42. EU gives more, not less, sovereignty to nation states
Switzerland and Norway, two independent countries have little or no negotiating leverage when they deal with the EU. In fact they have less sovereignty than member states who decide the policy. Britons are more able to control their own destiny - in areas from international trade, to environmental protection, to consumer rights - because they are part of a 27 nation, democratic bloc. Real sovereignty, rather than theoretical sovereignty, is enhanced by EU membership.
I'm not sure what perspective that argument is taking in the big picture neoliberal globalism issue I've studied. While it sounds a little bit like a salespitch for buying an SUV over a Corbin Sparrow,
in that they each have different advantages, it raises an interesting point for contemplation, and one I hope to explore more as I get to understand specific EU concerns better. Among other international trade features, according to the formula, within the EU, nation states are purportedly being empowered on the feature of negotiation with members of the EU, although the example given is of two states not members but which could benefit by joining. Technical details are missing for me at the moment so I don't know how to agree or disagree about it.
A trend which I have been looking at since I first got interestedf is the increasing freedom transnational corporations have been gaining to negotiate and effect nation state policies. I'm not sure if this is included in that stated formula in point 42 of sovereignty or if its an issue that essentially transcends the EU focused discussion, one that all states as a whole face in a globalizing environment.
I see some major macro issues that the globalization trend is facing, and I have read others here -- Helen, for one, in her diary brings this up -- and those issues indicate a need for nation state entities to find solutions for the upcoming challenges of accumulations of global eco-destruction, global warming, and declining cheap fossil fuels that so far fuel the globalizing economy. Subsets of that will be dealing with other large states, the US -- at least for now, though its hegemonic decline seems possible thanks to the acceleration of certain national factors that once gave it preeminence -- and what the US policies continue to do to effect the regions of significant resources, like the Middle East, where other emergent nations like China and India will be looking if they want to increase their economic standing in and share in the larger global economic system.
All of this to me is part of a larger neoliberal process that has a history that spans the beginning of European colonial expansion in the 1400s through a period of the colonies transforming to the composition of nation states the world is now.
Watch the following global map from Wiki's Colonialism and see how it changes from 1492 to now:
Not sure yet how neoliberalism is distinguished in the EU benefits list. Nor am I sure how "democracy" is defined. I hope to find out much more about the European perspective of those as I interact here.
So I am asking a question that may be on a different tact than the one in point 42, and that's whether the globalization process is transforming the nation states to something else yet, in the still formulating future.
For consideration I offer the following articles as an example of these challenges to nation states, the first is from a multi state NGO organization formed in 1973 by private citizens of Japan, European Union countries, US and Canada, The Trilateral Commission:
Globalization and the Changing Roles of States
The following remarks were made by Ernesto Zedillo to the 2001 annual meeting of the Trilateral Commission in London. Ernesto Zedillo is former President of Mexico:
It is commonly believed that globalization is forcing nation-states to adapt. This view considers that modern globalization is mainly a result of technological progress in production methods, transport, and telecommunications. It attributes to nation-states a somewhat reactive, even passive, role in the process. At the very best, proponents of this standpoint look at the nation-state as just one among several important factors in the globalization process. An extreme version of this view would submit that globalization frequently proceeds in spite of nation-states. I dispute the validity of this view because it does not correspond with practical experience and it can also lead to mistaken policy decisions. I believe that modern globalization has occurred not in spite of the nation-state, but really, to a significant extent, because of decisions and actions taken by nation-states.
Global integration, economic and otherwise, has indeed been driven by technological progress and economic incentives, but it would be inconceivable in its present form without the universe of political decisions taken by states at both the national and international levels in many fundamental respects. The rapid expansion of international trade and investment in recent decades has certainly been facilitated by technological progress, but it would hardly have occurred in the absence of very deliberate policies implemented by member states of the international community. At the national level, sovereign state decisions to foster the market economy by opening to foreign trade and investment and liberalizing financial markets are, more than anything else, key to explaining present economic integration. At the international level, it has been chiefly by virtue of political decisions made by sovereign states that many agreements leading to unprecedented integration have been made.
For example, regional agreements such as the European Union, Mercosur, and NAFTA were not the result of technological progress. They have been above all the result of political visions and decisions by sovereign states. The processes which have produced, for example, the remarkable, albeit yet incomplete, rules-based WTO system are of an equally political nature. Believe me that no technological factor would help to significantly explain the way in which the Mexican economy has integrated into the world economy in just a few years. Sheer political decision and action explain why today Mexico has free trade with more countries than any other nation in the world. Of course, this circumstance includes NAFTA and the unprecedented FTA with Europe.
Acknowledging the strong political roots of globalization brings with it both good and bad news. The good news is that notwithstanding their current adverse reputation, the human inventions of politics and the nation-state are still doing a lot of good. The bad news is that, contrary to some beliefs, globalization, being to a great extent a creature of political decisions, is not an irreversible process. Its technological determinism is a fallacy. Beware of the possibility that governments and politicians can still resort to new forms of protectionism to roll back existing liberalization and can also make policy mistakes that could lead to a less propitious environment for the expansion of the international economy. They can, in short, adhere too quickly and too blindly to the emerging "political correctness" that fallaciously imputes to globalization all the present evils of the world. Let us not forget that, in modern history, globalization was already reversed once by the actions of states with disastrous consequences for humankind.
If we believe, and I certainly do, that globalization is not the cause, but part of the solution to the problems of poverty and inequality which unfortunately prevail in the world, then nation-states have an enormous responsibility not only to confront, with good politics and wise public policies, the present hostility towards globalization, but also to continue playing an active role in its orderly development. Our conference chairman, Peter Sutherland has rightly pointed out that, "While the market economy system is largely agreed in principle, the mechanisms to make it work internationally are at an early stage of development." This is by no means an exaggeration. The agenda facing nation-states to harness globalization's full potential contribution to human development is very challenging as well as fascinating. Of course, I do not intend to burden you with an exhaustive discussion of such an agenda. Fortunately, it is being covered to some extent in the various sessions of this meeting. Just allow me to hint at a few points that I consider to be of some relevance.
First, I would insist on the fundamental and irreplaceable role of nation-states in the construction of global governance. In this task, as in many others, it is absurd to try to bypass the nation-state with agents of nil democratic representation and of dubious transparency and accountability. Indeed, let us be attentive to all voices, but without allowing the state to be overruled by other actors, however altruistic they may claim to be.
Second, nation-states should continue to strive for a rules-based international system. This is in the best interests of the weaker members of the international community. Far from diminishing modern national sovereignties, a rules-based system enhances the power of weaker states to safeguard their legitimate interests. I liked what Secretary Robin Cook said to us yesterday, "We are now as interdependent as we are independent." In reference to the developing countries' cases I could change somewhat Mr. Cook's idea to make it even more appealing: We are now independent to the extent that we are interdependent.
Third, the WTO experiment--indeed the first post-Cold War era rules-based institution--should not only be fully completed in a new comprehensive round of negotiations, but the basics of this model (binding regulations and dispute settlement provisions) should be extended to other essential areas. Rather sooner than later, the international community--represented by nation-states and assisted by existing multilateral institutions--should begin to decide on new or reinforced global institutions in fields such as the environment, investment, world taxation, banking standards, and accounting standards. Likewise, the fundamental issue of global public goods should be tackled.
Fourth, and most important, nation-states should more effectively confront the acute problem of social exclusion at both the domestic and the international levels. They should start by dispelling the mistaken idea that globalization per se is a main cause of existing disparities. Globalization offers unique opportunities that hardly any other economic arrangement could provide. The question is why some are able to take advantage of those opportunities, while others cannot--or are left behind. The bottom line (or I should better say, the dividing line) has to do with freedom. People are left behind because they are not free. And they are not free because they lack nutrition, education, training, health, basic human and political rights, security, elementary infrastructure, and employment. By means of well-designed and focused social policies which expand basic human freedoms, the most vulnerable members of societies can be empowered to share the opportunities provided by the market economy and globalization at-large. Of course this is more easily said than done. It requires sound domestic policies pursued by strong and democratic national institutions, but in many cases it also requires vigorous international cooperation that, unfortunately, is today practically absent from the agendas of the well-off countries of our world.
I hope that, beyond any altruistic sentiment, self-interest will advise a change in the present status quo about aid and international cooperation. Otherwise, confusion and animosity about globalization will prevail. And much sooner than later, everyone will have to pay for that.
The second is from another NGO of a different order, this one monitors the UN and is concerned that free markets are not enough to ensure global prosperity Global Policy Forum
Globalization and the Nation State
A Cartography of Governance: Exploring the Role of Environmental NGOs
Jayantha Dhanapala *
Colorado Journal of International Environmental Law and Policy
April 7, 2001
My task today is not an enviable one, for the twin subjects of my remarks -- globalization and the nation state -- have already been the focus of voluminous tracts by some of the keenest observers of the modern age. Yet one must address these issues, for the future role of environmental non-governmental organizations (NGOs) will be profoundly affected by the evolution of this complex process known as globalization, and this ever-changing structure known as the nation state. In the years ahead, environmental NGOs will not simply be passively influenced by these two hallmarks of our time, but they will also have the potential to influence them both for the good of all, and to ensure their harmonious coexistence for the common benefit of humankind.
Sovereignty, Globalization, and Interdependence
An essential link between globalization and the nation state is the concept of sovereignty, a term dating back several centuries, well before the nation-state system was established in 1648. Originally intended in reference to the establishment of order within a state, sovereignty has since been interpreted by some as a legal quality that places the state above the authority of all external laws. Yet whenever a state exercises its sovereign right to sign a treaty, it is also wilfully limiting that right by the very act of undertaking an international legal obligation. States are also bound by other rules, such as customary international law. With these formal legal limitations, sovereignty stubbornly persists even in an age of globalization -- and is manifested in such functions as the coining of money, the gathering of taxes, the promulgation of domestic law, the conduct of foreign policy, the regulation of commerce, and the maintenance of domestic order. These are all functions that are reserved exclusively to the state, a condition that the European Union is challenging today in many dimensions of governance, but has by no means overcome.
States have, over the years, discovered that their interests are better advanced within a broader system of binding rules than without such a system. Rules help to define rights, including property rights, as well as duties, including duties to do and not to do certain things. What precisely these rights and obligations are depends on a whole complex of circumstances: political, economic, cultural, and technological. In our current age, globalization is having a profound effect upon national and international rules -- it is, for example, influencing the norms that govern world commerce, transportation, environmental protection, to name only a few.
There is, however, no universally-agreed definition of this term. It made its debut in western public policy circles in the mid-1980s -- replacing "interdependence" -- and was at the time generally viewed in an economic context. Globalization simply referred to a largely commercial process involving rapid increases in the exchange of goods, capital, and services across national frontiers. It figured particularly in writings about the role of multinational corporations, with their global networks of vertically-integrated subsidiaries and affiliates.
Expanded flows of commerce across borders had, to be sure, many benefits. They provided profits, jobs, efficiencies of scale, lowered unit costs, and increased the variety of goods available for everyone to buy. This commerce was facilitated by important technological trends, like the increased speed and declining cost of long-distance transportation (both of passengers and of cargo) and similar developments in the field of telecommunications. Simply put, it was not just getting easier to do business across national borders, but highly desirable to the growing numbers of potential beneficiaries of this commerce.
Some commentators over the ages have even written that unfettered trade would be the key to world peace, since states -- and the large economic interests within them -- would be most reluctant to let wars interfere with the cool logic of mutual economic gain. Journalists, social scientists, and political leaders joined their economist friends in heralding a new age of interdependence, one that promised a more rational way of going about the world's business, one less influenced by unilateral actions by nation states, including the use of force.
Yet any fair assessment of interdependence must go back somewhat farther in history than the last few decades or so, for the concept is actually much older. Several historians, economists, and political scientists throughout the 20th century used the term extensively in their writings. They understood that the world's economy was highly interdependent even well before World War I. A recent study by the International Monetary Fund, for example, stated that "By some measures, international economic integration increased just as much in the 50 years before World War I as in recent decades, and reached comparable levels."
Many of these writers were also keenly aware of another dimension of interdependence -- namely, its potential to make armed conflicts much more devastating. Distinguished observers like Norman Angell, Leonard Wolf, Francis Delaisi, and Ramsey Muir wrote extensively on this theme and questioned the adequacy of the nation state in meeting the economic and security challenges of the new century. In short, the close interdependence of the world's economies did not only offer great benefits, but also entailed great risks, and great responsibilities for governmental reform. The capacity to generate wealth clearly did not come with any guarantees that this new wealth would be distributed equitably, as recent economic trends show clearly that the gap between the rich and poor -- both within and between nations -- has widened even in the generally prosperous decade of the 1990s. Interdependence also entails cross-border exchanges of what are called, negative externalities, including environmental pollution, risks of international pandemics, and thriving clandestine markets for arms, components of weapons of mass destruction, narcotics, and even illicit transfers of various forms of industrial wastes.
Globalization is an ongoing process, not a completed condition. Against the grand tapestry of history, it has arguably just started. It has grown from a purely economic or technological concept and now implies evolutionary change on a cultural dimension as well. Information communicated through modern print and electronic media is not just affecting commerce, but shaping world-views, relations inside families, and attitudes of citizens to the state. The process, however, has still not significantly touched an extraordinary proportion of humanity and hence has not yet truly earned its title, globalization.
U.N. Secretary-General Kofi Annan has spoken repeatedly about how unevenly the benefits of globalization have been distributed. He has noted the existence of a "digital divide" in which only 5 percent of the world is connected to the World Wide Web -- 80 percent of which is published only in English. He has repeatedly noted in his speeches that half of humanity has neither received nor made a simple telephone call. As for the economic benefits, he notes that almost half of humanity still lives on less than $2 a day, and that over a billion people earn less than $1 a day. Whether one looks at the availability of drinking water, sanitation, educational opportunities, other crucial facets of human development, one can see that globalization per se has offered no cure-all for humanity's welfare needs.
Nor has globalization ushered in a golden age of world peace. In the decade since the end of the Cold War, over five million people have been killed in armed conflicts around the world -- that is about a million more than the entire population of the state of Colorado. Today, the world is now spending around $800 billion on defence expenditures, over 90 percent of the levels spent during the Cold War. There also remain an estimated 30,000 nuclear weapons that, if used in a global conflict, could eliminate all the various gains of globalization in just a few minutes.
The Nation State
Many of the brightest prospects, as well as the worst potential risks, of globalization stem from the fate of the nation, in particular its association with the administrative structure known as the state. The idea that each state should have, or coincide with, its underlying nation goes back many years before the doctrine of national self-determination was enshrined -- albeit selectively -- in the Versailles Treaty after World War I. Though there is considerable disagreement over the formal definition of the term, the communitarian nation differs from the administrative machinery of the state much as the human spirit differs from the bones and muscles of one's body. The nation is not an administrative contrivance, but a form of collective social identity, one that is based on a common historical, linguistic, or cultural heritage.
Historically, the leaders of states have relied upon nations as a base of support for official laws and policies, indeed, as a basis for their own legitimacy. As the backbone of political power of the administrative state, the nation has rallied behind many great causes, including many of the progressive reforms in social, economic, and environmental policy of the 20th century. Yet since Napoleonic times, the nation has also been associated with the age of total war, of horrific conflicts between the peoples of the world rather than just their armies. This unfettered spirit of the nation, when combined with the revolutionary advances in military technology in the 19th and 20th century, has led to the bloodiest years in the history of humanity. Even today, the nation, and its associated ideology -- nationalism -- continue to provide a formidable obstacle to constructive international cooperation on an enormous variety of common global problems.
In an age of total war, of instant global communications and fast, cheap travel, the nation state has appeared to many observers as a quaint, even dangerous anachronism. Even a hard-core realist like Hans Morgenthau was drawn to declare thirty-five years ago that -- in his words -- Modern technology has rendered the nation state obsolete as a principle of political organization; for the nation state is no longer able to perform what is the elementary function of any political organization: to protect the lives of its members and their way of life . . . The modern technologies of transportation, communications, and warfare, and the resultant feasibility of all-out atomic war, have completely destroyed this protective function of the nation state.
Contemporary observers and leaders alike have devoted considerable effort throughout the postwar years in the pursuit of measures to go -- in the popular parlance -- "beyond the nation state." The functionalist approach of Jean Monnet and Robert Schuman -- the pioneers of the European Union -- sought to tackle this problem by building habits of cooperation in relatively non-sensitive areas of economic and cultural activity in the belief that, in due course, these habits of cooperation would spill over into more sensitive areas. Habits can be powerful political forces indeed. As Samuel Johnson once said, "The chains of habit are too weak to be felt until they are too strong to be broken." Obsolete though it may be in many ways, the nation state nevertheless persists as do, quite obviously, a multitude of nations. Indeed, many of the legal and political principles of exclusivity commonly associated with the nation state are enshrined in the great treaty linking all countries, the Charter of the United Nations. Yet, at the start of the new millennium, we are also seeing the gradual emergence of an awareness throughout the world of our common humanity and the planet as a whole rather than simply the sum of its parts.
This synthesis of the globe and the nation state as the fundamental units of sustained political activity is but another way of thinking about the process of globalization. The idea here is not to replace the nation state but to adapt it to be more responsive to human needs in new global conditions.
Without a doubt the best expression of the synthesis that is now underway can be found in a historic document that was issued last September after the Millennium Summit at the United Nations, the largest-ever gathering of world leaders. This document, called the Millennium Declaration, consists of a statement of common values and principles, as well as a list of specific common objectives. Specific initiatives are outlined in the areas of peace, security, and disarmament; development and poverty eradication; protecting the environment; human rights, democracy, and good governance; protecting the vulnerable; meeting the special needs of Africa; and strengthening the United Nations.
It is noteworthy that the primary agent for pursuing these common, global goals remains the state. The declaration itself, for example, was, unlike the Charter, a statement by "heads of State and Government" not their peoples. In this document, these leaders emphatically rededicated themselves "to uphold the sovereign equality of all States," to respect their "territorial integrity and political independence," and to reaffirm their commitment of "non-interference in the internal affairs of States." It is hard to read this language and conclude that the state is obsolete.
Yet to read only those passages pertaining to the state would be to ignore other parts of the declaration that clearly seek to move the focus of political action to the betterment of all humanity. Hence one finds listed among the key values of the new Declaration a "collective responsibility to uphold the principles of human dignity, equality and equity at the global level." The document declares the existence of a duty "to all the world's people" and refers throughout to "our common humanity." What makes this Declaration so interesting is not only the solid consensus behind it, but its brilliant synthesis and redefinition of ends and means in the millennium to come. The document puts forward clear global ends and relies upon states as key agents in pursuing those ends on behalf of all humanity. The Declaration offers states a road map of initiatives they should follow for the collective good of all.
In the area of protecting the environment, for example, the Declaration's language calls upon states to embrace and implement numerous international conventions and understandings, including the Kyoto Protocol and support for the principles of sustainable development enshrined in the Rio Declaration. The actions needed to enforce such agreements do not materialize from nowhere: they continue to depend heavily upon enlightened action by states.
Globalization and the NGOs
This begs the question, how is it possible to motivate structures of the state that have for centuries now sought to maximize the interest of specific local nationalities, to implement instead policies that serve the global common good? Even if it were possible to place an enlightened leader at the head of every government on Earth, that would be no guarantee that the complicated machinery of the state would respond to this solemn new responsibility.
Global values simply cannot be imposed upon states from without. They must be embraced by states from within. The state is a neutral administrative structure that can be used for purposes both good and bad. It is neither inherently nor inevitably the enemy of globalization.
The central challenge of our time is not to achieve the end of the nation state, but to rehabilitate the ends of the nation state.
Globalization must mean more than simply the sterile process of expanding markets. In presenting his Millennium Report to the General Assembly a year ago, Secretary-General Kofi Annan offered the following observations:
To make a success of this great upheaval, we must learn how to govern better, and -- above all how to govern better together. We need to make our States stronger and more effective at the national level. And we need to get them working together on global issues, all pulling their weight and having their say.
A few days later he described the following as needed for a well-functioning international system: "Ultimately, national action is the determining factor. If there is a single idea that embodies the sum total of national action, that idea is good goverance."
The essence of good governance is popular participation, transparency, and public accountability. Strong laws to protect the environment, for example, are forged as a result of a sustained political process, a process involving persisting efforts throughout civil society. Enlightened leaders in government require this popular participation to adopt laws and policies to meet genuine human needs, just as the groups in society that are advocating such reforms must also depend upon official authorities to promulgate and vigorously enforce such reforms.
In this light, NGOs can be a catalyst of what is truly good about globalization. Though they are elected by no one and lack legal authority themselves to govern, they play a crucial role in helping the state to identify new goals, in educating the wider public of the need for action, and in providing political support that government leaders need to enact new laws, to implement new policies, and to see that they are enforced. NGOs also will have a role in exposing inefficient and ineffective policies and in mobilizing demands for constructive change.
If it is true that the nation state is likely to remain for some time to come a prominent reference point in the "cartography of governance" -- the subject of this symposium -- it is also true that the specific role of this administrative structure will be determined by more than structural or topographic features of a political system. To this extent, a "meteorology of governance" is needed as well, for it addresses the dynamic though often unpredictable processes that occur across the political landscape.
If the winds of political change are to sweep into the dusty halls of government, they will originate from the same place they have always arisen from time immemorial -- they will flow from the voices of the people.
To overcome the numerous institutional obstacles to change, broad-based coalitions must be formed among the people. Environmental NGOs can accomplish much through their own hard work and focused efforts. They can accomplish much more, however, through networks of alliances with other groups throughout civil society that share a commitment to the common good. These are the kinds of networks that led to the conclusion of the Mine-Ban Convention and the campaign to create an International Criminal Court. The Partial Nuclear-Test-Ban Treaty owes much of its existence to sustained work by people around the world who were concerned about the health and environmental effects of atmospheric nuclear testing. This track record indicates that the nation state and globalization are surely not mutually-exclusive concepts. Working together, they have the potential to be among humanity's most effective means of improving life on this planet for all and on an equitable basis. This challenge is no more important than in international peace and security, and no more demanding than in the area of disarmament. If the collective aim is inclusive, results-based globalization, clearly environmental NGOs have already made an excellent start in their combined efforts -- not to eliminate the state -- but to channel its significant resources toward achieving responsible, collective ends. This is the solemn task of environmental NGOs in the future, the task of mobilizing a stubborn defence of our common global heritage. Its best partners in this grand endeavour will remain an informed public, other like-minded groups, a state guided by enlightened laws and policies, and a common global forum to coordinate and integrate different pathways to our collective ends.
The fate of these collaborative efforts will profoundly shape both the cartography and meteorology of governance in the new millennium. They will determine whether humanity will find itself facing the dawn of a new millennium, or the encroaching darkness of its last sunset.
About the Author:Under-Secretary-General for Disarmament Affairs, United Nations
And a third provacative question from Global Policy Reform:
Has Globalisation Really Made
By Noëlle Burgi and Philip S. Golub
Le Monde Diplomatique
From Gerhard Schröder to Massimo D'Alema, via Tony Blair and the apostles of the Third Way, Europe's politicians go on and on about less government and the weak state. In the same vein, many scholars argue that the nation state is a thing of the past. But these myths do not stand up to analysis. Worse still, they conceal the new configuration of power in the international system and lend legitimacy to the antisocial policies accompanying globalisation.
For 200 years capitalism was inextricably linked to the nation state. It emerged in the form of national markets, was based on national territories and relied on the state for support. Two nation states - Britain in the 19th century and the United States in the 20th - successively formed the hegemonic core of capitalism: each of them set the technological pace, set the rules of trade and production, and imposed the constraints of the world system. According to current wisdom, however, the bond between the nation state and capitalism is now coming to an end. Globalisation is said to be making the nation state obsolete, politics irrelevant and national sovereignty an empty shell.
This alleged demise of the nation state and national sovereignty is part and parcel of the universalist claims of contemporary capitalism. For the first time in history, capitalism has spread its reach to the remotest parts of the world and posits itself as a global system. Neither British capitalism in the 19th century nor even the American post-1945 version was truly universal. Today, capitalism is said to have finally broken away from its national moorings. It has become, as it were, extra-territorial, rootless, identity-less.
Hence the withering away of the nation state. Reduced to a managerial role in which it strives to cope with economic constraints that are beyond its control, it watches helplessly as the balance of forces swings towards the global markets. Within its historical borders it has ceased to be the locus of political action and identity, of social cohesion and the general interest. Beyond its frontiers it often retains only the formal attributes of sovereignty. In short, the state is supposed to have become, at best, just one among a number of otherwise private players in the international system. At worst, to have lost control altogether and to be no longer capable of influencing the course of events.
This view is particularly fashionable in Europe, where unification is proceeding by way of agreed transfers of sovereignty, but it does not stand up to an analysis of the origins of globalisation. It ignores the decisive role of the state in creating the global free market paradigm. It conceals the underlying aims of social policy. And it fails to appreciate the balance of power in the international system resulting from globalisation. Though in many parts of the world the state has indeed lost control, the fact remains that the American state has not withered away in the new free market utopia. On the contrary, US hegemony and sovereignty have been strengthened in spectacular fashion. In Europe, state power has been redeployed in accordance with the logic of globalisation to achieve economic unification. While the role of the state has been redefined (at the cost of growing social hardship), there has been no automatic weakening of state power.
Just as the intervention of the British state was decisive in establishing a free labour market to promote the expansion of industrial capitalism in the 19th century (see 'Globalisation then and now'), so the necessary conditions for the emergence of a global free market at the end of the 20th century have had to be created. The capitalist world economy in the period following the second world war was by no means a "free market". It was subject to a system of monetary regulation that ensured its stability and predictability. The state, as guarantor of social cohesion, coordinated economic, industrial and labour policy at a national level.
Globalisation is tearing apart this post-war social contract. The creation of a worldwide free market is rooted in a series of decisions taken by the US over the last 30 years which dismantled the post-war international monetary system, liberalised world markets and granted the financial sector an autonomy and power unparalleled since the golden age of British finance. The industrial capitalism of the "30 glorious years" after the second world war gave way to finance capitalism. And it is the financial sector - divorced from the economic foundations on which it rests - which now sets the pace, generates systemic constraints, and imposes normative behaviour.
The US began by abandoning the system of fixed exchange rates established by the Bretton Woods Agreements in 1944 (1) and introducing a system of generalised floating exchange rates. There was a strong economic motive for the decision, which the US authorities took unilaterally in 1973. They were seeking to compensate for declining competitiveness and a growing national debt by exporting the country's macroeconomic imbalances. The floating exchange rate system provided a flexible and efficient monetary tool that enabled them to avoid the adjustments that would otherwise have been required by America's new situation as a debtor. In a system of fixed exchange rates and gold convertibility, the US would have been obliged, like every third-world country today, to pay for its indebtedness with a relative loss of sovereignty and highly unpopular domestic austerity measures.
The new system also allowed the US to maintain a high standard of living at home by dipping into the planet's savings. Thanks to its political power and to the dollar, which was the world's only reserve currency, the US was able to keep its monetary sovereignty intact. Its allies could not question American policy without destabilising the institutional fabric and the cold-war security system from which they derived undoubted benefits. The burgeoning US deficit was funded for decades by Japan and Europe.
A decisive step was taken in the 1980s with the deregulation of the US finance industry, which paved the way for its globalisation via the Wall Street banks, brokers, hedge funds (2) and pension funds that dominate the world's financial flows. Worldwide liberalisation in the 1980s and 1990s gave the US finance industry access to the savings of the newly industrialised and emerging countries, where rates of return were very high. In short, the establishment of a global free capital market was essential for the economic and financial wellbeing of the world's leading debtor (3).
This explains the continuity of US policy on financial liberalisation, the "Washington consensus". In 1985 Ronald Reagan set out to knock down barriers to trade, foreign investment and the free movement of capital between industrialised countries, especially in Japan. His successor continued this effort though the Enterprise for the Americas Initiative, designed to support free markets and the free movement of capital in the western hemisphere. "Previous administrations had pushed for financial liberalisation principally in Japan, but under President Clinton it became a worldwide effort" directed in particular at the new area of wealth accumulation in East Asia, "seen as a potential gold mine for American banks and brokerages" (4).
The US secured the liberalisation of the Japanese financial system and the revaluation of the yen under the 1985 Plaza Accords through a mixture of coercion and cooperation typical of a hegemonic power. In so doing it inflated the bubble that eventually burst at the end of the decade. However, when it came to organising the forced march towards liberalisation of the newly industrialised countries, the government set itself on a war footing. The overall plan, coordinated by the US Department of Commerce, identified 10 rising economic powers from the Pacific to the Atlantic whose economies were to be opened up, and it called upon all government departments from the CIA to US ambassadors abroad (5).
As an emanation of the most powerful Western states that make up its membership, the International Monetary Fund legitimised this strategy. While some emerging countries and ruling castes have benefited from liberalisation, this does not alter the fact that it was imposed by coercion. As Robert Keohane and Helen Milner have pointed out: "During the 1980s intense political pressure was exerted by advanced industrialised countries on developing countries to open their economies ... the national economic regulations of developing countries were called into question" (6).
Hegemony has many faces. In the early 1990s Washington set itself three objectives: to maintain the global balance resulting from the end of the cold war, to ensure its technological lead and military supremacy, and to create an economic environment favourable to its own interests. For the most part, these objectives have been achieved. Admittedly, international balances are not static and hegemony does not mean absolute freedom of action. But no country or group of countries appears able to constitute a political counterweight to the US in the foreseeable future, let alone call into question its primacy in the hierarchy of nations. As political pundit Thomas Friedman puts it: "In the globalisation system, the United States is now the sole and dominant superpower and all other nations are subordinate to it to one degree or another " (7). In other words, they ought to accept America's "benevolent global hegemony".
Benevolent or not, US hegemony is a fundamental reality that conditions the international political economy. The worldwide free market is strengthening the American model, which today relies on its strong comparative advantages in the post-industrial sectors of financial and cultural services, communications, leading-edge technologies and scientific-technical production. At the same time, a normative world culture is emerging in the realms of economic activity, social practice and private international law.
And it is the US which is laying down the new groundrules, i.e. the dominant economic norms (profitability, shareholder value), the regulatory criteria (ratings of companies and states), and the legal rules (international commercial arbitration). For instance, the behaviour of the markets is shaped by the ratings awarded by two major US private rating agencies, Moody's and Standard & Poor. Acting both as judge and party, they are imposing US normative criteria on the rest of the world (8).
American capital thus operates in a universe of rules which it is constantly redefining and which determine the constraints of the international system. The US itself is not subject to those constraints. Nor has the American state lost control of the markets: the Federal Reserve's decisive action following the stock market crash in 1987 and the US Treasury's intervention in 1994-95 after the collapse of the Mexican peso are obvious cases in point. The state also played a crucial though belated role in 1997-98 during the Asian crisis in preventing the collapse of international banking system and ensuring that liberalisation could continue.
Within this overall primary hegemony, the other Western powers participate to varying degrees in a broader pattern of western hegemony vis-à-vis the "third world". Globalisation is institutionalising a new balance of power between states that hardens the sovereignty of some while reducing the autonomy of the others. The worldwide free market accentuates the disparity between the centres of capital and the peripheries. The players with knowledge and power lay down the rules; the others fall into line.
Trapped in an international division of labour that forces them into often harmful specialisation, the most vulnerable third-world countries are losing the last remnants of their sovereignty, while the newly industrialised countries have become even more dependent over the last few years, as recent experience in East Asia proves (9). This is hardly surprising. "Emerging" countries have never had more than limited autonomy, and the formal sovereignty of those on the weakest fringes has always proved more theoretical than real.
While the European Union is an active participant in the worldwide free-market utopia, at the same time it constitutes a potential counterweight. Since the early 1980s European unification has been directed towards the creation of an entity capable of competing with the US, rather than opposing it. By combining forces in a larger unit, the member states have been attempting to assert their sovereignty jointly in response to globalisation, since none of them is any longer able to do so individually.
From 1981 to 1983 France still believed it could go it alone. In the end it was forced to abandon its policy of growth stimulation in favour of an antisocial austerity package chillingly described as competitive deflation. It might seem that the constraints of globalisation and the demands of economic unification were now absolute and left national governments no room for manoeuvre. A closer look at the redeployment of sovereignty and political power in Europe shows this conclusion to be false.
Transfers of sovereignty to the EU - with regard to monetary matters or competition law - do not necessarily imply a reduction of national sovereignty. They are not a zero sum game. Under pressure in the new international political economy, the European nation states are pooling their sovereignty to resist submersion. In other words, they are attempting to recover the sovereignty under threat at national level by relying on the strength of a larger regional entity.
The EU has no central authority. Decision-making bodies vary from sector to sector. But on matters of strategic importance, the influence of the member states often remains decisive. The Council of Ministers (i.e. the national executives of the member states), and especially the ministers of finance and economic affairs, have a privileged position among the EU institutions, at the expense of the European parliament and the national parliaments.
If we consider sovereignty as relative autonomy within the inter-state system, there is little doubt that the national executives have been able to exercise it through the EU institutions, at least in key areas relating to the world economy. If there is one subject of European consensus, it is free competition, which has been raised to the status of an absolute good. There can be no doubt about the concordance of national and European policy on this matter, since many of the reforms introduced by member states at national level preceded the corresponding EU regulations and sometimes go much further than required by strict compliance with EU constraints. France's deregulation of its financial markets in 1984, on Anglo-American rather than German lines, is a case in point (10).
Popular sovereignty, on the other hand, is breached with increasing frequency by EU practices that prevent parliaments and, even more so, civil society from playing their proper role in areas of crucial concern. In the context of globalisation and European unification, we have a situation - often referred to as the "democratic deficit" - in which the redeployment of state sovereignty is being achieved at the cost of a considerable increase in the autonomy of the political authorities, barely concealed by a barrage of new regulations designed to attenuate the effects of social distress. And when it comes to social measures, the Commission is deliberately holding back on the grounds that the complexity of national systems of social protection, and the specific historical development in each member state, would make social harmonisation highly problematic if not impossible.
National governments, which are closer to their citizens, are supposed to be in a better position to defend their interests when it comes to respect for social traditions and national temperament. Nevertheless, all the national social reforms proposed or implemented are converging towards the same goal: the liberalisation of labour markets. Contrary to the new conventional wisdom, the fact that such reforms are entrusted to the member states, and are implemented incrementally, by no means indicates any resistance by national governments to the forces of globalisation.
The nation states are simply playing the role which Karl Polanyi identified in the context of the first "great transformation" (see 'Globalisation then and now'), that of "altering the rate of change, speeding it up or slowing it down as the case may be". Governments are defusing resistance by reforming step by step. But as the combined effect of the measures comes to be felt, they too are experienced as faits accomplis.
There is much lamenting over the powerlessness of national governments. Yet these very governments are contributing fully to the elaboration and implementation of the new hegemonic political economy. They have chosen to participate actively, rather than simply adapt (11), and are acting simultaneously at national, regional, local and European levels to redefine the rules in line with current neoliberal dogma and practice. The role of EU institutions has been less to usurp national sovereignty than to enable the member states to pursue their national interests by other means.
Because of the way it was conceived from the outset, European unification is a finality without a goal, a forced and blind march forward towards a final objective that is always receding into the distance (12). Since there is no turning back, member states cannot go back on their word. They are trapped in the machinery. In defining general policy options, they bear responsibility for rules subsequently laid down by the Commission that are binding on all their citizens and take priority over national legislation.
So far, responsibility for the consequences of the policy choices of the nation states has been largely attributed to Europe, thus protecting them from blame. But through this blame avoidance strategy, states could well end up losing control of the process. If that happened, there could be no return to the status quo ante. Left to themselves, nation states would lose the room for manoeuvre they had regained by concerted action. The only solution would be to redefine the purpose of European unification.
The growth of inequalities not only raises ethical issues. In the end it always holds back economic development and undermines social cohesion. The transnational dynamics of the EU could provide an opportunity for upward social harmonisation in line with the most favourable rules and practices (on working conditions, wages, employment, social protection, etc.) That would require political determination that is currently lacking but, if it could be mustered, would set an excellent example. Failing that, the establishment of a European free-trade empire in the face of US hegemony may perhaps result in multipolarity but will certainly not lead to a fairer world.
Noëlle Burgi is a CNRS research fellow at the Centre for Political Research, University of Paris I - Sorbonne. Philip Golub is a lecturer at the Institute of European Studies, University of Paris VIII - Saint-Denis.
(1) The Bretton Woods Agreements of 1944 laid the basis for the post-war international institutional set-up (IMF, BIRD, etc.)
(2) Speculative funds that avoid federal regulation by having fewer than 99 investors.
(3) The net US deficit now stands at $1.5 trillion, i.e. 20% of GDP.
(4) Nicholas D. Kristof and David Sanger, "How US Wooed Asia to let the Cash In", New York Times, 16 February 1999. See also "Les Etats-Unis et la mondialisation financière", Nord-Sud Export, no. 375, 30 April 1999.
(6) Robert O. Keohane and Helen V. Milner (eds.), Internationalization and Domestic Politics, Cambridge University Press, Cambridge, 1996, p.24.
(7) Thomas Friedman, The Lexus and the Olive Tree, Farrar, Strauss and Giroux, New York, 1999.
(8) Saskia Assen, Losing control?: sovereignty in an age of globalization, Columbia University Press, New York, 1996, pp. 14-18.
(9) See "La Mondialisation contre l'Asie", Manière de voir, no. 47, September 1999.
(10) See Jean-Paul Fitoussi, Le debat interdit : monnaie, Europe, pauvreté, Arlea, Paris, 1995, pp. 202 et seq. Another example is the change in the legal definition of the state made by France's Constitutional Council in 1987, which removed the reference to the public interest and restricted the definition of the state to the means available to it. The practical outcome is that, as a result of joint European and national measures, activities of public interest are increasingly subordinated to competition law.
(11) Egged on by the EU governments, European banks largely contributed to the bubble in the emerging countries. See Philip S. Golub, "La vulnérabilité des banques européennes sur les marchés émergents", Nord-Sud Export, no. 366, 4 December 1998.
(12) Marc Abélès, En attente d'Europe, Hachette, Paris, 1996.
Translated by Barry Smerin
Update [2007-4-19 19:24:20 by Ren]:Thanks to some friendly help from Jerome about the need for a macro, as a touch of my shady side of humor, I'm adding this YouTube clip as a suggested answer to the question in the title: