What if global powerhouse institutions, which people love to hate in a knee-jerk way, actually did their jobs pretty well during the Great Recession? That’s the premise of The System Worked: How the World Stopped Another Great Depression (Oxford University Press, 2014), a counterintuitive book from Daniel Drezner, a professor of international politics at Tufts University, as well as a prolific tweeter and frequent contributor to The Washington Post.
While trying not to sound too Pollyannaish, Drezner makes the case that the G-20, the International Monetary Fund, the World Trade Organization, the Bank for International Settlements, and other such groups helped to lessen the blow to the global economy inflicted by the worst U.S. financial crisis since the Great Depression. They accomplished this by coordinating policy, rewriting rules, and ensuring that trade remained strong even as markets tanked throughout the developed world. “Compared to similar crises of this magnitude in the past, the world economy did not suffer as big of an economic hit, and growth resumed more quickly than expected,” Drezner writes in the opening chapter.
(Lorenzo Gritti)Specifically, he argues that global institutions reacted quickly and staved off a worse financial crisis by implementing new banking regulations, known as Basel III, to ensure that banks kept more cash on hand. The IMF helped to nudge negotiations between capital importers and exporters to keep trade going. The G-20 supplanted the G-8 as the primary economic forum, allowing more countries to participate in key international decisions. And the WTO, IMF, and Organization for Economic Co-operation and Development jumped in and did a good job of monitoring economic trends.
These achievements, Drezner concludes, trump any breakdowns in global governance in the last few years, such as disagreements over fiscal austerity or the failed Doha trade talks (international negotiations that stalled when richer countries disagreed with developing ones, primarily over agricultural subsidies). “Looking for perfection in global governance is the enemy of finding the good,” Drezner maintains, giving himself some wiggle room in his analysis of how well the system worked.
That key caveat allows Drezner to draw his contrarian conclusion that the global governance system functioned postcrisis; it also lends the book less of a controversial sweep than his thesis first implies. It’s a bit like giving props to Congress in 2013 when lawmakers managed to pass a bill at the last minute to stave off massive tax hikes and spending cuts. The bar is so low for cooperative policy-making now, internationally or domestically, that any movement is cause for celebration. “The question is not whether global governance has been flawless, but whether it has been good enough in supplying the necessary policies and public goods,” Drezner says.
Within these narrow parameters, Drezner offers a thoughtful and contemporary analysis of global governing systems and their underlying politics. The book isn’t exactly a beach read, but it still contains important takeaways for D.C. policymakers in today’s hypercritical, hyper-partisan climate. Drezner wants readers to question the conventional wisdom that nothing works globally or otherwise. This “powerful bias” toward negativity, as Drezner calls it, can blind people to moments of international success, such as the one that followed the Great Recession. And a permanent sense of pessimism can feed into a false sense of nostalgia for the good old days. Drezner’s point? Those golden days never truly existed, nor will they in the future — so why not celebrate the smaller victories and moments of cooperation?
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