Globalisation and Insecurity

Introduction

Globalisation is a term that is contested in academia from the perspective of semantics, theory, history and characteristics. The fact of the matter is that the world is converging in a myriad of aspects not limited to economics, politics and society. Reading the daily financial news will give Australians guidance to the possible outcomes to the current European debt crisis, so intertwined and interdependent is the state of the global economy. The assertion is that the world is globalised to the extent that events in one nation are having impacts on other nations, which would not be the case in a non-globalised world.

This essay does not subscribe to the theory that globalisation is the gradual implementation of economic interdependency and internationalisation as Shaw would argue¹, rather, it adopts the view as put forward by Ellwood:

“Globalisation is a new word which describes an old process: the integration of the global economy that began in earnest with the launch of the European colonial era five centuries ago. But the process has accelerated over the past quarter century with the explosion of computer technology, the dismantling of trade barriers and the expanding political and economic power of multinational corporations.”²

At the heart of the rapid acceleration of the process of globalisation are the technological advancements which have provided a networked global platform from which globalisation advanced and continues to advance like wild fire. The past quarter century has seen the development of mobile phones, the internet, affordable international transport amongst other developments which have been overcoming the barriers of space and time³.

Globalisation has also forced a conceptual rethink in regards to security. The Cold War school of thought of threats to national security posed by foreign militaries is shifting to a paradigm of human security and threats that easily transcend state borders and boundaries Globalisation and Insecurity Pasquale Kabi riding on the back of the forces that drive globalisation, technology⁴. This article sets out to argue that globalisation has contributed to growing insecurity in the international system. Broad examination is made of the globalised economy, technological advancements that fuel globalisation and the globalisation of terrorism and their contributions to insecurity.

The globalised economy

Economic security has long been a concern for governments, globalisation has worked to redefine the way in which economic security is sought as the concern has shifted away from the threat of foreign governments interfering with the state’s domestic (and if not globalised, insular) economy⁵. As Kahler explains following the long hard lessons of the Asian financial crisis of 1997-1998:

“Economic vulnerability to other governments no longer loomed large among security threats. Even the new transnational security threats that accompanied more open borders paled in significance when compared to the risks brought home by the crisis. Instead, a new vulnerability to international markets and an awareness of the economic and political volatility imported through those markets became central to a redefinition of economic security.”⁶

Global financial crisis (its lingering effects), enormous corporate bail outs, subprime mortgage bubble, the shaky fate of the Euro zone are all contemporary issues that have arisen due (in full, part or by connection) to the globalised economy⁷. Though it can be argued by the proponents of the school of thought that globalisation is not directly responsible for the aforementioned issues⁸, it is without a doubt that these events have had marked, significant and wide reaching ramifications for the global economy at large. In Australia alone, the global financial crisis gave birth to a spate of extraordinarily costly policy responses, engineered by Prime Minister Kevin Rudd’s government (in the form of bank deposit guarantees, rounds of economic stimulus totalling over $50 billion AUD, infrastructure projects and reserve bank activity to stimulate demand⁹ ) with the goal of mitigating the effect of the global financial crises (GFC) domestically¹⁰, a proposed solution to a problem originating in the U.S.A.

Lax monetary policy and the inherent laissez faire nature of liberal capital philosophy are blamed for the GFC of 2007-2008¹¹ which continues to have an effect on the housing market. The truly global scope of the effects felt of the GFC are testament to the integrated and entwined nature of the globalised economy. In the European Union, the effects of the GFC were felt immediately with write downs and significant credit losses among some large European Banks, the estimates of the cost of the GFC in October of 2008 was $323.3 billion Euros¹². Clearly, the interdependent nature of the financial system exposed the greater economy to insecurity at the event of the GFC as seen by its effects in the Australian and European examples cited.

The global economy has not only been threatened by problems originating in the U.S.A., Europe and the destabilisation of the Euro zone is the single greatest contemporary threat to the global economy. Though it can be argued that the European crisis was initially sparked by the GFC, the underlying debt problems face by Greece and Italy would have eventually been uncovered due to the sheer volume of debt, 340 billion Euro in Greece’s case¹³ and 1.9 trillion Euros as owed by Italy¹⁴, both nation’s debt level far surpassing annual GDP¹⁵. In the case of Greece, Lewis argues that the fundamental issue which is the driving force behind the debt crisis is that of distrust¹⁶. According to Lewis, the Greek population’s distrust of the government is materialised by their unwillingness to pay government taxes, a practice that is engrained and not punished by law¹⁷. Herein lies a great incompatibility of economic ideals and practice between the Greek populace and the Germans, who will be substantially financially burdened in the event of a Greek bankruptcy or further bailout¹⁸.

Examining the human security perspective of the globalised economy, Nafeez asserts that globalisation has unequivocally been a driving force behind human insecurity, specifically in the developing world¹⁹. Nafeez’s argument centres on the assertion that the rules and regulations driving globalisation promote and benefit trans-national corporations (TNC) as well as the concentration of power with the developed world economies²⁰ implying that globalisation in the economic sense is selective and limited to developed or growing economies. By contrast, Nafeez cites statistic data²¹ indicating that while globalisation has indeed fostered positive outcomes, there has not been a sharing of the spoils given that five sixths of the population live in need²².

The effects of economic insecurity leading to human insecurity are not unique to developing states. Domestically, in Australia, the immediate effects of the GFC were felt in the form of a sharp decline in the value of the Australian dollar²³.

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¹ Shaw, M. (1997). The State of Globalization: Towards a Theory of State Transformation. Review of International Political Economy, Vol 4-3 . P.497.

² Ellwood, W. (2001). The No-Nonsense Guide to Globalisation. Verso; London. P.12.

³ Ibid. P.18.

⁴ Rudolph, C. (2003). Globalization and Security. Security Studies, 13 (1), 1-32. P.32.

⁵ Kahler, M. (2004). Economic Security in an Era of Globalisation: Definition and Provision, The Pacific View. Vol 17 No. 4. P.486.

⁶ Ibid P.490.

⁷ The opposite, insular state economies would not have direct global effects.

⁸ As pointed out by Carmassi et all (2009) subprime speculation and housing downturns are not unique to globalised economies, however, the consequences (within a globalised economy) transcend state boundaries.

⁹ Chesters, J. (2010). The Gobal Financial Crisis in Australia, The Australian Sociological Association. Accessed on the world wide web on the 4th of November 2011: http://www.tasa.org.au/uploads/2011/01/Chesters-Jenny.pdf

¹⁰ McKibbin, W. & Stoeckel, A. (2010). The Global Financial Crisis: Causes and Consequences. Asian Economic Papers, 9 (1), 54-86. P.62.

¹¹ Carmassi, J., Gros, D., & Micossi, S. (2009). The Global Financial Crisis: Causes and Cures. JCMSJOURNAL OF COMMON MARKET STUDIES, 47 (5), 977-996.

¹² STRATFOR (2008). The Financial Crisis in Europe. Accessed on the world wide web on 1st November 2011: http://www.stratfor.com/analysis/20081012_financial_crisis_europe.

¹³ STRATFOR (2011). The Financial Crisis in Europe. Accessed on the word wide web on 5th November 2011: http://www.stratfor.com/analysis/20081012_financial_crisis_europe.

¹⁴ Squires, N. (2011). Italy’s Debt Crisis: Doomed by Curruption, Bloated Bureaucracy and Poor Productivity, The Telegraph. Accessed on the world wide web on 5th November 2011: http://www.telegraph.co.uk/finance/financialcrisis/8880410/Italys-debt-crisis-doomed-by- corruption-bloated-bureaucracy-and-poor-productivity.html

¹⁵ STRATFOR (2011). The Financial Crisis in Europe. Accessed on the word wide web on 5th November 2011: http://www.stratfor.com/analysis/20081012_financial_crisis_europe.

¹⁶ Lewis, M. (2011) Lack Of Trust Underlies Greece's Debt Problem, NPR Morning Edition (Journal Article).

¹⁷ Ibid.

¹⁸ Ibid.

¹⁹ Nafeez, A. (2004). The globalization of insecurity: how the international economic order

undermines human and national security on a world scale. Historia Actual Online, 2 (5), 113-126. P.119.

²⁰ Ibid. P.119.

²¹ This data indicates that in the developing world; 34 countries reported shorter life expectancy, in 14 nations there was an increase in children dying before the age of nine and stating that five sixths of the world’s population live in need. This data pertains to the year 2003.

²² Nafeez, A. (2004). The globalization of insecurity: how the international economic order

undermines human and national security on a world scale. Historia Actual Online, 2 (5), 113-126. P.121 - 123.

²³ Chesters, J. (2010). The Gobal Financial Crisis in Australia, The Australian Sociological Association. Accessed on the world wide web on the 4th of November 2011: P.3.