Globalization, Enterprise and Governance: Twentieth Anniversary Re-release – Part I

Blogger’s Note. Reflecting upon the latest “long read” published this week in the Guardian – an absorbing piece by Nikil Saval entitled “Globalisation: the rise and fall of an idea that swept the world” – I was rather jarringly reminded of something I wrote back in the nineties.  What strikes me about this vintage analysis, published in the International Journal (53:1, Winter 1997, pp 17-37), is just how little the debate has advanced over the intervening two decades. It seems that virtually nothing has been learned, and even less done in response to this longstanding critique. Why?  As a contribution to everyone’s summertime reading, I have decided to re-release the original in five easy pieces, and, with apologies for the curious formatting, I would very much welcome reader commentary.

 

Globalization is about borderless nations, stateless firms, infirm states, and a new frontier –
without frontiers. That’s the Reader’s Digest version, popular with cocktail party cognoscenti
and among those who imagine themselves, someday, attending the World Economic Forum in
Davos, Switzerland. Globalization is emerging as the defining historical phenomenon of our
times, transforming structures and conditioning outcomes across an expansive range of endeavour.
It is a work in progress, a new order under construction, an expression of power relationships.
Given the relentless diffusion of the mass media and entertainment industries and rising levels of
trade and international investment, travel and immigration, education and communications, it
seems likely that more of the same is in train. Loved or loathed, globalization can be resisted, but
it can’t be ignored.

Simply put, globalization is working at the supranational level to create a single world society.
This is possible because fundamental change – greater interdependence and technological capacity;
increased mobility of most factors of production; higher levels of market integration and
liberalization; and deregulation, privatization, and a reduced role for government – has reshaped
the world economy.

 

Globalization is an active and comprehensive process in which a critical range of activities –
economic, social, and cultural – are transferred to the global scale. Because they contribute to
insecurity and threaten democratization, the political implications of globalization, too often
overlooked, are profound. Perhaps more than anything else, the striking speed of globalization
has generated attention. To date, and quite understandably, the negative aspects of globalization
have dominated the debate. But because the process is dialectic in nature, it also provides
opportunities for creative response. This aspect of globalization has been lost in much of the
contemporary commentary. Those with a limited tolerance for ambiguity or uncertainty, be
forewarned. It is extremely difficult to assign precise cause and effect to the various impacts of
globalization. In some cases it accelerates or exacerbates change already under way, and in others
the causal relationship is ambivalent or unclear.
The big picture, transformed
As the industrial age is supplanted by the information age, many economic constructions,
political relationships, and diplomatic conventions established in the wake of the Second World
War are being overtaken by events. Among a variety of colossal shifts, the end of the cold war
and the dissolution of the Soviet empire, accelerated modernization and urbanization, and the
dynamic emergence of the Asia-Pacific region figure prominently. Simultaneously, the triumph of
transnational structures and forces has shifted much of the action beyond the purview of
governments. In both theoretical and practical terms, many traditional assumptions which have
informed our perceptions and underpinned the legitimacy of institutions and activities have
become obsolete.

 

The exchange of goods among countries is being dwarfed by trade in services and the exchange of
both goods and services within and between corporations: one third of world trade now occurs
among units of the same firm. The lines between national and international, domestic and foreign
are no longer clear, if they exist at all. The rules, players, and games are changing. Among and
inside regions and countries, provinces and people, gaps are widening. This metamorphosis of the
global political economy will affect the lives of individuals, the balance sheets of corporations,
and the survival prospects of governments. Few will emerge unaffected.

 

The animus of globalization is corporate, its mantra is the marketplace, and its creed, adjustment.
Globalization, the highest cosmopolitan expression of capital, is the apotheosis of the neoliberal
imagination and its most advanced manifestation. It has been expedited in recent decades by
revolutionary technological change, first in transportation and communications, then in
electronics, computerization, semiconductors, and software. Advances in information technology
have reduced costs dramatically, and extensive databases, fibre-optic transmission, and
interconnections between networks have compressed time and space.

 

Multinational corporations are the primary agents of globalization. They control information,
markets, investment, financial flows, and employment practices. Their weight and presence are
huge: 51 of the 100 largest economies in the world are corporations; Mitsubishi generates more
annual economic activity than Indonesia; sales by the 200 largest firms exceed the combined
economies of 182 countries. Although globalization is a product of the activities of the
multinationals, it relies as well on a complex of political institutions and conditions such as
regional integration, international trade negotiations, and the continuing conviviality of
multilateral organizations. United Nations Security Council muscle will still be required, on
occasion, to compel the unco-operative or to quell interstate or intrastate conflict, but the real
action will increasingly be in the World Trade Organization (WTO) rather than the General
Assembly.

 

In the era of globalization, the international community will stumble around crises like Rwanda or
the former Yugoslavia, but when core interests are not at stake, peace-building performance is
unlikely to improve. On the other hand, a Desert Storm II, or its equivalent, would be a near
certainty if strategic energy or mineral supplies are jeopardized.

 

To what end?

 

The bid to secure profitable parts of the world for business brings with it a whole new
dispensation in which world wars are out and world markets, sourcing, and product mandates are
in. Geopolitics has given way to geoeconomics. Indeed, globalization is girded by, and dependent
upon, an interrelated constellation of macroeconomic policies. These include, inter alia, free trade,
structural adjustment, market liberalization, and drastic public spending and programme
reductions, combined, in the underdeveloped world, with the imposition of policy conditionality
and deep cuts in development assistance. Globalization’s intimate association with this
framework suggests that it is not neutral. It leaves in its wake winners and losers.

 

By integrating markets and extending networks, globalization expands the scope for
democratization, even as it cheapens the content and corrodes the broad cultural base upon which
democracy depends. By disseminating vast quantities of information, it undermines monopolies
previously enjoyed by some governments and corporations, even while it concentrates and
reinforces the power of a smaller number of key players. By subverting repressive, authoritarian
structures, it contributes to liberating political change, even as its tendency to sharpen economic
inequalities undermines the delicate social contract upon which all representative institutions
ultimately depend. Globalization creates efficiencies but breeds insecurity.

 

The end of the cold war removed the last, slender constraints on globalization. Decreasing aid
flows and reductions in other forms of support have contributed to the over-use or degradation of
dwindling resources across broad tracts of Africa, in sizable areas of south and central Asia, and
in parts of Latin America. Under the banner of economic liberalization and reform, a new
international division of labour is transforming the global village into a patchwork of gated
communities amidst a vast hinterland of shantytowns.

 

Whatever qualities one might wish to associate with the powerful efficiency of the global
economy, the distribution of wealth is increasingly skewed. Unfettered markets and corporations
accountable only to investors may have their virtues, but equity is not among them. For this, and
other reasons, there will be no peace dividend. Peace, such as it is, is heavily armed and
punctuated by low intensity conflict and the occasional enforcement action. With gaping

inequalities emerging as the essential element of the ’new world disorder,’ human security can
hardly be expected to flourish.

 

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