We argue in this paper that contemporary globalization is not really a laissez-faire utopia because of the political specifics available in the McWorld as well as the Third World. Rather, most of its benefits accrue to the First World because of the North’s dominant policy to resist laissez-faire in the movement of goods and people into its domain, and opposition to the dictates of the Washington Consensus in the Third World. Globalization has generally been stymied by the First World\'s reluctance to apply identical standards of laissez-faire to its borders and imports that it tries, though not always with success, to impose on the Third World\'s legal structures and imports. However, the state is yet to dismantled by the onslaught of globalization, as imperatives of the globalizing process require the continuity of the states system to ensure an unequal North-South dialog.
Globalization has been described (Kegley Jr. and Wittkopf, 1997: 249) as the “intensification of economic, political and cultural relations across borders” that is noticed in the following pieces of evidence: the average daily turnover in foreign exchange increased from $200 billion in the mid-1980s to approximately $1.2 trillion in 1996; net capital flows to developing countries grew from an annual average of $44 billion for the period 1983-88 to $197 billion in 1996; and Foreign Direct Investment increased from $10 billion to $91 billion (Echeverri-Gent, 1997). However, it has also been noticed (Lee, 1996: 382) that “the worldwide gap between the rich and the poor has become a vast chasm. Both within and between countries, the rich grow richer at the expense of the poor.” Lee adds that the share of income of the poorest 20 percent of the global population has fallen from 2.3 to 1.4 percent in the last 30 years while the share of the richest 20 percent of the global population has increased from 70 to 85 percent. More than 1 billion people live in countries where average per capita income fell between 1980 and 1993. Lee has even quoted the United Nations Development Program administrator, Gustave Speth, who maintains that if the world continues down its current path, “economic disparities between industrial and developing nations will move from inequitable to inhuman.”
It is as if a specter of sorts is haunting the world’s governments today - the specter of globalization. Some would argue that predatory market forces make it impossible for welfarist governments to protect their populations from the beasts of prey that lurk beyond their national borders while others counter that benign market forces actually prevent predatory governments from fleecing their own citizens. Although the two sides perceive different villains, they draw one common conclusion: omnipotent markets mean impotent politicians. Indeed, this formula has become one of the clichés of our Age of Globalization. But is it always true that governments have become weaker and less relevant than ever before? And does globalization, by definition, have to be the nemesis of national governments?
Globalization is a journey toward an unreachable destination, ‘the globalized world’ or the so-called Global Village. A ‘globalized’ economy may be defined as one in which neither distance nor national borders obstruct economic transactions. This is a world where freight charges are nil and tariff barriers set up by differing national jurisdictions absent. Needless to point out, we do not live in anything even close to such a world. And since many of the commodities we transport (including ourselves) are physical, we never would.
This globalizing journey is not a new one. Over the past five centuries, technological change has progressively reduced the barriers to international integration. Transatlantic communication, for instance, has evolved from sail power to steam, to the telegraph, the telephone, commercial aircraft, and now to the Internet. Yet, states have become neither weaker nor less important during this odyssey. On the contrary, in the countries with the most advanced and internationally integrated economies, the governments’ ability to tax and redistribute incomes, regulate the economy and monitor the activity of their citizens has increased beyond all recognition. This has been especially true over the past century.
The question that remains, however, is whether today’s form of globalization is likely to have a different impact from that of the past. Indeed, it may well, for numerous factors distinguish today’s globalizing journey from past ones and could even produce a different outcome. These distinctions include more rapid communications, market liberalization and global integration of the production of goods and services. Yet contrary to one common assumption, the modern form of globalization will not spell the end of the modern nation-state.
Today’s growing integration of the world economy is not unprecedented, at least when judged by the flow of goods, capital, and people. Similar trends occurred in the late nineteenth and early twentieth centuries. First, the proportion of world production that is traded on global markets is not that much higher today than it was in the years leading up to World War I. Commerce was comparably significant in 1910, when ratios of trade (merchandise exports plus imports) to Gross Domestic Product hit record highs in several of the advanced economies. Global commerce then collapsed during the Great Depression and World War II, but since then world trade has grown more rapidly than output.
Mainstream economic thought promises that globalization will lead to a widespread improvement in average incomes. Firms will reap increased economies of scale in a larger market, and incomes will converge as poor countries grow more rapidly than rich ones. In this win-win scenario, the importance of nation-states fades as the Global Village grows and market integration and prosperity take hold.
But the available evidence suggests an entirely different scenario. Average incomes have indeed been growing, but so has the income gap between rich and poor countries. Both trends have been evident for more than 200 years, but improved global communications have led to an increased awareness among the poor of income inequalities and heightened the pressure to emigrate to richer countries. In response, the industrialized nations have erected higher barriers against immigration, making the world economy seem more like a gated community than a global village. And although international markets for goods and capital have opened up since World War II and multilateral organizations now articulate rules and monitor the world economy, economic inequality among countries continues to increase. Some two billion people earn less than $2 per day.
At first glance, there are two causes of this divergence between economic theory and reality. First, the rich countries insist on barriers to immigration and agricultural imports. Second, most poor nations have been unable to attract much foreign capital due to their own government failings. These two issues are fundamentally linked: by forcing poor people to remain in badly governed states, immigration barriers deny those most in need the opportunity to ‘move up’ by ‘moving out.’ In turn, that immobility eliminates a potential source of pressure on ineffective governments, thus facilitating their survival.
Since the rich countries are unlikely to lower their agricultural and immigration barriers significantly, they must recognize that politics is a key cause of economic inequality. And since most developing countries receive little foreign investment, the wealthy nations must also acknowledge that the Washington Consensus (Williamson, 1990)2 - which assumes that free markets would bring about economic convergence - is largely mistaken. If they at least admit these realities, they would abandon the notion that their own particular strategies are the best for all countries. In turn, they should allow poorer countries considerable freedom to tailor development strategies to their own circumstances. In this more pragmatic view, the role of the state becomes pivotal.
Why have economists and policymakers not come to these conclusions sooner? Since the barriers erected by rich countries are seen as vital to political stability, leaders of those countries find it convenient to overlook them and focus instead on the part of the global economy that has been liberalized. The rich countries’ political power in multilateral organizations makes it difficult for developing nations to challenge this self-serving world-view. And standard academic solutions may do as much harm as good, given their focus on economic stability and growth rather than on the institutions that underpin markets.
So contemporary states informed by globalization are like so many Januses - it has, generally speaking, a robust face in the developed North but an almost impotent face in the developing or underdeveloped South. So globalization necessitates a dialog between the rich and the poor outside its essentialist assumptions of an uneven power discourse as conditions of Good Governance and Structural Adjustment Programs (Gary and Mayo, 1995) benchmark most Third World postcolonial democracies (Ray, 1989, 1996) today.
While there are contentions (Rapley, 1996) that aggressive market forces make it difficult for welfarist governments to protect their citizens from transnational actors that are as elusive as their hot money, there are also counter-arguments (Keohane, 1998) that institutions like the International Monetary Fund or the World Trade Organization actually safeguard citizens from the administrative limitations of their respective national governments. There appears to be a consensus, however, that powerful markets tend to undermine political élites at home (Barber, 1996; Cox, 1993; McGrew, 1992; and Slater, 1996). But does this also suggest that national governments have been so thoroughly undermined today that the Global Village can eventually replace the state?
John Echeverri-Gent (1997) has pointed out that if globalization, on the one hand, facilitates decentralization then, on the other, it also helps develop pockets of dynamic Free Trade Areas in large developing countries like China and India by reorganizing their economic geography, Foreign Direct Investment and global commodity chains. This process, however, creates large hinterlands of economic backwardness and entrenches economic inequality within the developing South. Globalization, therefore, intensifies regional disparities in the Third World. John Rapley (1996) has found that Structural Adjustment Programs have varied widely in the results they have yielded. While Latin America has partially benefited from structural adjustment, Africa has not. Rapley has also argued that Rolling Back the state ie less government (as an imperative of contemporary globalization) does not always lead to enhanced economic growth.
Globalization, therefore, would appear to be an open-ended journey toward a globalized world order whose weightless economy (Huws, 1999: 32) may be described as one that defies both national and international borders so far as economic transactions are concerned. This is a situation where freight charges are nil and trade / tariff barriers would disappear. Such a pilgrim’s progress, however, is nothing new. Technological innovations during the past five centuries have steadily helped integrate the global community into an emergent global civil society. Transatlantic communications have developed from sailing boats to steamships, to the telegraph, the telephone, the commercial aircraft and now the Internet where even nationalism as a conventional political ideology has been reduced to ’banal nationalism’ (Billig, 1995).
But states, meanwhile, have not ostensibly lost their importance and, on the contrary, even Third World governments’ capacities to tax and redistribute incomes, control their domestic economies and hegemonize civil societal activities have expanded in a significant manner (Aziz and Arnold, 1996). This is notwithstanding the fact that “In any corrupt regime people enjoy the benefits of bypassing the government regulation. Under-reporting of income leads to tax savings which helps both the taxpayer and the assigning official who receives a bribe. But, this is not an unmixed blessing. In a society where corrupt officials can wield power of coercion and harassment, people are forced to pay bribe to avoid problems. Thus corruption entails benefits as well as cost” (Marjit et al, 1999: 23).
However, the present-day transition of state efficacy - from welfare to Good Governance - has to be explained in terms of a paradigm shift that can even lead to deinstitutionalization of state apparatuses in postcolonial democracies as the conventional manner of looking at the welfarist state as a sponsor of nation building (Kothari, 1976) is subverted in the process. James Manor (1996: 8-9) would confirm that “In recent years, many Western aid and development agencies have increasingly emphasised the need to promote ’good government’ in their programmes . . . Many scholars . . . regard ’good government’ agendas and the conditionality that goes with them as an example of latter day imperialism. Many also worry that some of these agendas entail considerable hypocrisy on the part of Western funders . . . The contents of some ’good government’ agendas are rather curious. Some place enormous stress on the need for market forces to predominate, which is not everyone’s idea of ’good government’. Some mix that emphasis and pressure to enact structural adjustment programmes with pressure for democratization, decentralization, respect for human rights, legal reform, poverty alleviation, transparency and accountability. There is a degree of dissonance between some of these varied elements . . . Capitalism requires the existence of state institutions, no matter how many free marketeers loosely claim that what it most needs is the disappearance of government. As economic liberalization proceeds, there is a greater need for contract law and for judicial and executive institutions to ensure that it actually makes an impact.”
Globalization entails another paradox - it requires Good Governance underpinned by Structural Adjustment Programs that can, however, erode the popular bases of democratic governance (March and Olsen, 1995), and lead to collapse of entire régimes. Malcolm Waters (1995: 99-101) has pointed out that “In the third quarter of the twentieth century the corporate welfare state hit a multiple and widely recognized crisis . . . The response to this multiple crisis was a process of disétatization or state-weakening . . . state intervention by command was reduced but at the same time states sought to increase the scope and scale of the market. Many government services were opened to competitive tendering between the public and private sectors and, as is well known, many state-owned industries were returned to the private sector. Many states stopped providing welfare in certain areas . . . The crisis of the state contributes to the reflexivity of globalization.”
Globalization, therefore, would increasingly come across as the transition of world capitalism from one stage to another, safeguarding investments of global capital in this process. Globalization also increasingly requires disinvestment, prompting Anthony Giddens (1995: 140-1) to argue that “The relation between the decline of the welfare state and the changing character of the global order of states was to some extent masked by the very political successes of the New Right. The neoliberals led the attack on the ’overloaded’ welfare state in the name of freedom of competitive enterprise from bureaucratic burdens and from enfeebled labour markets. Simultaneously, however, they not only defended the state and nation but called for a ’strong state’ in the international arena. The paradoxical character of this position was soon noted by critics, and corresponded to the wider paradoxes of New Right political theory . . .”
Available evidence, as mentioned earlier, suggests that average incomes have increased while the income gap between rich and poor countries has also widened (Albo, 1997; Altvater, 1997; Echeverri-Gent, 1997; Epstein et al, 1996; Lee, 1996; and Wallis, 1996). Both trends have been evident for more than 200 years – it is only now, however, that improved global communications have resulted in a growing awareness among citizens of poor countries of income inequalities, and compelled them to increasingly immigrate to rich countries. Rich countries, consequently, have been provoked to pass laws that discourage mass immigration (Kalpagam, 1994). It has even been mentioned that (Fix et al, 1994) “Although there is no evidence to date of broad job displacement and the evidence regarding major wage effects is inconclusive, concerns have been raised about the impact of high levels of immigration on the growing wage inequality in the U.S.”
This, however, tends to reduce the global economy to an exclusivist power arrangement that also draws on McDonaldization / Coca-Colonization – or cultural homogenization – indicated largely by the one-way-traffic (ie infiltration and withdrawal of global capital into the Third World at will but not likewise when infiltration of Third World labor into the North is concerned). According to Eric Helleiner (1994: 173), “the globalization of finance has . . . aided the U.S. in preserving its policy autonomy in the face of growing external and internal deficits . . . the U.S. in fact actively cultivated the globalization phenomenon partly for this reason, beginning with its support of the Eurodollar market, carrying through opposition to capital controls in the early 1970s, and culminating in its enthusiasm for financial liberalization during the Reagan years. Globalization benefited the U.S. because of its hegemonic position in the new open global financial system, a position derived primarily from the unique attractiveness of U.S. and Eurodollar financial markets to foreign investors.”
Rich countries steadfastly maintain their immigration barriers and discourage agricultural imports while most poor countries have not been quite successful to attract much Foreign Direct Investment due to misgovernance on the part of their national governments. Rich countries, however, may as well concede that politics is a fundamental informant of economic inequality since they are not likely to lower their agricultural and immigration barriers in the near future in order to facilitate protectionism at home. Rich countries may also review the performance of the Washington Consensus, which assumes that free markets necessarily promote economic convergence and underscores important issues (like the rule of law, property rights and transparent banking systems) to sustain dialogs between the North and the South.
Nicola Bullard, in ’The Beginning of the End of the Washington Consensus’ (1998a), had observed that “In spite of the economic maelstrom threatening to engulf the world, this year’s IMF and World Bank meetings were notably subdued. It was clear to everyone that the global economy was in trauma: Long Term Capital Management, one of the world’s biggest hedge funds, had just been bailed out by what the New York Times described as ’Wall Street cronyism’ [with some arguing that not to (do) so would have threatened world financial markets]. Asia’s economies are showing little sign of recovery in spite of massive IMF intervention. Russia, suddenly and catastrophically, has been reduced to a cashless pariah (not that anyone dared speak about Russia - obviously its spectacular collapse is not a topic for polite company!). Brazil, meanwhile, is desperately trying to keep the speculators from the door, and Japan is seemingly unable to muster the political will to restructure its failing banks. Things were looking bad, and no one knew what to do” (italics mine).
Rich countries may also on occasion encourage poor countries to Think Globally, Act Locally ie design glocal - rather than global – development strategies that would be locally grounded within the larger context of globalization. According to Bullard (1998b), “Redistribution of wealth and purchasing power to the four-fifths of the world who are not being given a chance to pull us out of this recession would give the (U.S.) economy a kick start, would ease the problem of overproduction, and provide all sorts of useful ways to recycle profits. It would also cool down global capital markets.
“However, creating this demand requires significant social reform in terms of asset and income distribution. It means land reform and wage and labour reform. Industrialisation via cheap labour and natural resource exploitation is no longer viable. We have reached the point where further economic growth can only be achieved by expanding domestic markets and by expanding our definition of what is productive to include public goods, culture, the environment, and human security. We are at a moment in history where economic necessity coincides with social justice.”
Globalization has occasionally been regarded as a solution to problems like underdevelopment, malnutrition and violation of human rights, and important human rights institutions have been set up and incorporated into the global human rights régime. Governments are finding it increasingly difficult to violate their citizens’ human rights without attracting the attention of the media and international organizations as a result of developed telecommunications and global interdependence. Indeed, overall human rights practices have improved worldwide during the last decade or so. However, this improvement has neither been universal nor linear.
Globalization ie the growing interpenetration of states, markets, (tele)communications and ideas across borders is one of the major informants of the contemporary world order. International agencies for the protection of human rights are now more developed while an emergent global civil society facilitates avenues of appeal for citizens repressed by their own states. But assaults on fundamental human dignity continue, and the very obliteration of borders and promotion of transnational actors that had originally sponsored the global human rights régime may also generate newer sources of human rights abuse. Even as they are more widely propagated and accepted, the rights of individuals have come to depend increasingly on an entire range of actors and forces - from the multinationals to the missionaries! What are the patterns of the human rights impact of globalization? Are new problems replacing, intensifying or mitigating state-sponsored repression? How effective are new forms of human rights accountability? Can new global human rights problems be addressed by the global human rights institutions developed to combat state abuses? Are certain dynamics of globalization generating both problems and prospects? How can new opportunities be used to offset new problems? The emergence of the global human rights régime, growing transnational social movement networks, increasing consciousness and information politics have the potential to address both traditional and emerging forms of human rights violations. The United Nations has supervised human rights reform in El Salvador, Cambodia and Haiti while creating a new High Commissioner for Human Rights. The first international tribunals since Nuremberg are prosecuting genocide in the former Yugoslavia and Rwanda. Transnational legal accountability and humanitarian intervention promote universal norms and link them to the enforcement power of states. Thousands of non-governmental organizations monitor and lobby for human rights from Tibet to East Timor. Alongside important exponents like the Amnesty International, globalization has generated new forms of advocacy such as transnational professional networks (PEN, Doctors Across Borders etc), global groups for conflict monitoring as well as coalitions across transnational issues. New forms of communication allow victims to videotape their plight, advocates to flood governments with fax messages and Web sites to mobilize urgent action alerts. But the efficacy of global awareness and pressure on the states, paramilitaries and insurgents responsible for traditiona l human rights violations varies considerably. Moreover, access to the new global mechanisms is distributed unevenly so that certain worst-hit victims like the illiterate rural poor or the women refugees are the least likely to receive global as well as domestic redress. Beyond this interaction of new solutions with old problems, new human rights problems may result from the integration of markets, the shrinking of states, increased transnational flows, the spread of cultures of intolerance and the decision-making processes of new or emergent global institutions. For instance, the increasing presence of multinational corporations has challenged labor rights throughout Southeast Asia and along the Mexican border. Increasing migration worldwide expose growing numbers of refugees and undocumented laborers vulnerable to different forms of abuse by sending and receiving states. International economic adjustment and the expansion of sex tourism are linked to a rise in prostitution and trafficking in women and children, affecting millions in the Caribbean, Southeast Asia and the post-Soviet states. The Internet that empowers human rights activists on the one hand also happens to facilitate governmental repression on the other, and even instructs neo-Nazis to post transnational death sentences against their dissenters. Unelected global institutions like the World Bank, international peacekeepers or environmental NGOs administering protected areas increasingly control the lives of the most powerless citizens of weak states.
However, the political élites of rich countries may even find it occasionally convenient to overlook their own immigration and tariff barriers since such barriers are considered absolutely vital to their own domestic political stability. The amount of clout rich countries command at multilateral platforms like the International Monetary Fund or the WTO more often than not makes it difficult for developing countries to successfully negotiate such barriers.
Jan Aart Scholte (1996: 55) has analyzed in this connection that “Globalization has to date mostly been an extension of modernization. At the same time, the rapid rise and wide-ranging reach of this transformation of social space has brought great instability to capitalism, made traditional conceptions of sovereignty unviable, heightened worries about ecological sustainability, injected much confusion into the construction of identity and encouraged reactions against reason. To this extent, globalization has opened space for critical theory and a fundamental rethink of production, governance, ecology and community, as well as the nature and purpose of knowledge itself.”
We would conclude by maintaining that the contemporary states system may well be compared to Janus - it has a strong face in the developed North where immigration and tariff barriers have been erected to discourage further redistribution in terms of income transfer entitlements among Third World immigrants; the United States has even imposed embargo on import of Indian carpets ostensibly because their production involve child labor ie human rights violation! But the postcolonial state almost necessarily assumes a rather weak face in the developing South where governments have repeatedly failed to come up with Good Governance despite their modernizing, albeit non-Westernizing, civil societies (Huntington, 1968, 1996). However, the state located within the contemporary post-capitalist / post-industrial globalization discourse is yet to wither away – we may regard it (among its different avatars) as an important facilitator in the uneven, if not multicultural, North-South dialog. We may even also regard it as an actor that would continue to engage its civil societies and public sphere (Habermas, 1992a, 1992b) vis-à-vis critical issues like Good Governance, Structural Adjustment Programs and social capital formation (Loury, 1987; Putnam et al, 1993; and Coleman, 1994) or otherwise. As the theme song in Alfred Hitchcock’s The Man Who Knew Too Much would suggest: Que sara sara . . . What will be will be, the future’s not ours to see . . . Que sara sara . . . However, the liberal democratic state may become even more repressive and organized during the course of Globalization 2 in order to address increasing popular discontent and public disorder that would follow any roll-back of its welfarist arrangements and civil societal concerns.
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1. The author wishes to thank Jeffrey Friedman of Critical Review, New York, USA and Chris Morry of The Communication Initiative, Victoria, British Columbia, Canada for their comments on earlier drafts of this paper. The usual disclaimer applies.
2. Economist John Williamson's prescriptions that had informed the Washington Consensus were  Fiscal discipline,  Redirection of public expenditure,  Tax reforms,  Financial liberalization,  Adoption of a single, competitive exchange rate,  Trade liberalization,  Elimination of barriers to Foreign Direct Investment,  Privatization of state-owned enterprises,  Deregulation of market entry and competition, and  Ensuring secure property rights.
Copyright remains exclusively with the author.