‘Stop the world, I want to get off,’ was the name of a 1960s musical that became a global punchline. It also reflects a potential threat the world faces after the Group of Twenty (G-20) summit. Namely, that in coming years everyone will wash their hands off managing the international system. It helps to ask why the West was willing to deep-six the Group of Eight and share decision-making with 12 nations, most still desperately poor and many politically unstable. The answer: after such a money and morale-sapping meltdown, they found the trappings of power more burden than privilege. Economies like India and China will need to make hard-nosed assessments as whether they are prepared to take on the responsibilities of a G-20 managed economy. If they conclude they are not, the Pittsburgh summit will have ushered in the worst of all worlds: an economic throne abandoned by its incumbents and avoided by its inheritors.
The shift between G-8 and G-20 will be gradual, it can’t really be marked by the dates of the Pittsburgh meeting. But there is reason for wariness. Traditionally, the world economy has been handled by what scholars call a ‘hegemon’, with a dominant position in global trade and finance. Such countries — Britain in the 19th century and the United States in the 20th — learn to make short-term economic sacrifices to sustain a system that gives long-term benefits. Developing the political consensus and social stability to enact such policies is what differentiates the boys from the great powers.
These are exactly the type of policies that emerging economies like India and China often struggle with. But if the G-8 countries decide such policies are beyond them as well, then the world economy is heading becoming a ship without a rudder.
It is no surprise, then, that the G-20 communique is filled with plans to pass on the tasks of coordination and monitoring to international bodies like the International Monetary Fund, the World Bank and others. The vision is of a new world economic order of governments being guided by neutral multilateral agencies. The fear is that it could mean an era of governments succumbing to populist sentiments and the world economy disintegrating under the impact of protectionism, financial isolation and worse. The reality is probably going to be somewhere in between, but hopefully more in the direction of the former.