Governing the world is a recent idea. Even before the First World War, government was exercised within a specific geographical area, that of a nation or an empire, and apart from navigation on the high seas or the prevention of contagions, very few areas were governed by international rules. Of course, for trade to develop, businesses needed to be able to communicate from one country to another and defined standards for letters of credit were required. But the corresponding standards were either technical agreements with no direct political impact, or private arrangements in which governments had little say.
Government at global level or at least going beyond national borders operated essentially through rules. International agreements came under the legislative function, and disputes over their implementation were settled in courts or, more often, by arbitration. There was no place in this architecture for an executive function. This is understandable: in a democracy, an executive presupposes a parliament that sets the framework for its actions and oversees it. But to elect a parliament that goes beyond national borders, nations have to agree on the weighting of votes and accept being outvoted: two obstacles that the European experience confirms are very difficult to overcome.
Until 1914, therefore, there was no question of global governance. In what has become known as a “Westphalian” world (in reference to the Treaty of Westphalia which, in 1648, put an end to the Thirty Years’ War), each prince was master of his own country and had sovereignty over the rules that applied in his territory.
This all changed with the trauma of the two World Wars. The First led to an essentially diplomatic but ultimately unsuccessful attempt at a world order, with the creation of the League of Nations, which proved too weak to stop the escalation towards confrontation. The Second, on the other hand, led in July 1944 to the creation of a global economic, monetary and financial system: the Bretton Woods system, named after the New Hampshire town where the agreement was negotiated.
The agreement, which focused on monetary relations and the financing of reconstruction, established the International Monetary Fund (IMF) and the World Bank (officially the International Bank for Reconstruction and Development).