These are not radical complaints, but points that conservative authorities like Paul Volcker have made in calling for reforms to stabilize the world's currency relationships. Unlike previous examples, this problem cannot be easily fixed, and certainly not by a single nation. Managing the international stability of currencies was the original purpose of the IMF, but that function was wiped out three decades ago when Nixon unilaterally discarded the Bretton Woods system and accepted Milton Friedman's idea of floating exchange rates--money values determined, every day, in the marketplace. The triumph of laissez-faire produced the present turmoil. The IMF ought to be phased out, but that's unlikely until a new, more democratic institution is created to replace it. Big players can hedge against unpredictable losses, but people can't hedge their lives, their societies. Global finance needs a supervisory governor that everyone can trust.

Set aside current realities and imagine a different future: Every nation, rich or poor, conducts foreign trade in its own currency and, therefore, gains greater ability to steer its own national economic policies. The dollar and the euro, perhaps joined by the yen, serve as the most reliable anchors but no longer swing wildly in value against one another, damaging producers and workers on one end or the other. Poorer nations, exporting and importing in their own currencies, are no longer compelled to raise "hard currency" reserves to pay back foreign loans; thus they are free to move away from the model of export-led growth and concentrate more on domestic development. Exchange rates among the currencies still fluctuate in value, actively influenced by market forces, but the speculators have lost their best game. The extraordinary volumes of currency trading subside; the "hot money" finds less opportunity to panic. The rhythms of globalization become less volatile and randomly destructive, as investors discover that the best returns require investing with a longer perspective. Finance capital no longer acts like an imperious master, but only as one important agent in capitalism's processes of wealth creation.

All this is entirely plausible, but to reach this future one has to accept the need to create some kind of new governing authority for global finance. The most ambitious and persuasive plan I have encountered was designed by financial economist Jane D'Arista. The improvements described above are what D'Arista foresees as possible if the world undertakes a fundamental reordering. Someday, I predict, political leaders will be compelled to consider something like this, though I fear it may require a bloody catastrophe to get their attention.

Many reformers will object that this subject is wildly premature, too abstract for citizens to grasp, too distant from present politics to engage their scarce energies. Besides, they will say, does anyone really want a new, more powerful IMF? I disagree. Thinking ahead in larger terms can give self-confidence to this new movement. Asking hard questions about the future forces people to clarify their vision. Besides, governing elites are much too timid to think big for us.

D'Arista's concept borrows from John Maynard Keynes and Harry Dexter White, co-architects of the original Bretton Woods arrangement, but the operating principles are adapted to the greater, faster complexities of today. She calls this new institution an "International Clearing Agency" because it would act as the currency clearinghouse for payments in international trade (the place where exporters and importers exchange one nation's currency for another's). Banks would do the exchanges for them, much the way they use the Federal Reserve as a clearinghouse for all US banking transactions. The ICA would not be a true central bank, since it wouldn't have the power to create money, but many features and functions would be similar. Like a central bank, it would hold the world's reserves, backed by marketable financial assets deposited by the participating nations. This financial base would give it the power to act as lender of last resort in major emergencies and provide temporary liquidity loans to countries in difficulty (just as the Fed routinely lends to commercial banks).

The ICA's central function, however, would be a balancing act among nations and their currencies--keeping the exchange values of currencies within agreed-upon ratios. If a nation tried to capture artificial advantage by letting its currency stray, it would be nudged back in line by its shrinking reserves at the ICA and eventually compelled, more or less automatically, to correct its economic imbalances or face a formal devaluation. Thus the ICA would adjust and stabilize the flows much as the original IMF did. Other times, it would help a country deal with unexpected shocks like commodity-price gyrations or natural disasters. Overall, the agency could discreetly counter the runaway surges in financial activity, just as the Fed is supposed to do. Defending the safety and soundness of the system is in everyone's interest, not just private investors. It's an alternative to the Wild West.

Such an institution would have awesome power, no question about it, but less awesome and arbitrary, I think, than the unaccountable powers that private capital randomly asserts, for self-interested profit, over the affairs of nations. Smaller countries, ironically, might find D'Arista's scheme more attractive because it promises them more sovereign space to pursue their own ideas of economic development. The centers of financial wealth--especially the United States--would likely be the skeptics, since it requires them to surrender much of their ability to manipulate and dominate others. When the United States developed into a truly national economy in the late nineteenth century, it suffered repeated, disastrous financial upheavals that eventually persuaded politicians, albeit reluctantly, to accept the need for a central bank. The question now is whether the world has yet had enough of the chaos and profiteering to accept something similar.

The toughest challenge concerns democratic governance, not financial design. Who would run and control this institution? Wouldn't the same old crowd take over and use it to bully others, as with the IMF? D'Arista has some tentative answers. She proposes a rotating executive committee whose members must insure representation on two levels--population and economic output--so that at least half the world's population would be represented at the table, as would nations that, combined, account for at least half the world's economic output. I suggest two additional levels of representation--the world's regions and the people at large themselves. It's not practical, obviously, to have a popular assembly supervising the global financial system, but here's a radical thought: Why not elections? I can imagine a regular worldwide referendum in which people everywhere vote directly to express themselves--thumbs-up or thumbs-down--on the ICA's performance. A negative vote would force a change in the leadership, much as in parliamentary systems. The same principles might be useful for restructuring control of the IMF and the World Bank (while they exist) or, for that matter, the United Nations and other international forums that lack credibility and power because they do not truly reflect world realities.

These are just ideas, of course. But if nations are serious about the notion that globalization can lead to worldwide democracy, we ought to look at distant horizons and begin asking ourselves how this new democracy might work. The vision is simple: putting people first, instead of behind capital.

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