Tim Hayward – Constituting Finance as a Global Public Good

PTRG 10 May 2017

Photo: Glenda Alvarez

Summary of the paper

The economic premises of the Western liberal democracies are unsustainable in the light of social justice and ecology.  This indicates the ‘necessity’ of conceiving of an alternative to the existing global economic institutions.  The global financial system, too, needs to be reorganised and reoriented.  But how?  Answering this question may indicate the ‘possibility’ of conceiving of alternative constitutional arrangements concerning global finance. 

It can be observed that a set of norms and institutions of a constitutional kind is now being formed at the global level, and that the financial system is part of it.  But the ongoing process of constitutionalisation at the global level, Tim argues, lacks a key feature that makes it legitimate: namely, the political oversight that reflects the will of the constituent people and peoples of the world.  Also, according to him, the global norms and institutions of finance – in particular, investors’ rights conferred to private corporations as legal persons – are severely compromising social and ecological goods.  So, Tim suggests that a real solution to the current unjust global state of affairs may entail finding a new way to organise, assign and constrain political, economic and legal powers so as to promote the global public good rather than undermining it.  This is a matter concerning global constitutional arrangements.

To indicate a right direction in which he thinks such arrangements should be developed, Tim highlights two contrasting approaches that have been developed outside the literature of political theory, but that have been influential in practice.  The first of these is the liberal-globalist model associated with George Soros.  This embraces a borderless market-based world where the role of states largely withered away but were not replaced by a world state.  After pointing out several problems with this model, Tim considers the second approach, which is the international-socialist model associated with Che Guevara.  This envisages the world where the social functions of finance were fully absorbed into the sphere of public administration and planning, and where socialist societies, through international cooperation, eventually coalesced into one political entity.

A recent technological development that Tim suggests may be conducive to the realisation of the international-socialist world is that of the blockchain – a distributed database that serves as a public ledger people can use to record transactions.  So, he finally considers a recent debate concerning this new technology.  His essential point seems to be this: although the instrument in question could be employed to facilitate the realisation of the world associated with Guevara, it could be also employed to realise the world associated with Soros.  This indicates the threats and opportunities that this instrument presents.

Discussion

The presentation began with a brief comment from Tim, which set the paper in the book project he is currently working on.  The ensuing discussion invited interesting questions including whether the blockchain, because it is a ‘distributed’ ledger, could serve the end of ‘central’ planning as Guevara envisaged it at all, whether Tim’s presentation of Guevara’s scheme is adequately balanced, whether the duty of care may have any implication for the socialist conception of work as a social duty, etc.  The discussion was very constructive.  And the book, when it comes out, will surely be an original contribution to the literature of global justice.

Written by Yukinori Iwaki

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Tim Hayward is Professor of Environmental Political Theory and Director of the Just World Institute.

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