Working Together for a Common Good

A man in the Democratic Republic of the Congo receives maize meal. The country has vast natural resources that are of great value to the global economy, but most of the citizens live in grinding poverty

The 2008 global financial crisis showed how interconnected national economies are in the 21st century. A housing bubble in the United States burst, and the whole world plunged into recession. The spike in food commodity prices in 2007-2008 was due partly to financial speculation in rich countries,¹ energy policy in the United States, droughts in Australia, and long-term neglect of investments in agriculture and food security.² An additional 100 million people were plunged into hunger by the resulting runaway food and fuel prices.

The global economy has evolved faster than anyone has learned how to manage effectively. Globalization has helped many countries develop rapidly, but it has also exposed more nations to systemic risks that arise because of the gap in management ability. Even before the financial crash, the risks were present. Warren Buffett labeled the infamous credit default swaps “financial weapons of mass destruction” in 2002³—six years before they detonated and almost took down the global economy.

Building institutions to manage the fluid global economy is essential. Some progress is being made; for example, the G-20 rather than the G-8 is now the dominant decision-making body on global economic issues. Its rising influence has been a victory for diversity and signals recognition by rich countries that their prosperity is bound up with that of developing countries. The G-20 breathed new life into the International Monetary Fund (by pumping in a lot of money) to keep credit flowing to poor countries during the recession.⁴ The G-20 gave a boost to the L’Aquila Food Security Initiative announced at the July 2009 G-8 Summit.⁵

In a speech at the Woodrow Wilson Center for International Studies in April 2010, World Bank president Robert Zoellick laid out the challenges facing his own institution and others. “We are now in a new, fast-evolving multipolar world economy—in which some developing countries are emerging as economic powers; others are moving towards becoming additional poles of growth; and some are struggling to attain their potential within this new system … Economic and political tectonic plates are shifting. We can shift with them, or we can continue to see a new world through the prism of the old. We must recognize new realities. And act on them.”⁶

The site of his address was not lost on Zoellick—an organization whose namesake, President Woodrow Wilson, is remembered best for his promotion of the League of Nations. The League of Nations was created specifically to provide a set of global public goods. “Some now view Woodrow Wilson’s attempt to create a new international system after World War I as an opportunity lost that left the world adrift amidst dangers,” said Zoellick. “Will this be a similar moment?”⁷

In Woodrow Wilson’s day, no one could have known that climate change would one day be the threat it is now. Probably no one would have believed that global trade would evolve as it has. There are global threats that would have been impossible to fathom in a pre-digital age. But hunger was a well-known scourge, even in the most prosperous countries of the day, including the United States. The world’s population is much larger now, but a far smaller proportion of people are going hungry. Further progress, though, is threatened by the same threats to progress as a century ago: lack of political will to confront and solve the major challenges of the day.