Stabilizing the world economy

The global political economy is built on information flows and market exchanges. It is also built on an intricate set of rules whose maintenance and enforcement require concrete organizations, both at the global and national levels. There is a need for rules coupled with robust institutions to enable a predictable environment. Unless problems of inequity and volatility are addressed in institutional terms they will grow worse. The complex changes in the organization of production and exchange resulting from globalization have far outpaced institutional frameworks of governance. Existing global governance organizations are still in their formative stages.

The creation of United Nations and the Bretton Woods institutions was coupled with the strengthening of national institutions aimed at social protection. By combining an institutional framework aimed at international openness with one aimed at social protection it is possible to make openness socially beneficial and therefore politically feasible. However, these institutions are not sufficient since their benefits accrue primarily to citizens of the advanced industrial countries of the North Atlantic, and do not anticipate the extent to which technological and economic change can propel the openness of the world economy and undercut the social protection dimension.