Globalization: Economic and Social Integration - Coursework Example

Running Head: GLOBALIZATION/ICT HAS CONTRIBUTED AND ALSO HINDERED Globalization: Economic and Social Integration [Author’s Name] [Institution’s Name] Table of Contents Table of Contents 2 ABSTRACT 3 INTRODUCTION 4 GLOBALIZATION & ECONOMIC INTEGRATION 5 EXTERNAL AND INTERNAL GLOBALISATION 7 GLOBALISATION AND SOCIAL INTEGRATION 10 CONCLUSION 13 REFERENCES 14 ABSTRACT Globalization is an extremely contested expression whose recurrent usage has masked a lack of accord with view to what it entails, details of how it operates and the path(s) in which it is heading. At the heart of what may be termed "globalization studies" lie the problematic nature, status and powers of the national state in the contemporary world political and economic order. A number of related questions stand out. One set of questions has focused on whether, and the extent to which, the balance of power between states and capital has shifted to the benefit of capital and global capital in particular. Another set has focused on how significant the national state is as a sphere of social activity and how effective governments can be in economic management. States are locked into an unprecedented scale and depth of both interdependence and competitiveness, but their capacity to effectively manage both the global, "borderless" economy and their own "national" economies is said to be diminished. A third set of questions has focused on whether the state is being hollowed out, is withering away, or is "in retreat". Few predict the actual demise of the state, and the debate has focused more on the retreat of the state relative to other forms of authority in the global political economy and the extent that this will cause it to undergo transformation and adaptation. Globalization: Economic and Social Integration INTRODUCTION One's position on the issue of the consequences of globalization for the state and for the welfare state is likely to hinge on the acceptance of a qualitative shift from the "old" international order based on inter-national relations primarily between nation states, to a "new", globalized order characterized by "global relations between organized capitals" under which relations between national states are subsumed (Teeple 2007). Thus, Robinson argues that "transnational capital [is] being liberated from any constraint on its global activity" (2007: 13-14), while Meiksins-Wood argues that globalization is "another step in the geographical extension of economic rationality and its emancipation from political jurisdiction" (2007: 553). Closely associated with the supposed "uncontrollable" powers of transnational corporations is the notion that globalization represents a new stage in the development of capitalism: The history of capitalism has ceased to be defined by and limited to national boundaries. It would be wrong to draw the conclusion that the world has entered a post-capitalist era. Rather, it is between a weakening of all aspects of a society founded on national capitalism and the growing power and dynamic of global capitalism. (Petrella 2007: 68) Overall, "strong" globalization theories stress the primacy of global forces over national or "local" ones, and the primacy of economic forces over political ones. A principal criticism has focused on the way in which "globalization" is depicted as something "new" and uncontrollable. Gray argues that "much current debate confuses globalization, an historical process that has been underway for centuries, with the ephemeral political project of a worldwide free market" (2008: 215). Indeed, much of the discussion on the contemporary world economy has "emphasized the complete 'globalization' of economic relations, so much so that there is sometimes an unquestioning certainty about the existence of a truly global economy" (Axford 2007: 94). GLOBALIZATION & ECONOMIC INTEGRATION Strong globalization portrays capital as a unified force, whereas capital is as fragmented and fractured as the forces it faces globally. For example, foreign direct investment in a productive plant in a peripheral country has very different interests than speculative capital that flows into real estate and currency speculation. Domestic and global capital also has different interests; domestic capital has often been at the forefront of arguments for greater, not less, protectionism. Furthermore, the economic determinism of strong globalization underestimates the continued importance of politics in the globalization process. Anyone who is in doubt of the powers of states need only look to their role in the downfall of the Multilateral Agreement on Investment (MAI). The MAI, if successful, would have significantly strengthened the powers of capital over states by allowing "investment rights" even where it was against national or broader social interests (Sanger 2008). A related point about the importance of the state in shaping globalization, rather than merely "receiving" it, is the idea that much of the literature on globalization has focused on unifying economic and technological processes as evidence of greater global interdependence. In so doing, it has neglected the more fragmented political and social spheres which point to more moderate claims about the nature of "globalization" as well as offering importance evidence of resistance to it. Although recent economic trends may be correctly identified, it is not clear how these relate to long-term structural changes, or how they are moderated by counter changes or opposing forces. On this point, Green argues that "the dialectic of history is missing … globalization theory has a strong tendency towards economist, reading the political off un-problematically from what it takes to be inevitable economic trends" (2007: 157). The neglect of these countervailing forces and counter changes obscures decisive "local" factors and fragmentation that are associated with globalization: the conventional notion of globalization as an advancing force bulldozing the world around it is clearly at odds with the multiplicity of forms encountered or engendered in diverse contexts. Confusion occurs when one overlooks the way that centralizing elements of globalization fuse with distinctive local and regional conditions. (Mittelman 2007: 232) Global economic forces, then, should not automatically be elevated above, or assumed to steamroll over, "local" factors and forces which are internal to states and which can restrict both the state's and capital's margin of operation. These "local" forces include the nature and strength of ideologies, social movements and traditions within countries which may resist or oppose "investment" by global capital and the implementation of the policies of international institutions. Neither have been unopposed, and inhabitants of affected countries have responded with civil and political unrest, with the result that "the new uprisings of the world's poor have altered the international political economy" (Walton 1987: 384). Overall, globalization is not hegemonic or uncontested, nor does it steamroll over all areas of social life or trample over states as "strong" versions have portrayed. International economic processes are refracted through national institutions and mediated by local conditions. States and governments are far from being "victims" of globalization (even if they like to portray themselves as such), and although many have more than enthusiastically embraced the integration of their economies into the international economy they still possess substantial regulatory powers, both individually and collectively, over global capital. Whether they choose to exercise these or not is a different matter. This approach has emphasized the constraints that economic globalization places on states, public policy and welfare states. Although it is generally accepted that capitalism has always been a global system, that there was always the risk of capital flight, and that states' policies have historically been bound by parameters acceptable to international monetary institutions, there is none the less an assumption that state capacity and policy autonomy has been eroded by the "external" forces of the contemporary global economy. International economic forces are said to have eroded the "domestic" economic (and political) basis and conditions that have historically underpinned the welfare state. The relocation of corporations from "high-cost" to "low-cost" countries impacts on the employment structure in the exited country, leaving behind unemployment and a fiscal deficit, while the transnational nature of economic activity makes its control and taxation much more difficult (Perraton et al. 2007). Stryker (2008) identifies a number of ways in which the structure and operation of the global economy may shape national social policy. EXTERNAL AND INTERNAL GLOBALISATION The balance of "external", global influences to "internal", national ones (e.g. demography, labour markets, the balance of political forces) is held to have altered in favour of the former. As Ash Amin argues, "state policy is becoming more and more driven by external forces" (2007: 129, original italics). The range of "structurally viable" policy options has not only been narrowed by economic forces but state policy will be primarily oriented to supporting market forces and promoting economic competitiveness. A major problem with these predictions about the power of the global economic forces, in particular global capital, to force a particular course of action is that they share many of the assumptions of "strong" globalization theories in so far as they regard globalization as an "external", naturalistic phenomenon; assume that capital interests are unified; assign a determinant degree of power to (global) economic forces over the course of (national) political action; and assume that globalization is a force primarily of unification. The criticisms levied against "strong" globalization theories in section 2 suggest that the political and economic resources of global capital to directly determine individual states' public policies have been exaggerated and that globalization is not homogeneous or unitary in process or effect, either within or across states. Indeed, the issue is far more complex than one of simple causality for the reasons I have just described, as well as for the reasons outlined below. Of prime importance, first of all, is ideology. As Rhodes argues, "the nature of the contemporary welfare state dilemma … is difficult to disentangle from ideology" (2007: 307). Ideology is of particular importance here because it has been central to the advancement of globalization as a political project — through the diffusion of neo-liberalism (Stryker 2008). Neo-liberal ideology emphasizes the limited influence and effect that governments can exert over national economic performance or in subverting the "natural" outcomes of global markets, while stressing the costs of certain courses of political action: economic success (and prosperity) or failure (and hardship) in an interdependent and competitive global economy is seen as depending on maintaining a competitive advantage. Stryker (2008: 11) argues that the impact of globalization on welfare states occurs primarily through ideological shifts which in turn cause national expenditure reductions, privatization and marketization in some social welfare programmes. However, even here, he asserts that the evidence over the past twenty years of left governments slowing welfare expansion and/or embarking on austerity programmes "does not prove the idea that financial globalization and global diffusion of market-oriented cultural ideals facilitate welfare state retrenchment. But it is consistent with these ideas" (2008: 11). On a similar line, Jordan (2008) also notes the consistency between the "new politics of welfare" of the British and American governments which put the wage-relation at the centre of welfare reform, and globalization which also hinges on the wage-relation. Ultimately, it seems, at best we may be able to demonstrate consistency rather than causality. Ideology, rather than crude economic determinism, is important, therefore, in any explanation of the impact of globalization on welfare states. Policy-makers' beliefs, values and assumptions about the global economy are shaped by ideology: they may believe that particular interventions will prompt speculation on the national currency, mass capital flight abroad, or a downturn in investment by foreign firms. Moran and Wood (2007) refer to this framing of social policy by ideas and beliefs about national competitiveness in the global economy as "contextual internationalization". The contemporary welfare state "dilemma" can be attributed to the political power of economic ideas, in particular neo-liberal ideas, which have shaped perceptions of global economic "logics" and foreclosed "the parameters of the politically possible" (Hay 2008: 529). Jordan similarly argues that "the idea of a global market is probably even more powerful than global forces themselves; governments believe that they are competing for prizes in budgetary rectitude before a panel of international financial institutions, and this affects their actions" (2008: 9). The second reason why it is not possible to establish causality is that states have other functions than economic ones and governments have to respond to a wider range of constituencies than just the international business community. These "local" factors are decisive rather than incidental in determining the content of public and social policy and how sweeping any reforms may be. These "local" factors include the political and institutional constellation of national welfare states, historical and cultural traditions, social structures, electoral politics, the partisan nature of government, the presence of strong "veto players", and the internal structure of the state (Esping-Andersen 2007; Rhodes 2007; Hallerberg and Basinger 2008; Garrett 2008). Other "local" factors mediating the way in which globalization is "received" also include the degree of integration of the national economy into the international economy and the particular species of capitalism that has developed nationally. GLOBALISATION AND SOCIAL INTEGRATION Germy (2007) argues that although states may indeed become oriented towards maintaining economic competitiveness — indeed, he predicts the rise of "competition states" — they may become more, not less, interventionist in certain spheres. They may become more authoritarian in policing the consequences of economic globalization — poverty, marginalization and crime. In fact, far from overriding pressures for the state to reduce its welfare effort, a range of pressures to expand the scope of public policy intervention may be placed on governments to counteract marginalization and promote social integration, equality and justice. Public (social) expenditure may increase as a direct consequence of policies that pursue economic competitiveness (Garrett and Mitchell 2007, cited in Wilding 2007), while social protection programmes may be extended to cushion individuals, households and communities against increased economic risk. It is not evident that the predominant theme, or the only way forward, is marketization, as the recent nationalization of care insurance in Germany has illustrated. While the issue of whether the "embedded liberalism" of the international political economy imposes limits on redistributive justice (Rhodes 2007; Jordan 2008) is a pertinent one, economic globalization constitutes less of an objective constraint than it is often believed to be, while the convergence thesis is certainly exaggerated. The "constraints" arising from the global economy are to a large extent "imposed" by the political power of ideas about the logics and dynamics of the global economy. These constrain states and governments because they narrow the margins of what is believed to be possible and orientate them to the needs and exigencies of international competitiveness. Within these parameters, though, choices are still possible (Rhodes 2007: 309) and it is important to affirm that these choices have significant consequences for the distribution of resources, the quality, extent, and form of welfare provision, and the social rights of the population. 4. Global Governance and Social Policy Although arguments that the state has been emasculated by international economic forces should be treated with a good deal of caution, it is equally clear that states operate in a markedly different economic and political environment than they did, say, forty years ago. Social policy making, implementation and provision takes place in a context in which states are no longer the exclusive subject of international politics, the sole mediators of domestic politics, or even the principal representative of their populations. Political globalization and associated institutional and organizational changes in the way that territories, trade and populations are governed means that "politics is becoming more polycentric" and that states are "merely one level in a complex system of overlapping and often competing agencies of governance" (Hirst and Thompson 2007: 183). This framework of "global governance", and the political processes associated with it, has implications for states' sovereignty and policy autonomy. A global governance perspective offers a more nuanced framework for examining how social policy relates to globalization. Social policy now develops in a pluralistic and multi-levelled institutional framework of global governance which has altered the political dynamics of social policy. Social policy has been (partially) decoupled from the national sphere as a consequence of the greater involvement by supranational and international institutions in the political management of globalization. However, I have emphasized the decisive importance of "local" factors in shaping globalization — politics still matter. It is at this local level that non-geographically located global forces must "touchdown" and be expressed. When they attempt to do so, they often meet with a range of mediating, regulatory and oppositional forces. CONCLUSION These forces may be as instrumental in shaping the political management of globalization as the formal social policies and discourses of international institutions. This recognition of the importance of local factors tempers the more apocalyptic accounts of the prospects for welfare states under contemporary globalization and elevates the importance of politics, rather than economics, as the driving force of national social policy reform. Consequently, it allows a re-evaluation of "traditional" factors such as class, ethnicity, race and gender politics in shaping social policy. From this perspective, "globalization" in the sense of international economic forces is just one factor amongst others that influence welfare state development. REFERENCES Axford, B. (2007), The Global System: Economics, Politics and Culture, Cambridge: Polity Press. Esping-Andersen, G. (ed.) (2007), Welfare States in Transition: National Adaptations in Global Economies, London: Sage. Garrett, G. (2008), Partizan Politics in the Global Economy, Cambridge: Cambridge University Press. Gordon, D. M., (1987), The global economy: new edifice or crumbling foundations, New Left Review, 168: 24-64. Gray, J. (2008), False Dawn: The Delusions of Global Capitalism (2nd edn), London: Granta. Green, A. (2007), Education, Globalization and the Nation State, Basingstokc: Macmillan. Hallerberg, M., and Basinger, S. (2008), Internationalization and changes in taxation policy in OECD countries: the importance of domestic veto players, Comparative Political Studies, 31, 3: 321-52. Hay, C. (2008), Globalization, welfare retrenchment and the "logic of no alternative": why second-best won't do, Journal of Social Policy, 24, 4: 525-32. Hirst, P., and Thompson, G. (2007), Globalization in Question: the International Economy and the Possibilities of Governance, Cambridge: Polity Press. Jordan, B. (2008), The New Politics of Welfare, London: Sage. Meiksins Wood, E. (2007), Modernity, postmodernity or capitalism?, Review of International Political Economy, 4, 3: 539-60. Mittelman, J. H. (2007), How does globalization really work? In J. H. Mittelman (ed.), Globalization: Critical Reflections, London: Lynne Rienner. Moran, M., and Wood, B. (2007), The globalization of health care policy? In Philip Gummett (ed.), Globalization and Public Policy, Cheltenham: Edward Elgar. Petrella, R. (2007), Globalization and internationalization: the dynamics of the emerging world order. In R. Boyer and D. Drache (eds), States against Markets: the Limits of Globalization, London: Routledge. Rhodes, M. (2007), Globalization and West European welfare states: a critical review of recent debates, Journal of European Social Polity, 6, 4: 305-27. Sanger, M. (2008), MAI: Multilateral Investment and Social Rights. Paper presented to the GASPP seminar on International Trade and Investment Agreements and Social Policy, Sheffield, December. Stryker, R. (2008), Globalization and the welfare state, International Journal of Sociology and Social Polity, 18, 2/3/4: 1-49. Teeple, G. (2007), Globalization and the Decline of Social Reform, Toronto: Garamond Press. Walton, J. (1987), Urban protest and the global political economy: the IMF riots. In The Capitalist City, Oxford: Blackwell. Read More