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Christiana Wyly

Christiana Wyly

Posted: July 3, 2009 02:45 PM

The Juggling Contest -- Balancing the Global Economy: An interview with Economist James Quilligan


This interview is a follow-up to Guest Blogger James Quilligan's blog which appears in my previous post "Stimulate This!"
In the previous post Mr.Quilligan shares with us what is emerging out of the UN Conference on the World Financial and Economic Crisis and its Impact on Development, along with some insights on the barriers to achieving equity and stabilization. This post will be followed by a continuation interview with questions and answers specific to our shared passion of economic and environmental equity including a new take on the Waxman-Markey measures.

CW: You mention that there are discussions happening on both emergency and long-term measures on financial reform -- how much long-term thinking is possible in the midst of such an urgent crisis? It seems as though there are all hands on deck just to keep the plates spinning? Is there room for innovation? Is there an openness to creating new models?

JQ: A lot of exciting dialogue and planning is taking place. While the world is still engaged in its old juggling contest involving foreign reserves, trade balances, financial leveraging, international balance of payments and the global balance of power, many new variables have now inserted themselves into the prime equation -- including human needs, human rights, human security, energy security and ecological debt. In trying to manage all of these factors without adequate global standards, rules and institutions, the de facto policy of laissez-faire competition continues to shape our global attitudes and practices. Yet at the international level, many leaders have recognized that there are major problems with our traditional concepts of legal boundaries -- including private property and sovereign borders -- and much progress is being made on trans-border cooperation agreements.

But the real epistemic break is happening where individuals with deeper understanding are organizing to preserve and manage a particular commons which they depend on for their own livelihood or well-being (be it natural, social, cultural or intellectual), and allowing the energy of shared governance to flow in and through that space. These autonomous commons groups are organizing spontaneously across the world in response to the global economic crisis and will eventually develop a unique ontological identity and power as a third sector to solve the local and transnational problems that businesses and governments are not equipped to address on their own.

CW: In your article you say, "Without coordinated efforts by developed nations to help the world's poorest nations, 100 million people may fall into extreme poverty each year for the foreseeable future." What would real coordinated efforts look like, and what would it take to facilitate those?

JQ: The Outcome Document of the UN Economic Conference states, "Strong action is needed to counter the impact of the crisis in poor countries and help them restore strong growth and recover lost ground in progress toward their development goals." Where to start? Let's recall what John Maynard Keynes proposed at the Bretton Woods conference in 1944 -- an international requirement for trade surplus nations to recycle their financial excess through a global resource pool, which would then be redistributed to poor nations that need help. In rejecting Keynes' proposal, the United States assured him that the poor nations of the world would develop rapidly if a few rich countries would provide them with capital and technical knowledge on a discretionary basis. If international trade and market-driven investment are not enough to end poverty, the US told Keynes, then loans for credit payments adjustments and development issued by the new International Monetary Fund and its sister institution, the World Bank, supplemented through foreign aid, philanthropic grants and remittances, would be sufficient to end poverty.

So that's the deal that went down at Bretton Woods. Now, fast-forward sixty-five years to the present: the post-war laissez-faire system for the distribution of world resources has utterly failed to curb global poverty, while many entrenched interests are still trying to breathe life back into the dying carcass of that system. The point is that we need an updated version of Keynes' proposal for automatic -- not voluntary -- recycling of the world's resources and an economic multilateralism that includes the equal participation of rich and poor nations in the international rules and institutions for managing these global allocations. In the short-term, it means creating global stimulus measures through new liquidity and development financing to boost trade, financing, infrastructure, agriculture, green technology and human security needs in all nations, not just the richest ones. In the long-term, it means the creation of development measures beyond the UN Millennium Development Goals, the protection of our common global resources including a strong climate change treaty, the restructuring of global economic rules and institutions, the establishment of new forms of governance, and the generation of multilateral financing through the implementation of global standards.


CW: The global economic summit called for the creation of a new body, a Global Economic Council, to coordinate and oversee the international economy. This would certainly be a departure from our present lack of international economic coordination, but is it possible that a council could be effective? How would it function? Who would be involved?

JQ: Long before the recent UN proposal, the Brandt Commission and the Commission on Global Governance also called for a high-level body to monitor and coordinate the international economy and development. It is still a brilliant idea. Instead of a large bureaucracy, it would be a small council that would provide oversight and advice on the coordination of global policies, specifically to monitor the state of the international economy, anticipate monetary and financial crises, track currency exchange rate stability, take the risk out of international financial flows, provide a long-term policy framework for sustainable development, secure consistency between the major international organizations, register input from regional organizations and build consensus between governments on new global economic policies.

The UN is also calling for new mechanisms through its Economic and Social Council and the UN system for resource mobilization, surveillance, regulation, and coordination of the global economic system and multilateral financing for development. Obviously, in order to earn respect and legitimacy, this council and the other proposed oversight committees and agencies must be comprised of people of the highest integrity, who are globally representative and thoroughly transparent public servants. Certainly, this would require an unprecedented degree of international trust, but that is precisely what this economic crisis is about -- restoring trust in our social and financial institutions on the basis of a new global system of value.


CW: The global economic and environmental transition is clearly the major issue of our time. It's a large question, but what will this change really involve? How long do you expect it will take before we resolve the present crisis and create a new global economic system that is environmentally sustainable?

JQ: It's safe to say that this transition will play out for most of the 21st century. That means successive waves of intensive transformation for us and for our descendants. Our generation is tasked with the hardest part, because we are between the tides of the outgoing and incoming forces of this global evolutionary change -- and we have been caught flat-footed, inadequately prepared for this axial moment. The main challenge now is to develop a new global understanding of the relationship between economics, energy, the environment, food and water, all within an international, intergenerational and interspecies context. Here in the US, our modern interpretations of the values of the Enlightenment -- famously enshrined in the US Declaration of Independence and Constitution -- are quite strong on freedom but particularly weak on the equity of individuals with each other and with nature.

As the G-2 (that is, China and the United States) seeks common ground on a range of issues for a new international balance of economic and political power, the US is facing a partner which -- despite its many political deficiencies -- is deeply committed, historically, culturally and economically, to finding harmony between human beings and nature. Liberal democracy will not lead us wisely through this period of Great Adjustment unless we understand that the ultimate source of value comes, not from business or government, but from our natural, cultural, social and intellectual commons. Government should not be granting anyone the rights to these commons, we should be taking them -- they are ours by right of birth.

The immediate crisis we are facing is to shift from seeing energy, nature, food and water as monetized commodities to recognizing them as reserve values that are essential for our survival and well-being. Only then shall we understand that money is a cultural creation expressing the intrinsic value of these commons -- and not a function of the marketplace or of a Central Bank. The creation of a new international monetary system is just around the corner and global value must be integrally informed by human beings, culture, the environment and energy, which means a complete rethinking of all our values for a fair, inclusive and sustainable globalization supported by an authentically new and resilient multilateralism.

CW: Thank You James, its a rare opportunity to get to hear some "behind the scenes" information on the process of the UN Economic team, and even more rare to hear innovative thinking on our collective economic future. I certainly hope that many of the strategies on creating aligned global economic governance and value allocation to the commons come to fruition. Thank You so much for your time and willingness to share.

To read more from James Quilligan, visit his website: http://www.global-negotiations.org.