Editorial


3/2004		  

Where markets fail

There are no national borders for infectious diseases. A year ago SARS, the respiratory disease, caused alarm around the world – and also considerable economic costs. Now we are dealing with bird flu. Both cases show how closely national societies have become interwoven. Individual states cannot control important risks on their own. Complaints about the shortcomings of global governance are common, the system of internationally binding rules to safegard humankind’s concerns is not running smoothly. But moaning does not help. Therefore, an initiative by the United Nations Development Programme is important. The UNDP wants to stimulate the debate on greater multilateral cooperation with the concept of Global Public Goods.

“Public good” is an academic term used in economics theory. In specific cases, there are market failures that require state intervention. This is the case when products or production methods do not only concern those directly involved in market transactions. Persons who have a vaccination, for instance, do not only protect themselves, they also reduce the infection risks of other people. Similarly, whoever pollutes the environment – be it as producer or consumer – is not only acting in the private sphere. Some goods do not only provide personal benefits but also serve the public interest. Reliable information on broadcast media, for example, contributes to democratic discourse. For other products, moreover, it does not matter how many people want to use them. A loaf of bread may only be eaten once, but a book – at least in principle – can be read infinitely often.

In all these cases, markets do not ensure the optimal allocation of goods. They cannot do so. After all, markets are instruments to maximise individual benefits. National states traditionally use various instruments to offset market failure. These include compulsory education, public service broadcasting stations (such as National Public Radio in the USA), vaccination programmes, public libraries and much more. Complex finance systems with taxes and charges make the provision of public goods possible. The rule of law and non-violent social life are also public goods. Of course, neither judiciary nor police can offer absolute guarantees on these counts anywhere, but how well these institutions work plays a huge role in determining the quality of life in any given country.

There are also public goods at the global level. They include the control of dangerous diseases, fair rules to govern international trade, protection of the atmosphere and of biodiversity, peace and security, as well as a stable finance system. Only multilateral coordination can handle deficits that arise globally. In political and conceptual terms, an International Task Force on Global Public Goods is working on getting a clearer grip of humankind’s shared interests. The aim is to improve the capacity for action at intergovernmental and supranational levels.

The German Development Ministry supports the Task Force (Heidemarie Wieczorek-Zeul, p. 100). The UNDP Director who has drawn international attention to the concept of public goods emphasises the useful impact it might have on multilateral politics (interview with Inge Kaul, p. 104). However, the unfulfilled need for international coordination is evidence of the weaknesses of the current multilateral system (Dirk Messner, p. 111). Moreover, the debate does not, of course, take place in a power vacuum. The question is how to make the Global Public Goods agenda palatable for developing countries. Many of them have so far experienced multilateral politics subjected to orders from the World Bank and the International Monetary Fund and as wallflowers in the World Trade Organisation rather than as partners with equal rights (Mariama Williams, p. 113).

Without doubt, a utopian element of hope marks the debate on Global Public Goods. However, its core of the – economically defined – public interest is brilliantly rational. After all, economics is originally the science of the intelligent use of resources. Unfortunately, economics jargon is far too often abused for non-sense rhetoric with the intention of making political cases seem irrefutable. Citizens then become customers, public administrations are turned into management agencies, and matters of public interest are reduced to objects of narrow-minded bean-counting.

This is not so in the case of Global Public Goods. Here we are dealing with correctly defined issues of humankind’s welfare and survival. The very fact that the concept has not yet been made operational in political terms makes the debate about Global Public Goods all the more relevant. The converging global society must meet enormous challenges – and that implies that governments have to pursue strategies of cross-border cooperation. It may be impossible to check what happens with every single German tax euro in a multilateral policy context and, indeed, the negotiations are prone to be more complicated and time-consuming than in the case of bilateral agreements. The challenges of globalisation, however, will not be mastered with individual bilateral projects – no matter how successful they might turn out.