After the creation of the United Nations (UN) in 1945, world leaders and intellectuals from President Harry Truman to Albert Einstein hoped that the organization would herald the advent of a new era, in which a global government would prevent conflicts and settle disputes between nations. It is safe to say this hope was disappointed. Instead of a central government, the world got an alphabet soup of treaties, agencies, and platforms for cooperation. Some are global, others regional; a few appear well-run, but many are bloated and inefficient; a handful are influential, and many have grown irrelevant. None of them, however, has any real coercive powers.
And yet the fear of “global governance” runs rampant among conservatives and libertarians, as if an unaccountable global autocracy was just around the corner. Hudson Institute’s John Fonte claims that “the forces of global governances” count among three most “serious opponents” to liberal democracy—the other two being “radical Islam” and “a rising autocratic China.” Unless confronted forcefully, it will result in a “suicide of liberal democracy,” which has been underway in European countries, subordinated to the “supranational legal regime of the European Union.”
It is easy for a conservative or a classical liberal to be irritated by the bureaucracy, mission creep, and waste of international organizations. However, no serious person can honestly see those agencies as a threat to free societies in any way comparable to the rise of autocratic regimes around the world. No cabal is being formed to replace democratic decision-making with unaccountable bureaucrats or judges in opaque international agencies. Indeed, pretending that there is is itself a much bigger threat to liberal democracy: it adds fuel to the populist wave that risks undoing the fabric that has kept the western world peaceful, democratic, and increasingly economically integrated.
Where have the critics of global governance gone wrong? First, by seeing “global governance” as a homogenous phenomenon, consisting of a transfer of political authority from sovereign nation states to supranational organizations. The reality has been more complex. First, truly global governance remains the exception. In the area of trade, for example, liberalization through World Trade Organization (WTO) talks has stalled. Instead, countries are mostly pursuing bilateral or regionally defined multilateral projects. The European Union, the most advanced project of political integration—and the most frequent bogeyman of the critics of global governance—is a regionally defined organization.
Critics also allege that by delegating decision-making authority away from the democratically elected representatives to outside powers, political regimes are being fundamentally transformed. “Under global governance […] legitimacy flows from post-national elites in transnational institutions via open-ended treaties downwards to post-sovereign governments enjoying powers regulated by transnational bureaucrats and lawyers to—finally—the voters,” writes John O’Sullivan, former advisor to Margaret Thatcher and president of the Budapest-based Danube Institute. Not only, however, can delegation lead to other forms of decision-making than simple hierarchies he describes, it is also never unconditional or irreversible, as Brexit powerfully illustrates. Whether it is the EU, UN, or any other organization or treaty, exit is always an option.
Far from being a top-down construct devised by cosmopolitan elites, various structures of global governance are best thought of as bottom-up, polycentric orders, to use the vocabulary of the late Nobel laureate in economics Elinor Ostrom. Ostrom’s research focused on local arrangements for managing common-pool resources, and also on understanding the seemingly inefficient structures of governance in U.S. metropolitan areas. However, the analytic framework that she developed with her husband Vincent, a political scientist at the University of Indiana-Bloomington, goes a long way in explaining the ecosystem of international organizations, treaties, and forms of governance that emerged after the Second World War, as well as their successes, failures, and limitations.
A polycentric order is characterized, first, by the existence of autonomous sources of decision-making which interact in a framework shaped by common rules. The EU, for example, is not a top-down hierarchy, locking member states into a subservient position to Brussels. The member states, deciding in the European Council, are the sine qua non of common European rules. The main purpose of those rules is to specify how states, firms, and other actors in the EU interact with each other.
Ostrom’s work aimed to understand the mechanisms created by societies to manage common-pool resources and supply certain public goods. The starting point of her work was the recognition that there was no inherent reason why the scale of such problems—e.g. managing irrigation infrastructure, assigning fishing rights, or providing various municipal services—should correspond to the size of existing political units. In reality, different public goods require different scales of production—from local, national, to supranational. Within countries, the problem can be solved through federalism and devolution of competences, oftentimes including the power to tax, to local authorities. In the case of public goods that span across national borders, overcoming problem might be trickier.
Contrary to any sweeping judgments about “global governance”, specifics matter. For continental states such as the U.S., economic integration with other countries is a relatively low priority item. For small European nations, being able to trade with others without facing tariffs or discriminatory regulation is a necessary condition for economic growth. One reason why Europe is not home to any technological giants such as Google or Facebook has to do with the continuing fragmentation of its digital and service markets.
In the context of common-pool resources, Ostrom argued that social scientists needed a richer vocabulary than the traditional distinction between the market and the state, in order to accommodate the rich array of mechanisms developed by local communities. Likewise, in the international context, the dichotomy between sovereignty and supranational control is inadequate to capture the spectrum of institutional forms that governments have developed in order to cooperate across borders.
Take regulatory barriers to trade as an example. In building the single European market, the EU has relied on a mix of harmonization and mutual recognition of rules to bridge gaps existing between different regulatory regimes. In some areas (most importantly, services), creating a single marketplace has proven too politically contentious, in spite of the substantial economic benefits it would create. There are many other mechanisms for regulatory cooperation, used in different contexts, including regulatory provisions in free trade agreements, formal cooperation partnerships, organizations that maintain dialogue among national regulators (such as the International Consumer Protection and Enforcement Network), and transnational rules that emerge out of private sector-led efforts at standardization (ISO, IEC, and the like).
The point is not that supra- or transnational arrangements are always preferable over national solutions. Instead, it is simply shows that each of those carry costs and benefits that are context-dependent. By virtue of their common legal heritage and close economic ties, Australia and New Zealand are home to one of the most successful mutual recognition arrangements in the world, predicated on tight coordination between the two countries’ regulators and legislators. It would be impossible to exactly replicate this structure elsewhere; indeed, in other contexts the best response to divergent regulatory regimes might be to do nothing and let the private sector bear the burden of costs.
As a rule of thumb, a combination of two factors make international cooperation viable and desirable. First, the presence of economies of scale—or of externalities crossing national borders. The larger the economies of scale, the stronger the case for some form of cooperation, or pooling of sovereignty. Second, the absence of a marked heterogeneity of preferences: In areas where citizens of different countries hold vastly divergent views, it might be impossible to agree on a common response.
Technical standards can be characterized by a high degree of scale economies (once a standard is agreed on, it can be used anywhere in the world) and extremely low degree of preference heterogeneity (few care strongly about what the right size of a general-purpose screw thread should be). On the other end of the spectrum are polices where scale economies are low and preference heterogeneity is high: education policy or laws governing gay marriage are appropriate examples.
The most vexing issues involve a high degree of scale economies and a high degree of preference heterogeneity. Climate change might be global in nature, but there is not necessarily an agreement across major polluters on how to tackle it. Similarly, passportless travel across the Schengen area is a valuable public good for citizens and businesses of Europe. However, Schengen is not sustainable without a common border protection and asylum policy—something on which European countries disagree vehemently.
As a seminal paper co-authored by the Harvard economist Alberto Alesina shows, the EU itself has not been very successful in focusing on policies that marry a high degree of external effects with a low degree of preference heterogeneity. Instead, it plays a large role in areas such as citizen and social protection, where cross-border externalities are small and preferences diverge, while not providing a sufficient platform for cooperation on environmental issues, or security.
There are no guarantees that inter- and transnational structures that governments and non-state actors create will be successful. However, failure does not breed tyranny, but dysfunction. Two years since the refugee crisis, the EU has not forced Poland and Hungary to acquiesce to its relocation mechanism for incoming asylum-seekers. “Climate change alarmism”, as some on the right call it, has not led to a global environmentalist tyranny but to the departure of the United States from the Paris Agreement, with no consequences. The numerous UN agencies that have outlived their purpose might be wasting taxpayers’ money—similar to many government agencies at home—but they are emphatically not taking over the world.
It is a well-known fact that the post-WWII international order, built largely thanks to America’s leadership, has coincided with a global decline of violence and a spread of democracy and economic openness around the world. Conservative critics of “global governance” are correct in saying that such correlation tells us little about causation. But it is also conservative, when confronted with complex phenomena, to err on the side of caution rather than jump to unwarranted, though ideologically comforting conclusions. That means developing a much better understanding of the different forms of “global governance”, of their strengths, flaws, and limitations. Otherwise, the reflexive repudiation of any form of international authority or rules that constrain domestic policymaking risks provoking outcomes that few of us will like, regardless of our politics.