The group of seven

New Political Economy

Volumn 13, Issue 1, 2008, Pages 103-115

  Baker, Andrew ^a  

^a QUEEN'S UNIVERSITY BELFAST   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

FINANCIAL SYSTEM; GLOBAL ECONOMY; GOVERNANCE APPROACH;

EID: 40449085143     PISSN: 13563467     EISSN: 14699923     Source Type: Journal    
DOI: 10.1080/13563460701859843     Document Type: Article

References (46)

1. Michael Hodges, 'What Future for the Summits?', Concluding remarks at the conference Jobs, Money and Crime: Challenges for the G8 in 1998 Plaisterers' Hall, London, organised by LSE, University of Toronto G8 Research Group and Clifford Chance, 13 May 1998.
2. Stephen Gill, 'Structural Changes in Multilateralism: The G7 Nexus and the Global Crisis', in Michael Schechter (ed.), Innovation in Multilateralism (Macmillan for United Nations University Press, 1999).
3. Robert Cox, Production, Power and World Order: Social Forces in the Making of History (Columbia University Press, 1987).
4. On K groups, see Duncan Snidal, 'The Limits of Hegemonic Stability Theory', International Organization, Vol. 39, No. 4 (1985), pp. 579-614.
5. On the club model, see Robert O. Keohane & Joseph S. Nye, 'The Club Model of Multilateral Cooperation and the World Trade Organization: Problems of Democratic Legitimacy', John. F Kennedy School of Government, Visions of Governance in the 21st Century Working Paper No. 4, 2001.
6. On the notion of a flock of Gs, see Roy Culpepper, 'Systemic Reform at a Standstill: A Flock of "Gs" in Search of Global Financial Stability', G8 Governance Working Paper Series, 2000. Available at http://www.g7.utoronto.ca/g7/scholar/culpeper2000/index.html (last accessed 1 February 2008).
7. There are actually 11 members of the G10 - the current G7 together with Belgium, Netherlands, Sweden and Switzerland.
8. Harold James, International Monetary Co-operation Since Bretton Woods (Oxford University Press, 1996), p. 183.
9. For a fuller account, see Paul Volcker & Toyoo Gyohten, Changing Fortunes: The World's Money and the Threat to American Leadership (Times Books, 1992), p. 126.
10. Robert Putnam & Nicholas Bayne, Hanging Together: Co-operation and Conflict in the Seven Power Summits (Sage, 1988), p. 48.
11. Ngaire Woods, 'Making the IMF and World Bank more Accountable', International Affairs, Vol. 77, No. 1 (2001), pp. 83-100.
12. Statement of G7 finance ministers and central bank governors, 12 April 2003. Statement available at http://www.g7.utoronto.ca/finance/ (last accessed 1 February 2008).
13. This has been the general trend over the last 15 or 20 years. However, this is not an absolute pattern. For example, for the Gleneagles Summit Tony Blair appointed Michael (Lord) Jay, the most senior official from the Foreign and Commonwealth Office to act as his envoy and Lord Jay remains in post. More generally, finance ministry officials have been sceptical about the summits, regarding them as something of a side show or jamboree, and as something that gives foreign ministries an input into the increasingly specialised world of multilateral cooperation.
14. Confidential interview with official, February 1997.
15. Point made repeatedly in interviews, 1997-1999. The deputies do de-brief colleagues but minutes are not formally recorded and transcripts of discussions are not taken. Since 1994, the deputies have been assisted in their preparatory work by deputy deputies, usually the second most senior international financial official in finance ministries, so as to increase the speed of consensus formation and build up a greater momentum of cooperative relations between G7 finance ministries. A central banks' deputy-deputy group also now operates.
16. Confidential interview with official, July 1997.
17. The choreography surrounding G7 meetings has become increasingly complicated. The president of the European Central Bank and the president of the European Economic and Finance Council attend the surveillance session, then European national central bankers join discussions. European Commission, Russian, IMF and World Bank officials also attend portions of the meeting.
18. Mark Sobel & Louellen Stedman, 'The Evolution of the G7 and Economic Policy Coordination', United States Department of the Treasury, Office of International Affairs, Occasional Paper, No. 3, July 2006.
19. Confidential interview with official, February 1997.
20. Confidential interview with official, July 1997.
21. Ibid.
22. Hodges, 'What Future for the Summits?'.
23. To an extent the USA has a unilateral power of veto in global financial governance that is not shared by any other G7 country, largely because the USA is home to and regulator of the world's most important financial market institutions, and no initiative has much chance of success without US support.
24. Robert Wade & Frank Veneroso, 'The Asian Crisis: The High Debt Model versus the Wall Street-Treasury-IMF Complex', New Left Review, No. 228 (1998), pp. 3-23
25. Jhagdish Bagwati, 'The Capital Myth: The Difference Between the Trade in Widgets and Trade in Dollars', Foreign Affairs, Vol. 77, No. 3 (1998), pp. 7-12.
26. My book develops this argument in some depth: Andrew Baker, The Group of Seven: Finance Ministries, Central Banks and Global Financial Governance (Routledge, 2006), chs 4, 5 and 8.
27. On the concept of an integrated ensemble of market-state governance, see Geoffrey Underhill & Xiaoke Zhang, 'The Changing State-Market Condominium in East Asia: Rethinking the Political Underpinnings of Development', New Political Economy, Vol. 10, No. 1 (1995), pp. 1-24.
28. On how the concept of transparency reflects a particular form of market power, see Mark Blyth, 'The Political Power of Financial Ideas: Transparency, Risk and Distribution', in Jonathon Kirshner (ed.), Monetary Ordrs: Ambiguous Economics, Ubiquitous Politics (Cornell University Press, 2003), pp. 239-59.
29. Randall Henning & Ian Destler, 'From Neglect to Activism: American Politics and the 1985 Plaza Accord', Journal of Public Policy, Vol. 8, No. 3/4 (1988), pp. 317-33
30. Wendy Dobson, Economic Policy Co-ordination: Requiem or Prologue? (Institute for International Economics, 1991).
31. For more on this tidy consensus, see Fred Bergsten & Randall Henning, Global Economic Leadership and the Group of Seven (Institute for International Economics, 1996).
32. Lawrence Summers, 'US Policy Towards the International Monetary System on the Eve of the Lyon Summit', Remarks to Emerging Markets Traders Association, 24 June 1996.
33. Andrew Baker, 'American Power and the Dollar: The Constraints of Technical Authority and Declaratory Policy in the 1990s', New Political Economy, Vol. 11, No. 1 (2006), pp. 24-46.
34. Michael Webb, 'The Group of Seven and Global Macroeconomic Governance', in Richard Stubbs & Geoffrey Underhill (eds), Political Economy and the Changing Global Order (Oxford University Press, 2005), pp. 158-69
35. Andrew Baker, 'The Three-Dimensional Governance of Macroeconomic Policy in the Advanced Capitalist World', in Andrew Baker, David Hudson & Richard Woodward (eds), Governing Financial Globalization: IPE and Multilevel Governance (Routledge 2005), pp. 102-29.
36. Note that these indicators are also those most monitored by operators in financial markets. Layna Mosley, Global Capital and National Governments (Cambridge University Press, 2003).
37. The G22 was convened by the USA to produce post-Asian architectural reports. Later a permanent G20 was established by the G7, with a slightly different membership, most notably involving the exclusion of Malaysia, possibly as a reaction to the use of more stringent capital controls.
38. However, the G7 did formally reject the IMF's sovereign debt restructuring mechanism (SDRM) in their statement of April 2003 and instead opted for the relatively modest step of inserting collective action clauses into sovereign bond contracts.
39. For an elaboration of this argument, see Baker, The Group of Seven chs 7 and 8.
40. Sobel & Stedman, 'The Evolution of the G7 and Economic Policy Coordination'.
41. There is an element of double jeopardy in this for this USA. Without Chinese interventionist policies, the recent decline of the dollar would have been far greater than we have seen, squeezing US purchasing power, producing a greater risk of inflation and limiting US capacity to continue to fund its budget deficit with inflows of foreign capital through the sale of US Treasury bonds. Yet part of the cause of the decline of the dollar has been the record US current account deficit and no adjustment is likely to take place in this deficit with a realignment in the dollar-Renminbi-yuan exchange rate. As the dollar continues its long-term decline, the willingness of foreigners to invest in US bonds and securities might also decline.
42. Off-the-record remarks at 'Global Financial and Monetary Governance, the EU and Emerging Markets', 1st Annual GARNET Conference, Amsterdam, 27-29 September 2006.
43. A proposal for a currency G4 involving China, the EU, Japan and the USA has been forwarded by Peter Kenen, James Schafer, Nigel Wicks & Charles Wyplosz, International Economic and Financial Co-operation: New Issues, New Actors, New Responses (Centre for Economic Policy Research, 2004).
44. For a commentary, see Robert Wade, 'On G8 Expansion: How to Establish a Heads of Government Global Advisory Forum Which is Both Effective and Representative in a Hurry', Talk on symposium on 'Global Economic Imbalances: A Need to Go Beyond the G8', Berlin, 6-7 June 2007. The G7 summits were of course expanded to create a G8 with the inclusion of Russia at Birmingham in 1998. The finance ministers opted to continue to operate as a G7, as a Russian presence may have undermined the coherence of the G7 as a coalition of creditor states. At the summit level a G8 + 5 including India, Brazil, South Africa, China and Mexico has been operating to discuss climate issues.
45. Sobel & Stedman, 'The Evolution of the G7 and Economic Policy Coordination'.
46. Statement by G7 Finance Ministers and Central Bank Governors, Washington, 13 April 2007. Available at http://www.g7.utoronto.ca/ finance/fm070413.htm (last accessed 1 February 2008).