Globalization: A contested concept, both analytically and normatively

Contents

1. Introduction

2. The main schools of thought
2.1 Hyperglobalists
2.2 Sceptics and intergovernmentalists
2.3 Open regionalists and transformationalists
2.4 New institutionalists
2.5 Ideationalists
2.6 Scholte’s supraterritoriality

3. Implications for the role of the nation-state

4. General remarks and conclusions

5. Bibliography

6. Appendix: Figures and tables

1. Introduction

“We don’t know what globalization is, but we have to act.”^[1] This sentence, from a peasant activist in North East Thailand interviewed in Bangkok on 10 June 2002, makes clear why ‘globalization’ is still one of the most contested concepts in recent international political economy. Global media has raised people’s awareness of the fact that ‘the world is moving faster than ever’. Reduced formal barriers to commerce (e.g. import tariffs)^[2] have helped world trade to grow faster than output^[3] and foreign direct investments (FDI) faster than trade^[4]. Multi-national corporations (MNC) with a global target market have entailed the threat of off-shoring and outsourcing, which exerts a constant downward pressure on wages in developed countries. The information and communication technology (ICT) revolution as well as the decreased transportation costs due to the airplane and containerization have accelerated a new division of labour. Moreover non-economic issues as the change of the nation-state role and the growing importance of transnational institutions are feeding the talks about globalization. Yet, just as the interviewed peasant above, nobody really knows what the exact topic is.

From the beginning of the 1980s, the period where many see the starting point of globality (according to Scholte (2002) the condition for globalization) to the anti-globalization riots of Seattle^[5] and Genoa^[6] nothing groundbreaking could clarify the confusion about ‘glo-blah-blah’^[7]. In Germany, an export champion that gained enormously from the integration of markets, the term ‘globalization’ still prompts feelings of fear and is associated with pay cuts and layoffs. Economists as Peter Bofinger and Hans-Werner Sinn have tried shed some light on the dispute between German neo-liberals and leftists but have found little resonance in politics. Obviously it is not easy to capture ‘globalization’ in a simple, universal definition.

From a semantic and etymological point of view the word ‘globalization’ might remind some pundits of the story of the “Tower of Babel”. In a Judeo-Christian context, this story is used to explain the variety of languages and communicational barriers on earth resulting from God’s divine chastisement after a united mankind had tried to reach heavens in the hubristic act of building the Tower of Babel. Obviously one can draw parallels to modern history and current events. Since the end of the Bretton-Woods system and especially after the end of the bipolarized world in the early 1990s humanity seemed to be able once again to pursue a common goal, economic prosperity, along the guidelines of the Washington consensus. This consensus claimed to provide affluence by the worldwide spread of democracy and free trade. The way in which the world developed in the last years economically, politically, culturally, technologically, etc. has been increasingly associated with the term ‘globalization’. Yet, there has been no neat and clear definition of it that would help to understand ‘what is going on’ and if it is something desirable or not. Instead, dissent on the exact meanings of the popular catchword is impeding progress in the debate on how best to guide mankind’s future towards brightness.

In discussions confronting globalization advocates and antiglobalizers the fundamental problem seems to be that none of them knows what exactly they support/oppose. In such a situation a fruitful outcome is impossible. As Scholte (2002) rightly points out, “definition is not everything, but everything involves definition”^[8]. In the second part of this essay we will try to give an overview of the main schools of thought explaining how they differ both analytically and normatively. Subsequently, we derive the implications of the different opinions for the role of the state, truly one of the major actors. Finally, we conclude summarizing the implications of our analysis for the initial question and for future studies.

2. The main schools of thought

Before characterizing the main schools of thought we should make a few general remarks on the settings that made globalization so contentious. According to Higott (2000)^[9], it was a change of mood that made globalization, initially driven by the neo-liberal Washington consensus, so highly contested. This mood swing was triggered by the following events. First, the failure of the OECD^[10] to establish a multilateral agreement on investment became one of the early victories for coordinated NGO^[11] opposition to the dominating neo-liberal stream. Second, the financial crises in East Asia in 1997 brought many to rethink the role of the state. The clash of different economic development models (Anglo-American way versus ‘developmental state’ approach) as well as the IMF’s ability to act and react in turbulent times came onto the agendas. Third, the WTO Summit in Seattle (1999) was another proof of the occasional possibilities of NGOs, such as ATTAC^[12], to intervene in the elitist decision-making and project their concerns worldwide on media screens. Fourth, regardless of the absence of funded evidence for causality, often the mere publication of economic data that correlates globalization with poverty and inequality lets many people think it is bad. Thus the antiglobalisers have been growing in numbers.

When defining time frame for our debate some authors have argued that it came in several waves. Hay & Marsh (2001) differentiate between three waves: the first was dominated by hyperglobalist literature, the second by ‘sceptic’, refuting views and the third by more nuanced, ready to compromise works. Strange (2003)^[13] distinguishes even four waves. The first and the second being equal as before, he adds a third structural dependency approach, which emphasizes the defencelessness of the nation-states against capitalist pressures and a current, neo-gramscianist fourth wave with an active, ‘competition-state’ able to interact with the economy at the heart of its argumentation.

2.1 Hyperglobalists

Advocated by Reich (1991) and Ohmae (1996) among others and originated in American business schools, it is the first realist/positivist view of globalization. Hyperglobalists state that the nation-state is hollowed out by footloose MNCs and hypersensitive capital flows. The latter render governments powerless to control the economy as they used to do with interventionist measures during post-war Keynesianism. They allege Britain (1976), France (1981/1982) and Sweden (1994) as nations which have painfully experienced the punishments of ‘free’ financial markets when trying to introduce discretionary policies. Furthermore this school of thought forecasts the end of the welfare state through a ‘race to the bottom’ in capital and corporate taxes. A proof of it is the massive FDI flows to low-wage and flat-tax countries (e.g. Romania, Slovakia, Baltic states). The driving forces of globalization are deemed to be capitalism and new technologies (especially in the IT sector), both reordering human action by eliminating geography. British conservatives have stressed that hyperglobalization allows for credible commitments to low taxation, low public spending and deregulation and will thus bring prosperity only if governments adhere to neo-liberal guidelines.

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^[1] Quoted in Scholte, J. A. (2002), What Is Globalization? The Definitional Issue – Again, CSGR Working Paper 109/02, University of Warwick

^[2] See figure 1 for an illustrated evolution of tariffs

^[3] See figures 2 and 3 for detailed data on the growth of trade

^[4] See figures 4 and 5 for detailed data on the growth of FDI

^[5] Seattle hosted the WTO Summit in 1999

^[6] Genoa hosted the G8 Summit in 2001

^[7] See Rosenberg, Cf., J. (2001), The Follies of Globalization Theory: Polemical Essays, London Verso quoted in Scholte, J. A. (2002), What Is Globalization? The Definitional Issue – Again, CSGR Working Paper 109/02, University of Warwick

^[8] See Scholte, J. A. (2002), What Is Globalization? The Definitional Issue – Again, CSGR Working Paper 109/02, University of Warwick

^[9] Higott, R. (2000), Contested Globalization: The Changing Context and Normative Challenges, Review of International Studies, 26, pp. 131-153

^[10] Organization for Economic Cooperation and Development

^[11] Non-Governmental Organizations

^[12] Association pour une Taxation des Transactions financières pour l’Aide aux Citoyens, founded in 1998 it seeks to be an anti-globalisation umbrella organization for anti-neoliberal movements

^[13] Strange, G. (2003), Symposium: Globalisation and Social Democracy, Beyond ‘Third Wave’ Globalisation Analysis: A Critical Review of Structural Dependency Theory in International Political Economy, ECPR, Spring, Vol. 2, No. 2