The problems with global governance—and the consequences of these problems-- today
are becoming better understood. The closer integration of the countries of the world—
globalization—has given risen to a greater need for collective action. Unfortunately,
economic globalization has outpaced political globalization. We are just beginning to
develop an international rule of law, and much of the ‘law’ that has developed—for
instance the WTO rules governing international trade—are grossly unfair; they have been designed to benefit the developed countries, partly at the expense of the developing
countries. We approach international issues in an ad hoc, piecemeal manner.
After analyzing the current state of the global institutions, and identifying the current forces for change, the author establishes a 8 points list for a possible global reform.
The institutions that do exist have undemocratic governance, and suffer from
‘smokestack syndrome.’ A single country, for instance, has effective veto at the IMF;
votes are allocated on the basis of economic power, and not even based on current
economic standing.2 Even though the policies of the IMF (or other international
economic institutions) have enormous implications for many aspects of society—for
education, health, or the environment, it is only the finance ministers and central bank
governors that have a direct say. By contrast, within western democracies, when
important economic issues are being discussed, typically all of those who are affected
have a voice in the decision, even if some voices are stronger than others. Today, few
democracies limit voting to those with property, or apportion voting rights on the basis of
After giving an idea of the undemocratic nature of the International Institutions nowadays, Stiglitz analyzes in this clear-minded essay, which are actually the current "forces for change", from the self-interested motives and the need of mutual cooperation, to the need of recognition of a rule of law and the democratic forces. In a late section the author proposes a list of reforms concerning the International Institutions internal organization and external role in the framework of the global governance architecture. He also deals with global taxation, the management of global resources and the environment, the production and protection of global knowledge, and the need for a Global legal infrastructure.