East African Business Week (Kampala)
John Musinguzi
15 November 2008
opinion
Leaders from 20 leading economies met in Washington 14-15 November 2008 to consider reformation of the global economy.
This article was written before the summit commenced. From the look of things, the current moment is being likened to the end of World War II in 1945. So pundits are talking of creating a new order that will give emerging economies a bigger stake in the global financial system by permitting hem a bigger role in managing global financial affairs.
The 64-year Bretton Woods financial system created in 1944, has become exposed as inappropriate for the times after a massive credit bubble in the US housing market burst last year and the impact spread worldwide. The International Monetary Fund (IMF), leaders of the Euro zone and other authorities have just forecasted that the shrink in all countries will continue throughout next year.
Can the financial system be reformed alone and not along with the other organisational systems that were created then? The endeavor has to be made in line with creation of a more truly global society, by way of a new Social Contract. Whereas the politicians, economists and academicians are preoccupied with brainstorming on how to "reform the financial architecture," more crucial is how "to stabilise the social organism," including the legal, political, economic and spiritual systems.
The reforms must include political ones like how to arrive at a form of human governance superior to the United Nations (UN). The bringing onboard of middle power states like Brazil or India in the management of global finances by making the G20 replace the hitherto G8 cannot be placed above a new deal to pull up the poor countries through various instruments like debt cancellation, fairer trade, aid flows and an environmental legislation biunding on all states.
In fact, if claims to democracy are to be upheld, all countries should be involved. I assume it is not being emphasised that 1945 was a mere truce and the big powers must pursue their self-interest and self-importance at any time. Why, for example, is no one questioning the role of US chronic budget deficit and military expenditure in the current global economic recession? Enlightened leadership ought to see things with lenses of common human survival, not lenses of national self-interest.
The post-World War Two Marshall Plan that transferred 1% of US national income to Europe for four years had more ideological considerations than concerns for human equity. The increased interdependence begs for more economic inclusiveness policies of fairness and justice that are lacking in the World Trade Organisation (WTO), the IMF and the World Bank.
The immediate handling of the credit crunch and its resultant instabilities, while helping out in the short term are bad precedent and not sustainable. The long-term measures must consider the wisest possible management of human affairs in a wider cosmos. Not only is humankind today living in a more unified global society, but human activity has gone into the outer space and both human population and human technological capacity have risen tremendously.
This is why the world leaders must be cautioned against the overconfidence of maneuvering within the same contaminated waters. The mistrust and double standards that have been often blamed on the IMF, WB, WTO and UN Security Council have to be confronted starkly in the face. It's just not possible that states alone can handle the reformation of the systems. Other stakeholders like religious organisations, social movements and civil society organisations have to be involved and arrive at a broad common code of public management. The statist approach to all social issues cannot help much in this era of transnational presence. There ought to be also ample time for consultations with constituents and a public debate.
The brainstorming of diverse stakeholders should lead to improved risk management principles, including reduction of reliance on a mere country's currency, the US dollar as a global reserve currency. Methinks to reshape the architecture of the world financial system goes hand in hand with a mind shift, a worldview reform consonant with the present and future levels of knowledge, technology, population and habitation. Whatever measures will be arrived at in Washington will have only a temporary, at best a transitional, value. Time to scratch heads further!
The author is a Ugandan journalist.
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