The System Worked: How the World Stopped Another Great Depression
Daniel W. Drezner
Oxford University Press, 2014
280 pp., $29.95
The System Worked
What about those rapacious bankers the Occupiers had in their sights? Didn't they smooth-talk their way to outrageous settlements and more business as usual? Far be it from this Canadian to judge American justice, but on a global level, they didn't. In fact, international banking policy is one area where significant improvement followed the Great Recession. In case you ever need a cure for insomnia, the regulatory revisions made by the Basel Committee on Banking Supervision (BCBS) to Basel II, creating—wait for it—Basel III, show that the major international banks at the table went home disappointed. Powerful North Atlantic banking interests certainly saw minor success, for example on the liquidity coverage ratio (LCR), but by and large banks were forced into much stricter regulation that required more-liquid (thus, lower returning) assets in reserve. Without higher liquidity levels, banks were unable to function during credit crunches. This was a failure of Basel II, to be sure, but hardly a primary cause of the meltdown. It was also noted prior to 2008, and resolved through Basel III with relative speed.
And the cases go on. They prove only that while there is plenty of reason for criticism, even systemic overhaul, of global governance structures, ugly as it may have been, the system kind of worked: no great reversal of globalization like the Great Depression followed, and relatively aligned and even haltingly coherent national-financial policies emerged. That's how systems and institutions work: it's ugly, it's borderline broken, but it kind of worked, and it's better than it was. That's politics.
I count myself among Dan's skeptical readers. After 2008, I panicked. I joked sarcastically, but also with a little veiled seriousness, to students in political economy that it might be time to buy gold and stuff it under our mattresses. Like any serious work of political economy, then, The System Worked contains much which is convicting and confessional. It proves something which I, as a Calvinist, have long suspected: I am the problem.
"The last decade," writes John Ikenberry, "has brought remarkable upheavals in the global system—the emergence of new powers, a global recession, and bitter disputes among allies … . Despite these upheavals, liberal international order as an organizational logic of world politics has proven resilient. It is still in demand." "Still in demand" is the kind of Churchillian political rallying cry I can gather around. Turn off the pessimism porn, says Drezner; "a healthy dollop of optimism is in order."
Robert Joustra teaches politics and international studies at Redeemer University College, where he is Director of the Centre for Christian Scholarship. He is editor, with Jonathan Chaplin, of God and Global Order (Baylor Univ. Press, 2010); author, with Kevin den Dulk of Persecuted (Calvin College Press, 2015); and author, with Alissa Wilkinson, of The Politics of Apocalypse (Eerdmans, 2016). He tweets @rjoustra.
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