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Article Excerpt
Following the East Asian crisis of 1997-1998, much attention was paid to financial sector reform. While little of substance has changed in the intervening years, a number of potentially important new forums were established to facilitate international cooperation. By drawing on and modifying theories of hegemony, this article provides a theoretical context within which to explore one of these institutions: the Group of 20 (G-20). The key question examined is whether institutions like the G-20 are likely to provide genuine mechanisms for cooperation and inclusion or simply become instruments of "hegemonic incorporation." The argument here is that despite the continuing "structural" dominance of the international system by the United States and the Group of 7 (G7) nations, the G-20 provides some scope for other nations to influence outcomes. KEYWORDS; G-20, hegemony, governance, institutions, international financial system.
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The contemporary international financial system in recent decades has expanded greatly in size, reach, and liquidity. At the same time, however, it has become much more susceptible to crisis and instability, not only in emerging markets but more recently in the developed economies as well. (1) The financial crisis that engulfed East Asia in the late 1990s was especially important in highlighting the potentially devastating effects of exposing immature domestic financial systems to highly volatile international capital flows. Debates about a "new financial architecture" and new coordinating institutions followed in the wake of these events. (2) A report by the Bundesbank's president, Hans Tietmeyer, was endorsed by the Group of 7 (G7) in 1999 and led to the creation of the Group of 20 (G-20) and the Financial Stability Forum (FSF). The focus of this article is the G-20, a forum designed to promote dialogue on financial and global economic governance issues in which nations of both the North and the South come together to discuss and attempt to manage common systemic problems. Its key participants are finance ministers and central bankers from the traditional G7/8 countries as well as from Australia, Argentina, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union (EU). These are countries that together represent over 85 percent of world gross domestic product (GDP), 80 percent of world trade, and two-thirds of the world's population. The G-20 also has representatives from the EU, the International Monetary Fund (IMF), and the World Bank.
To help frame our analysis of the political dynamics of the G-20, we utilize two conceptualizations of the politics of international coordination and inclusion: hegemonic incorporation and collectivist cooperation. Both are potential vehicles for coordination but on different terms and via different logics of interaction. Hegemonic incorporation implies US and G7 dominance, which Alison Bailin refers to as "group hegemony," involving an "incorporationist" logic applied to the non-G7 members within the G-20. (3) This logic encourages the adoption of a broadly neoliberal consensus and policy model by emerging market economies, not only in the interests of overall coordination and a safer world for the lead economies and their economic and financial interests, but also in terms of the conditions under which emerging market economies gain access to key trade and financial flows. However, collectivist cooperation involves an institutionalized voice and new role, especially for the non-G7 members of the G-20. The creation of the G-20 ostensibly suggests a collectivist and inclusive logic in international politics aimed at functional and normative goals: a more diverse and inclusive membership increases the prospects for consensus and effective policy coordination, while simultaneously enhancing credibility and legitimacy through a wider representation of interests. (4) The collectivist logic also implies some degree of mutuality and shared influence in developing new understandings or policy frameworks. In this sense, the politics of collectivist cooperation may not simply be a fig leaf for continuing US or G7 dominance, but a genuine--if still incremental--shift toward wider participation in the governance of the international economic and financial system. Certainly, this was the way the G-20 was presented to the world by its sponsors back in 1999.
The central questions we address are whether the emergence of institutions like the G-20 mark a fundamental departure from US or group hegemony, or whether this apparent embrace of such a multilateral approach is simply hegemony by other means. Our broad answer to both questions is no or, perhaps better still, not quite. The G-20 does not mark a fundamental departure from US or group hegemony, but nor should it be understood as simple hegemony by other means. This is largely because the incremental shift toward wider participation apparent within the G-20 marks an interesting multilateral departure in international politics born of specific institutional dynamics within the G-20, underpinned by wider structural shifts in the international system. The specific institutional dynamics we refer to involve a form of relational hegemony involving trade-offs and resource exchanges between the members of the G-20. We thus locate the G-20 within the shifting modalities of authority and the promulgation of new norms in international politics and argue that the G-20 network is helping to produce modified variants of hegemony and collectivism within the system. These institutional and structural dynamics caution against writing off the G-20 as part of what some scholars see as a wider current crisis of multilateralism. (5) It may be true that institutions such as the IMF, World Bank, and World Trade Organization (WTO) are being marginalized, but we argue that the institutional dynamics emerging within the G-20 nevertheless deserve wider analysis and discussion. In this article we explore new perspectives on the G-20 gained in part by interviewing key Australian insiders. (6)
In other words, we suggest that neither of the two models presented wholly captures the evolving politics of the G-20. Their either/or nature obscures the fact that the dynamics of both hegemony and collectivism are at work within the G-20, each being partly shaped by different structural logics in international political economy. Hence, the operation of the G-20 and, especially, its broadly neoliberal policy commitments reflect important elements of structural influence over the international economy by the major powers, notably the United States. Nevertheless, nested within this broader framework, the G-20 should also be seen as a case of dynamic institutional development in which new institutional effects and at least some collective capacities appear to be developing. The key to our analysis is to show how structural elements of hegemony (properly understood) relate to institutional and agent-centered relational dynamics within the G-20 itself. We also argue that the dynamics and exchanges within the G-20 relate to two different structural dynamics in the international system: the structural dominance of neoliberalism and the lead states, and structural shifts in the system whereby power balances as well as levels of economic integration are being altered by the rise of significant emerging market economies, such as, among others, India, Brazil, and China. (7) The G-20 itself refers to this latter change as a "tectonic shift in the global economy." (8)
In the next section we unpack the models of hegemonic incorporation and collectivist cooperation before briefly outlining the origins of the G-20. Following an exploration of the internal dynamics of the G-20, we argue then that the evolving amalgam of hegemony and collectivism within the G-20 reflects deeper structural and institutional logics.
Modeling International Economic Governance
Both of the models outlined in the following discussion offer accounts of possible patterns of international coordination in the contemporary international system. To understand their development, significance, and possible attractions, however, we need to place them in context and say something about the evolution of US hegemony.
Hegemony in Historical Perspective
There is now a large literature that deals with the nature of hegemony from a variety of theoretical perspectives. (9) What is significant about such debates in the present context is the way they help us to understand familiar, if not entirely resolved, problems of structure and agency. For our purposes, it is useful to make a general distinction between the structural and relational aspects of hegemonic...
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