The Meaning of Globalization - Assignment Example

The Meaning of Globalization The term globalization admittedly has been used in such diverse contexts and broad applications that theorists have taken up diametrically opposed views not only as to its benefits or evils, but even as to whether it exists in actuality or only as myth. For this discussion, three articles from among the required readings have been selected with this issue in mind: the existence, or non-existence, of globalization. This discussion will be undertaken by examining each author’s claims, comparing them one against the other, and in the end harmonizing the different viewpoints to create, if possible, one cogent synthesis. The first article chosen is that by Hirst and Thompson (2000) entitled Globalisation: A Necessary Myth? The very title is at once intriguing and revealing as it thrusts forward, almost anti-climactically, the conclusion of its authors. The argument is developed in this wise: Globalization is defined in the ideal, in the sense that the world economy operates beyond the regulation of nation-states, transnational corporations or TNCs (in contrast to multinational corporations or MNCs) are truly stateless corporations and are the prime movers to the world economy, and international bodies exercise “legitimacy from consumers/citizens across national boundaries” without need for endorsement nor acknowledgement from national governments. In a truly globalized economy, the paper argues, developing countries would have equal footing with advanced countries in trade and foreign direct investments or FDI, mainly through the operation of TNCs. The authors treat TNCs as distinct from MNCs insofar as the companies’ national affiliation is concerned. Purportedly, TNCs are truly stateless, being as much associated with any of the states where they maintain their presence. There would be full domestication of production because of the dispersal of capacity throughout the TNCs subsidiaries and affiliates. Given this, TNCs could thus no longer be under the control of national governments, and any intervention by the latter would merely be distortionary upon the working of the global economy. If TNCs could successfully operate beyond the regulatory reach and constraints of nation states, then the global economy will be closer to reality. However, the paper concludes, the foregoing conditions are far from materializing into actuality, thus the title: globalization is a myth. Hirst and Thompson have presented well defined ideas of what globalization should be. Taking off from this ideal, they have measured up the present state of affairs and have determined that the conditions they set forth defining globalization are not plausible. These conditions are, to this writer’s mind, well founded. Globalisation should have elements that transcend the control of individual nation states, otherwise it would not be truly global. The fault of the reasoning lies, however, in the absoluteness and unconditionality with which the authors view these criteria. Anything approaching but falling short of the perfection of these conditions renders the situation as not truly global. Viewed in this matter, globalization is indeed impossible. Contrast this with the views expressed by Castells (2001) entitled The New Global Economy. At once, the title is an affirmation of that which Hirst and Thompson’s article negates – the existence of a global economy. Castells’ opinion on the indicators that characterize a global economy is strikingly similar to that of the earlier article. Globalization involves the operation of economic systems beyond the regulation of governments; international trade and commerce operates spontaneously among producers and consumers with little government intervention; transnational networks exist through companies that disperse their production, distribution, and management functions; and the gap between developed and developing countries is diminishing. However, having laid this foundation, Castells proceeds to prove their substantial actualization. He first cites the emergence of global financial markets that integrate capital flows and currencies that work in real time and as a singular unit. For instance, cross border transactions of bonds and equities have, between 1970 and 1996, grown 54 times in the United States, 55 times in Japan, and 6 times in Germany. Capital flows increased seven fold from industrialized countries to developing countries within the period 1960 to 1996. More importantly, market valuation firms, notably Standard and Poor and Moody’s, have developed a legitimacy and following that rules and criteria these institutions establish and enforce command compliance by participants in the world markets within which they operate. Even the International Monetary Fund applies criteria developed by these valuation firms in decision making. And where capital markets and currencies re interdependent, then so follow monetary policies and interest rates, and ultimately economies. Castells further points out that international trade is veering more towards commerce in manufactured products rather than commodities and raw materials, and that developing countries are gaining a greater share of worldwide exchange. As proof, the most internationalised region in the world in terms of trade is Africa, and trade growth rates are higher for the transforming and developing economies rather than the industrialized countries. Production has also become internationalized, since MNCs account for 2/3 of international trade, half of which is trade within the same corporation and its ancillaries. Finally, mainly also through the operation of MNCs and through joint ventures and acquisitions, there is a diffusion of technological capacity, and the technology transfer results in the globalisation of science and technology. Castells’ reasoning, like his writing style, is down to earth and practical. His views are reflective of a practitioner’s or financial professional’s sense – practical, pragmatic and concrete. There is no adherence to any strict definition of ideals. Instead, there is a sensitivity to detail and a recognition of strong and distinct trends in the financial markets and economic activity. Reading Castells, one gains a sense initially of a lack of sophistication, but going beyond the style and engaging the content, one finds his arguments convincing and supported by facts. The two articles, surely enough, agree on the theory of how globalization should be defined and characterized, but nevertheless arrive at opposite, though equally emphatic, conclusions. The third article could provide the explanation for this. Robertson and Khondker (1999) expand the view of globalization beyond the realm of finance, economics, production, or technology, into the realm of social phenomena. People attach variable meanings to the term, the article states. Globalization is conventionally taken to mean the homogenization of culture, thus inferring an invasion of nation states’ identity and uniqueness by the imposition of a foreign dominant state’s own culture. Taken this way, globalization is a threat to the survival of anything different from the dominant culture. The difficulty with this is that globalization becomes a paradox, that is, different nations, countries or cultures find themselves moving inextricably towards global integration even as the preservation of their uniqueness clashes against it. For instance, anti-globalization movements (say, against trade liberalization and trade “globalization”) have formed an international following which, in itself, is a global phenomenon. Robertson and Khondker, in seeking to harmonize the concepts of globalization, universalism and particularism (i.e., uniqueness and variety), have come to define globalization, in its most basic sense, as “the compression of the entire world, on the one hand, and a rapid increase in consciousness of the whole world, on the other.” In essence, this means that globalization is not homogenization, it is not sameness. Globalization, while building structures and institutions for international cooperation, also anticipates and expects difference. Globalization builds commonalities even while it preserves uniqueness and heightens consciousness of this diversity as an integral part of the “constitution of the world as a single place.” Rather than negate the nation state, the essence of globalization promotes the consciousness of nation states in the context of the global sphere. This is a powerful concept, and it unifies the seeming clash between the observations of Hirst and Thompson on the one hand, and Castells on the other. Both of the latter articles agree that globalization transcends regulation; Hirst and Thompson state that this is impossible as the regulating state shall become irrelevant, while Castells states that it is already happening. Using Robertson’s and Khondker’s reasoning, while globalization transcends regulation in some aspects, it does not negate it, but a happy compromise is possible. For instance, it used to be that regulation pegged the dollar’s value to a standard (such as the gold standard), and likewise other countries pegged their currency’s value to the dollar (such as the Chinese renminbi). As globalization became a reality, deregulation took place and the pegs gave way to a system of floating valuation fuelled by open trade and auction. Countries’ monetary policies have adjusted to this, no longer regulating by statute but intervening as a market participant. Central banks may release more foreign exchange in the market or curtail monetary supply, or it may seek to influence the raising or lowering of interest rates by the acceptance of tenders for government securities. Nation states are not negated; instead they find a new, highly relevant role as participants. In the end, it is this view of globalization that is consistent with the salient views of all three articles and that which unifies their arguments. The view that globalization is both unifying and differentiating is that context that is in harmony with the present-day developments in our increasing global environment. The world is becoming smaller indeed, but our differences are celebrated because of increased acceptance and understanding. That is true globalization. N.B. – All quotes are drawn from the articles being discussed. REFERENCES Required selections: Castells, M. (2001) The new global economy. In J. Muller, N. Cloete & S. Badat (eds.) Challenges of Globalisation: South African debates with Manuel Castells. (pp.2-21). Cape Town: Maskew Miller Longman. Hirst, P. & Thompson, G. (2000) Globalisation: A necessary myth? In D. Held & A. McGrew (eds) The Global Transformations Reader (pp. 68-75). Cambridge: Polity. Robertson, R. & Khondker, H.H. (1999) Discourses of globalisation. International Sociology, 13(1) pp. 25-39. Additional references: Brown, G. W. 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