Can multilateralism evolve?
Over the last 75 years, multilateralism has been a powerful driver and pillar of global integration, peace, and prosperity. However, recent disaffection with globalization and with existing forms of global governance threatens the foundations of the rules-based multilateral order.
Growing political discontent with multilateralism, most notably in the United States, is associated with the failure of the post-Bretton Woods system to stem the tide of slow growth, rising inequality, migration, social fragmentation, and job insecurity associated with skill-biased technological change, offshoring and financialization.
In addition to its failure to deliver shared prosperity, the ever-widening scope of globalization also undermined democracy by reducing nations’ sovereign policy autonomy, inhibiting often desirable policy diversity and experimentation in the process.
As Dani Rodrik has argued, there is a trilemma preventing the simultaneous achievement of deep globalization, national sovereignty, and democracy. Far too often, small and medium-sized nations — particularly in the Global South — have been forced to choose between gaining access to global markets and keeping policy space for the pursuit of their national development strategies.
Global challenges predate COVID-19
The COVID-19 catastrophe has piled on by exposing key vulnerabilities in today’s hyper-globalized mode of production as well as important gaps in the global governance architecture. The current configuration of economic globalization was designed to maximize short-term efficiency, minimize transaction costs, and reap the benefits of scale, at the expense of robustness and security.
In return, politicians promised that the rising tide would lift all boats. But while global GDP has risen quite rapidly over the past decades—with China and, to a lesser degree India, achieving particularly rapid growth—globalization has resulted in widening inequalities within most countries and exposed nations to unquantifiable levels of systemic fragility. Not surprisingly, COVID-19 and the resulting economic downturn are only aggravating existing social cleavages within and across countries.
But while COVID-19 has poured jet fuel on deep and hard-set fault lines, even before its emergence the world was already fast approaching irreversible thresholds and tipping points on several global challenges, most notably in the realms of climate change and artificial intelligence. The window of opportunity to address some of these problems is closing; the COVID-19 catastrophe only adds greater urgency to the need for a multilateralism that can deal with the immense dangers that lie ahead.
Cooperation is a necessary means rather than an end
The greatest obstacles to achieving greater cooperation stem from a profound loss of direction about why to cooperate in the first place. All too often treated as an end in itself, multilateralism must be reimagined as a means to empowering people and enhancing social prosperity. While in practice this may entail a “thinner” globalization, a scaled back but inclusive and sustainable multilateralism is preferable to no multilateralism at all. A case must be made for a truly global and inclusive multilateralism being not only worth having, but also of the utmost necessity.
For the past two decades, calls have grown louder to reform the current multilateral system to reflect changes in the economic, demographic and geopolitical weight of advanced and developing economies. Political rigidities in multilateral organizations such as the International Monetary Fund, the World Bank, the UN, and the World Trade Organization have prevented adequate reform from being achieved.
Disillusionment with multilateralism has led to consideration of various alternatives, such as the replacement of multilateral agreements by bilateral deals or of multilateral rules by rules for likeminded or geographically proximate countries. Alas, none of these alternatives can substitute for true multilateralism, since a world facing inherently global challenges requires globally concerted action.
Time for inclusive and sustainable multilateralism
To safeguard its benefits and ensure it works in the service of all nations and people, a multilateral compromise fit for the 21st century ought to prioritize the wellbeing of the worst-off, build much more robustness into the global system, and accommodate legitimate demands for policy autonomy, while ensuring the prevention of beggar-thy-neighbor policies, the provision of global public goods and the management of the global commons.
A negotiated understanding of where to position international institutions within the globalization trilemma should shape the parameters of this new compromise. Legitimizing global governance entails improving the representativeness of global rulemaking processes, enhancing the inclusion of marginalized voices and bolstering responsiveness and accountability mechanisms. While inclusion and equity are valuable features in and of themselves, they also serve the purpose of making systems more legitimate and therefore more sustainable.
Now is the time to think boldly about a global governance that reflects the lessons learned from past decades as well as the lessons of the current crisis. Multilateralism needs to address its discontents and evolve to be fit for purpose in an era of renewed great power competition and a decoupling of economic prosperity from social prosperity.
It is all the more urgent to look ahead as the threats from climate change are growing and as new technologies, while offering immense promise, also carry grave dangers. These realities necessitate ambitious international cooperation to address inherently global problems. The challenge is to find a set of general principles to guide and constrain global rule-making that all nations can agree on. Either way, inaction is not an option — nature abhors a vacuum.
This article is adapted from a T20 policy brief titled “The Future of Multilateralism: Responsible Globalization that Empowers Citizens and Leaves No One Behind”, co-authored with Dennis Snower.