The last 20 years of the 20th century were dominated by the leitmotif of liberalisation, privatisation and deregulation. At the same time governments were stepping away from their responsibilities to set a policy framework, whether in tax rates, economic policy management, interest rate policy or exchange rate policy.
But the need for a framework of mechanisms for global market governance is clear from events such as Californian power cuts in the wake of energy deregulation, British rail crashes in the wake of privatisation and a corporate governance crisis following the collapse of Enron in the United States. The key debate at the beginning of the 21st century is how to guarantee effective public regulation.
A spectrum of mechanisms is available, from “hard” international regulations covering specific fields such as those of the WTO and IMF, through looser policy co-ordination such as the G8, OECD, and ILO, to regional integration, national and district level policies. But the international governance architecture shows a striking imbalance in the power and enforcement capabilities of different institutions. It is unacceptable that the world system of governance has binding protection for intellectual property rights, investors’ rights, and even environmental standards and yet denies enforceable protection for human rights, including core labour rights.
Some progress has been made towards the goal of effective regulation to guarantee core labour rights. The OECD and World Bank now regard core standards and trade union recognition as at least neutral in their economic effects, and at best positive because of their influence on improving the quality of governance. The OECD now has revised its Guidelines on Multinational Enterprises which set out a benchmark for corporate behaviour. The debate has now moved on to enforcement mechanisms. Modest progress could be made, for example, by modifying WTO rules to clarify the primacy of human rights over trade rules and developing a codex of existing human rights obligations as called for by the UN High Commissioner on Human Rights, Mary Robinson.
But if stable and sustained long-term growth is to be realised changes must also be made to the financial market architecture. For too long the debate over financial market reform has been held behind closed doors by bankers and finance ministry officials. The institutions charged with financial market reforms remain closed to discussion with the labour movement and civil society. Labour must have a “place at the table” in these debates. The OECD should work as a “bridge” to make this happen.
Global unions have put forward a range of measures designed to establish better regulation of international financial markets. These include improved fiscal and monetary policy co-ordination between major currency zones and serious examination of an international tax on foreign exchange transactions to finance “global public goods”. (Tobin tax: see article by Helmut Reisen).
There needs to be a non-ideological debate on the role of the public sector that accepts the notion that an effective public sector is an economic as well as social necessity. The response of the trade union movement to globalisation is not to bemoan changes or react defensively. The response is to campaign for the mechanisms of governance to manage them.
©OECD Observer No. 231/232, May 2002