How might a stable international monetary regime be considered a collective good?

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There are a number of ways that an international monetary regime can be considered a collective good. Let's look at some of the common ways that plays out.

For starters, international monetary regimes can help fend off an economic crisis through its lending practices. If a nation is at risk...

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There are a number of ways that an international monetary regime can be considered a collective good. Let's look at some of the common ways that plays out.

For starters, international monetary regimes can help fend off an economic crisis through its lending practices. If a nation is at risk of falling into a financial crisis, the regime can provide financial assistance to temporarily prop up its economy while the underlying issues can be addressed and corrected. They can also provide technical assistance by designing and implementing economic policies that are healthy for a nation's economic stability. This can help prevent a crisis that could affect not only that particular nation but others with a stake in its economic well being.

By helping to prevent an economic crisis an international monetary regime protects the collective good of many other countries as well. A healthy economy benefits all involved. A stable economy promotes trade relations and the flow of international commerce. Conversely, when a country faces an economic crisis, other nations might have to bail it out or limit trade, affecting their own domestic markets.

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A stable international monetary regime could be considered a collective good as all of the countries supported by it have greater economic stability, which in turn leads to more success for those nations and their peoples.

Picture someone stranded in the middle of the ocean. When the international monetary regime is strong, the supporting country’s currency essentially acts as a Coast Guard for a struggling country. It is able to provide a life raft because its own currency is strong, which means that the other country is able to rely on it for help. It is not as if that country is on its own without any support. It is thus “collectively good” for all others because all others know that if one country falls into trouble, another will always be there to help. This benefits all involved and creates a more stable financial environment worldwide.

And if countries flourish economically and remain stable, then they are better able to participate in the free-flowing market of goods and services around the world, which also ensures that they stay afloat financially and will not need to later be fiscally rescued.

In addition, given that countries are so interdependent in today’s society, a stable international monetary regime can aid in preventing future financial crises, which obviously benefits the the greater collective good of all.

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A stable international monetary regime should clearly be considered as a collective good (also known as a public good).  To understand why this is so, let us first look at the definition of a collective good.

There are two main aspects to collective goods.  First, they can be consumed in what is called a “non-rivalrous” way.  What this means is that when one person or country consumes a collective good, it does not diminish anyone else’s ability to do so.  If I breathe clean air, I am not reducing your ability to do the same.  Second, no one can be excluded from consuming these goods.  If the air is clean, I cannot force you to breathe dirty air because you did not pay your fair share of the cost of cleaning the air.

A stable international monetary regime would fit this definition.  If the monetary regime is stable, it will benefit all countries.  The regime will help ensure that the global economy is more stable.  This will help all countries.  One country’s benefit does not reduce that enjoyed by another country.  In addition, it will be impossible to exclude any country from taking advantage of the benefits.  It would not be possible to tell one country that it must trade in an unstable system because the stability would be like the clean air; it would simply be a fact of life that all countries would enjoy.

For these reasons, a stable international monetary regime would be a collective good.

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