Globalization and the myth of the powerless state

New Left Review

Volumn , Issue 225, 1997, Pages 3-25

  Weiss, Linda ^a  

^a NONE

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EID: 0031517416     PISSN: 00286060     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (66)

1. This article draws on my forthcoming book, The Myth of the Powerless State: Governing the Economy in a Global Era, Policy Press, Cambridge 1998. I would like to thank William Coleman, Robert Wade, David Levi-Faur, John Ravenhill, James Richardson, John Hobson, Robin Blackburn and participants at the ANU seminar on 'Globalization' for their comments.
2. For an argument which is more open-ended than conventional accounts about the impact of economic globalization, see Jonathan Perraton, David Goldblatt, David Held and Anthony McGrew, 'The Globalization of Economic Activity', New Political Economy, vol. 2, no. 2, 1997, pp. 257-77.
3. For an informative study of north-south differences, see Richard Doner and G. Hawes 'The Political Economy of Growth in Southeast and Northeast Asia', in M. Dorraj, ed., The Changing Political Economy of the Third World, London 1995.
4. In response to the Thai crisis, a number of commentators have suggested that the real challenge for Thailand is to 'overhaul its bureaucracy' which, among other things, would mean increasing pay to improve its quality; see, for example, the Far Eastern Economic Review, 29 May 1997, p. 15; 12 June 1997, p. 74.
5. The Thai crisis has led both Malaysian and Indonesian governments to issue lending guidelines to local banks detailing how much they should spend on any one sector. See the Economist, 12 April 1997, p. 76; Far Eastern Economic Review, 12 June 1997, p. 72. But such measures proved too little and too late to head off the financial crisis.
6. The Thai crisis has led both Malaysian and Indonesian governments to issue lending guidelines to local banks detailing how much they should spend on any one sector. See the Economist, 12 April 1997, p. 76; Far Eastern Economic Review, 12 June 1997, p. 72. But such measures proved too little and too late to head off the financial crisis.
7. Support for this view comes not only from strong export growth, but also from the changing composition of exports as more countries shift manufacturing from lower to higher value-added - for instance, from textiles to computers. See, for example, the Asian Wall Street Journal, 16-17 May 1997; Far Eastern Economic Review, 19 June 1997, p. 63.
8. Support for this view comes not only from strong export growth, but also from the changing composition of exports as more countries shift manufacturing from lower to higher value-added - for instance, from textiles to computers. See, for example, the Asian Wall Street Journal, 16-17 May 1997; Far Eastern Economic Review, 19 June 1997, p. 63.
9. See, for example, K. Ohmae, The Borderless World, New York 1990; R.B. Reich, The Work of Nations, New York 1992; M. Horeman and A. Marshall, After the Nation State, London 1994.
10. See, for example, K. Ohmae, The Borderless World, New York 1990; R.B. Reich, The Work of Nations, New York 1992; M. Horeman and A. Marshall, After the Nation State, London 1994.
11. See, for example, K. Ohmae, The Borderless World, New York 1990; R.B. Reich, The Work of Nations, New York 1992; M. Horeman and A. Marshall, After the Nation State, London 1994.
12. This position is best expressed by the Economist (for instance, 7 October 1995, pp. 15-16) which holds that the state never had the (macroeconomic planning) powers it is said to have lost, and that those powers it continues to have are still (regrettably) significant.
13. This position is exemplified by Paul Hirst and Graham Thompson, Globalization in Question, Cambridge 1996.
14. A more extended analysis of the limits of globalization can be found in The Myth of the Powerless State, ch. 6.
15. See Andrew Glyn, 'Social Democracy and Full Employment', NLR 211, May-June 1995, p. 44.
16. For studies supporting such a conclusion, see among others the excellent chapter by Robert Zevin, 'Are World Financial Markets More Open?', in Tariq Banuri and Juliet B. Schor, eds, Financial Opennes and National Autonomy, Oxford 1992.
17. This paragraph draws on Robert Wade, 'Globalization and Its Limits: Reports of the Death of the National Economy are Greatly Exaggerated', in S. Berger and R. Dore, eds, National Diversity and Global Capitalism, Ithaca 1996, p. 66.
18. See, for example, Barbara Stallings and Wolfgang Streeck, 'Capitalisms in Conflict? The United States, Europe, and Japan in the Post-Cold War World', in B. Stallings, ed., Global Change, Regional Response, Cambridge 1995, p. 78.
19. Of course, foreign companies often borrow locally so that their investments go unnoticed in official FDI - for instance, Japanese investors already in Thailand borrowing from Japanese banks operating in Thailand - but this does not challenge the basic point about FDI composition: such locally raised funds probably find their way more readily into non-manufacturing ventures, especially construction, real estate markets, and financial services.
20. Glyn, 'Social Democracy and Full Employment', p. 49.
21. Hirst and Thompson, Globalization in Question, p. 72. Has M&A activity slowed in the 1990S, in keeping with the popular view that the United States economy is booming?
22. From the point of view of both sustainable world growth and the effectiveness of domestic policy, this imbalance is fir from a desirable trend. Compared with FDI which is more difficult to withdraw at short notice, large flows of portfolio capital have the potential to destabilize domestic policy, as seen in the Mexican crisis precipitated by the non-renewal of bonds By contrast, these distinctions have been more readily appreciated in East Asia where tighter controls have maintained short-term flows at a relatively low level.
23. Glyn, 'Social Democracy and Full Employment', pp. 48-9, Table 2.
24. Yao-Su Hu, 'Global or Stateless Corporations are National Firms with International Operations', California Management Review, Winter 1992; Hirst and Thompson, Globalization in Question; Winfried Ruigrok and Rob van Tulder, The Logic of International Restructuring, Londan 1995.
25. Yao-Su Hu, 'Global or Stateless Corporations are National Firms with International Operations', California Management Review, Winter 1992; Hirst and Thompson, Globalization in Question; Winfried Ruigrok and Rob van Tulder, The Logic of International Restructuring, Londan 1995.
26. Yao-Su Hu, 'Global or Stateless Corporations are National Firms with International Operations', California Management Review, Winter 1992; Hirst and Thompson, Globalization in Question; Winfried Ruigrok and Rob van Tulder, The Logic of International Restructuring, Londan 1995.
27. This argument is developed in a comparison of state capabilities and state-industry relations in Sweden, Germany, Japan and the East Asian NICs in The Myth of the Powerless State.
28. Data for this and the following paragraph are drawn from Wade, 'Globalization and its Limits', pp. 66-7.
29. See James Fallows, Looking at the Sun, New York 1994, p. 265.
30. Stallings and Streeck, 'Capitalisms in Conflict?', p. 73.
31. For references to this dispute, see Wade, 'Globalization and its Limits', p. 75. It should also be noted here that even in the major industrial economies, such as Germany, governments continue to shape net price differentials in borrowed funds by instituting particular tax regimes designed to favour certain kinds of investment.
32. Author's calculations. For the comparative data for 1950-93, see The Myth of the Powerless State, ch. 6.
33. Wade, 'Globalization and its Limits', p. 74.
34. See, for instance, The Economist, 17 October 1995, pp. 16-17.
35. For a fresh perspective on globalization tendencies more generally, see Michael Mann, 'The Global Future of the Nation State', paper presented at the Direction of Contemporary Capitalism Conference, Sussex, April 1996.
36. Ibid., p. 10. The contrasting 'globalist' argument can be found in Sven Steinmo, 'The End of Redistribution? International Pressures and Domestic Tax Policy Choices', Challenge!, vol. 37, no. 6, 1994.
37. Ibid., p. 10. The contrasting 'globalist' argument can be found in Sven Steinmo, 'The End of Redistribution? International Pressures and Domestic Tax Policy Choices', Challenge!, vol. 37, no. 6, 1994.
38. Zevin, 'Are World Financial Markets More Open?', p. 73.
39. By 'strong' state I mean not a coercive state but one with the organizational capacity for governing industrial transformation. For a theoretical analysis of the domestic foundations of state capacity as well as a discussion of its main varieties in Germany, Sweden, and East Asia, see Weiss, The Myth of the Powerless State. For a more general discussion of strong and weak states, see Linda Weiss and John M. Hobson, State and Economic Development, Cambridge 1995.
40. By 'strong' state I mean not a coercive state but one with the organizational capacity for governing industrial transformation. For a theoretical analysis of the domestic foundations of state capacity as well as a discussion of its main varieties in Germany, Sweden, and East Asia, see Weiss, The Myth of the Powerless State. For a more general discussion of strong and weak states, see Linda Weiss and John M. Hobson, State and Economic Development, Cambridge 1995.
41. For two recent accounts respectively emphasizing these conclusions, see Wade 'Globalization and its Limits' and Mann 'The Global Future of the Nation State'.
42. For two recent accounts respectively emphasizing these conclusions, see Wade 'Globalization and its Limits' and Mann 'The Global Future of the Nation State'.
43. Hirst and Thompson, Globalization in Question, p. 190.
44. G. John Ikenberry, "Funk de Siècle": Impasses of Western Industrial Society at Century's End', Millennium, vol. 24, no. 1, 1995, p. 125.
45. As the French discovered, industrial policy based predominantly on the tools of state-led industrial credit has proved vulnerable to financial liberalization. But the conclusion from the French case should not be 'the end of industrial policy' in general, but rather the need for new tools to meet the new transformative tasks set in motion by international competition.
46. Singapore's remarkably high savings rate (approximately 45 per cent of GDP) has been achieved through a system of forced savings which channels compulsory contributions from employers and employees to the Central Provident Fund (CPF). Singapore's dominant social security institution, the CPF contributed 30.1 pet cent of gross national savings in 1990. For a discussion of the government's use of these funds in a scope much broader than social security, see Garry Rodan, ed., Singapore Changes Guard, New York 1993.
47. For individual studies of Japan and Korea, see respectively Chalmers Johnson, 'The Institutional Foundations of Japanese Industrial Policy', California Management Review, vol. 27, no. 4, 1995; and Peter Evans, Embedded Autonomy, Princeton, NJ 1995. For a comparative analysis of Japan and the NICS, see Weiss and Hobson, States and Economic Development; on technological learning, see John A. Mathews, 'An Emerging Silicon Valley of the East: How Taiwan Created a Semiconductor Industry', California Management Review, vol. 39, no. 4, 1997.
48. For individual studies of Japan and Korea, see respectively Chalmers Johnson, 'The Institutional Foundations of Japanese Industrial Policy', California Management Review, vol. 27, no. 4, 1995; and Peter Evans, Embedded Autonomy, Princeton, NJ 1995. For a comparative analysis of Japan and the NICS, see Weiss and Hobson, States and Economic Development; on technological learning, see John A. Mathews, 'An Emerging Silicon Valley of the East: How Taiwan Created a Semiconductor Industry', California Management Review, vol. 39, no. 4, 1997.
49. For individual studies of Japan and Korea, see respectively Chalmers Johnson, 'The Institutional Foundations of Japanese Industrial Policy', California Management Review, vol. 27, no. 4, 1995; and Peter Evans, Embedded Autonomy, Princeton, NJ 1995. For a comparative analysis of Japan and the NICS, see Weiss and Hobson, States and Economic Development; on technological learning, see John A. Mathews, 'An Emerging Silicon Valley of the East: How Taiwan Created a Semiconductor Industry', California Management Review, vol. 39, no. 4, 1997.
50. For individual studies of Japan and Korea, see respectively Chalmers Johnson, 'The Institutional Foundations of Japanese Industrial Policy', California Management Review, vol. 27, no. 4, 1995; and Peter Evans, Embedded Autonomy, Princeton, NJ 1995. For a comparative analysis of Japan and the NICS, see Weiss and Hobson, States and Economic Development; on technological learning, see John A. Mathews, 'An Emerging Silicon Valley of the East: How Taiwan Created a Semiconductor Industry', California Management Review, vol. 39, no. 4, 1997.
51. The importance of MITI's industrial policy role since the mid-1970s is contentious and cannot be defended here. For the most recent attack on the Chalmers Johnson school, from the Kent Calder stable, see Scott Callon, Divided Sun: MITI and the Breakdown of Japanese High-Tech Industrial Policy, Stanford 1995. For a critique, see Weiss, The Myth of the Powerless State.
52. The importance of MITI's industrial policy role since the mid-1970s is contentious and cannot be defended here. For the most recent attack on the Chalmers Johnson school, from the Kent Calder stable, see Scott Callon, Divided Sun: MITI and the Breakdown of Japanese High-Tech Industrial Policy, Stanford 1995. For a critique, see Weiss, The Myth of the Powerless State.
53. See Warren Davis, ed., The Semiconductor Industry, Washington 1992,
54. For an intriguing account of the contests between Japanese and World Bank officials, representing opposing models of capitalism, in the making of the controversial World Bank report on East Asia, see Robert Wade, 'Japan, the World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective', NLM 217, pp. 3-36.
55. Business Week, 12 December 1994, p. 30.
56. Kent Calder, 'Japan's Changing Role in Asia', in The Japan Society, New York 1991, p. 27.
57. As cited in the Far Eastern Economic Review collection, Japan in Asia, Hong Kong 1991, pp. 116-17.
58. Chu, 'The East Asian NICs: A State-Led Path to the Developed World', in Stallings, Global Change, p. 221. Though the argument developed here is my own, discussion of the three strategies that follow is based on Chu.
59. In this respect, the management of ODA tend to follow Japanese practice, being tightly linked to trade and investment and focused on infrastructure projects of significance to the investment activities of national firms.
60. Chu, 'The East Asian NICs'.
61. The classic source for this concept is Chalmers Johnson, MITI and the Japanese Miracle, Stanford 1982. See also the important new collection edited by Meredith Woo-Cummings, The Developmental State (forthcoming).
62. The classic source for this concept is Chalmers Johnson, MITI and the Japanese Miracle, Stanford 1982. See also the important new collection edited by Meredith Woo-Cummings, The Developmental State (forthcoming).
63. Michael Lind, 'The Catalytic State', The National Interest, no. 27, Spring 1992, p. 3.
64. I am grateful to Victor Sumsky for the observation about Russia.
65. Ikenberry, 'Funk de Siècle', p. 124.
66. For an accomplished discussion of this issue, undertaken from an historical and comparative perspective, see John M. Hobson, The Wealth of States: A Comparative Sociology of International Economic and Political Change, Cambridge 1997.