The prospects and limitations of a global governance of finance

Résumé du document

In our modern societies, market mechanisms shape the modes of production and distribution of goods and services, particularly more and more through the financial sphere, "that part of an economy that links savings with investments through different instruments denominated in monetary values'' (Scholte 2003, 189) such as loans, bonds, and options. In the current context of globalization, concept that refers to the growing intensity, extensity and velocity of worldwide interconnectedness (Baylis and Smith 2005), financial activities are fundamental to the development and modernization of countries - witness the increase of average volume of foreign exchanges, from 15 $ billion per day (1971) to 1.450 $ billon per day (1998) (Gilpin as quoted by Scholte 2003, 190). The concept of global governance refers to "rule systems that rely on steering mechanisms through which authority is exercised in order to preserve the coherence of the systems and move towards desired goals" (Rosenau 2003, 72). This worldwide process of decision-making is thus a means to overcome global problems such as, in the case of finance, a lack of efficiency, a lack of stability, and a problem of compatibility with social and environmental expectations.

Extraits

[...] This refers more to what Mc Grew calls distorted nature of global governance'' (2003, 281). The challenges and prospects of balanced financial governance As pointed by Scholte (2003, 197), the lack of transparency (implying less reliability), the creation of monopolies (closing the price competition and reducing the incentives to innovation), and the development of self-referential activities decrease the efficiency and stability of financial markets. Speculation on bonds and currency, for instance, because of the overestimation of the relative values of goods, may result in the flee of capitals abroad and the collapse of interconnected economies witness the Asian crisis in 1997 (Held and Mc Grew 2003, 4-5). [...]

[...] In a Marxist approach (Callinicos 2003, 250), the structure of capitalism itself and the mechanism of class struggle accounts for increasing financial and economic structural imperatives. But the emergence of a world market can also be explained in the light of Realist theories (Scholte 2003, 201). Confronted with a situation of anarchy (the absence of supranational authority) the states shaped national and international finance according to their own interest so as to ensure their permanence and dominance. In this respect, processes of colonization and imperialism are more part of geopolitical interstate competition than the result of market pressures. [...]

[...] Are the US, and basically the state, still in the centre of financial governance? The biased governance : interests and ideologies In the context of globalization, concerning the financial sector, the situation apparently quite evolved. Confronted with the rise of transnational financial actors and networks, the state encounters more pressure in global decision-making processes: the growing role of NGO's and the lobbing of transnational firms (Ngaire Woods 2003, 27) as well as the autonomy of international institutions challenge in a way the state sovereignty. [...]

[...] Governing globalization. Power, Authority and Global Governance, Polity press, Cambridge. Hewitt Tom (2000) ‘Half a century of development' in Tim Allen and Alan Thomas, eds. Poverty and Development in the 21st Century. Oxford University Press, Oxford Koenig-Archibagi, Mathias (2003) ‘Mapping Global Governance' in Held David and Mc Grew Anthony, eds. Governing globalization. Power, Authority and Global Governance, Polity press, Cambridge. Ngaire Woods (2003) ‘Global Governance and the Role of Institutions' in Held David and Mc Grew Anthony, eds. [...]

[...] What can be done to improve the financial system? Through the discussion and combination of Realist and Marxist approaches, this paper aims at focusing on the relations of power between the different actors. Then, beyond the ideas of hegemony and economic competition, the paper turns towards the views of Liberalism - particularly Cosmopolitanism, so as to underplay the previous deterministic and state centric analysis and broaden the debate of global finance governance. This paper is developed in three sections, each of them being divided in two subsections: the first section deals with state making and interstate competition in relation to the market pressures of capitalism, particularly the influence of the US in the shaping of the post-war order; the second section studies the current relations of power and authority within the different modes of financial global governance and their consequences in terms of economic decision-making processes; lastly, the third section explores the measures and the challenges of what could be a balanced global financial governance, while underlying the prospects and limitations of Cosmopolitanism. [...]