28 Pages Posted: 8 Mar 2001
Date Written: February 2001
Multilateral cooperation has been remarkably extensive, indeed unprecedented, in the latter half of the 20th century. After World War II, a compromise was struck in rich countries that John Ruggie has termed embedded liberalism. Increasing economic openness was made politically feasible in a democratic era through the development of the welfare state, and through a set of international regimes for finance and trade that accommodated the welfare state. Until the end of the 1970s, what Fred Hirsch called "the missing legitimacy for a predominantly capitalist system in conditions of universal political participation" was provided by Keynesian policies that were tolerant of inflation. International regimes in this period "served the second-best objective of the liberal community, of maintaining an open international economy at whatever inflation rate [had] to be accepted to attain this." Inflation eventually rose to the point where it was a source not of legitimacy but of political disaffection, and since the 1980s governments of the advanced capitalist economies have emphasized price stability. Legitimacy at the domestic level has apparently been maintained in these countries, judging from the lack of large-scale protests and the maintenance in power of governments ? whether nominally of the Left or the Right - dedicated to preservation of a market system. Such legitimacy may have different sources in different countries: economic growth, as the United States, the preservation of a social safety net even in the presence of great unemployment, as in continental Europe, or simply the maintenance of still-prosperous and orderly, if stagnant, political economy, as in Japan. At any event, the collapse of socialism in the Soviet Union, and the serious constraints on the expansion of the welfare state resulting from global competition, have largely removed the major potential contenders from the field.
Until recently, the international regimes for trade and money that made this system work were largely invisible to publics. We will characterize them as following a "club model" of institutions. While the club model is an ideal type, and gradual change has occurred since the Uruguay Round, the simplification is useful. As these institutions have become more important, and their membership more diverse, they have become more controversial, as the Seattle demonstrations against the World Trade Organization (WTO) of November 1999, and the Washington protests of April 2000 against the International Monetary Fund (IMF) and World Bank, indicate. The classic political issue of legitimacy, within the context of democratic norms, has been insistently raised. The club model has come under challenge.
In this paper, we consider descriptive and normative aspects of legitimacy, as it relates to international institutions, particularly to the WTO. First we will describe the club model and how, in a stylized sense, it has operated for the past half-century on issues such as international trade. After briefly introducing a distinction between adversary and unitary democracy, we will then consider the ways in which international organizations such as the WTO experience a "democratic deficit." We consider issues of transparency and participation, but we emphasize the insufficient politicization of these organizations ? their lack of effective politicians linking organizations to constituencies. We then turn to a more detailed normative analysis of democratic legitimacy. The legitimacy of institutions is affected both on the "input" side ? in particular, through procedures for accountability ? and on the "output" side, in terms of effectiveness. In the last few pages of the paper we offer some incomplete suggestions about steps that the WTO, and similar international organizations, might take to enhance their legitimacy, in a world infused by democratic norms. Other chapters in this volume discuss the WTO in greater detail: our focus is on our conceptualization the legitimacy and the challenges posed by nongovernmental organizations (NGOs) and critiques of the club model based on democratic theory.
Keywords: International Economics, Intergovernmental Relations, International Development, International Security, International Trade and Finance, Law and Legal Institutions
Suggested Citation: Suggested Citation
Keohane, Robert and Nye, Jr., Joseph S., Between Centralization and Fragmentation: The Club Model of Multilateral Cooperation and Problems of Democratic Legitimacy (February 2001). KSG Working Paper No. 01-004. Available at SSRN: https://ssrn.com/abstract=262175 or http://dx.doi.org/10.2139/ssrn.262175
By Paul Berman