The Future of Global Governance: A New Bretton Woods?

Governments and policy experts around the world are starting to catch up with the rapid rate of technological change, and the disruption that has been unleashed by now powerful technology companies.

I’ve been writing about this for the Centre for International Governance Innovation (CIGI) and I follow the rest of the work they do closely. It was with great interest that their founder, Jim Balsillie (who was also the co-founder of Blackberry) gave a talk to a recent IMF conference, in which he called for a second Bretton Woods moment.

Bretton Woods is a resort town in New Hampshire that hosted a meeting of allied powers in 1944 that established the post-war rules for commercial and financial relations, establishing global financial infrastructure in the form of the International Monetary Fund (IMF) and later the World Bank. The Bretton Woods system was an acknowledgement that governments have a role to play, both in the collaborative development of globally focused policies, as well as the ability to intervene in the global economy.

In calling for a second Bretton Woods moment, Balsillie is making the argument that existing multilateral institutions are no longer able to address issues and concerns arising from the digital economy, and that new institutions that promote stability, cooperation, and sustainable growth are required.

While this is a timely and important argument, can it gain traction and support in an era plagued by conspiracy theories and populist movements who seem to fear multilateral and global governance models?

Balsillie argues that a big difference between the first industrial revolution and our current one (often referred to as the fourth industrial revolution driven by data and automation) is that while the first raised all boats, the second is only raising mega yachts. Put simply, the super rich are getting super richer while the rest struggle to survive.

He cites Evgeny Morozov who notes the contradiction that the “internet is a paradise for consumers and hell for citizens.” The convenience of technology has distracted us while the institutions of democracy have been undermined if not left obsolete. As consumers we’ve been seduced by what technology offers, yet as citizens we’ve missed a seismic shift in our economy.

This is understandable given the near invisibility of data and the related resources that drive the digital economy. We can see fur, trees, cars, oil, and wheat, some of the traditional drivers of the Canadian economy. Yet data and intellectual property (IP), remain elusive to the average citizen.

These so called intangible assets — data and IP — now comprise the bulk of what makes top companies valuable. Further their impacts on markets are the inverse of what we’re used to as market opening drives concentration and not competition. Hence why the current system has led to massive global consolidation.

Balsillie argues that data governance is the most important public policy issue of our time:

“Whoever controls the data, controls who and what interacts with it. Furthermore, any data collected can be reprocessed and analysed in new ways in the future that are unanticipated at the time of collection and this has major implications for the global economy and for democracy.”

He goes on to note that what was once a global integrated system of rules is now fragmenting into competing policy models:

“China has its great firewall and aggressively supports national champions like Baidu, Tencent and Alibaba. The US aggressively pushes for open data flows that support Silicon Valley superstar firms. Because Europe does not have large pre-existing data-driven companies, it takes a more defensive approach by focusing on data standards and regulation, such as GDPR (General Data Protection Regulations) and competition policy. But it too is now looking to go on offense, building on its ‘Digital Single Market’ policy.”

Balsillie poses the question as to how we address the incompatibilities in these strategies; and, what should be the strategies for the rest of the world (with a clear focus on Canada)?

It’s important to note, that this is not just about trade. Increasingly trade agreements have language that cover all sorts of policies, like forbidding data sovereignty. Balsillie offers advice on the role of the exceptions that are embedded within said agreements:

“Trade agreements have general exceptions to cover national security and fundamental social policy objectives. In principle, these exceptions can be called on to address problems as they surface. However, countries must be shrewd when it comes to their 21st century economic strategies or they will be out-maneuvered by more sophisticated states and private companies — and in the process lose their security, sovereignty and a fair shake at capturing their share of potential economic returns. Pay close attention to who controls the data.”

Jim Balsillie is an interesting and important gadfly in a pivotal moment in history. As a technology entrepreneur he’s been on the front lines of technological change for decades, and now as a funder is helping to support policy development and debates that respond to the challenges we face. This is partly why I found his call at the end of his talk so interesting:

“And wouldn’t it be powerful to see the IMF — a child of the original Bretton Woods agreement — give birth to a new system of rules for the digital 21st century and carve the path forward that enhances global digital cooperation and welfare.”

In an era of populism and growing distrust of (global) institutions this is a bold provocation. We certainly do need new institutions, however they must be credible. We definitely need a new system of rules, but it has to be legitimate, and have buy-in among more than just governments, but also their respective citizens.

This strikes me as the ultimate challenge. How do we foster a new social contract that reflects a new digital world?

On the surface, this seems possible, given the way technology enables collaboration and distributed decision making. However given the current cultural climate, this seems impossible, as civil discourse and debate seems to be diminishing, as a lack of mutual respect fosters a culture of trolling and abuse.

Which is why a second Bretton Woods moment may remain elusive. In 1944 there were no expectations of citizen participation or buy in. Allied leaders, who were at the time at war, did not have to engage in consultations or deal with a revolt enabled by social media.

While Balsillie makes a powerful argument that current governments are in the early stages of an information war, they are also now far more accountable to those that they govern. Suggesting that in order to create a new global policy infrastructure, we first need to foster or embrace a global dialogue infrastructure.

Thanks to the reach and capability of global communication technology, a global dialogue infrastructure is already emerging, yet it is largely controlled by a handful of corporations who have terrible models of governance.

The digital parliaments, whether Facebook, Twitter, or otherwise, are neither democratic, nor transparent. The people who run these companies do not have expertise in governance let alone participatory institutions or consultations. Rather they’re more like jailers who are focused on keeping their users captive.

A logical next step is a literal social media revolt. The jail break that liberates our commons, liberates our ability to communicate with each other, from the current social media dictatorships. Only then can we foster the dialogue infrastructure necessary to negotiate the new social contract and by extension a new global policy infrastructure.