Socioeconomic Justice: Freeing People

Even if a universal human right to free international movement is rejected, one may still argue that affluent states have strong reasons of (global) socioeconomic justice to liberalize human movement. However, such a view is subject to important challenges. Some (Miller Reference Miller, Cohen and Wellman2005) object that (1) the demands of distributive justice do not apply to the global level while others (Ypi Reference Ypi2008) that (2) even if such demands do apply internationally, it is not clear that, empirically, opening borders would benefit the global worst off. Finally, others (Miller Reference Miller, Cohen and Wellman2005) contend that (3) even if the demands of distributive justice do apply globally and even if opening borders would benefit the global worst off, there can be alternative, better means to achieve the same end, such as sending aid to poorer countries or reforming international institutions. Perhaps, on grounds of justice, it is better to restrict rather than liberalize human migration.

I believe that the power of such objections is limited. With regards to (1), even those (Miller Reference Miller, Cohen and Wellman2005) who reject global egalitarianism would generally concede that ‘persisting global injustice does impose on rich states the obligation to make a serious contribution to the relief of global poverty’. The question then becomes: would a policy of (largely and progressively) open borders be an effective means to relieve global poverty? Answering this question conclusively would require assessing counterfactuals that may simply be impossible to reliably assess – how many people would move were borders to become open? The available empirical evidence does, however, provide some reason for hope. A significant number of macro-level analyses (Acosta et al. Reference Acosta2008; Yoshino, Taghizadeh-Hesary, and Otsuka Reference Yoshino, Taghizadeh-Hesary and Otsuka2017; see also Oberman Reference Oberman2015 for a more extensive review), which focus on cross-country national-level poverty, show that international migration overall reduces global poverty. The main causal mechanism is provided by the level of remittances which, as we saw, are a basic-liberty-protected kind of capital movement. Even those who caution against macro-level analyses, noticing that the size of the effects of remittances on poverty reduction varies considerably country by country, would nevertheless agree that free movement significantly benefits the migrants themselves (see, for example, Stillman et al. Reference Stillman, Gibson and Rohorua2015; Gibson et al. Reference Gibson, Mckenzie, Rohorua and Stillman2018) and, through remittances, their immediate families (Bertoli and Marchetta Reference Bertoli and Marchetta2014; McKenzie, Theoharides, and Yang Reference McKenzie, Theoharides and Yang2014).

But, of course, those who support (2) could respond that, insofar as immigration is something that only the relatively affluent can afford, it is, at most, only their relatively affluent families that would benefit from a policy of open borders. Further, the flight of human capital – so-called ‘brain drain’ – that results from skilled workers leaving their country of origin has notorious harmful consequences for developing economies (Marchiori, Shen and Docquier Reference Marchiori, Shen and Docquier2013).

These considerations are, however, insufficient to support (2). For one thing, while it is true that the desperately poor rarely migrate, the great majority of migrants from developing countries are still poor according to global standards. More importantly, the fact that the very poor are often neither a migrant nor a member of a migrant's household does not mean that they do not benefit from the aggregate effects of wealthier migration. Indeed, individual and household-level poverty reduction from migration has effects on national-level poverty. Emigration often leads to increased wages for non-emigrants in origin countries, particularly in the short term, which can in turn positively affect national poverty levels (Martínez and Yang Reference Martínez and Yang2006).

We should also ask: why don't the very poor migrate more often? The high financial costs of migrating, the lack of networks that can help navigate bureaucratic constraints, and policy choices that impose barriers on would-be migrants are the main factors that impede migration by the very poor (Murrugarra, Larrison, and Sasin Reference Murrugarra, Larrison and Sasin2011). Since all these factors are under human control, the fact that the very poor are less likely to migrate (together with the fact that global poverty would be significantly reduced by their migration) is an argument to open borders while also reducing the costs of migration.

But what about brain drain? Brain drain can have harmful consequences for developing economies but, sometimes, for the reasons explained above, even the migration of highly skilled migrants can have positive aggregate effects on poverty reduction. And even in the case in which brain drain is a real concern, as Oberman (Reference Oberman2015) argues, ‘there is every indication that a fairly open immigration policy, coupled with selective use of immigration restrictions in cases in which brain drain is a real problem, offers effective means to reduce poverty’.

It seems, then, that the real disagreement should be on whether lifting immigration restrictions is the best or most appropriate means to fulfil the (at least sufficientarian) demands of international justice. Here the counter-argument, as raised in (3), is that there are other, better means, most obviously foreign aid, to address the same problem. However, as things stand, migration programmes are often more effective than foreign aid in improving economic conditions (see, for example, Gibson and McKenzie Reference Gibson and Mckenzie2014). Further, although foreign aid has the important advantage of not creating a situation in which someone must leave their country of origin to live a decent life (Oberman Reference Oberman2015), it has nevertheless the notorious disadvantage of creating conditions of dependence and domination between countries, as well as a perpetuation of institutional decay, often reproducing the very problems that the aid is meant to cure. Even if we assume that better, alternative means could be developed, it might take a long while. In the meantime, lifting (a large part of) immigration restrictions would seem to remain the most effective and, all things considered, morally superior means to reduce global poverty.

More importantly, it is unclear why we should regard international assistance and the lifting of immigration restrictions as mutually exclusive. One can agree that states should not use the fact that they have lifted most of their immigration restrictions as an excuse to fail to address global poverty in other ways, and still agree that economic justice demands that restrictions on human movement should be progressively lifted. The justice-based case for liberalizing human migration is thus very strong. But, what about capital movement?

Socioeconomic Justice: Restricting Capital

Do states have the same reasons of international economic justice to lift restrictions on the movement of capital as they do for the movement of people? Many economists are (perhaps surprisingly) in agreement with Barry and think that unrestricted capital mobility is necessary to improve the position of the global worst off in absolute terms.Footnote ⁶ How so? First, it is often assumed that the savings of rich countries can, uniquely, supply scarce investment funds in poor countries and that state restrictions that block access to foreign investment inhibit their growth and development. Second, it is assumed that free capital mobility is necessary to support free trade, which is an essential means of economic growth and development for many developing countries. If such assumptions are correct, like in the case of human migration, also in the case of capital movement a reduction in global poverty would seem to provide strong reasons for lifting restrictions. But how convincing are these assumptions?Footnote ⁷

The first problem concerns the relationship between savings and investment. Although it is true that the savings of the rich may, in principle, channel into productive investments that benefit the poor, to theoretically assume that this is a necessary relationship is problematic. First, savings that exist in the form of cash do not have to be productively invested, they can be hoarded as idle funds. Second, they can be invested speculatively in liquid securities in pursuit of momentary returns that do not necessarily benefit production and growth. For welfare-enhancing development, long-term productive investment is necessary. The main issue then is how developing economies can increase their rate of productive investment.

The answer is a well-functioning banking and credit system. Yet, the source of credit for productive investment need not be past savings. Indeed, global credit creation – and thus global investment – runs through channels that exist independently from savings (Borio Reference Borio2016). When banks grant loans, generating funds that often cross borders, they do not always directly draw from depositors' savings somewhere in the world. Rather, they simply create new deposits funded through chains of debt instruments. In theory, then, access to foreign savings offers nothing that a well-functioning national, regional, or even global system of credit creation cannot. It follows that free capital mobility may not, after all, be necessary to generate increases in investable funds for developing countries.

While poor countries with inadequate domestic financial systems may immediately benefit from tapping foreign savings in some circumstances, this comes with a long-term cost. Dependence on foreign inflows may only contribute to the persistence of an inadequate domestic financial system (IMF 2020). Regardless – as we shall see – due to capital flight, the costs of unrestricted global capital mobility can be high, outweighing the benefits.

What about the second claim that free trade and, more broadly, economic integration benefit the worst off and that capital mobility is necessary to achieve such benefits? Although there is no empirical obvious correlation between economic growth and unrestricted global capital mobility (Obstfeld, Shambaugh, and Taylor Reference Obstfeld, Shambaugh and Taylor2010), it is true that, since 1980, global poverty has reduced. This suggests a plausible case that the global worst off may have benefitted from recent global economic integration.

But what kind of integration? One reason for the reduction of global poverty is rapid economic development and poverty reduction in China and India (Alvaredo et al. Reference Alvaredo2018). Chinese development has depended upon foreign demand for goods and a multilateral system of global trade. Yet, the Chinese state has maintained many restrictions on capital inflows and has only recently moderately liberalized its capital account (Lin Reference Lin2015). This means that, even if the liberalization of international trade may have contributed to poverty reduction, unrestricted capital mobility is arguably not necessary to bring about benefits for the worst off in international trade.

But there is more. Unrestricted capital mobility comes with great costs for the worst off. For one thing, there is a notorious causal connection between unrestricted capital mobility and financial volatility. One leading study estimates that one-fifth of capital inflow surges to ‘emerging market economies’, which results in destabilizing capital flight, immediately followed by financial crises (Ghosh, Jonathan, and Mahvash Reference Ghosh, Jonathan and Mahvash2016). Such economies are three times more likely to suffer financial crises after large capital inflow surges. The typical emerging market economy experiencing high capital volatility grows 0.7 percentage points slower than it otherwise would. Call these the costs of financial destabilization. Importantly, there is no obvious way through which global investors, when initiating these disruptions, could compensate those who suffer the consequences of capital flight.

Furthermore, the policy tools that states must employ to cope with capital flight undermine economic development. To either prevent capital flight or to recruit fickle hot money once the capital flight has begun, states often raise the interest rate they pay to depositors willing to hold their currencies. Interest rate hikes only choke off the supply of domestic credit, hampering investment, growth, and employment (Rodrik and Subramanian Reference Rodrik and Subramanian2009). Call this the cost of ‘forgone economic development’.

Finally, to face off the threat of capital flight, developing economies tend to hoard enormous reserves of foreign exchange – currencies or assets denominated in foreign currencies like, say, US public debt (Dominguez, Hashimoto, and Takatoshi Reference Dominguez, Hashimoto and Takatoshi2012). However, the hoarding of foreign exchange reserves entails significant costs (Herzog Reference Herzog2019). As unspent idle funds, hoarded reserves are not spent on critical needs. Given that they are deflationary, they depress global interest rates and undermine global aggregate demand for the world's goods (further imposing costs on the global worst off, whose potential employment incomes often depend upon that demand). Call this the ‘opportunity costs of hoarding reserves’.

In sum, not only are the benefits of unrestricted global capital mobility for the global worst off doubtful, but a regime of unrestricted mobility also imposes severe costs (beyond the risks of costs imposition, which is itself a cost) on developing economies – costs which, given their character, cannot be fully compensated ex post and which further undermine the socioeconomic position of the global worst off. Such a system thus may well fail to improve and is likely to worsen the situation of the global worst off.

The result is that in the case of capital movement, unlike the case of human movement, international economic justice imposes on both developing and affluent countries a pro tanto duty to limit rather than to liberalize both outflows and inflows of a large part of (mostly speculative) capital to the extent that these limits are necessary to protect developing economies, where the global worst off are likely to reside, from the costs of financial destabilization, forgone economic development, and the opportunity costs of hoarding reserves. Consider the case of developing countries facing a threat of capital flight. Insofar as these countries often lack the institutional capacities to impose effective restrictions on investors' ability to leave, their attempt to restrict outflows must be coupled with limits on investors' ability to enter safer countries. Affluent countries thus have a pro tanto duty to limit capital inflows to prevent the flight of capital from developing countries. Therefore, while affluent countries have a pro tanto duty to take in more immigrants than they usually do, on grounds of justice, they have a parallel duty to keep out more capital than they usually do, on the very same grounds. To the extent that the obligation to reduce global poverty enjoys at least some lexical priority over domestic distributive justice, wealthy countries ought to adopt such limits, at least up to a threshold, even if these restrictions would make their domestic group of citizens worse off (within limits) than they would be in a state of affairs without those limits.

However, this argument does not apply to all kinds of capital movements equally. Remittances and productive, long-term investments do not pose the same threats of capital flight and financial volatility as short-term movements of so-called ‘hot money’, which constitute a very large part of capital mobility in the world today. Therefore, socioeconomic international justice provides a strong reason to restrict the latter kind of movement only. Whereas remittances are basic liberty-protected movements and should not be restricted, long-term productive investments are not protected by any basic liberty; however, states arguably have no reason of justice to restrict them and, indeed, may have good reasons to facilitate at least a part of them.

So far, I have argued that international economic justice provides states with strong reasons to lift restrictions on a large part of human movement while, at the same time, also providing them with equally strong reasons to impose restrictions on the movement of capital. It could be objected, however, that I have failed to take seriously the costs of brain drain – the flight of human capital. If the prevention of brain drain justifies imposing restrictions on human movement in the same way in which the prevention of capital flight justifies – as I have argued – imposing restrictions on capital movement, it may not be true that, all things considered, people should be much freer to move than capital, at least not on grounds of economic justice. I now turn to address this objection.

Objection: Brain Drain vs Capital Flight

How does the justice-based case for limiting human movement in the event of brain drain compare to the justice-based case for limiting capital movement in the event of capital flight?

In the case of brain drain, restrictions on movement are often justified (see, for example, Oberman Reference Oberman2013), by appealing to the following considerations: (1) brain drain harms those left behind by generating a lack of essential labour that cannot be adjusted for without imposing severe restrictions on the ability of skilled workers to move to another country and (2) in some cases, skilled workers are duty-bound to stay in their country of origin, such that restricting their movement does not amount to coercing them not to do what they have a right to do.

Similar to brain drain, as we have seen, capital flight also harms those who are left behind. We should thus ask whether similar considerations may justify, at least prima facie, restrictions on the ability of investors to relocate their capital in the case of a credible threat of capital flight. My view is that the case for restricting an investor's ability to exit is, all in all, much stronger than the case for restricting a skilled worker's ability to leave. Here is why.

First, although brain drain and capital flight can both have profound harmful effects, the negative effects of brain drain are arguably more predictable than those of capital flight. This is because capital moves more quickly, unpredictably, and in higher quantity than people. This is an obvious consequence of the fact that emigrating entails higher physical and psychological costs than the movement of capital. The result is that states have generally more time to develop policy solutions to either prevent or adjust for the losses of human capital than they have for the sudden loss of financial capital (except for reserves hoarding, which is itself harmful). In the case of an imminent threat of capital flight, restricting investors' ability to exit may be the only solution.

Second, restrictions on a person's right to physically relocate must pass a higher burden of proof than similar restrictions on an investor's right to pull out capital. As we discussed earlier, being forced to reside in a country where one does not want to be is a more profound attack on our capacity for self-determination than being prevented from reinvesting one's assets somewhere else while still maintaining rightful possession over those assets (preventing outflows is not the same as expropriation). But even if we assume, arguendo, that an investor's right to exit is as basic as a skilled migrant's right to exit this does not mean that investors and skilled workers have an equal duty to stay or that they can be equally expected to do so, even temporarily.

In the case of brain drain, a worker's requirement to stay, at least for a time, in his or her country of origin is sometimes said (Oberman Reference Oberman2013) to be grounded on (1) a civic duty to repay the state for its public investment in the worker's education, or on (2) a duty of assistance towards those who would be harmed by the worker's unconditioned departure. So, we should ask: can any of these rationales ground a duty to stay, at least for a time, in the case of investors? In the case of capital flight, it is generally foreign investors who pull out money from a foreign country. This implies that investors' duties to stay for a decent period cannot arguably be grounded on civic duties.Footnote ⁸ But what about assistance?

Following Oberman (Reference Oberman2013), we may argue that there is a general duty for skilled workers to stay in the case of brain drain because (i) many skilled workers from poor countries are likely to be better able to assist their poor compatriots than foreign skilled workers and (ii) it is likely to be less costly for a native skilled worker to stay in his/her home country than it is for a foreign skilled worker to move there. Skilled workers have a general duty to stay provided that (iii) they cannot provide assistance from abroad and (iv) they won't face unreasonably high costs in staying (2013, 437).

Whether skilled workers meet these conditions, especially the last two, is subject to contention. However, there are good reasons to think that investors can meet the above conditions even if skilled workers do not. With regards to (i) and (ii), foreign investors are also likely to be better able to assist the worst off by leaving their assets where they already are than other people (substitute investors) are by having to compensate for the losses incurred by pulling their assets out. There are no reasons to think that the costs of staying for the former are higher than the costs of compensation for substitute investors. Concerning (iii), while skilled workers can arguably provide compensation for the harm caused from abroad through remittances, as well as by later returning to their country of origin with a higher level of education and improved skills, no ex post investments can arguably be enough to compensate for the harms, including of financial destabilization, caused by the sudden flight of capital once that flight has already happened. Most importantly, concerning (iv), whereas the costs in terms of loss of autonomy and estrangement involved in being forced to physically stay in a country one wishes to leave are very high and it may be impossible to compensate them, the revenue losses of investors, even when judged as unreasonably high, can in principle be compensated ex post through reserves or other means, when and if appropriate.

Therefore, even if assistance may arguably not be able to ground a duty to stay, at least for a time, in the case of brain drain, it does justify an investor's duty not to engage in capital flight. This means that while states may well be regarded as violating people's rights when they place obstacles on free human movement to prevent brain drain, these same states do not violate investors' rights by restricting their ability to leave, for investors cannot have an unconstrained right to do what they have a duty not to do.Footnote ⁹ Indeed, states should make inflows of capital conditional on investors' willingness to stay for a period, particularly when states must limit outflows in response to a credible threat of capital flight.

All in all, international economic justice, even when understood in merely sufficientarian terms, provides strong reasons to largely liberalize the movement of people while also providing equally strong reasons to largely constrain the movement of capital. Further, the case for restricting capital movement in the case of capital flight is much stronger than the parallel case for constraining human movement in the case of brain drain. But what about culture?

Cultural Integrity: Freeing People, Restricting Capital

Even if one accepts that international economic justice provides affluent states with strong reasons for lifting immigration restrictions, states may still have other reasons for keeping those restrictions in place. One often cited reason is culture. It is sometimes argued that large inflows of immigrants lead to irreversible changes in the culture of the hosting country. Yet countries – the argument continues – have a fundamental interest in preserving their own culture, whether this is because there is something inherently valuable about cultural continuity or because such continuity is instrumentally necessary for the appropriate functioning and reproduction of institutions such as the welfare state (Miller Reference Miller, Cohen and Wellman2005).

According to some, however, the value of cultural continuity does not provide equally strong reasons to restrict capital movement. This is because, as Barry (Reference Barry, Barry and Goodin1992) puts it, ‘foreign capital has far less effect on the everyday life of a country [than inflows of foreign people]’ at least insofar as it is prevented from contributing to the funds of political parties.

Many compelling arguments have been made against the cultural case for restrictions on human movement (for example, Pevinick Reference Pevinick2009). Here, however, I do not want to dispute the validity of such a case. Instead, I will argue that, according to the cultural argument itself, at least in its most plausible version, we have stronger reasons to restrict the movement of capital than we have to restrict the movement of people.

For one thing, the advancement of global capitalism in recent years makes Barry's empirical claim about the moderate cultural effect of foreign capital inflows suspect at best and implausible at worst. It is enough to take a look at the ways inflows of foreign capital have changed the urban structure and architecture of many cities around the world: they have driven ever faster processes of gentrification, forcing people to leave the neighbourhoods where they grew up, and they have led to cheaper and easier access to technological goods that have changed people's everyday habits (see, for example, Sassen Reference Sassen2001). Beyond the aesthetics of cities and those who can afford to live in them, financial globalization has changed the music we listen to, the food we eat, the clothes we wear, and so on.

But there is more. Since cultural change is unavoidable, a minimally sound cultural argument for immigration restrictions must be able to differentiate between different kinds of cultural change. Why is it the case that cultural change brought about by immigration inflows is more problematic than cultural change that unavoidably derives from the adoption of new socioeconomic policies; from new ideas sparked by the random encounter between fellow citizens who had never met before; by the evolution of research and the publication of new books; a country's higher or lower birth rate in different historical periods; the discovery of new resources; and so on? The answer that is often given appeals to a distinction between what we may call exogenous vs endogenous processes of cultural change (see, Miller Reference Miller, Cohen and Wellman2005). Exogenous processes are externally imposed; they do not result from an exercise of self-determination on the part of those who are subject to those processes and cannot, therefore, be regarded as the result of their willingness or doing. Endogenous processes are, by contrast, initiated and guided or at least endorsed by those who are subject to them. It is often implied that cultural changes brought about by immigration flows are exogenous, unlike those changes that naturally flow from the free exercise of people's freedoms of, say, expression or association within a country that has chosen to protect those freedoms, or from policies adopted through exercises of political self-determination.

One can reasonably doubt whether, in practice, the distinction between endogenous and exogenous cultural change makes sense, to begin with. The point I want to make, however, is different. If the cultural change brought about by inflows of migrants is distinctively problematic because of it being exogenous, then inflows of capital are even more problematic. First, while people can engage with immigrants through deliberative interactions, they cannot engage in the same way with global capital. People who physically reside in the same territory can, in principle, openly confront each other's cultural differences. They can try, to some extent, to learn about each other's way of living and decide for themselves what aspects of different cultures they find attractive and what aspects they find unappealing or worth resisting. With time, they may eventually come to appreciate or simply find normal what they or their parents previously found curious or disturbing. This is, of course, not to say that culture is a precisely identifiable good that, like broccoli or potatoes, one may choose to consume or not at will. It is just to say that the process through which a culture might change as a result of the progressive inflows of new people happens partly through real interactions between those new people and the people who already reside within the country in question. This slow process leaves ample space for human judgement and need not bypass the agency of those subject to it. It need not be experienced as exogenous. And if the worry is that immigrants may outnumber pre-existing citizens when the time to vote comes, then a solution – if one buys the cultural argument – would be to make the path to full citizenship conditional on some degree of cultural assimilation.

With inflows of capital, especially if large, things are different. The cultural change brought about by large investments of foreign capital is often both sudden – again, capital moves much faster than people – and quite faceless. Those who drive the process – the capitalists – are not a local community with a specific identity and with whom direct interaction is possible. Indeed, most foreign investors do not even reside in the countries where their money goes. Consider how a city like London has changed in the last twenty years. Residential skyscrapers have been built and council houses have been transformed into luxury condos but very often those who bought apartments in those buildings do not live there; indeed they do not even reside in the UK. In the eyes of those who witness it, the aesthetic transformation that accompanies these changes has occurred a bit like magic. It is not clear who, if anyone, drove it, except for a general agent known as global capital – not the kind of agent one can deliberate or have affective interactions with. No requests for cultural assimilation are possible; indeed, local inhabitants often feel they are the ones being culturally assimilated by an anonymous process of globalization. It could be objected that people can direct the process of cultural change brought about by foreign investments through politics. After all, it is the state that can shape the direction of foreign investments. But states, including affluent ones, are often unable to domesticate foreign capital, especially when this is allowed to move in and out that fast. Capital mobility, as we saw, tends to undermine the state's capacity for political self-determination. This is not only because capital as a form of economic power can influence politics, even when no formal right to fund political parties is granted, but also because global capital imposes pressures on states that the latter cannot often resist without incurring great costs, as the previous section of this paper has discussed. These considerations, I believe, are enough to support the case that cultural integrity itself provides reasons to impose stronger restrictions on the movement of capital than on the movement of people.

Objection: The Prerogatives of States

It could be objected that I have failed to consider the prerogative of states to control their borders, whether these be territorial or currency borders, through immigration or capital mobility policies respectively. One could agree that states have reasons to behave in certain ways and still think that they ultimately have the right to control their borders as they wish. So, perhaps, capital should be freer to move than people simply because states have the prerogative to decide that this should be the case.

If by prerogative it is meant a state's legitimate authority to establish, without external interference, its immigration or capital mobility policy, then I do not deny, although I do not intend to affirm either, that states have any such prerogative (see Cordelli and Levy Reference Cordelli and Levy2022).Footnote ¹⁰ Rather, my account provides substantive principles to assess when the exercise of the authority in question counts as unjust or arbitrary, the result being that there are strong reasons to think that it is both unjust and arbitrary for states to impose strict restrictions on human movement while refusing to restrict capital movement.

If, by contrast, by prerogative it is meant a state's moral right, grounded on self-determination, to have a free hand in adopting whatever immigration or capital mobility policies it sees fit, then I reject the argument that states have any such unconstrained moral right. For one thing, the rights of states are generally limited by the fundamental claims of both citizens and foreigners. Even those who agree that states have a fundamental right to control their territorial borders would tend to also agree that this right is limited by the claims of refugees (see, for example, Miller Reference Miller, Fine and Ypi2016a; Miller Reference Miller2016b, although see also Wellman Reference Wellman2008). Similarly, the state's right to control the borders of their national currency is constrained by the basic liberties of individuals to move their property in and out of those borders for the protected purposes previously illustrated. Further, to the extent that basic principles of international justice are necessary to secure the background conditions for a system of politically self-determining, non-dominated, and legitimate states, such principles should be regarded as constraining the self-determination of those very states. The coordinated imposition of heavy restrictions on global capital mobility should be regarded as a necessary component of such background conditions, as it is necessary to avoid the costs of financial and thus political destabilization. Therefore, the obligation on the part of both developing and affluent countries to uphold such restrictions should be taken as constraining their political self-determination.