International Institutional Performance in Crisis

The global financial crisis was a challenge to three of the most promising, and seemingly effective, institutions of international law-the World Trade Organisation, the International Monetary Fund, and the international network of regulatory agencies-and it was a challenge they failed to meet. This Article reviews the performance of these three institutions in the aftermath of the financial shocks of 2007-08 and finds that they had little to say in response. Those responses that were forthcoming were either ineffective or counterproductive, and only the IMF has emerged from the crisis with its potential burnished. The record appears to vindicate the critics of these international institutions and illustrate the primacy of politics in international crisis response. That primacy has been exemplified by the importance of the G20 in coordinating an international response to the crisis. The G20 is neither law-based nor governance-focused, but can best be characterised as a modern-day Concert of Europe, which appears to be quite unconstrained by law, and is not a regulatory network. I. INTRODUCTION What can the global financial crisis tell us about the institutions of international governance? Because the legal versions of those institutions best positioned to respond to the crisis - economic treaties, financial regulatory networks, and the species of international organizations known as international financial institutions - have been ineffective or, at best, marginally useful, critics are likely to raise the age-old charge against international law: that they do not matter. This charge will likely be leveled by those that either do not believe in large swaths of international law, such as the international relations realists in political science departments and their sympathizers in law schools,1 or those who believe that legal institutions in general fare poorly in emergencies, as Eric Posner and Adrian Vermeule have argued in a different, domestic context.2 The increasingly global production of administrative law has often been thought to offer a response to critics like these, as international administration has appeared in a number of different guises, all of which have contributed their share of oversight to the increasingly interlinked world economy. The World Trade Organization (WTO), a formal treaty, has overseen and encouraged that inter-linkage by enforcing the reduction of trade barriers through a process of adjudication. The World Bank and the International Monetary Fund (IMF) have evolved into standalone providers of development aid, which they have, at least until recently, conditioned on adoption of die "Washington Consensus" on market reform. Perhaps most promisingly, regulators increasingly cooperate with one another. Domestic agencies have turned abroad for the formulation of critical policies, which has been seen to be a victory for international governance and possibly a way forward for a broadly defined view of international law itself. The initial failure of these administrative institutions is a challenge for internationally minded lawyers. It suggests that the variety of international administrative institutions can fairly be critiqued on their contribution to the legalization of international relations. That legalization, it turns out, has been limited. Would-be defenders of the potential of these institutions must turn to the less happily quantifiable contributions of the relationships created by networks, treaties, and international organizations as the foundations of political cooperation. Unfortunately, claims that earlier cooperation in other areas of governance ineffably augmented the international cooperation resulting from the crisis verge on the unfalsifiable.3 In this Article, I begin by making clear how unhappy international lawyers should be with the performance of their institutions so far, and then propose ways to evaluate the contributions of those institutions more systematically. …