Between Centralization and Fragmentation: The Club Model of Multilateral Cooperation and Problems of Democratic Legitimacy

Abstract

Multilateral cooperation has been remarkably extensive, indeed unprecedented, in latter half of 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 era through development of welfare state, and through a set of international regimes for finance and trade that accommodated welfare state. Until end of 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 second-best objective of liberal community, of maintaining an open international economy at whatever inflation rate [had] to be accepted to attain this. Inflation eventually rose to point where it was a source not of legitimacy but of political disaffection, and since 1980s governments of advanced capitalist economies have emphasized price stability. Legitimacy at domestic level has apparently been maintained in these countries, judging from lack of large-scale protests and maintenance in power of governments ? whether nominally of Left or Right - dedicated to preservation of a market system. Such legitimacy may have different sources in different countries: economic growth, as United States, preservation of a social safety net even in presence of great unemployment, as in continental Europe, or simply maintenance of still-prosperous and orderly, if stagnant, political economy, as in Japan. At any event, collapse of socialism in Soviet Union, and serious constraints on expansion of welfare state resulting from global competition, have largely removed major potential contenders from field. Until recently, international regimes for trade and money that made this system work were largely invisible to publics. We will characterize them as following a of institutions. While club model is an ideal type, and gradual change has occurred since Uruguay Round, simplification is useful. As these institutions have become more important, and their membership more diverse, they have become more controversial, as Seattle demonstrations against World Trade Organization (WTO) of November 1999, and Washington protests of April 2000 against International Monetary Fund (IMF) and World Bank, indicate. The classic political issue of legitimacy, within context of 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 WTO. First we will describe club model and how, in a stylized sense, it has operated for past half-century on issues such as international trade. After briefly introducing a distinction between adversary and unitary democracy, we will then consider ways in which international organizations such as WTO experience a democratic deficit. We consider issues of transparency and participation, but we emphasize insufficient politicization of these organizations ? their lack of effective politicians linking organizations to constituencies. We then turn to a more detailed normative analysis of legitimacy. The legitimacy of institutions is affected both on input side ? in particular, through procedures for accountability ? and on output side, in terms of effectiveness. In last few pages of paper we offer some incomplete suggestions about steps that WTO, and similar international organizations, might take to enhance their legitimacy, in a world infused by norms. Other chapters in this volume discuss WTO in greater detail: our focus is on our conceptualization legitimacy and challenges posed by nongovernmental organizations (NGOs) and critiques of club model based on theory.