Utopia: where pure politicians hand out free money

George Monbiot is well known as a polemicist against all aspects of globalisation. From his weekly perch in The Guardian , he has denounced multinational corporations, the US, other G7 governments, the International Monetary Fund, the World Bank, the World Trade Organisation, the Washington Consensus and many individuals, especially politicians associated with trade and development policies. He is splendidly negative and can deploy a deadly invective. While I almost invariably disagree with him, he is fun to read.

In this book Monbiot has turned over a new leaf. He is now in a constructive mood and indeed on at least one of his pet hates - the WTO - even in a recanting phase. His big idea is that rather than being against globalisation, the time has come to manage it from below. He has a three-pronged proposal. He wants to create a world parliament of 600 members directly elected from constituencies of 10 million voters each. He wants to create an international clearing union in place of the IMF, to issue a global currency to clear trade imbalances. And he wants to push the WTO in the direction of fair rather than free trade.

The bulk of the book is devoted to the world parliament proposal. Monbiot dislikes all the existing national and international institutes so much that rather than build on existing structures such as the United Nations, he starts as if the world was tabula rasa . This strategy is further complicated by the fact that his vision of democracy is a Platonic one where directly elected people's representatives have to be pure as driven snow. He spurns financial help from governments to finance this.

Constituencies have to straddle national boundaries (at least for small nations with populations below 10 million). Elections have to be conducted without national government help.

Having created this body of 600 worthy "senators", Monbiot expects it to have a legitimacy and a moral authority of such grandeur that his hopes of what it will achieve seem quite modest. "It would review international decisions made by governments, by the big financial institutions and by bodies such as the UN and the WTO. When it discovers that they have breached the principles of good governance, it would pass resolutions and publish critical reports. We have every reason to believe that, if properly constituted, our parliament, as the only body with a claim to represent the people of the world, would force them to respond."

Is that all? Can you seriously "manage" globalisation by passing resolutions and issuing critical reports? Does a national parliament, directly elected and hence with national legitimacy, get its way by passing resolutions? Without the power to raise taxes or the military force to implement decisions, how does the world parliament get taken seriously? It reminds me of Stalin's remark to Roosevelt at Yalta when he was told that the pope might be unhappy at one of the decisions they had made. "And how many divisions does the pope command?"

These constructive proposals are infused with an unworldly idealism and naivety that makes one wonder whether, despite all his invective, Monbiot really understands how politics, let alone economics, works. Because his critique of globalisation is so generalised, he betrays no knowledge of how trade, investment or banking decisions interrelate with electoral politics and bureaucracy to bring about the profound changes we have witnessed.

Neither the IMF/ World Bank nor the UN "runs" globalisation. Even the US, powerful as it is, is scared enough of the effects of trade flows to impose steel tariffs and feels anxious about jobs flowing to India in information technology outsourcing. The effects of capital flows have effected the biggest reduction in poverty in Asia of the past 20 years, though the movement for global trade justice ignores this.

Monbiot's innocence is transparent when he revives Keynes' 1944 proposal for an international clearing union that would circulate bancors as "free" money. But how could such a body be established and the IMF be removed? Monbiot argues that, since poor countries owe a debt of $2.5 trillion, by threatening default the poor can "threaten to ruin the economy of the rich nations". This is pure fantasy. Through the 1980s, the debt incurred by developing countries to commercial banks was never paid back fully. It was equitised, discounted and swapped but, in the end, only about 15 cents in the dollar was paid back and the commercial banks of rich nations did not bat an eyelid. The sum of $2.5 trillion is large for poor countries but not large for a global economy. Here, Monbiot reveals his poor grasp of elementary economics.

The WTO proposals are fairly mild and involve asymmetrical treatment of poor countries about adopting protectionist measures. Much of this is allowed at present under the General Agreement on Tariffs and Trade. Yet for every country that succeeds with protectionist policies and infant industries, ten make a mess and waste resources. There is more to economic success than tariffs. Indeed, instead of marching for fair trade, if the trade justice movement would march for free trade and ask for the abolition of agricultural subsidies in the US, European Union and Japan, the poor of the third world would gain more. But President Chirac would rather grandstand about the Tobin tax than give up 1 euro of subsidy to European farmers. He understands how power works - and it is not by finely worded resolutions.

I had fancied that Monbiot was a wolf in sheep's clothing. He is really a tame pussycat thinking he is a tiger.

Lord Desai is director, centre for global governance, London School of Economics.