Review of  ‘Divided Nations: why global governance is failing and what we can do about it’ by Ian Goldin

Review of  ‘Divided Nations: why global governance is failing and what we can do about it’ by Ian Goldin

Reading Ian Goldin’s new book on global governance provided close to a near-death experience. My entire working life flashed before my eyes and my thoughts turned inexorably to the possibility of redemption. Which of us would not say the same? Has anyone in development not worked on, or at least worried about, some combination of collective action and the reform of international organisations, whether in finance, trade, poverty reduction, climate or humanitarian action? Do any of us not have shelves containing works by Mancur Olson, Elinor Olstrom, Jean Francois Rischard, David Held, Kemal Dervis or Ngaire Woods. Precious few, I guess.

All of which makes it admirable that Goldin, Director of the Martin School in Oxford, and Professor of Globalization and Development, has managed to write a short and approachable book which adds new ingredients to the well-stirred mix. The point about seeking redemption is to ask whether Goldin, in the end, has created a recipe for global governance that will solve collective action problems. We will come to that.

Goldin is something of a catastrophist (in this book), alarmed by the systemic risks that he identifies as ‘the underbelly of globalisation’ (Pg 165). These include finance crises, health pandemics, climate change and cyber-(in)security. He thinks that ‘global politics is grid-locked’ (Pg 178); and quotes approvingly a remark by Pascal Lamy that ‘the enduring viscosity of international decision-making puts into question the efficiency of the international system’ (Pg 106).

Why might this be so? Goldin cites: misaligned incentives; short-termism; free-riding; enforcement problems; and coordination failures. He worries about ‘villains in the village’, like rogue traders in finance. And he emphasises a possible trade-off between legitimacy and efficiency in the international system: code for saying that the UN is legitimate but ineffective, whereas the World Bank and the IMFInternational Monetary Fund present the opposite configuration.

So far, so good, more or less. Personally, I would have liked to see a greater emphasis on the global opportunities that could be unlocked by more effective collective action – for example a revolution in green technology, creating new market opportunities and livelihoods for developing countries. I can also think of some other reasons why collective action might fail, including lack of trust and the inability to achieve ‘network closure’ in global consensus-building. There is a literature on all this, to which I have made small contributions over the years.

The more interesting question is what might be done. Here, Goldin leaves us with some work to do. In the last chapter, he cites five reform principles developed jointly with Ngaire Woods, but there are several other principles embedded in earlier chapters. If these are added, we arrive at what might be referred to as WG Plus: the original Woods/Goldin, with additions.

WG Classic so to speak, makes these five points:

• First, ‘subsidiarity’, in that not all issues require global collective action, and should therefore be excluded from the agenda, leaving only the most urgent issues for true global action;
• Second, ‘selective inclusion’, in the sense that only those most directly affected should be involved in decision-making on particular issues;
• Third, ‘variable geometry’, in that different combinations of countries will be needed round the table for different issues;
• Fourth, ‘legitimacy’, meaning that institutions must be representative and accountable; and
• Fifth, ‘enforceability’, so that sanctions can be place to ensure compliance.

The new, improved WG, WG Plus, will need to add a few points, to reflect the analysis of Chapter 3, which focuses mainly on networks, and Chapter 4, which deals with individual agency. To be specific,

• Sixth, make use of transnational and professional networks, including civil society and business networks, to create new norms and expectations; and
• Seventh, mobilise ‘the power of one’, via crowd-sourcing, digital democracy and similar techniques.

This is a plausible list, and we should be grateful to Goldin for not wearing us down with long dissertations on Security Council membership, Board composition, or the mathematics of qualified majority voting. Is it complete? Well, I compared it to my own list of eight principles for reform of global governance, published in 2005, and they do not quite match. For the record, my list, which benefited greatly from a collaboration with Sarah Gillinson, is

1. Keep the core group small;
2. Build trust;
3. Use the same group for multiple decisions;
4. Use social pressure to deliver network closure;
5. Choose the right issues. These are the ones where all the players have something to gain and something to lose.
6. Deploy positive incentives to encourage compliance;
7. Deploy negative incentives to punish defection from the collective;
8. Build the institutions needed to manage repeated interactions.

Comparing this list to WG Plus, I would say Goldin could have written a little more about trust-building and a great deal more about positive and negative incentives. I also observe that the various points about using the same group and institutions for repeated interactions (itself derived from analysis of iterated prisoners’ dilemma games) directly conflicts with the WG points about selective inclusion and variable geometry. I wonder whether there is recent theory or experiment to adjudicate between these competing positions?

The ultimate test of any list is whether it helps solve collective action problems in the real world. There could be many examples. At the time of writing, with the G8Group of Eight meeting in Northern Ireland, some come quickly to mind:  a peace process in Syria; global taxation; post-2015 sustainable development goals; or the impact on the Doha Round of EU-US trade negotiations. Another example, with the inter-sessional climate talks in Bonn having come to an unsatisfactory conclusions, but also noting the prominence of this issue in the recent bilateral US-China Summit, is climate change.

Let’s take climate change, and measure it against the tests identified by WG Plus. On the positive side:

First, this is a genuine global public good. However ambitious the efforts of individual countries, cities or businesses, adequate progress is unlikely to be achieved without a global deal which limits emissions and provides a global framework for pricing or taxing carbon. The subsidiarity, or in this case, ‘superiarity’, test is passed.

Second, the UNFCCC is legitimate and accountable, so the legitimacy test is passed.

Third, there are strong professional and transnational networks, for example cementing scientific consensus through the IPCC, as well as many cross-country alliances (BASIC, AOSIS, Cartagena etc . . . ), which all contribute to the network test;

Fourth, there are many opportunities for individual leadership and engagement, which partly contribute to the ‘power of one’ test.

On the other hand, some of the WG Plus tests are not met, and some arguably should not be in this case.

Selective inclusion, designed as a way to limit the number of people sitting round the table, is not straightforward, when climate change is pervasive. Current and potential large emitters need to be in, but so also do all the countries affected by climate change, and also any remaining countries that might be affected by, for example, global carbon pricing. Would anyone want to be standing in the corridor when a global deal is hammered out? The selective inclusion principle itself may be valid in theory, but the trouble with global challenges is precisely that they are global and affect everyone.

Variable geometry also sounds sensible, but is problematic in the climate field. One application could be to have different groups of countries dealing with different problems, forestry, say, or energy, or adaptation, coming together at the end in a comprehensive agreement. This certainly might simplify the negotiations, but would also reduce the scope for compromise and deal-making across sectors. And, again, who would want to be left out of any particular negotiation?

On this point, the US-China talks are interesting. Is this an example of an emerging side-deal which will enable the two countries to contribute to the collective UNFCCC process? Or is it instead the precursor of the kind of bilateral trade deal which has sounded the deathknell for multilateral trade talks? Might we see a succession of such bilateral climate talks, by-passing the UNFCCC process? And, if so, would the agenda change and who would be the winners and losers?

Enforceability is a good principle, but is absent in the UN process. For example, the Kyoto Protocol, adopted in 1997, set targets for reductions in carbon emissions, but without penalties for failure. Compliance relies instead on voluntary action, with peer pressure and public opinion as additional levers of influence. Would the prospect of strict enforceability, for example with fines for non-compliance, have made reaching a deal easier or more difficult in 1997? And would it help to reach a deal in 2015? Highly doubtful. Perhaps enforceability should be a second or third generation aspiration, once frameworks are in place and countries see that they can manage the targets? In other words, set laws that people are likely to keep.

In addition, using my own list, trust-building is modest in the climate context, negative sanctions are absent, and the de-linking of climate change from other issues limits the possibility for cross-sector deal-making. On the other hand, the inclusion of climate finance, with an agreed target that developed countries should transfer $US100bn p.a. to developing countries by 2020, offers the possibility (not yet realised) of a significant positive incentive, if one is needed, to join the collective effort.

This all suggests a useful way of accelerating progress on climate change. In particular, better linkage of climate to other issues, and greater attention to positive and negative incentives, could make a useful contribution. The Climate and Development Knowledge Network (which I chair) is working on these issues.

The analysis also illustrates why collective action frameworks are useful, and why Ian Goldin’s book is a valuable handbook on the topic. Immediate redemption may be too much to hope for, but we certainly need a new theology.