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A new Global System

It’s time to redesign and rebuild! The end of WWII demanded new institutions to protect
the peace, stabilize global finances, reconstruct destroyed economies and restore
international trade. This crisis requires a new economic, social and political order. We
cannot waste trillions of dollars reconstituting the system that caused the problem.

This crisis was triggered by structural imbalances, a focus on short-term gain and
neglect of the need for effective controls. We relied excessively on markets and financial
engineering, disregarding the claims of social equity and eco-systemic balance.

Spending on infrastructure, green technology, capital adequacy and liquidity, better


clearing and settlement arrangements and systemic financial supervision, are necessary
but not enough: To check protectionism and sustain recovery, we must reorient our
ethos.

We say we live in a global village, but we don’t. The global economy is integrated and
has dramatically improved well-being, but global society is fractured. We have no global
polity. The parlous state of governance makes us vulnerable. Global risks need
integrated responses.

Our paradigms – power politics that encourage states to seek unilateral advantage, and
economic policies that prioritize short-term profits over sustainability – are outdated. We
need three initiatives:

A Rule-based Regime
The tension between interdependence and parochial regulation threatens our survival.
We must help governments align domestic interests with social and ecological
sustainability.

We need a new regime of privileged trade, financing and collective security conditions
for states that commit to a Global Charter on:
(a) international security - eschewing aggression and resolving conflicts;
(b) ecological responsibility – pursuing the highest feasible standards of
environmental protection; and
(c) social justice – demonstrating respect for human dignity through security and
welfare.
Adopting a Charter will transform the incentive landscape for states, but making it
effective, means creating ways to enforce it.

A Global Security Regime


Throughout history, integrating smaller groups into larger units has demanded new
security arrangements. One does not leave security to individuals in a community, nor
allow rival armies to confront one another in a state. Since the birth of nation states,
governments have been responsible for civil order.

Global economic integration has broadened acceptance of secular values, but digital
integration has created new avenues for disruption. Efforts by states to protect
themselves can invite ideological mobilization and retaliation. A Global Charter must be
buttressed with a regime that empowers multilateral institutions to help secure global
order.
This is not revolutionary. States from Costa Rica through Japan don’t provide
independently for military security. The USA is their guarantor, as it was for Western
Europe in the Cold War. But no hegemon can guarantee collective security. The effort
burdens the provider, risks compromising the integrity of the recipient, and invites
antagonism from others. We urgently need inclusive mutual security arrangements in the
Middle East, the Gulf, Central Asia and East Asia.

A Global Charter will facilitate this. Clear rules and effective enforcement will enable
collective security. As enforcement instruments must be available when and where
needed, local arrangements are most effective. But these will fail occasionally and must
be reinforced with a global Rapid Deployment Force with transparent rules. Effective
collective defence must underpin the principle of mutual security.

A Global Security Regime will discourage arms races, facilitate nuclear disarmament
and reallocate funding to social development and productive investment.

Investment in Equity and the Environment


A new economic model must address two distortions.
o Ecologically irresponsible growth: Abrupt change is impossible – our
dependence on hydrocarbons is too great and rapid urbanisation has allowed
billions to escape poverty – but we must design a path to sustainability.
o Likewise, while those who contribute more, deserve larger returns,
today’s asymmetries are not justified morally or economically.
Socially and environmentally sustainable growth means balancing personal freedoms
with acceptance of responsibility for the common good, and protection of the global
ecosystem

Investing in health, education and ecologically-viable infrastructure in the developing


world will drive global demand. Future growth must not cause a doubling of carbon
emissions and the destruction of forests and water basins. We need a model that
combines outstanding R&D with culturally sensitive innovation. A $1000 billion multi-year
Global Growth Fund could deploy Asian structural surpluses that contributed to the
crisis.

We must recognize capacity constraints in delivering the investment. Reform of the IMF
and the World Bank is overdue. We have debilitated both institutions and created
confusion about their mandates.

The Charter, the Security Regime and the new Investment strategy are mutually
reinforcing. Implementing them will allow us to build a sustainable future. Failure will
squander the chance. It is not a difficult choice.