(FORTUNE Magazine) – Not so long ago the annual economic summit meetings of the world's richest nations (this year's was in late June in Lyon, France) were a very big deal. They were preceded by drum rolls of newspaper articles and trumpet blasts of position papers. The world's media and markets waited breathlessly to see what new promulgations would be forthcoming about debts, the dollar, and the developing world.

These days the summits are a lot more low key. In fact it's not much of a stretch to say that they have become little more than photo ops, at which the leaders of the G-7 nations (short for the "Group of Seven": the U.S., Japan, Germany, France, Italy, Great Britain, and Canada) strut their stuff, make bland declarations about noncontroversial issues, and go home.

One reason the G-7 meetings seemed more momentous in the Eighties is that the economic problems of that decade were more immediate than today's. Back then we had the Third World debt crisis, the widely feared "hard landing" of the U.S. dollar, and the reverberations from the 1987 stock market crash. Today we worry about fuzzier things, like slower-than-usual growth and rising entitlement spending. Another reason things seemed more exciting in the Eighties is that some of that decade's drama was overblown--the result of hype from such headline-seeking summiteers as James A. Baker III (U.S. Treasury Secretary in the latter Reagan years).

But the real reason no one takes the G-7 so seriously today is that there has been a widespread failure of faith in the very idea of international economic cooperation. Fewer economists and politicians these days believe that the nations of the world are really able to coordinate their policies to produce better global outcomes. Fewer are confident that--to take a specific example--nations can usefully manipulate currency exchange rates. Instead, world economic opinion has arrived at a new consensus through trial and error that goes like this: What we do know is that countries will be better off, in the long run, if they minimize inflation and reduce their budget deficits. If everyone pursues those goals independently, they will foster international stability and, hence, encourage stronger economic growth.

So should we forget about the more institutional approaches to international economic cooperation embodied in the G-7 summit process? Before we say yes, there's a school of pro-cooperation "internationalists" who still make the case for preserving, reconfiguring, and expanding the economic summit process. The case is made very powerfully--passionately, even--in Global Economic Leadership and the Group of Seven, by C. Fred Bergsten, a former Treasury official and director of the Washington-based Institute for International Economics, and C. Randall Henning, a professor at American University.

Bergsten and Henning believe in their bones that international cooperation could vastly improve the world economic condition. They recount the demise of the G-7 process in detail, painting scenes of bureaucratic infighting, bad communication, and political rivalry. Their conclusions are stark: The G-7 hasn't just lost effectiveness over the past decade. "Indeed it has totally failed to act on a wide range of issues in which global leadership was required."

Some of their grander arguments are naive. They argue, for example, that the world economy has been weak in the Nineties "despite the ready availability of a coordinated growth strategy that the G-7 could have adopted throughout the early part of this decade." One element of that strategy is that the U.S. should have cut its budget deficit much faster in the early Nineties. Now whether that would have been a good policy is arguable; the idea that it was "readily available" is not. There was absolutely no way that the U.S.--struggling out of the 1990 recession at the same time it hung tough on deficit reduction--could have mustered the political or popular support for even bigger tax increases or spending reductions.

But even those who are skeptical of the philosophical points may find themselves agreeing with some of Bergsten and Henning's prescriptions. Perhaps the most intriguing is that we replace the G-7 with a G-3: just the U.S., Japan, and one entity representing Europe. As anyone familiar with group dynamics knows, three is a good size for productive meetings: With seven, things start getting unwieldy. That's especially true if some of the parties have peculiar agendas. Think of Germany's obsessive fear of inflation, of the French affinity for bureaucracy, of Italy's long-standing commitment to fiscal irresponsibility and policy chaos.

Perhaps with a slimmed-down G-3 and more realistic expectations of what coordination can achieve, the summit process, as the internationalists contend, could finally work to keep lines of communication open, provide early warnings of emerging economic problems, and allow for swift responses when crises occur. Without such changes, there's reason to worry that it won't.