Globalization and Nation State - Essay Example

Globalization and Nation Introduction The end of the twentieth century is a period characterized by rapid and unprecedented change. As Smith and his colleagues (1999, p.1) discuss this idea, not only is our world becoming increasingly interdependent, but the nature of fundamental relationships between its parts are changing - and at an increasing pace. Smith and his colleagues continue that the unprecedented volume and velocity of international flows of trade, investment, information, cultural exchanges, and human migrations are creating a new, more tightly integrated, world and one that seems to be in the throes of some fundamental structuring (Smith et al. 1997, p.1). Many professionals ranging from commentators to journalists, from politicians to scholars across all disciplines, have tried to describe and analyze this phenomenon and tend to agree that "globalization," along with the halt of the Cold War, has radically changed the basic "rules of the game" for a variety of key factors, particularly states (Smith et al. 1997, p.1). With the onset of this "globalization" and transnational companies, there have been long debates about the relationship of so-called sovereign states to each other (Wallerstein 1999, p.20). Wallerstein (1999) states that views range from those who emphasize the effective sovereignty of the various states to those who are cynical about the ability of so-called weak states to resist the pressures (and blandishments) of so-called strong states. Krasner (1999, p.34), on the other hand, reports that some analysts argue to the point that the world is entering into a new era, one in which the existing institutional structures, especially the sovereign state (by which they often mean several different things) is being undermined weakened, marginalized, or transmuted, by globalization. Globalization and Sovereignty Defined According to Krasner (1999, p.34-35), globalization can mean some mix of developments that might include the legitimization of human rights, the digitalization of transactions, the speed of communication, the density of global non-governmental organization (NGO) networks, the transmission of diseases, the growth of international capital markets, the surge of manufacturing in geographically dispersed areas, the universal availability of MTV, the increase in illegal migration, legal migration, and the like. Most analyses that emphasize the growing importance of globalization point to the transformatory nature of modern technology e.g. costs of communication and transportation have plummeted. Kelleher and Klein (1999, p.146) defines sovereignty in that "states accept no political authority as superseding their own." According to the principle, no international institution has the right to determine the laws and policies that apply to people within the borders of any sovereign state. Sovereignty, then, has the effect of designating government as the sole representative of the population of a state (Kelleher and Klein 1999, p.146). Krasner (1999, p.35) also provided that the term sovereignty has been commonly used in at least four different ways: 1. Interdependence sovereignty has referred to the ability of a government to actually control activities within and across its borders (including the movement of goods, capital, ideas, and disease vectors). 2. Domestic sovereignty has referred to the organization of authority within a given polity. 3. Westphalian sovereignty has referred to the exclusion of external authority; the right of a government to be independent of external authority structures. 4. International legal sovereignty has referred to the recognition of one state by another; some entities have been recognized by other states; others have not. Recognition has been associated with diplomatic immunity and the right to sign treaties and join international organizations. Globalization: A Threat to Sovereignty According to Krasner (1999, p.36), many observers have suggested that the increase in globalization is a threat to sovereignty. He asserts that these people mean that the state is losing control over certain activities but some of these people have at least hinted that this could lead to changes in authority structures as well. Richard Cooper (1968) in his study, The Economics of Interdependence, points out that capital mobility was undermining the ability of the states to control their own domestic monetary policy. However, Helleiner (1999, p.145-149) indicates that this is only true under a fixed exchange rate system; with floating rates, states can control their monetary policy. What they cannot do is control monetary policy and exchange rates at the same time in an environment with open capital flows (Krasner 1999, p. 36). Noam (1987, p.44) adds that "in the long run telecommunications will transcend the territorial concept and the notion of each country having territorial control over electronic communication will become archaic in the same sense that national control over the spoken (and later the written) word become outmoded." Meanwhile, Jean Rosenau (1990) asserts that new issues have emerged such as "atmospheric pollution, terrorism, the drug trade, currency crises, and AIDS' that are a product of interdependence or new technologies and are transnational rather than national. He further asserts that states cannot provide solutions to these and other issues (Krasner 1999, p.37). However, Krasner (1999, p.34) believes otherwise. He claims that sovereignty is not being fundamentally transformed by globalization. Globalization, he asserts, has challenged the effectiveness of state control and has not qualitatively altered state authority which has always been problematic and could never be taken for granted. Thomson and Krasner (1989) support this view in their study, Global Transactions and the Consolidation of Sovereignty, in that the argument that globalization meant the attrition of sovereignty has two defects: first, that it confounds one meaning of sovereignty - effective state control - with other meanings of sovereignty that are related to issues of authority and legitimacy; second, globalization arguments are historically myopic, sometimes implicitly assuming some golden age in the past where states could exercise effective control, and ignoring the fact that many measures of international flows were as high at the end of the nineteenth century as they are now. It is not self evident that contemporary environment poses qualitatively different challenges to state control. Meanwhile, Eric Helleiner (1989, p.138-157) studied if financial globalization is undermining the sovereign state and reviewed the following existing arguments on the matter: 1. Walter Wriston (1986; 1988; 1992) argues that states have a declining capacity to regulate finance because of technological changes (e.g. information technology revolution) that have propelled the globalization trend. Once the states have lost their ability to regulate finance, they have lost a central aspect of sovereignty which is the ability to control the value of their currency. 2. Phil Cerny (1995) challenged that the increased mobility of financial capital has let loose powerful competitive deregulation pressures that hinder states from considering regulations in the financial sector such that states are forced to lower regulations in order to ensure that mobile financial capital and business is attracted to and kept in their own markets. Due to increased financial capital mobility, the ability of sovereign states to impose an independent macroeconomic policy are undermined e.g., independent tax policies are seen to be more difficult as individuals and corporations evade domestic taxation by moving assets abroad (Helleiner 1999, p. 145). Langhorne (2001, p.12) also takes the similar argument contending that while businesses locate themselves where it is most advantageous to undertake any particular part of their operation and create alliances with other firms, this process fundamentally impaired the ability of governments to run macroeconomic policies and reduced most of them to micromanagement designed to ensure that they create the optimum conditions for attracting global investment to their own area. He furthers that "this is not sovereignty in any recognizable sense but a form of servanthood" (emphasis mine), nonetheless, it represents a new and important role for the state to play. 3. Saskia Sassen (1996) argues that Euromarkets brought about by globalization challenge the sovereign state by acting as locations within national territories that are created deliberately beyond its regulatory limits to service the global economy. In the words of John Ruggie (1993), these financial activities in these Euromarkets challenge the sovereign state by acting as locations within national territories but "are to exist in an extranational realm." Helleiner (1999, p.154) evaluates that the first three arguments overstate the extent to which financial globalization has actually eroded state power either in the macroeconomic realm or the regulatory sphere. Helleiner claims that even if financial globalization was undermining state power in the ways the first three arguments suggest, this would not necessarily indicate support for the case that the sovereign state is eroding. This is because of a second weakness in the arguments presented: they lack a long historical perspective on the world-order transformations that these arguments analyze. Helleiner continues that this weakness "is especially evident when these arguments employ indicators such as 'declining regulatory power' and eroding macroeconomic policy autonomy' to measure the decline in the sovereign state. However, Helleiner acknowledges that the indicator used in the fourth argument as a measure in the decline of sovereignty - territoriality - is one more widely accepted by historians of the sovereign state. Globalization Impacts: Empirical Evidence David Pozen investigated the effect of globalization in welfare regimes using the European Union as an example. Pozen recognized the prevalent ideas of critics that globalization leads to a "diminished role for the state in welfare protection and eventually, to the downfall of the state." Ironically, he supported the economic argument that globalization does not absolutely lead to the downsizing of national welfare regimes but may actually lead strengthen it. The case of the European Union, where globalization has imprinted undeniable impacts became a strong evidence on the active role of the government in individual countries. The nation-states comprising the European Union enormously differ from each other. Consequently, the effects brought about by globalization are also varied. In Southern European welfare regimes comprised of Spain, Italy, and Portugal, we have seen the huge role of European Union in helping the country break free from the traditional authoritarian rule which suppressed their economic efficiency. Globalization, which is facilitated by the creation of a more integrated economy served as a catalyst in strengthening the welfare provision in the aforementioned countries. It is notable that as these economies exerted considerable effort to "catch-up" and integrate with more robust welfare systems, they also consequently increased their social expenditure ratios in the process. Since the 1980s, Southern European countries showed upward trends in their social spending relative to their GDP and their government spending. Ironically, globalization helped the countries in Eastern and Central Europe move away from the "vast, comprehensive, and often failing welfare systems of socialism/communism towards a more residualist, American model (Pozen 2003)." These countries boarded on more liberal, market oriented reforms with the aid of International Monetary Fund, the World Bank and the Organization for Economic Co-Operation and Development. The new reforms in place had encouraged the withdrawal of the state from the welfare sector highlighting the inability of the private sector to replace the state in equal measure. This dismal economic and administrative condition is giving rise to a renewed interest in socialism. Currently, the positive impact of globalization in welfare state is highlighted in Western Europe. After the economic integration brought about by the creation of the EU, it is notable that social transfers and government consumption of services continue to mount in all Western European nations with the exclusion of Belgium and Netherlands. Comparing these values to as a percentage of total government outlays, we see a ballooning in all countries. There is also a prevailing view among public that the government has an active role in the management of the entire economy and administering social programs and benefits. Though some data supports that there has been a welfare retrenchment in Western Europe during the period considered, the process remains somewhat subtle and far from systematic (Pozen 2003). Case 2. Globalization and the American Constitutional Law The huge impact of globalization in the administration of justice in the United States is now becoming more apparent as it is supported by recent experiences in the application of constitutional law. As a starting point, we should note that traditionally, the US Constitution has a great inclination in adhering to globalization as it declared, "International law is part of our law, and must be ascertained and administered by the courts of justice of appropriate jurisdiction as often as questions of right depending upon it are duly presented for their determination (qtd. in Morley, 2004)." The influence of globalization in American Constitutional Law is further emphasized in the Court's ruling in the Thomson vs. Oklahoma case in 1998 where a plurality of the Court decided that the execution of a 15-year old is a clear violation of the Eight Amendment's prohibition against cruel and unusual punishment." The Thomson court stated that "[T]he conclusion that it would offend civilized standards of decency to execute a person who was less than 16 years old at the time of his or her offense is consistent with the views that have been expressed by respected professional organizations, by other nations that share our Anglo-American heritage, and by the leading members of the Western European community (qtd. in Morley, 2004)." This is a very strong evidence on how, even in state's the execution of justice, globalization plays a gigantic role. As such, it also shows the globalization of the American jurisprudence and the increasing usage of the interpretation of foreign and international law in constitution. The Role of National Governments: Conclusion If indeed the sovereignty of the state is challenged by globalization, how can still the government use its sting According to Langhorne (2001, p.23), in an age when the communications revolution has allowed manufacturing to be located anywhere on the globe, the role of a government, though it is reduced in terms of its macroeconomic decision-making capacity, remains significant, and is even enhanced in respect of the policies it adopts which create encouragement for global companies to locate part of their operation within its borders. Laghorne continues that it is the task of the governments to make the global system work both better and more acceptably such as the facilitators of efficient factor and product markets or serve as guardians of the legal and commercial institutions underpinning global markets as well as the rules and standards that overarch market transactions. Finally, Laghorne indicates that the government's representative capacity remains important as they have the principal means of protecting national economic interests at international meetings of states, such as the World Trade Organization or the International Monetary Fund (2001, p.26-27). Krasner (1999, p.48-49), meanwhile, takes another positive look on globalization and on the role of the government. According to Krasner, if anything, globalization has made international sovereignty more important. He notes that the number of international agreements and organizations has proliferated in the last few decades. Many of these agreements, Krasner believes, represent efforts to capture the benefits of globalization and compensate for the loss of national control (italics mine) by establishing new coordinating and regulatory mechanisms at the international level. Krasner also believes that World trade Organization can be seen in this light but also acknowledged that with the opportunities that technology has opened up, these opportunities have increased potential conflicts over issues such as market access and financial services, among others. This becomes the qualifier as to why states entered into international agreements in which they constrain their own freedom of action in exchange of similar commitments offered by others. Moreover, Krasner stresses that it is the states, not multinational corporations, non-governmental organizations, or foundations that enter into these international agreements. If viewed from the perspective of international law, these agreements enhance rather than undermine (italics mine) sovereignty. Indeed, the agreements would be impossible in the first place if states did not mutually recognize their capacity to enter into them (Krasner 1999, p.48-49). 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Wallerstein, I 1999, 'States Sovereignty The dilemmas of Capitalists in an Age of Transition' in D Smith et al. (eds), States and Sovereignty in the Global Economy, Routledge, USA and Canada, p.20. Read More