Liberalism in Crisis?

Liberalism in Crisis?

European Economic Governance in the Age of Turbulence

Edited by Carlo Secchi and Antonio Villafranca

During the current economic crisis recurring questions on the validity of the liberal economic system have resurfaced concerning the role of the state and the free market, the proactive use of fiscal policies, economic nationalism, and environmental sustainability. However, due to the depth and scope of the crisis new emphasis is being placed on these issues. This book attaches great importance to the specific consequences for the European Union by addressing critical themes surrounding its role in the new era of global economic governance. These include the coherence of common monetary policy with national fiscal policies, new financial regulation and supervision, and the future sustainability of national rescue plans and their compatibility with ambitious targets, such as those addressing climate change.

Chapter 7: Feeling the Heat: Towards a Revised Governance of Climate Change

Antonio Villafranca

Subjects: economics and finance, international economics


Antonio Villafranca 1. INTRODUCTION The search for a new economic governance, not reflecting the post-war order but rather the new balance of power which is emerging in the era of globalization, lies at the core of the current international debate. The economic crisis has made this search more urgent. The world economy needs a revised and better-shared governance which also allows the qualified participation of big emerging countries. This seems to be a prerequisite for solid and sustainable recovery leading to a new era of economic cooperation. But the recovery of industrialized countries and the return of emerging countries to a path marked by impressive growth rates raise doubts on their future sustainability in global warming terms. As a consequence, the anomalous and striking rise in world temperatures has included the climate change issue in the seeking of a new world governance. It is now quite clear that climate change is at least partially a human-induced phenomenon, and as such it requires human intervention which cannot be limited to ‘business as usual’. In other words, the debate over the new world economic order needs to be coherent with a more intense and shared fight against climate change. The high costs borne to exit today’s crisis must not hamper individuation of new, stronger tools with which to face this challenge. Indeed, the intensive use of renewable resources and the development of new ‘green technologies’ represent a unique economic opportunity, especially in view of the inevitable depletion of fossil fuels and increase...

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