Globalization and national governance: Antinomy or interdependence?

Review of International Studies

Volumn 25, Issue 5, 1999, Pages 59-88

  Weiss, Linda ^a  

^a NONE

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EID: 84980022687     PISSN: 02602105     EISSN: 14699044     Source Type: Journal    
DOI: 10.1017/S0260210599000595     Document Type: Article

References (83)

1. Wolfgang H. Reinicke, Global Public Policy: Governing Without Government? (Washington, DC, 1998) offers an unusually rigorous and coherent statement of this position.
2. For a clear statement of the globalization thesis and the way global flows are seen to impact on the state, see Jan Aart Scholte, ‘Global Capitalism and the State’, International Affairs, 73:3 (1997), pp. 427-452.
3. See also, Susan Strange, The Retreat of the State (Cambridge, 1996);
4. Philip G. Cerny, ‘Globalization and Other Stories: The Search for a New Paradigm for International Relations’, International Journal, 29: 1 (1996), pp. 617-637;
5. Stephen J. Kobrin, ‘The Architecture of Globalization: State Sovereignty in a Networked Global Economy’, in J. H. Dunning (ed.), Governments, Globalization, and International Business (Oxford and New York, 1997);
6. David Held, Anthony McGrew, Jonathon Perraton, and David Goldblatt, Global Transformations (Cambridge, 1999).
7. See, in particular, Michael Mann, The Sources of Social Power, vol. 1 (Cambridge, MA: 1986).
8. Scholte, ‘Gobal Capitalism and the State’.
9. The important exception appears to be derivatives trading. See in particular, William D. Coleman, ‘Private Governance and Democracy in International Finance’, Institute on Globalization and the Human Condition, Working Paper Series, February (1999), pp. 14–15.
10. who carefully dissects the domestic, international, and global aspects of financial systems and their governance. One could argue that the evolution of offshore debt or credit markets, designated as ‘Euromarkets’ to distinguish them from national financial systems, are a further important exception. These banking and securities markets, the basis for much of the global capital market development over the past 25 years, remove borrowing and lending from the jurisdiction and regulatory influence of national authorities. Thus, for example, the markets for dollar-denominated loans, deposits, and bonds in Asia or Europe are not subject to US banking or securities regulations. The differences in interest rates and other conditions that exist beween domestic and external markets stem mainly from the extent to which national regulatory constraints can be avoided. Yet even in offshore debt markets, where the role of territorially-based domestic institutions is marginal, at least on a day-to-day basis, ‘every international bank is ultimately accountable to a single national regulator’ (Kapstein, 1994).
11. The phrase is from Michael Borrus and John Zysman, ‘Globalization with Borders: the Rise of Wintelism as the Future of Global Competition’, Industry and Innovation, 4: 2 (1997), pp. 141-166.
12. On the overstatement and underevidencing of ‘capital mobility’, see the thought-provoking comments in M. Pollin (ed.), Globalization and Progressive Economic Policy (Cambridge, MA: 1998).
13. On the post-Cold War sentiment that borders are inimical to peace, see Barry S. Strauss, ‘A Truly Crucial Chapter In the History of Borders’, International Herald Tribune, 30 April (1999), p. 9, Director of the Peace Studies programme at Cornell University.
14. See, in particular, Anthony D. Smith, Nations and Nationalism in a Global Age (Cambridge, 1995).
15. See 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, NY, 1996);
16. Paul Hirst and Graham Thompson, Globalization in Question (Cambridge, 1999);
17. Andrew Glyn, ‘Internal and External Constraints on Egalitarian Policies’, in D. Baker, G. Epstein, and R. Pollin (eds.), Globalization and Progressive Economic Policy (Cambridge, MA: 1999).
18. Glyn, ‘Internal and External’, p. 402.
19. For a balanced account of trends in international production and finance before 1914, see Paul Bairoch and Richard Kozul-Wright, ‘Globalization Myths: Some Historical Reflections on Integration, Industrialization and Growth in the World Economy’, UNCTAD discussion papers, 113:March (1996).
20. Coleman observes that in the most ‘globalized’ sector, that of finance, the emergence of global markets in most areas of financial services has run in parallel and complemented processes of internationalization based on distinct national financial systems; see ‘Private Governance and Democracy in International Finance’, p. 5; On the rejection of the global-national dualism in international production, see Borrus and Zysman, ‘Globalization with Borders’.
21. As Bairoch and Kozul-Wright observe, ‘behind the basic disagreement as to whether globalization will lead to immizeration and economic crisis or to faster economic growth and convergence, there is a widely shared assumption that the role of the State in managing economic activity has already diminished under globalization pressures and will become irrelevant in the truly global economy’, ‘Globalization Myths’, p. 4.
22. There are several noteworthy exceptions to this negative-sum reasoning, among them those deriving from close analysis of international finance, production, and public policy, such as William D. Coleman, Financial Services, Globalization and Domestic Policy Change: A Comparison of North America and the European Union (Basingstoke, 1996);
23. Reinicke, Global Public Policy; and Borrus and Zysman, ‘Globalization with Borders’. For an argument that globalization has at times increased state sovereignty in the Southeast Asian growth economies, see Richard Stubbs, ‘States, Sovereignty and the Response of Southeast Asia's “Miracle” Economies to Globalization’, in D. Smith, D. J. Solinger and S. Topic (eds.), State and Sovereignty in the World Economy (London, forthcoming).
24. Questioning of the global-national dualism is also a feature of recent conceptual analyses, in particular, Michael Mann, ‘Has Globalization Ended the Rise and Rise of the Nation-State? Review of International Political Economy, 4:3 (1997), pp. 472–496;
25. and Ian Clark, ‘Beyond the Great Divide: Globalization and the Theory of International Relations’, Review of International Studies, 24 (1998), pp. 479ff. For many such writers a legitimate concern is that the regulatory bodies emerging out of intergovernmental cooperation to oversee global flows are not subject to democratic control—a sentiment neatly encapsulated in Scholte's statement that ‘contemporary globalizing capital presents a challenge not to the survival of states, but to the realization of democracy’, ‘Global Capitalism and the State’, p. 452. That may nonetheless downplay a more serious possibility. For if we turn our focus to ‘threats’ rather than ‘challenges’, we would have to conclude that some aspects of contemporary globalizing capital present a major threat not to the system of nation-states as such, but to the stability of the world economic order. Indeed, in the most globalized, risk-intense markets of all— derivatives—it is not even the absence of democracy, but the absence of any form of public governance that appears truly threatening. See Coleman, ‘Private Governance and Democracy in International Finance’.
26. Among the many authors discussing this topic, see Robert O. Keohane, ‘Sovereignty, Interdependence, and International Institutions’, in L.B. Miller and M.J. Smith (eds.), Ideas and Ideals (Boulder, CO: 1993);
27. Stephen D. Krasner, ‘Westphalia and All That’, in J. Goldstein and R.O. Keohane (eds.), Ideas and Foreign Policy (Ithaca, NY: 1993);
28. Gianfranco Poggi, The State: Its Nature, Development and Prospects (Stanford, CA: 1990).
29. G. John Ikenberry, ‘The Myth of Post-Cold War Chaos’, Foreign Affairs, 75: 3 (1996), pp. 79–91.
30. On the role of the IMF in promoting the postwar vision of liberal internationalism, see Louis W. Pauly, ‘Promoting a Global Economy: The Normative Role of the International Monetary Fund’, in R. Stubbs and G. Underhill (eds.), Political Economy and the Changing Global Order (New York, 1994).
31. See Glyn, ‘Internal and External Constraints on Egalitarian Policies’, p. 397. Emphasis added.
32. The idea that national governments were in control of their economies, independently pursuing their pReferences took hold in the three decades after 1945, when trade openness was still a highly managed affair, and financial liberalization had barely begun. See Meghnad Desai, ‘Global Governance’, in M. Desai and P. Redfern (eds.), Global Governance: Ethics and Economics of the World Order (London and New York, 1995).
33. Mark W. Zacher, ‘The Decaying Pillars of the Westphalian Temple: Implications for International Order and Governance’, in J. N. Rosenau and E.-O. Czempiel (eds.), Governance Without Government: Order and Change in World Politics (Cambridge, MA: 1992).
34. See, for instance, David Held and Anthony McGrew, ‘The End of the Older Order? Globalization and the Prospects for World Order’, Review of International Studies, 24 (1998), pp. 219–243.
35. Many assess this development in normative terms: as ‘a good thing’, on the assumption that any process or institution which dilutes sovereignty must be good for world peace or world freedom. The Enlightenment thinkers thought along parallel lines, advocating commerce as an antidote to war. See Albert Hirschman, The Passions and the Interests: Political Arguments for Capitalism Before Its Triumph (Princeton, NJ: 1977). Such reasoning culminated in Adam Smith's celebrated study, The Wealth of Nations, in which he proposed that increasing international trade would eliminate war between nations.
36. See Robert O. Keohane, International Institutions and State Power (Boulder, CO: 1989); for a recent contribution to, and defence of, the realist position, which examines the problem of relative gains, see Joseph Grieco, ‘Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal Iinstitutionalism’, in D. Baldwin (ed.), Neorealism and Neoliberalism: the Contemporary Debates (New York, 1993).
37. ‘International institutions: can interdependence work?’, Foreign Policy, 110 (1998), p. 84.
38. See Stephen M. Walt, ‘International Relations: One World, Many Theories’, Foreign Policy, 110 (1998), p. 46.
39. See, for example, David Held and Anthony McGrew, ‘The End of the Old Order? Globalization and the Prospects for World Order’, Review of International Studies, 24 (1998), p. 235.
40. ‘Reflections on Managing Global Integration’, paper presented at the Annual Meeting of the Association of Government Economists, New York City, 4 January (1999), p. 10.
41. Both Japan and Germany, for example, traded in their militarism after 1945 for a more pacific identity, concentrating on economic strength; but that transformation required the foundation of shattering defeat on which national shame could help reshape national purpose while admission to the international community could keep it on course. See Peter Katzenstein (ed.), The Culture of National Security (New York, 1996).
42. On the persistence of capitalist diversity, in spite of liberalizing reforms, see in particular Steven Vogel, Freer Markets, More Rules (Ithaca, NY: 1996), and.
43. Vivien Schmidt, ‘Still Three Models of Capitalism? National Adjustment to Globalization and Europeanization’, unpublished paper, Boston University, 16 May (1999).
44. See Linda Weiss, The Myth of The Powerless State (Ithaca, NY and Cambridge, 1998), ch. 7.
45. The important qualification is that if states enter such alliances from a position of structural and organizational weakness or ideational uncertainty, they are more prone to ‘capture’ by business and to exploitation by other states Hence the greater likelihood of a lopsided or hierarchical relationship emerging out of such power imbalances. See Peter Evans, Embedded Autonomy (Princeton, 1995) and.
46. Weiss, The Myth of the Powerless State, ch. 3.
47. Mann develops this argument at length in Volume I of The Sources of Social Power (1996).
48. Guy B. Peters, ‘“Shouldn't Row, Can't Steer”: What's a Government to Do?’, Journal of Public Policy and Administration, 12:2 (1997), p. 54.
49. Duane Swank, ‘Funding the Welfare State: Globalization and the Taxation of Business in Advanced Market Economies’, Political Studies, 46:4 (1998), p. 691.
50. Political Studies.
51. Dani Rodrik, Has Globalization Gone Too Far? (Washington, DC: 1997), Table 4.5.
52. Swank, ‘Funding the Welfare State’, p. 691.
53. For a state-of-the-art analysis on this whole topic, See Martin Rhodes, ‘The Implications of Globalization and Liberalization for Income Security and Social Protection’, Robert Schuman Centre, European University Institute, Florence (1999);
54. See also OECD, National Account Statistics, vol. II, Country Tables (Paris, various years), which show almost universally that the trend is towards increasing welfare expenditure levels in the 1990s, compared with the 1980s.
55. Paul Pierson, ‘The New Politics of the Welfare State’, World Politics, 48: 2 (1996), pp. 143-180.
56. See Gosta Esping-Andersen (ed.), Welfare States in Transition: National Adaptations in Global Economies (London, 1996); and.
57. Martin Rhodes, ‘The Implications of Globalization and Liberalization for Income Security and Social Protection’.
58. Colin Crouch argues that decline in the demand for low-skilled labour is not due to increased international competition per se. It is because the welfare state had grown to its limits, especially with respect to its financing; increased pressures on the public purse have curtailed job creation schemes in the public sector, an important, widespread means of creating employment for relatively low-skilled workers in the 1970s and early 1980s. See Colin Crouch, E. Hernerijck, and David Finegold, ‘The Skill Predicament in the Open Economy’, Conference paper for ‘Relations between Social Protection and Economic Performance’, Florence, EUI, European Forum, Centre for Advanced Studies, May 6-7, (1999), p. 32.
59. See Colin Crouch, David Finegold and Marie Sako (eds.), Are Skills the Answer?: The Political Economy of Skill Creation in Advanced Industrial Economies (Oxford, 1999).
60. Gosta Esping-Andersen, Social Foundations of Postindustrial Economies (Oxford, 1999).
61. See, for example, Robert Reich, The Work of Nations (New York, 1992).
62. See, for example, L. Branscomb and J. Keller (eds.), Investing in Innovation (Cambridge, NY: 1998).
63. Yves Doz and Gary Hamel, Alliance Advantage: The Art of Creating Value Through Partnering (Harvard, MA: 1998).
64. See, for example, Weiss, The Myth of the Powerless State.
65. See, for instance, Hirst and Thompson, Globalization in Question, ch. 9.
66. Globalization in Question.
67. Globalists who reject the global-national dualism, however, do not necessarily accept this emasculated capacity interpretation (see, e.g., Scholte, ‘Global Civil Society: Changing the World?’, CSGR Working Paper no. 31 (1999), p. 23;
68. see also Richard Higgott, ‘Economics, Politics and (International) Political Economy: The Need for a Balanced Diet in an Era of Globalization’, New Political Economy, 4:1 (1999).
69. Chalmers Johnson, MITI and the Japanese Miracle (Berkeley, CA: 1982). We are of course talking in terms of broad ‘ideal types’. All states in reality combine both features; the purpose of the ideal type is to highlight and magnify those features which tend to predominate.
70. See Meredith Woo-Cumings (ed.), The Developmental State (Ithaca, NY: 1999).
71. For the argument that there are still three models of capitalism in spite of international integration, see Vivien Schmidt, ‘Still Three Models of Capitalism?’.
72. Steven Vogel, Freer Markets, More Rules.
73. See, for example, Woo-Cumings, The Developmental State;
74. Schmidt, ‘Still Three Models of Capitalism?’;
75. Lonny E. Carlile and Mark Tilton, Is Japan Really Changing Its Ways? (Washington, DC, 1998);
76. Weiss, The Myth of the Powerless State;
77. Linda Weiss, ‘Developmental States in Transition: Adapting, Dismantling, Innovating, not “Normalizing”’, Pacific Review, 13:1 (2000).
78. Indeed, during our most recent round of interviews with the Central Bank of China, conducted in Taipei in June 1999, it became clear that developmentalism is not just the central defining feature of the Ministry of Economic Affairs or the Committee for Economic Planning and Development; it is a fundamental orienting quality of the central bank. The regional financial crisis has provided a critical if unexpected test of Taiwan's developmental commitment and the result has been a reaffirmation of the latter, accompanied by a sharpening of the state's monitoring and coordinating powers, especially where short-term capital flows are perceived to threaten Taiwan's industrial competitiveness. These ideas are developed in Wan-Wen Chu and Linda Weiss, ‘Has state capacity survived liberalization and democratization in Taiwan?’ (forthcoming).
79. For the detailed argument, see Linda Weiss, ‘State Power and the Asian Crisis’, New Political Economy, 4:3 (1999).
80. See Vogel, Freer Markets, More Rules.
81. See Weiss, The Myth of the Powerless State.
82. John Hertz's term refers to ‘a world in which sovereign states recognize their interests in mutual respect for each other's independence and in extensive cooperation’, cited in Zacher, ‘The Decaying Pillars of the Westphalian Temple’, p. 100.
83. Lars Mjoset, ‘Atlantic, West-European and Nordic integration’, Department of Sociology and Human Geography, University of Oslo (1999), p. 12.