Jay Ulfelder has a nice critique of pieces by David Bosco and Anne-Marie Slaughter in Foreign Policy magazine’s “future is now” special report:

What Bosco and Slaughter have given us is the liberal institutionalist view of international relations in the early twenty-first century. Complex interdependence in the global political economy is creating new threats, but one person’s threats are another’s opportunities for mutual gains from cooperation. To realize those gains, however, states must create institutions that solve problems of coordination and enforcement. And so they will.

As sympathetic as I am to their hopeful visions, I’m more skeptical than Bosco and Slaughter about the prospects for deeper global governance in the near future. As observers of institutional development have repeatedly shown, the prospect of mutual gains from better governance does not lead inexorably to the development of new regimes or the strengthening of existing ones. Disagreements over exactly what the rules ought to be and how to share the costs and benefits of enforcing them have a tendency to scuttle or cripple most integrationist projects. Institutions may be useful as solutions to problems of cooperation, but demand does not lead automatically to supply.

Current happenings in the EU are a nice illustration of this point. There seems to be widespread agreement that the euro is bound to fail without some institutional solution to the problem of heterogeneous fiscal policies. Yet, there is no guarantee that such a solution will emerge. The farthest we have come is the initiative by German Chancellor Angela Merkel and French President Nicolas Sarkozy to create a “European economic government.” It turns out that the other 15 euro zone countries may actually have some ideas of their own about this. Moreover, what Merkel and Sarkozy call a “government” seems little more than a talking club of heads of governments that would meet twice a year to enforce rules that were basically already part of the 1992 Maastricht Treaty and the 1997 Stability and Growth Pact.

Many financial experts like the idea of commonly issued eurozone bonds. Yet, this essentially means that the stronger economies will have to pool risks with the struggling debtor nations. It just so happens that many of these stronger economies are going through waves of populism. The domestic politics of this just don’t add up, at least not as an initiative with the size economists think is necessary.

Another problem is that the 17 member Eurozone does not neatly overlap with the 27-member European Union. This makes it more difficult to utilize established EU institutions and thus make a new institutional solution look like an old one. The European Central Bank already has received a lot of additional authority and has become under increasing scrutiny from domestic legislatures. It can’t really sanction countries for irresponsible fiscal behavior (remember that France and Germany were among the initial offenders).

The conventional wisdom is that the eurozone will either break apart or that Europe will move to much greater centralization of fiscal policies. The political incentives, however, are to muddle through. Breaking up the eurozone is extremely risky and centralizing authority is extremely unpopular. Markets, of course, can discipline European political leaders or make it impossible for individual countries to maintain the euro. However, I wouldn’t be too surprised if a few years from now the institutional architecture of the eurozone looks remarkably similar to what it is today.

[Cross-posted at The Monkey Cage]

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Erik Voeten is the Peter F. Krogh associate professor of geopolitics and global justice at Georgetown University.