Working Paper 6/2022

Kotilainen, K (2022).

Towards an International Clearing Union (at Last)? Normative Underpinnings and Elements of Institutional Design.

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Abstract: The present article constitutes the first contribution to the Academy of Finland’s ongoing project "How to overcome tendencies toward trade wars? A multi-method study about institutional designs for an International Clearing Union" (01.09.2021–31.07.2025). The aim of the paper at hand is to lay the groundwork for subsequent research on ICU designs. First, the key normative underpinnings and institutional elements of a few of the most prominent existing ICU proposals (made by John Maynard Keynes, the Brandt Commission, Paul Davidson, and Joseph Stiglitz together with Bruce Greenwald) are outlined. The proposals are then assessed from the perspective of democratic, ethico-social, and existential concerns humanity faces. Although each proposal is found to have its own merits, none of them turns out to be fully satisfactory in all relevant respects. Besides eliminating trade wars, it is concluded that an appropriately designed International or Global Clearing Union could play a helpful role in resolving many other potentially fatal current and future issues.

Keywords: Trade wars, global catastrophic and existential risks, weaponized interdependence, eurocentrism, technocracy, Keynes, post-Keynesianism, cosmopolitanism, capability approach, International Clearing Union, ethics, global governance