The Cornwall Consensus

Context: G-7 summit could give new direction. But new principles must not be ruses to serve dominant interests.

Rising significance of the G7: Seeks to redefine the broader relationship between states and markets in three ways:

• States are reasserting control: The control which was relaxed with the oncoming of Neoliberalism, which, however, provided a misleading picture of what makes economies vibrant.
  • Neoliberalism led to a sense of loss of collective control over the economic future.
  • It led to inequality, and in some fields, like technology, it created new forms of corporate power.
  • Through Cornwall, the states are required to reverse these consequences through taxation or treatment of technology monopolies at the global level.
• Recognition of public goods:
  • Earlier, the G7 or even the G20 were considered as the political steering committee of global capitalism.
  • However, now, there was short shrift given to the global public goods like health. The commitment of G-7 to provide one billion vaccine doses is a welcome step.
• Tackling the ‘Two Cold Wars’: In geopolitical context, G7 has to tackle the two cold wars –
  • With China: Geopolitical tensions with China, greater coordination and unity of purpose amongst the G-7 will become more important.
  • Threat of authoritarianism: From states like Russia and Belarus and forces that might want to subvert democracy.
  • It is important, therefore, to demonstrate that the G-7 countries are part of a functional democratic civilisation.

Challenges with the G7:

• Vulnerabilities of globalisation not understood: While the taxation of global corporates is not a bad idea, will there are subsequent losses to many countries.
  • The United States, Netherlands and United Kingdom are three of the top five countries (along with the Cayman Islands and Luxembourg) responsible for tax losses inflicted on other countries. - Tax Justice Network’s “The State of Tax Justice Report” 2020.
  • The US, Switzerland, Singapore and Hong Kong are amongst the highest on the Financial Secrecy Index, countries whose financial systems allow individuals to hide their finances from other countries.
• Bias towards advanced economies: While there is a renewed focus on climate change and labour standards, developed nations dominate in these deliberations with regulations biased towards them.
• Discussion on finance is missing: This is because finance tends to be more economically and socially powerful in the political economy of most countries than even industrial capital.
  • But if one is looking at potential sources of vulnerability, the ability to create winners and losers, and possible threats to global resilience, then regulation and coordination of global finance deserve more attention.

Conclusion: if the G-7 wants to truly exercise more leadership, it will have to convince the world that all its new principles, resilience, inclusion, global public goods, are not simply ruses to serve only the interests of the developed world