The second half of the 20th century saw the rebirth of economic liberalism to a greater or smaller extent in almost all countries. On a national level, privatization was a key mechanism for returning economic activity to the market; internationally, organizations were created or developed to guide and manage the conduct of trade and business away from the hands of national governments.
It is difficult to say why exactly this process started when it did. Perhaps a growing, evidence-based understanding of the nature of the market helped; perhaps the acceleration of international communications started to bypass national markets; or perhaps the rise of the multinational simply cut national governments out of the chain.
By the year 2000, most sectors of the world economy had been mostly liberated. Here are some of the instruments of their freedom (there is a much fuller list of international economic organizations in Appendix I):
The GATT, later the World Trade Organization
(these three are termed the 'Bretton Woods' institutions)
The Basle Agreement
The World Bank
Although in many cases – notably the 'Bretton Woods' multilaterals – it was leading nation states who set them up, it is no longer accurate to think of them as being in any meaningful sense the instruments of their progenitors. The reasons for this are complex, and not the same for each individual organisation (see below). But the results are the same: that to a large degree, nation states have lost their power over the dimensions of economic activity controlled by the 'multilateral' in each case.
Although the United States, with its immense economic wealth, has been able to stymie some aspects of the work of the 'globalizing' multilaterals in response to domestic protectionist pressures, nonetheless its internationalist instincts have usually prevailed in the end. And the hostile response of other countries to the occasionally selfish behaviour of the USA itself demonstrates a general underlying belief in the construction of a rational international economic order, even if it is often cloaked in nationalistic language.
Alongside the liberalization of economic governance, most individual economic sectors have also been undergoing a process of 'marketization' during the last 50 years, combining privatization with globalization. Of all the sectors, the most important, because of its essential role in all other sectors, is the financial industry. There is not space here to analyze the spread of the multinationals in energy, mining, transport, electronics and other sectors; but this process has been widely described elsewhere so that its outcome – a pattern of globalized manufacture and distribution that bypasses national boundaries – is not in doubt, even if left-leaning organizations such as the European Parliament and the OECD, which has transmogrified from an instrument of economic rationality into the rich-countries' attack dog, do everything they can to impede the multinationals.
In the remainder of this chapter, we will first analyze the institutions of global economic governance listed above, along with some of the regional and sectoral governance bodies that are growing up, and finally we will consider the globalization of finance, and what this may mean for the future global polity.