Has neo-liberalism fatally undermined the idea of global governance?

GD readers might find interesting this piece by Columbia University’s Mark Mazower, from the FT this weekend. He has a book coming out in October on the history of the idea of global governance. Brief highlights:

“They decided without us. Let us advance without them,” reads the slogan on the website of Syriza, the leftwing Greek party that shot to prominence after elections this month. But what emerges as one reads on is less a clear strategy for the country’s future than a worldview suffused with the images and memories of its turbulent past. Here, the fight against today’s perceived enemy – neoliberalism – evokes the struggle against the military junta 40 years ago, and the resistance to Nazi occupation during the second world war…Alexis Tsipras, Syriza’s leader, is too young to remember this: he was born just as the junta fell, in the summer of 1974. However, his party’s language reminds us that the eurozone crisis is raising some deep historical questions about what has happened to politics, to democracy and to the very idea of international co-operation.

It was in Europe, two centuries ago, where the idea emerged that the world was a governable place. This idea was radically new: the term “international” itself was coined by British philosopher Jeremy Bentham and only entered general circulation in the decades after Napoleon’s defeat. Although nationalism was emerging as a potent force at this time, the supporters of international co-operation were not alarmed. On the contrary, they believed that nationalism and internationalism were soul mates, that a continent of vibrant national democracies necessitated co-operation among its diverse people. Novelist Victor Hugo conjured up the vision of a federal Europe to a wildly cheering audience of peace activists in Paris in 1849; the Italian revolutionary Giuseppe Mazzini inspired US president Woodrow Wilson with his idea of a society of democratic nations.

If Wilson’s ill-fated League of Nations was one outcome of such views, other internationalists fought equally hard for free trade, or for communism. But the second world war saw anti-fascists in Europe return to the idea of federation for the continent as an antidote both to the bellicose nationalism of Hitler and Mussolini, and to the hopeless high-mindedness of the League. They believed that without integration, Europeans would continue to fight indefinitely; with it, the nation could be tamed and the needs of the weakest members of society guaranteed.

The origins of the EU thus reflect the persistence of the old idea that international co-operation is the best guarantee of national well-being. US support for European integration was premised on the belief not only that it would boost growth and keep communism at bay but that it would revive democracy itself. The early decades of the common market coincided not only with unprecedented productivity gains and growth across western Europe, but simultaneously with significant falls in inequality and enhanced spending on social services and welfare.

That achievement seems to belong to an almost neolithic past. The past 25 years have seen many of those gains reversed and have thrown into question the notion that national sovereignty and international co-operation are complementary. The architects of this reversal were not philosophers such as Bentham or revolutionaries such as Mazzini but sober technocrats such as Paul Volcker and the IMF’s Michel Camdessus. Managers of the global monetary system after the oil shocks of the 1970s, they believed that international prosperity and stability depended upon the liberalisation of capital movements. Europe’s enthusiastic participation in this financialisation of the global economy has had striking if largely unintended consequences.

All international organisations require their members to give up some sovereignty in exchange for the benefits of joining the group. But in earlier times, this choice did not entail anything close to the kinds of sacrifices that are required today. Legislatures within the EU, and especially within the eurozone, are now obliged to cede discretionary power to unelected central bankers, judges, bureaucrats and industry regulators. One does not have to be a supporter of Syriza to see how this allows established political parties in difficult times to be turned into stooges of shadowy special interests.

So what is at stake in the eurozone crisis goes beyond the consequences of a Greek exit and beyond even the future of the EU itself. The crisis has thrown into question the very idea that the world can be governed.