A Bretton Woods Moment: How This Year’s G7 Summit Could Rewrite the International Rules

June 3, 2021

From June 11 to June 13, the leaders of the so-called Group of Seven countries will meet in Cornwall, UK, to discuss the health of our democracies and economies. Also known as the G7, the group brings together Canada, France, Germany, Italy, Japan, the UK, and the US, with the European Union (EU) and rotating “guest” countries also attending the meeting. (This year, the guests are Australia, India, South Africa, and South Korea.) 

While the G7 is an informal grouping—without regular headquarters or enforceable rules—it plays a pivotal role in coordinating policy among its member countries, which collectively make up nearly half of the global economy. And this year’s summit could be especially important in shaping a new global paradigm.


A Series of Firsts

These countries’ heads of governments have been meeting annually since the 1970s, but this year marks a number of important firsts. 

It is Joe Biden’s first summit as president. It’s the first time since the pandemic that these leaders will be able to sit face to face and grapple with the loss of nearly 5.5 million people to COVID-19. It is the first in-person G7 meeting since 2019, as the Trump administration canceled the 2020 summit—another first—in the wake of COVID travel restrictions. 

It’s also a first for the Roosevelt Institute. 

As Roosevelt President and CEO, I have been appointed to serve as the US representative to the G7 Economic Resilience Panel, which will make recommendations to G7 leaders at the June summit—about how governments can better respond to future shocks, including pandemics and climate change, as well as the corrosive effects of inequality on our democracies and economies. 

Our participation is an important opportunity to internationalize the Roosevelt Institute’s vision for a sustainable and equitable future, building from our work on the failures of neoliberalism and its alternatives, and our growing body of global-facing Roosevelt Institute work on climate, trade, worker power, international relations, and more. The Cornwall summit comes at a time that’s likely to define a generation of policymaking.

 

A Bretton Woods Moment

Treasury Secretary Janet Yellen recently reflected on this moment in our history, likening it to 1944, when policymakers gathered in Bretton Woods to define our post–World War II order. There, in a New Hampshire town, delegates to the conference sought to address the immediate devastation of a global crisis and lay the groundwork for a new economic order. 

They created what came to be known as the Bretton Woods system, a global regime of fixed exchange rates and economic cooperation with roots in the economic ideas of the Roosevelt administration and the economist John Maynard Keynes

Today, we have a similar opportunity to upend the prevailing economic theories of our time and create new institutions and agreements that can shape the global economic order for decades to come. We also have an obligation: Without international consensus on a new worldview and rules framework, we won’t be able to tackle the existential, intertwining crises facing our planet.

 

The G7 Today: Time for a New Consensus

In 2021, the world is facing wreckage and hardship wrought not only by the pandemic but by the failure of our international economic politics and governance to ensure that globalization did good for workers, citizens, and the environment. In the decades after Bretton Woods, trade liberalization devolved into an end in itself, usually benefiting multinational corporations but not the common good.

As the pandemic demonstrated, the status quo understanding of global governance—a hands-off approach to managing health crises, international taxation, and of course climate change—is no longer acceptable.

The legitimacy of multilateral economic institutions depends on whether they produce outcomes that leaders of sovereign, democratic states can embrace. As multinational corporations shift $1.38 trillion out of their home countries and into tax havens like Luxembourg or the Cayman Islands to avoid paying taxes, and companies like Facebook wield disproportionate power in our democracies, multilateral institutions can and should serve as a collective, countervailing power to prevent wealth extraction at the expense of our people. And with humanity looking at a future of 122-degree Fahrenheit heat waves, annual wildfires that make breathing outside impossible, and billions of people who are food- and water-insecure, the primary goal of multilateral economic institutions should be to preserve the global commons, including by preparing for and mitigating the effects of climate change.

It’s time for a new consensus to emerge, and this year’s G7 summit could be an essential step.  A new, post-neoliberal international approach would:

  • Collectively curb corporate power by removing patent protection from vaccines as a first step to ramping up production around the world; 
  • Institute a country-by-country global minimum tax to discourage tax havens, bring in more than $500 billion over the next decade, and help re-root finance in the communities they should be serving;
  • Invest the trillions of dollars required to address climate change and decarbonize our economies; and
  • Modernize trade rules—and the World Trade Organization—so that they facilitate solutions to crises rather than create roadblocks (as they do at present).

As US Trade Representative Katherine Tai has said, “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures.” The same is true for all of the crises we face. Now is the time to move past a neoliberal order and into a new era of equality and justice. Now is the moment to rewrite the international rules. At Cornwall, I hope we seize it.

 

Felicia Wong is president and CEO of the Roosevelt Institute and also serves as the US representative on the G7 Economic Resilience Panel.


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