The future of global governance

Earlier this year School of International Futures (SOIF) was asked to design and facilitate a series of five roundtables, culminating in a high-level discussion on “the future of global governance” between senior UK Government officials and leading figures from outside government. The roundtables brought together more than a hundred experts and policy-makers. The policy areas addressed in the workshops were international trade, crime and corruption, the internet, movement of people and global health.

The work was commissioned by the Government’s Horizon Scanning team as part of an exercise to consider the implications of the different forms of governance that could emerge over the next thirty years in response to shifts in the economic and political influence of countries and regions, as well as social and technological change and environmental pressures.

The high-level discussion offered the opportunity to develop a systemic approach to areas of policy that were sometimes treated separately, when they would benefit from a government-wide approach. One of the challenges was to imagine “what a complex adaptive policy-making approach looks like.”

As part of the exercise, two short scenarios were drafted. One foresaw a world where global governance took place predominantly through networks of actors including states, private companies and civil society groups; the other imagined a more state-led, multipolar system of governance.

The exercise and discussion brought home how many overlapping and intersecting themes and dimensions lie within the governance space. At present, and probably even more so in the future, these dimensions are in flux.

Support for the current global governance model

Although the current system of global governance is often criticised, there is also acceptance that much of its ‘plumbing’ needs to be preserved in any future system. Regular crises – financial, pandemic, cyber – tend to lead to calls for the strengthening of governance institutions. Criticism from developed countries tends to be about effectiveness and efficiency; while emerging powers challenge Western dominance of the major institutions (particularly those created at Bretton Woods after the Second World War).

The fact that the current system is state-led, with limited opportunities for other actors to influence it, appeals to many countries: the UN still enjoys a lot of support, not least from China. Citizens’ demand for governance structures is strong and strengthening, precisely at the time when these structures are being weakened by globalisation. This ‘mismatch of supply and demand for governance’ is seen as one of the factors that has led to the growth of populism, with its promises of re-establishing order and control.

Looser models of governance

There is a lot of interest, particularly in developed countries, in ‘networked’ governance approaches, where businesses, NGOs and other non-state actors have a role. This is linked to the growth of the internet and social media and the new forms of democracy these enable, from online petitioning to referendums and participatory policy-making.

The roundtables surfaced some of the difficulties associated with implementing a networked approach to governance. These ranged from the practical – how to manage such a complex ecosystem of interests, how would such a system deal with threats such as dual-use technologies and DNA manipulation – to the legal, ethical and philosophical – where does a networked governance model derive its authority, can we create legitimate structures within which other actors can operate, etc.

For example, social media now offer a wide sample of views and opinions on an issue in close to real-time, which some hail as a valuable form of citizen participation. Others, on the contrary, decry this “Twitter legitimacy” as a new form of demagoguery that needs to be tempered by time and the processes of democratic representation.

Soft power and values

A governance system is never value-free. For China and many other countries, the current system of global governance bears a Western and particularly a US stamp – the implication being that the interests and values of Western countries are valid for the world as a whole. This system will be contested and is likely to change.

The UK was praised for the ‘soft power’ impact of its thought leadership, for example the Stern and Turner reports. The suggestion, however, that intellectual leadership of this kind could help bring prosperity to Sub-Saharan Africa, reduce tensions between India and Pakistan, or bring peace to the Middle East was challenged as patronising in its assumption that the elite of today’s developed countries are best placed to sort out the problems faced by the rest of the world over the next 30 years. It was felt that institutions such as the AIIB, BRICS bank, etc. are more likely to come up with solutions that take into account the needs, resources and priorities of developing countries.

Role of the private sector

Tensions between governments and the private sector are likely to increase. Technology and the internet move faster than governments and international institutions (for example, WHO and Ebola). To be prepared for the acceleration of this trend, we need to develop mechanisms for legitimacy outside governments (including accountability and representation). The current UN model does not allow this.

Global Trade

The easy battles in trade have been won. The rest will be hard – starting with agriculture, but especially norms, health and safety, intellectual property – standardisation is still likely to be a source of conflict in 2040.

By then, trade in services will dominate: developing countries will need to develop a strategy for this. Regional trade agreements will be important, but African countries (especially Sub-Saharan) are likely to do less well out of these, partly because of lack of negotiating capacity.

Internet retail platforms such as Amazon and Alibaba are transforming trade, enabling micro companies to sell across the world. This is a fast developing trend that isn’t properly reflected in trade statistics. The UK could benefit from helping small companies access platforms such as Alibaba.

The following actions on the part of the UK would have a positive impact on global trade

  • Free up trade in agricultural products
  • Support and protect developing countries within the trade system (management of financial flows, participation in standards efforts)
  • Provide thought leadership, tackling topics such as “What does trade mean in a service economy world?”
  • Engage more with Commonwealth countries, help African countries build service capacity (not just agriculture)

Risks from financial flows and the complexity of the trading system

Financial flows are a major destabilising factor. China will open up its financial system over the next 20 years, starting later this year when it is granted ‘market economy status’. This could lead to a massive increase in financial flows, at some point triggering a crash.

The source of the next crash could also be a cyber outage, or a bigger version of Hurricane Sandy. The complex, highly fragmented nature of trade is under-appreciated, as is its dependency on tighter and tighter linkages between firms within a fragile and brittle system.

Ways forward

The global governance system will come under pressure for change, irrespective of the influence of ‘networked’ actors, as emerging powers demand a role commensurate with their new status in the world. There is even a risk that developed country support for networked governance approaches will be perceived as a way of denying emerging powers their seat at the table, just as they are about to sit down. Overt soft power initiatives may only serve to enhance this suspicion; even on projects serving the ‘public good’ the UK should seek to work within a coalition of international groups and networks.

In roundtable discussions, the expression ‘hybrid approach’ was used to suggest how the benefits generated by looser coalitions of actors could be reconciled with the expectation of many – states and citizens – that authority should ultimately still rest with state governments. Civil society involvement in the COP21 climate change discussions in Paris was given as an example; while international institutions might benefit from being ‘flanked’ by groups such as the G20.

It was suggested that countries such as the UK should first try out such an approach on the national level, for example by introducing a more open and deliberative governance approach within a ‘traditional’ policy-making model. If this was successful, such an approach might be adopted by other countries.

Finally, a condition for support for any global governance solution will be the maintenance of economic growth for new generations, without which any form of governance runs the risk of being rejected.