No link – cosmopolitanism decenters the nation-state as the center of international politics – we embrace openness to other modes of organizing government, not an abolition of all nation-states

What David Held (Citation2010, 143) calls “the paradox of our times” nicely captures some of the main motivations for cosmopolitanism: “the collective issues we must grapple with are increasingly global and, yet, the means for addressing these are national and local, weak and incomplete”. As a basic premise, most cosmopolitans share a version of the view that diverse globalisation-related processes have eroded the policy capacity of contemporary nation-states in a wide range of important issues and / or that the range of intrinsically global challenges is widening. Cosmopolitanism is therefore often defended, in part, on the practical grounds of policy efficacy.

Simultaneously, globalisation seems to have undermined the legitimacy basis of national representative politics. The standard democratic all-affected principle (in Held's terminology, the criterion of all-inclusiveness), according to which the group of decision-makers should coincide with the group of “decision-takers”, underlies this judgment and encourages calls for cosmopolitan democracy (Held Citation2010, 173; see also Lagerspetz Citation2015; Näsström Citation2011). The principle seems to capture a core motivation for democracy – people should be free to decide about precisely those affairs that affect themselves (ideally to the extent that they are affected). Because the present organisation of politics around nation-states often fails to serve all-inclusiveness, the cosmopolitans call for supranational democratic governance structures also on the normative grounds of policy legitimacy (on legitimacy in global governance, see Tallberg, Bäckstrand, and Scholte Citation2018).

To recreate conditions for democratic politics, the cosmopolitans argue that numerous supranational, or truly global, reforms and institutions are urgently needed (Holden Citation2000, 1–13; Patomäki and Teivainen Citation2004). According to some authors, these institutions should be accompanied by a comprehensive legal framework, a cosmopolitan law (Held Citation2010, 93–116). Relatively few contemporary cosmopolitans argue for a centralised global government, however.Footnote30 As Held emphasises, the goal of securing all-inclusiveness often “points to the necessity of both the decentralisation and the centralisation of political power” (175).

Despite their differences, even the most modest proposals for supranational forms of democracy effectively question the merits of the traditional “Westphalian model” of exclusive state sovereignty.Footnote31 As Held (Citation2010, 96) puts it, “any assumption that sovereignty is an indivisible, illimitable, exclusive and perpetual form of public power – entrenched within an individual state – is now defunct”.

What does this apparent transformation of sovereignty mean for a discussion on monetary sovereignty? The cosmopolitans have not addressed the implications of supranational democracy for the specifically monetary aspects of state sovereignty in much depth. This is a regrettable omission in the otherwise rich literature on global economic governance. For tentative guidance on how the issue of monetary sovereignty could be approached from a cosmopolitan angle, I will draw on Held’s (Citation2010, 107–110) normative framework of “economic cosmopolitanism”. Held's related account of economic governance is underdeveloped and it does not tackle monetary sovereignty explicitly.Footnote32 But despite their relative vagueness on economic subtleties, Held's ideas can nevertheless be helpfully applied in this section's examination of the legitimacy conditions of national exercise of monetary sovereignty.Footnote33 Also Andrew Linklater’s (Citation2006, Citation2011) work on the global harm principle proves useful.

Held (Citation2010, 107–110) discusses economic cosmopolitanism as one aspect of his overall vision, alongside legal, political, and cultural aspects. He argues that there exists a cosmopolitan “rationale for a politics of intervention in economic life” (108). In an attempt to justify this rationale, he states that “market economies can only function in a manner commensurate with self-determination and economic freedom if [the indeterminacy of the market system itself] is addressed systematically and if the conditions of the possibility of self-governance are met” (190). Largely concurring with a wide critical political economy literature, Held accuses Washington Consensus policies for undermining democratic self-governance at all levels, including the general erosion of communities’ “capacity to provide urgent public goods” (154).

How should this cosmopolitan intervention in economic life be carried out? Held notes that cosmopolitanism does not necessarily imply the end of nation-states themselves but rather only the end of the primacy they have enjoyed in the present world order. In his conception of cosmopolitanism, states and local institutions can indeed continue to play an important role in many areas of policy. As Held (Citation2010, 106) puts it, “recognising the complex structures of an interconnected world, political cosmopolitanism views certain issues as appropriate for delimited (spatially demarcated) political spheres (the city, state or region) while it sees others … as needing new, more extensive institutions to address them”.

National exercise of monetary sovereignty is thus not necessarily incompatible with Held's economic cosmopolitanism. If certain requirements are fulfilled, the state may be even the most appropriate body to exercise control in macroeconomic issues. In Held’s (Citation2010, 167) vision, cosmopolitan social democratic policies should be pursued “while ensuring, on the one hand, that different countries have the freedom they need to experiment with their own investment strategies and resources and, on the other, that domestic policy choices uphold basic universal standards” (my emphasis).

Held thus seems to embrace the autonomy of states in macroeconomic policy with some crucial caveats – he insists on a sort of (what I call) cosmopolitan condition on legitimate national exercise of economic policy. In order to meet this condition specifically with respect to the rights and capacities associated with monetary sovereignty, the national issuance of currency and the related conduct of monetary and fiscal policy would have to be at least compatible with the policy goals and strategies of other states as well as with certain universal standards.

A cosmopolitan condition on legitimate national exercise of monetary sovereignty can be developed further by viewing it as an instance of a global harm principle (see Linklater Citation2006, Citation2011). In a weak form, this condition would require each state to exercise its monetary sovereignty in a fashion that is (merely) compatible with basic cosmopolitan values and does not harm (interfere with) the ability of other states to conduct their own preferred versions of (similarly cosmopolitan) economic policies. Formulated more strongly, this condition would call for the national exercise of monetary sovereignty to positively promote cosmopolitan social democracy both at home and abroad.