Unlike most recent analyses of the world economy, this one is not crisis-driven. Well before U.S. Treasury Secretary Robert Rubin and other top policy-makers began to see an urgent need for a "new architecture" for global finance, Wolfgang Reinicke, an economist and political scientist, was busy at Brookings Institution devising a model with a much broader scope--an "architecture" adapted to globalization as a whole.
In "Global Public Policy, " Reinicke, now a senior economist in the corporate strategy group at the World Bank, seeks to come to grips with the "sweeping, radical transformation" of a large part of the international economy from interdependence to globalization. He differentiates carefully between the two. The growth of international commerce by leaps and bounds starting in the 1960s was an intensification of a long-term quantitative trend of economic interdependence, but the mid-1980s saw the beginning of qualitative development-- globalization. It is marked not only by an explosive growth in trade and investment but also, more importantly, by a vast expansion of corporate business and structures across national boundaries. "Globalization," he writes, "is for the most part a corporate-level phenomenon." One indicator: in 1994 about 40% of total U.S. trade was intra-firm trade across borders (and it's now around 50%).
Unlike those who denounce globalization and the corporate expansion that energizes it, Reinicke sees globalization as a natural outcome of unsurpassed technological innovation, the widespread deregulation of domestic economies, and the liberalization of cross-border economic activities. For him, the only issue is how to adjust to this reality. The institutions and principles that have governed the international economy since the end of World War II are unable to do so, he argues, since they were devised for economic interdependence, not for globalization.
Contrary to those who hold that the world economy is basically self-regulating, Reinicke sees it as requiring a measure of "global governance." By that he doesn't mean global government, which he rejects as utopian and undesirable. Instead, he advocates a global system of "public-private partnerships" in which non-state actors share some responsibility with governments for writing, implementing, and enforcing the international rules and standards necessary for making globalization function without major disruptions.
For those who, like Economist Dani Rodrik, think such a development is impossible, Reinicke points out that such governance is already haltingly and imperfectly underway. He illustrates that trend by providing case studies in three areas--banking and finance, the control of money-laundering, and the management of trade in dual-use (military and commercial) technology.
The persuasiveness of Reinicke's case partly depends on grasping some important concepts that are not part of popular discourse, like the difference between a nation's "internal" and "external" sovereignty. So "Global Public Policy" is not an easy read, but it's worth the effort if you want to make sense out of the global economic crisis and the prescriptions to cure it. --Robert A. Senser, editor, Human Rights for Workers
