Global Governance: Power, Ideas and Material Forces
The paper examines the creation of new international institutions to govern the globalized and liberalized financial markets in recent years. In the 1980s and early 90s, the area of international finance was marked by the neoliberal policies of deregulation and liberalization and the idea of a self-regulating market. Since the mid-1990s, however, there has been a significant policy and ideological shift towards an emphasis on (re)embedding the global financial market in institutions. The purpose of this paper is to explain this shift and to examine both the form and substance of these new international financial institutions. The existing literature on international financial institutions has been dominated by “rationalist” or positivist approaches, namely realism, liberal institutionalism and rational choice theory. Recently, a number of International Relations scholars have started studying the various aspects of global finance and financial institutions from a constructivist perspective, and they have offered a critique of what they usually describe as “materialist” approaches. Although the constructivist analyses make a significant contribution to the study of globalization and international institutions, they tend to replicate the similar types of theoretical and analytical problems for which they criticize the materialist approaches. I argue that both the “rationalist” and constructivist studies are either explicitly or tacitly based on a dichotomy between the realm of material forces and that of ideas and discourses. Even when they avowedly reject such a dichotomy, they slip back to it in explaining the creation and functioning of international financial institutions. As a result, they largely fail to grasp the intrinsic, reciprocal determinations between the two realms. This paper aims to provide an integrated study of how material forces and ideas have mutually influenced one another in the recent construction of a set of international institutions for the governance of global financial markets.
Keywords: global governance, international institutions, global finance, constructivism, rationalism
Dr Nilgun Onder
Assistant Professor, Department of Political Science, University of Regina