ABSTRACT
This chapter discusses the economic crisis that began in 2008 in the financial sector but then spread into a sovereign debt crisis threatening the real economy. One may distinguish between a number of coordination mechanisms for economic life. On the one hand is the global market economy and on the other is the set of government mechanisms: domestic, regional, and international. The International Monetary Fund (IMF) deals with short-term currency crises via liquidity infusions, raising funds almost entirely from its members. The growth in the global market economy since 1970, in combination with the success of a monetarist framework for economic policymaking, constitutes a background for the emergence of theories proclaiming the superiority of the market over the state. It should be pointed out that economic coordination is more accomplished than environmental coordination to enforce human rights. Economic coordination among nations offers basically a series of variable-sum games through which governments may avoid worst-case outcomes from the business cycle.
