While new information and communication technologies have created a more globalized world, organizations such as the World Bank, the IMF, and the WTO have served as the main tools of global governance. The Bank and IMF have used structural adjustment policies to liberalize developing and transition economies. Without offering real democratic governance, these organizations have forced poor countries to follow a free trade system.
After nearly three decades of implementing of these policies, what can be said? Even the World Bank has recently recognized that the poverty in many African and Latin American countries has increased. Meanwhile, income disparity has increased overall.
According to UN data, one billion people live in extreme poverty, defined as less than a dollar a day. Twenty percent of the poorest people have just 1.4 percent of world income. Meanwhile, 83 percent of the world's income goes to the richest 20 percent. If John Rawls is correct that justice is the virtue of social institutions, then our globalized world is far from virtuous.
A compounding issue is the rise of religious fundamentalism in the Middle East and North Africa. This phenomenon is a counter-movement to globalization and Western culture. On the one hand, it seems to be an anti-capital movement. According to French postmodern thinker Michel Foucault, it tries to create a new politics based on virtue. On the other hand, the fundamentalist approach tries to stop the movement of history and curtails human rights, particularly those of women. This has been the experience in countries such as Afghanistan and Algeria. Nevertheless, religious fundamentalism has grown as a response to the lack of fairness in globalization and the increasing gap between rich and poor countries.
What should be done? There are two different approaches for heterodox economists: the approach of neo-Marxist thinkers and that of structural-institutional thinkers. Both argue that the expansion of capitalism is inconsistent with egalitarian development. For the first group, replacing the current system with socialism is the only way to establish a fair world. For the second group, it's possible to overcome capitalism's challenges by using a development model based on the national interests of developing countries, while establishing democratic governance at the world level.
The second approach is preferable and feasible. First, the IMF and the World Bank should be replaced by a World Development Fund, which would levy a world tax on incomes of multinational companies and redistribute some income from developed countries to poor countries. Second, the rules of the WTO should favor fair trade as a basis for economic diversification. Third, the United Nations and its institutions should be restructured to help poor countries pursue national development and resource management strategies.
National development strategies are insufficient for overcoming the problems in poor countries. Cooperation at the regional and world level is needed to solve the problems that originate from weak world governance. In the case of environmental problems such as climate change, it's clear that they are global problems and need global solutions. Global solutions are also needed for the problems of unfair globalization and global poverty, which result from gaps between developed and underdeveloped countries.
Establishing a fair and democratic world is a solution to religious fundamentalism in the Middle East. Respect for all cultures will make our planet more beautiful. Problems in the Middle East and other regions require democratic global governance that considers the rights of all people. As philosopher Karl Polanyi pointed out, the market should be governed based on the goals of societies. Development should be based on justice both within and between nations.