Governance, defined in its simplest form, is about the way in which decisions are made, who makes them, and in whose interests such decisions are made.

Global economic and financial governance today is an intricate web of institutions, rules, and norms, operating at the national, regional, and global levels, composed of intergovernmental organizations (such as the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO)), regional economic and financial institutions, national or regional institutions (treasuries, central banks, and regulatory institutions), and economic coordination mechanisms or clubs (such as the G7 or the G20), aimed at supporting and regulating economic and financial activity, within and across borders around the world. It also includes the internal governance of global corporations across many jurisdictions that have become more powerful than many nation-states where they operate and have an outsized influence in their host states.

The decision-making processes of global economic institutions reflect the balance of power that was created and evolved among major economies in the world that emerged after World War II (WWII). This means that they reflect more or less the economic power of the United States and the largest European economies. Relatively small adjustments were made to reflect the economic power of large Asian economies, such as Japan, China, and South Korea, but the real balance of power has not shifted significantly. The modus operandi also remains the same: richer economies broadly set the rules of the global economy.

This power is exercised through the economic ministries of these countries, their central banks, and other economic and financial regulatory bodies. But to understand the dynamic between power, participation, and capture, one needs to go beyond the formal levels of global governance, where state actors are present, to the decision-making processes in the nation-states of the largest market-based economies who hold sway in these institutions. As has been clearly described by many scholars, including, in particular, Nobel Prize-winning economist Joseph Stiglitz, the power play between large business interests and political decisionmakers in many of these economies is skewed in favor of such interests. In the name of participation, business interests do have many participatory mechanisms to influence legislation and rulemaking that affect the business sector (consultation, comments, direct lobbying), some of which can be fully understood because they are important stakeholders in the economic arena. However, such participation is not on par with the participation of other stakeholders, such as households, labor, consumers, and civil society at large.

This discrepancy was made abundantly clear in the 2008 financial crisis where speculative behavior in the real estate market by large financial institutions in the United States and elsewhere led to a bubble, a crisis, and a government bailout of such actors without much accountability. As explained by Stiglitz and other scholars (using the methodology of network analysis), the problems are related to the system of lobbying and campaign finance, which allow undue influence by business interests in political decision making. This influence helped move agendas such as excessive deregulation, weakening of banking risk requirements, environmental and labor protection rules and mechanisms, promotion of concepts such as “too big to fail,” push for privatization as a panacea, and weaker conflict of interests rules that make it easier for economic elites to move in and out of government and the private sector.

This state of affairs at the national level has important consequences at the international level since the economic policies promoted by the governments of the more powerful economies do often intersect or reflect the views and interests of their business sectors. Those views often are amplified, consciously, unconsciously, or even reluctantly by the academic, media, and technocratic elites (to which I belonged) in major institutions, given their education, interests, and ties with other economic elites. Such approaches led, for example, to the so-called Washington Consensus which shaped the views and actions of the Bretton Woods institutions for a long time, and not always in the common interests of all their member states. In the area of global finance, the phenomenon of regulatory capture has also been emphasized as it leads to the export of industry-friendly rules into the global financial system (e.g., regulated institutions write the policy script of the rules that apply to them).

In short, one could argue that there is a form of elite capture manifesting in the global economic governance system given that the decision making is tilted in favor of the largest economies of the world represented by political decisionmakers who often share the views and/or advance the narrow interests of their national business sectors. This leads to outcomes that are not always in the best interests of the people, communities, and business actors of other countries or the global environment.

COVID has laid bare many inadequacies of the current global economic governance system and the values that underpin it. It has shown that it is a system based on: (1) values and an economic model that do not fully match the current needs of the world; (2) institutions, structures, and mechanisms that no longer reflect the post-WWII balance of power and are thus misaligned with the needs and demands of a multipolar world; consequently this governance system is cracking from within with the continued disengagement or sometimes hostility of its main sponsor, the United States, as well as from outside, given the growing demands to end poverty and economic inequality in and among all nations, protect the environment, and respect human rights in all nations; and (3) fragmented governance mechanisms that often reflect or amplify the voices/interests of economically powerful nations and their business interests preventing the participation of billions of oppressed, poor, or marginalized people or communities in every nation whose destinies have become inextricably linked by technology and economic relationships in a globalized world.

1. 1. Outmoded values and economic model: This growing economic crisis generated by COVID is showing that the values of the dominant economic model, often based on the unrelenting pursuit of economic growth, business efficiency, and maximization of shareholder value, at the cost of environmental sustainability and human rights, is a grave risk for the planet. For example, national supply chains that outsourced manufacturing in order to reduce costs and increase profit margins without due regard to resiliency and local community needs, proved wholly inadequate to respond to a crisis like COVID and provide basic items such as health care equipment.

2. 2. The outmoded values and economic models are no longer fit for purpose in a multipolar world that has been reshaped by technology and a deeper consciousness of interdependence reflected in calls for more equity, accountability, and sustainability. As a result, institutions, structures, and mechanisms of a bygone era, based on the post WWII balance of power and worldview, are cracking under the pressure of growing demands to end poverty and economic inequality within and among all nations, protect the environment, and respect the human rights of people everywhere. They have inadequate economic resources to face today's needs and decision-making processes with a democratic deficit. While the global and national financial institutions are struggling to inject more resources in the troubled economies of the world, these resources, while helpful in the short term, are inadequate to tackle the deep-seated issues of economic and social inequality that the global economic governance system sometimes fueled (e.g., Washington Consensus) or has been unable to address. It is clear that global financial institutions need more resources to address global crises like the economic fallout of COVID. However, simply increasing such resources without rethinking the values, economic models, and decision-making processes would not be enough. What will matter most is how to move from indirectly advancing the interests of the few to truly serving the interests of the whole.

3. 3. The current global economic and financial governance system has a democratic deficit given the discrepancy in influence on the decision making of the economic elites in advanced market economies compared to the average people and communities in the rest of the world. In addition, the current economic governance system does not have a democratic and accountable decision-making system that sometimes prevents it from implementing holistic approaches representing the interests of all stakeholders and the environment. This is shown in fora such as the G7 or G20 and their mechanisms such as the Financial Stability Board, or in global organizations like the Bretton Woods institutions where the selection of the top leaders and Board decision-making processes based on a quota system give the upper hand to the most powerful economies. This leads often to the promotion and implementation of strategic and policy agendas that reflect the choices and interests of such economies.

4. 4. Another important weakness of the global governance system is its fragmented nature, laid bare by the COVID crisis. A health crisis resulting from human environmental pressure on wildlife has triggered the most severe, rapid, and worldwide economic crisis that the globalized world has ever seen, and economic policymakers did not see it coming and are struggling mightily to cope with it.

COVID is truly an inflection point for the global community like WWII. It has shown both the progress made toward a global human community, but has also unmasked the limits of globalization as it has been implemented. Globalization helped the world achieve great progress in connecting people through advances in science and technology and the broader exchange of ideas, knowledge, needs, and aspirations of communities around the world. But it has also shown the limits of the current system of governance in respect of its values, institutional and legal makeup, and the lopsided way in which it serves the interests of the more powerful few often at the expense of the larger whole, including the environment and poor, oppressed, and marginalized populations. A new global governance should be inclusive, integrated, and representative of the voices of all stakeholders, and value the interests of the whole through justice, environmental sustainability, and political, economic, and social freedoms.

In the light of the foregoing, I see the following avenues for further reflection and investigation:

1. 1. A need to take stock objectively, honestly, and comprehensively of the elite-led global governance system, its values, modus operandi, achievements, and failures;

2. 2. Identification of what needs to be discarded, in particular some of the self-serving values underpinning the current system that led to elite capture and the democratic governance deficit;

3. 3. Identification of what should be the new values underpinning a new and better global order which would truly be in the service of the entire human community as well as the Earth;

4. 4. Identification of the types of institutions, global and national, needed to properly respond to the new needs of communities, nations, and the environment in a truly interconnected world; and

5. 5. Identification of the types of truly inclusive, integrated, democratic decision-making processes that are needed for a globalized world, which would end all forms of existing and potential capture by the elites.