If I were a G8 demonstrator...

By: Wolfgang Münchau

Is there a good reason for a ration demonstrator to travel to Heiligendamm, the Baltic Sea resort where the G7/8 summit takes place June 6-8? It is clearly not easy to get there. The venue is sealed off. Thousands of police and more than a hundred judges are on standby to deal with demonstrators. From the vantage point of a demonstrator, the German police are probably going to be a formidable opponent.

 

Now, this may be the wrong question to ask. The kind of demonstrator who travels to Heiligendamm, or Genoa or Seattle beforehand, are not of the rational variety. But let us pursue the question for the sake of the argument. Is there a rational reason to demonstrate?

 

If there is, it cannot conceivably have anything to do with what the summit agrees upon. Within the G8, we do not agree on what constitutes goods democracy (for example, we disagree with Russia), we do not agree on energy security, we do not agree on climate change (the US does not accept that there is a problem in the first place), we do not agree whether or not to regulate hedge funds, and we all agree that something needs to be done on Africa, but cannot think of anything that works. The communique that will be issued at the end of the summit will not contain anything that anybody of sound mind would want to read, let alone demonstrate against.

 

There is, however, one rational reason why anyone would want to demonstrate at the meeting. And this is to call for the abolition of the G8 itself, for it is no longer suited to the tasks it has set itself up to do. G8 summits have become as depressing, pretentious and wasteful as a Davos spouse programme. Now if you invited me take part in such a demonstration, I would come any day, though I fear this would be a rather small demonstration, not of the stone-throwing kind.

 

Good governance is governance by institutions, and the global macroeconomy is not well served by an institution that was set up at a time when North America, Europe and Japan constituted the lion share of the world economic output, and when almost all problems of the world economy were related to macroeconomic policies in those countries.

 

Globalisation has done a lot more than to bring up newly industrialised countries, and reduce the western world share’s of global output. The really important point is that global governance can no longer done in an effective way through the use of oligopolistic institutions such as the G8. Adding a few members, such as China or India, is not going to solve the problem for economic governance, just as adding Germany, Japan and South Africa to the UN Security Council would not improve global political governance. The word has changed in structural terms, and the present global institutions are almost all far too inflexible to deal with this change effectively.

 

We do not need new institutions to deal with our problems. In fact, we probably need fewer. The UN is still the best place for a global agreement on climate change, and institutions such as IMF, or a rather reformed IMF, and the BIS are still best suited to deal with global financial and economic instability. There may be a case for a G4 – US, eurozone, Japan, and China – but with a remit to deal with exchange rates specifically, and macro policy in general (an ad-hoc group, with no rotating agendas and annual summits). But I can see no case at all for a wide-remit G7/8/9.

 

 

---