Andreas Dombret: The merits of and challenges for global
cooperation
Speech by Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank,
at a reception to celebrate the 30th anniversary of the Bundesbank's Representative Office,
Tokyo, 22 May 2017.
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1. Introduction
Governor Kuroda
Deputy Governor Nakaso
Ladies and gentlemen
It is wonderful to be back in Tokyo, this extraordinary city. I am happy to see so many of familiar
faces and so many important stakeholders here with us today.
Tonight we are celebrating the 30th anniversary of the Bundesbank's Representative Office in
Tokyo. Actually, we are ten days early: the Representative Office started its work on 1 June 1987.
But what are ten days among friends?
To mark the occasion, I would like to say a few words on the merits of global cooperation.
2. The merits of cooperation
Nowadays, international cooperation is under attack from nationalist, populist movements. Their
claim: We are better off on our own. And I must say that -from an economic point of view -
some of the frustration is rational, since the advanced economies have been undergoing a
substantial economic transformation due to trade and technological change, which always has
both winners and losers.
Yet, I cannot agree with the conclusion that we should heavily limit or even withdraw from
international trade and global cooperation.
Why, you may ask. The answer is simple: Evolution. One of the key insights of the theory of
evolution is "the survival of the fittest". Many people conclude from this that "competition" is what
makes our species so successful. And while that is not wrong, it falls short of explaining why the
human species is one of the most successful on earth - meaning that it has spread over most
regions of the planet and massively increased in number; because it is cooperation and the
division of labour which make our species so successful.
Evolutionary biologists have shown that there are only a few species - between ten and twenty,
depending on the exact definition - on the planet that are capable of cooperating in a complex
manner. And these eusocial species, as they are labelled, are the most successful species on
the planet. The fittest to survive will be those who can compete and cooperate.
In other words: while competition within a species is important for progress, cooperation may be
even more important. This is actually programmed into our DNA.
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Let me explain by giving an example. In two scientific studies, capuchin monkeys and
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chimpanzees proved that primates are programmed to be fair and place a high value on social
contracts. In these studies, two primates were each offered a snack in return for carrying out a
simple task. The two animals would get either a tasty grape or a less tasty piece of vegetable. All
of the animals preferred the grapes, but they also liked the vegetables - they would eat the latter,
as long as both primates got the piece of vegetable. You can probably see where this is going:
once one of the two animals got a grape and the other a vegetable, the latter would refuse to eat
his snack, even though he had eaten it when both got the vegetable. To express their feeling that
this was unfair, several of the disadvantaged primates actually threw the pieces of vegetable at
the researchers!
The study with chimpanzees revealed a further very interesting finding: if one chimpanzee got a
grape and saw the other receiving the vegetable, the one with the grape would in most cases
also refuse to eat the tasty grape. What a conscience! Primates clearly seem to be programmed
to cooperate.
But why then the recent tide of populism and nationalism, you may ask. Well, it may be because
redistributive and restructuring tendencies in developed economies, globalisation and
technological change in particular - while having created huge welfare gains for our societies -
have also been penalising significant segments of our societies. This has created political
tension and conflict over time - the Great Recession was a tipping point at which the frustration
grew. This has led people to be frustrated with globalisation and free markets. But we should be
careful not to throw out the baby with the bathwater: trade and globalisation have brought us
more gains than losses. So rather than resorting to protectionism, we should improve
international cooperation.
3. Focused global cooperation
Yet, when talking about global market liberalisation and economic cooperation, we hear extreme,
ideologically motivated solutions all too often: for instance, populist nationalism promises that
everything will get better if we build new walls between our societies. At the other extreme are
those who favour hyper-globalisation, that is, no borders to economic activity at all and full
harmonisation.
History has proven that both solutions are mere ideologies. The theories of both sides have
proven to be unrealistic and, to a considerable extent, plain wrong.
So what form of international economic coordination is actually viable?
To answer that - without giving a long lecture - we can borrow a simple yet powerful analysis:
the globalisation trilemma. Dani Rodrik, the well-known economist from Harvard University,
argues that we face the following trilemma: we cannot have all three things at once: (a) full,
global market liberalisation, (b) national sovereignty, and (c) democracy. We must choose two of
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these three, and give one up.
If we choose full economic globalisation, without any obstacles to free trade, then we must give
up either our national sovereignty or our democratic ability to oppose global rules. For example, if
we give up democracy, an autocratic ruler could decree that everyone has to accept the global
rules. If we give up national sovereignty, we could have a global democracy. I think it is fair to say
that we would rather not give up democracy or national sovereignty.
What remains is to limit market liberalisation where our societies deem this necessary. This is
not a convenient truth, because it means we have to look for answers in less clear waters: we
need to find those areas where global cooperation and harmonisation is sensible, and how far it
can go. This strategy must then go hand in hand with more national autonomy for finding
domestic solutions to national challenges.
Given these constraints, a realistic middle ground would be focused global cooperation:
continuing to cooperate and to harmonise regulations where possible - but also focusing and
improving our efforts. Focused global cooperation would also offer greater scope for solutions
that respect the legitimate interests of countries wanting to run their economies independently.
But let's not throw vegetables at each other - let's share grapes.
4. The value of personal ties
A few years down the road, I very much hope that we will be living in a world where multilateral
cooperation has been enhanced to benefit all segments of society. Close friendships like those
between Japan and Germany and the multilateral approach would still form the bedrock of
international cooperation.
The Bundesbank's office in Tokyo furthers that cause. Our team has done an excellent job over
the past 30 years by playing a vital role in the exchange between the Bundesbank and the Bank
of Japan as well as the Japanese Government. And that is crucial for cooperation: while it may
be technically possible to cooperate without ever meeting each other personally, close personal
ties and an understanding of where the other side is coming from are more important than ever -
especially during times of heated debate.
I want to thank all our colleagues for their dedicated and excellent work - and that includes not
only the current staff but all those who have been serving here since 1987. And especially I want
to thank Ms. Gudrun Moede for her excellent job in running the office and preparing today's event.
At the same time, we could not be more thankful for the outstanding partnership with the Bank of
Japan. From the very first day, our team felt more than welcome and I am confident that this will
continue into the future.
Governor Kuroda, I would like to thank you and your team in the name of the Bundesbank and our
Tokyo team: it has been and continues to be a privilege to work side by side with you and the
team of the Bank of Japan. We are deeply thankful for the warm welcome, for your support and
for your honest, friendly, and effective cooperation.
5. Conclusion
Ladies and gentlemen
Global economic cooperation has helped us to build a more prosperous society. However, it
does have side effects. Only by reducing and managing these side effects can we foster global
cooperation in the long term.
Only if we manage to strengthen the cooperative principle can we remain successful. Focused
global cooperation promises a way forward. We should all put our minds together to decide how
this can be best achieved.
Continued close cooperation between our nations will serve us well. And our office here in Tokyo
will continue to further that cause.
Thank you for your attention.
troglodytes. Animal Behaviour, 79(6): 1229-1237.
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Rodrik, D. (2000). How far will international economic integration go? Journal of Economic Perspectives, 14(1):
177-186.