Peter Gallagher

There is a defin­able ‘pub­lic good’ in the trans­par­ent and well-ordered reg­u­la­tion of the global trad­ing sys­tem, just as there is in the global finan­cial sys­tem. In trade-related poli­cies, there are also strong ‘local pub­lic goods’ (as Rodrik describes them) reflected in domes­tic polit­i­cal econ­o­my­set­tle­ments that cou­ple wealth dis­tri­b­u­tion through insti­tu­tions of government—such as admin­is­tered mar­kets or the pro­gres­sive income tax system—with sup­port for pri­vate endeavor, inter­est and reward.

The post-WWII trad­ing sys­tem over­came the con­flict between sov­er­eign con­trol at home and coop­er­a­tion abroad by form­ing a con­tract between sov­er­eigns that exchanges rec­i­p­ro­cally bind­ing oblig­a­tions on the char­ac­ter of domes­tic reg­u­la­tion. The oblig­a­tions have a wide scope: thresh­olds for reg­u­la­tion, oblig­a­tions on trans­parency, require­ments for spe­cific ele­ments of due process and even on the role of courts, enforce­ment agen­cies and crim­i­nal penal­ties (in IP rights enforce­ment). It’s hardly a new tech­nol­ogy that Rodrik and Rogoff are debat­ing here.

The chal­lenge now fac­ing this sys­tem, as the unhappy his­tory of Doha reveals, is that although you don’t need a cen­tral gov­ern­ment to run a ‘club’, a col­lab­o­ra­tive, club-like, orga­ni­za­tion runs into the lim­its of col­lab­o­ra­tion, espe­cially as its mem­ber­ship changes. The bal­ance gov­ern­ments strike between an inter­est in global order and domes­tic pol­icy dis­cre­tion dif­fers from gov­ern­ment to gov­ern­ment. The largest, most rapidly grow­ing and still poor economies of the BRICs, for exam­ple, strike a some­what dif­fer­ent bal­ance than the mature, wealthy and older economies of Europe and Japan. They may still all sub­scribe to the same club, but only if it has mod­est rules for members.