the significance of other factors. One core argument is that, while decentralizing authority has occurred, sometimes, through forms of fragmentation, it has especially been a consequence of growing integration, with greater influence for more diverse actors in global economic governance . It should be noted that this claim concerns economic aspects of global governance , rather than drawing conclusions about security or other policy areas. Security disputes and other issues, such as climate change, could have important effects on multilateral economic cooperation and could conceivably undermine it in future. However, without making a strong claim about the converse argument, suffice to note that Robert Keohane and Joseph Nye (1987, 727–728) have argued that one benefit of economic cooperation is the potential to reduce the international tensions that lead to security conflict.

Contemporary evidence indicates that the global economic architecture ...

Table of contents

• Cover
• Frontmatter
• 1. Introduction: The Shifting Global Economic Architecture
• 1. Shifting Organizational Framework
• 2. Contesting Policy Principles, Norms, and Practices
• 3. Destabilizing Actor Hierarchies
• Backmatter