Nation State Object or Actor in A Global Economic Process

NationstateObjectorActorinGlobalEconomicProcesses?
NationstateObjectorActorinGlobalEconomicProcesses?
byJarosawWojciechGrski
Source:
ThePolishQuarterlyofInternationalAffairs(ThePolishQuarterlyofInternationalAffairs),issue:4/
2005,pages:3557,onwww.ceeol.com.
JAROSAW WOJCIECH GRSKI
Nation-stateObject or Actor in Global Economic Processes?
Territorial State Sovereignty Formerly and in the Globalization Era
The vigorous discussion about the economic dimension of globalization is
accompanied by equally intense debate about its impact on state institutions.
Globalists,
1
especially those with a negative attitude to globalization, contend
that the latter is a force weakening the authority exercised by the state and its
traditional responsibilities. According to this view, as a result of cross-border
economic flows the state is losing the ability to maintain effective control over
what is happening within its territory. Due to the erosion of formal structures and
national governments loss of authority the state is ceasing to be an effective
form of social organization capable of either assuring its citizens enjoyment of
the benefits of globalization or taking steps to ward off global threats.
This position is contested by globalization sceptics.
2
They argue that
globalization is merely a concept, another name for internationalisation of the
economic sphere of life. They dismiss the globalists claims regarding the
diminishing significance of states and their loss of sovereignty vis--vis
increasingly powerful global entities and world markets. They believe that the
state continues to be the only significant, fully autonomous actor with full
decision-making authority in international relations.
The Polish Quarterly of International Affairs, 2005, no. 4 35
1
Followers of the hyper-globalization school, throughout this article referred to as globalists.
The name given to people who regard globalization as a qualitatively new stage in the evolution
of civilization (see, for example, B. Liberska, Wspczesne procesy globalizacji gospodarki
wiatowej, in: B. Liberska (ed.), Globalizacja: Mechanizmy i wyzwania. Warszawa, 2002, p.
21). They agree that the world economy is more integrated than ever in history and that
integration now has characteristics that are different in kind. They place globalization at the top
of the forces shaping contemporary international relations. However, within the globalist
approach there is a clear split into two camps: globo-enthusiasts, who see globalization as a
virtually unmixed blessing, and globo-critics, who highlight its inherent threats.
2
Globalization sceptics believe that globalization is merely an intellectual construct artefact and
see no evidence of the kind of processes that would validate the idea of a new era of integration
of the world economy. They argue that in the past it was already more or less integrated so that it
makes more sense to speak of further internationalisation of national economies than emergence
of global relations.
Aside from these two diametrically different perspectives there is one other
position since exponents of the global transformations approach theorists believe
that representing globalization and the nation-state as two alternative forms of
social organization contending with each other, as in a zero-sum game, for
influence and power in international relations is a serious methodological error.
It is hard to accept the globalization sceptics assertion that nothing is changing
in the actor structure of international relations. It is likewise impossible to accept
the globalist claim that globalization is undermining nation-state institutions.
Both groups overlook the fact that we are dealing with a comprehensive
transformation of the system of international relations and domestic relations
within states. By contrast, in the global transformations approach the focus is on
the new tasks of states in the globalization era and the necessity of redefining its
functions, sphere of responsibilities and methods of implementing policy
broadly defined. This means that globalization is not a threat to the state but
something morea challenge requiring development of new forms of exercising
sovereign territorial authority.
The doctrine of sovereignty developed in two distinct dimensions: the first
concerned with the internal, the second with the external aspects of sovereignty.
The former involves the legally entrenched right of a person, or political body, to
exercise supreme command over a particular society. Government then enjoys
the final and absolute authority within a given territory. The latter involves the
assertion that there is no final and absolute authority above and beyond the
sovereign nation-state. States must be regarded as independent in all matters of
internal politics. External sovereignty is a quality that political societies possess
in relationship to one another; it is associated with the aspiration of a community
to determine its own direction and politics without undue interference from other
powers.
3
The classic system of sovereign states took shape in the 17th century. The
key factor in the rise of this system was a process of reciprocal acceptance of
countries as the dominant sources of authority and as organizations enjoying a
monopoly of the machinery on the use of coercive power within a particular
territory. The emergence of a society of mutually recognized states, first in
Europe and later across the globe, went hand in hand with a new conception of
international law now referred to as the Westphalian regime. The Peace of
36 The Polish Quarterly of International Affairs, 2005, no. 4
Jarosaw Wojciech Grski
3
D. Held, The Changing Structure of International Law: Sovereignty Transformed?,
http://www.polity.co.uk/global/pdf/GTReader2eHeld.pdf, p. 1.
Westphalia
4
sanctioned implementation of policy in a given area inhabited by a
distinct community on an autonomous basis, that is by a sovereign authority
exercised in this geographically discrete territory. The Westphalian settlement
gave birth to an international system for recognition of states which opened the
way to internationalization of intra-state authority and politics. Thenceforth the
state was perceived as a first-order political community with the right and ability
to determine and execute every kind of activity that fell within the bounds of
legitimate authority as it was then understood. The society of states was, therefore,
a self-contained world of entities acting on their own account.
5
Kenneth Waltz
6
has characterized post-Westphalia world relations by means
of a theatrical analogy: states wrote the script and played the leads, non-state
actors had walk-on parts in the unfolding story.
In the 1970s and 1980s it became obvious that the traditional pattern of
international relations and its almost complete domination by inter-state relations
was no longer the order of the day. Greater importance began to be attached to
analysis of global actors which were neither states nor state institutions. However,
even within these new approaches there could be seen adherence to the belief
that countries were still the chief sources of power and authority.
Today states are no longer treated as the sole actors in global relations.
International economic-political blocs, international (or supranational) organizations,
multinational corporations and international non-governmental organizations
(international included) are now numbered among the socio-economic actors
which operate across borders.
7
In recent years there have even appeared arguments
in support of the claim that the significance of states as actors in global relations
is declining. In many spheres they are no longer capable of asserting sovereign
authority within their borders since many of their erstwhile functions have
disappeared or are more effectively performed by supra-territorial organizations.
4
P. Hirst, P.G. Thompson, Globalisation and the Future of the Nation-state, in: J. Michie (ed.),
The Handbook of Globalisation, Cheltenham, 2003, p. 290. Basically, Westphalia comprised
two treaties, one signed: in Mnster, the other in Osnabrck.
5
Cf. the seven principles of the Westphalian model of the nation-state, in: D. Held, Democracy
and the Global Order: From the Modern State to Cosmopolitan Governance, Oxford, 1997, p. 8.
6
K.N. Waltz, Theory of International Politics, New York, 1979. Quoted in: R. Woodward, An
Ation Not a Nation: the Globalisation of World Politics, in: J. Michie (ed.), op. cit., p. 311.
7
Cf. S. Flejterski, P.T. Wahl, Ekonomia globalna: Synteza, Warszawa, 2003, pp. 5990.
Globalists refer to a separation of authority from territory and to atrophy of state
institutions.
The classic regime of sovereignty is becoming history, but this is not true of
sovereignty as such. Its traditional, post-Westphalian form has been rendered
obsolete by changing global order processes. National independence and
autonomy exist in a broader context of governance and law in international
relations in which states are no longer the sole source of political power. The end
of sovereignty conceived in terms of the Westphalian model of the state can for
convenience be dated to 1945 and the signature of the UN Charter by 50 nations.
This fact should be recognized as curtailing the omnipotence of the sovereign
state vis--vis both other states and its own citizens
8
and the creation of a
broader, international law-delimited context for the sovereignty of countries.
The most important change that has taken place since the Peace of
Westphalia is that sovereignty can no longer be perceived as unfettered effective
power. Cross-border interactions and policies crafted at new levels of
supranational governance (and concerning, for example, the world economy, war
and peace issues, protection of the environment, or human rights) are dissolving
state boundaries and negate the idea of sovereignty as an indivisible, unrestricted,
exclusive and permanent form of public authority attributed to a particular
country.
Globalists believe that the end of the 20th century spelled the end of state
sovereignty. Lester Thurow and Wolfgang H. Reinecke argue that the state has
lost its monopoly over internal sovereignty and as an externally sovereign actor
it will become a thing of the past.
9
It is, however, worth pointing out that
historically the scope of states effective autonomy, defined in terms of the
capability of independent formulation and implementation of public policy, has
always been smaller than implied by the demands and aspirations of sovereign
national governments.
10
Though states have never enjoyed an absolute monopoly of authority an
assertion often found in the literature is that at present the more powerful state
8
E. Wnuk-Lipiski, wiat midzyepoki, Krakw, 2003, pp. 146150.
9
Cf. W.H. Reinecke, Global Public Policy, Public Affairs, 1997, no. 76; L.C. Thurow, Building
Wealth: The New Rules for Individuals, Companies, and Nations in a Knowledge-Based
Economy, New York, 1999.
10
J. Perraton, D. Goldblatt, D. Held and A. McGrew, The Globalization of Economic Activity,
New Political Economy, vol. 2, July 1997.
makes skilful use of their decision-making powers and are asserting fuller
control over the course of both external and internal processes. According to
Waltz,
11
the range of functions performed by governments and the extent of state
control over society and economy, at least in well-established states, has
seldom been fuller than it is now. Other specialists deny the existence of a
tendency to weaken citizens identification with their states and consider belief
in the diminished sovereignty of nation-states, dilution of their power and
narrower decision-making scope to be merely an illusion, not a reflection of the
realities.
12
In an interesting analysis of the future of the state in the globalization era
13
Paul Hirst and Grahame Thompson also take issue with the view that
globalization gainsays the raison dtre of independent state power. They point
out that it is precisely in the 20th century that states have acquired the resources
and found ways for effective management of national economies either through
autarky and central planning or through dirigisme as in Britain and Germany
during the first and second world wars or through Keynesian measures
employing monetary and fiscal policy to influence economic actors decisions
and thereby economic outcomes.
The society of states has moved from the anarchic to a quasi-civic stage of
evolution. But this is not to say that inter-state relations are lacking in any
elements of struggle for power, influence or outright political and economic
hegemony: dialogue and cooperation have not blinded states to these conflicts.
Instead, the focus in inter-state rivalry has shifted to the economic sphere.
Aspirations to exclusive possession of the instruments of power and coercion in
a particular territory are no longer a necessary condition of the survival of the
state defined as a form of social organization.
Judgements about the destructive impact of globalization on the sovereignty
and autonomy of states frequently derive from adoption of too rigorous a
definition of sovereignty as the ability to control everything (including economic
life and social movements) within a given territory. Though the state does not,
and probably never will, have complete supervision over internal processes, it
continues to be the sole legitimated source of the rules governing relations
11
K.N. Waltz, Globalization and Governance, Political Science & Politics, 1999, no. 4, p. 6.
12
Cf. W. Pfaff, Despite Global Changes, National Sovereignty Remains King, International
Herald Tribune, 30 March 2000, http://www.globalpolicy.org/nations/intl.htm.
13
P. Hirst, G. Thompson, op. cit.
within its jurisdiction. At present sovereignty means that all actors inside and
outside the state, whether a golf club or the World Trade Organization, can
exercise their prerogatives only because they have obtained the assent of nation-
states.
14
Even the European Union, a grouping with a pattern of governance that
comes closest to the supranational model, possesses its range of decision-making
powers because it has been invested with these by sovereign state organs.
But that still leaves one crucial but problematic question. Do all states have
equal capacities to structure international relations and the scope of sovereignty?
Can every state claim to have an input in the transfer state authority to
international organizations which then exercise their powers and realize their
interests in the territories of particular states? Do globally implemented social,
economic and political rules have their source in all the countries directly or
indirectly obligated to observe them? There are no simple answers to these
questions which call for profound reflection.
Particular attention is drawn to the fact that it is the sovereignty of
developing countries that is most at risk since they are the ones most vulnerable
to pressures from sources of power which lack legitimation and are beyond the
reach of these states control mechanisms.
15
Emerging nations meet with
recommendations originating directly or indirectly (through international
entities) in the advanced countries which concern employment of specified
policies and institutions. The institutional system recommended toand in part
simply forced upondeveloping countries as a pre-condition of admission to
broader participation in global processes offering the economic benefits of
integration into the world economy includes arrangements relating to, among
other things, democracy, the bureaucracy, protection of property rights, human
rights and labour standards, financial institutions, and organization of the public
finances and social security system. It is objected that the arrangements currently
pressed on poorer countries circumscribe their capability of sovereign management
of internal relations since they do not speed up development (not only in
quantitative termse.g. through size of GDP, but also qualitativelythrough
conditions conducive to improving the quality of life) but reflect, rather, the
14
D. Armstrong, Globalization and the Social State, in: R. Higgott, A. Payne (eds.), op. cit.,
p. 529.
15
Cf., for example, C. Ha-Joon, Kicking Away the LadderGlobalisation and Economic
Development in Historical Perspective, in: J. Michie (ed.), op. cit.; J. Toye, The International
Monetary Fund (IMF) and the World Bank (WB), in: J. Michie (ed.), op. cit.; J. Stiglitz,
Globalization and Its Discontents, New York, 2002.
interests of the advanced industrial countries. Advanced countries with
well-established and autonomous internal authorities and strong representations
in supranational organizations with a considerable influence in global relations
(notably the International Monetary Fund, the World Bank and the World Trade
Organization) push through neo-liberal policy measures referred to most
generally as the Golden Straitjacket. Such measures may be called pragmatic
application of liberal principles
16
and consist of economic policies backed by
institutional arrangements which the North countries, when they were at a stage
of development comparable to the Souths current stage of development, did not
have but which are to their advantage today.
Autonomy of States in the Economic Policy
In writings on the subject we can find radical assertion that the state is being
stripped of all autonomy by global processes. According to some observers, the
globalization process is tending inexorably toward destruction of the institutions
of government as such. By contrast, the progress and momentum of economic
globalization are fuelled by the wakening of the state and abandonment of the
pursuit of economic policy. The state becomes dominated by capital and
financial markets and the result is nothing short of disfranchisement of national
governments.
17
The impact of globalization forces on the ability of states to pursue a
sovereign economic policy is effected in three basic areas: international trade in
goods and services, internationalization of production and integration of
financial markets. Global trade is considered a significant threat to realization of
the welfare state idea in which an important role is played by two basic
elements: public provision of social services (e.g. education and healthcare) and
income redistribution programmes (pensions, unemployment benefit and the
like). Operation of a welfare state has the effect of increasing business costs,
driving up inflation and interest rates and crowding out private investment,
and in the longer run producing economic stagnation. Since no state can afford
such costs it is thought that countries wishing to participate actively in the world
economy through intensification of trade are forced to scale back the public
sphere and wind down the states presence in the economy.
16
T.G. Grosse, Globalizacja gospodarcza i jej implikacje dla Polski, Ekonomia, 2002, no. 8,
p. 185.
17
W. Szymaski, Globalizacja. Wyzwania i zagroenia, Warszawa, 2001, p. 99.
A second source of constraints on pursuit of autonomous state-controlled
economic policy is internationalization of production. It is indisputable that
multinational corporations can call on the requisite arguments to secure
advantageous operating conditions within national economies that help them
realize high profits at low costs. One such compelling argument, of course, is the
threat to pull out of a country and relocate to a more friendly environment. No
country is strong enough to afford the risk of driving away foreign capital: quite
the contrary, national economies are engaged in competition for investment by
foreign companies. On the one hand, it is thought that such pressures are
triggering a process known as the race to the bottom in economic policies, that
is reduction of economic costs through tax cuts and deregulation. On the other
hand, it would be wrong to overestimate the significance of the cost factor by
which corporations are guided in choosing destinations for production
offshoring. A number of studies have shown that the geographical location of
foreign investment is determined primarily by a wish to gain access to new
technologies, distribution channels and new markets.
18
A significant area in which global processes merge with autonomous action
by government in the economic sphere is integrated financial markets. It is
thought that global capital is the ultimate and inflexible arbiter of the actions of
states, an enforcer of economic policy discipline. Conducting policies which in
any way distort the market is liable to meet with severe punishment ranging
from rising public debt service to massive capital flight and financial crises.
These three areas of diminishing national autonomy in the economic policy
sphere reflect a belief that by dragooning countries into race to the bottom
globalization basically prevents implementation of any kind of governmental
economic policy, whether macroeconomic or industrial, social or regional. The
blame for such far-reaching disempowerment of the state by the tide of global
processes is laid, on the one hand, on the remorseless spread of neoliberal
doctrine and the related Washington consensus, on the other, on the operations
of multinational corporations which are now present in all three areas of erosion
of sovereign, national economic policy: trade, investment and financial markets.
The global processes-driven race to the bottom in economic policy has been
most searchingly investigated on evidence drawn from the more economically
developed countries belonging to the Organization for Economic Cooperation
18
Cf., for example, J. Cantwell, Technical Innovations in Multinational Corporations, London,
1989; J.H. Dunning, Multinationals, Technology and Competitiveness, Boston, 1998.
and Development (OECD).
19
One of the possible ways of testing whether
globalization leads to races to the bottom and retreat by government from the
economy is to examine levels of budget expenditures and deficits. Since 1870
right up to the present day the scale and scope of the states presence in the
economies of advanced industrial countries have expanded almost non-stop
(spiking in the period from the 1940s to the 1970s) and was measured both by
the share of budget spending relative to GDP
20
and the size of budget deficits.
An overview of the statistics points to a correlation between advances on
globalization and growth of public expenditures, which seems to contradict the
occurrence of races to the bottom in OECD countries. The budget spending and
deficit figures in developing countries exhibit a similar interconnection.
It has, however, to be pointed out that concurrence of globalization and
expansion of the public sphere does not necessarily mean that there is a causal
relationship between these two phenomena. The most significant observation
connected with the fiscal policies pursued in various OECD countries in the
years 19601994 concerns, however, the lack of convergence in these policies.
One could infer divergence of economic policies.
21
Globalization generates a
need for government action the main aim of which is to minimize market failures
(particularly glaringly manifest in global capitalism). However, different states
respond to this need in different ways.
Nor does analysis of the effective distribution of tax burdens between capital,
labour and consumption confirm the existence of a general interrelationship as
per race-to-the-bottom theory. In particular there is no evidence that tax systems
worldwide greatly privilege capital. Dani Rodriks hypothesis
22
that as a result
of globalization the tax burden is shifted to less mobile entities (populations) has
not been borne out in this analysis. It has been found that there is no correlation
between financial openness and significant increases in the tax rates on labour
19
Cf., for example, G. Garrett, Shrinking States? Globalization and National Economy in the
OECD, in: R. Higgott, A. Payne (eds.), op. cit.; World Bank, World Development Report
1997: The State in a Changing World. Summary, Washington, 1997; R. Wade, Globalization
and Its Limits: Reports of the Death of the National Economy are Greatly Exaggerated, in:
R. Higgott, A. Payne (eds.), op. cit.
20
World Bank, World Development Report 1997: The State in a Changing World. Summary,
Washington, 1997, p. 4.
21
G. Garrett, op. cit.
22
D. Rodrik, Has Globalization Gone Too Far?, Institute for International Economics,
Washington, 1997; quoted in G. Garrett, op. cit., p. 471.
income. Furthermore, there are no signs of OECD countries moving towards
uniform tax systems and harmonizing these systems in terms of capital
preferences and liabilities. Indeed, increases in the effective taxation of capital
do not by any means spell a decrease in inward investment into a country which
decides on such a step. What matters is the structure of tax receipts from the
different forms of capital. The shifts in tax rates on capital that have occurred in
recent years have, basically, conformed to the interests of investors of mobile
capital and transnational corporations.
Based on the analyses conducted to date and close observation of the
relationships between globalization and national economic policies there are no
ground for concluding that the logic of markets operating across borders,
liberalization and deregulation of international trade, given the sweeping advances
made in this process, leads () to reduction of the sovereignty of states
economic policy.
23
Nor are there convincing arguments that in the globalization
era states with more extensive public sectors record worse economic results. On
the other hand it would be true to say that the quantitative and qualitative
involvement of government in an economy and the extent of that economys
regulation by the public administration depends not only on the degree of a
countrys integration with the world economy but, first and foremost, on the
state itself, on its institutions, political regime and type of government.
Using the nomenclature proposed by David Soskice one can say that the
challenge facing the state is developing institutional competitive advantage.
24
There is, of course, an important role here for a judiciously pursued economic
policy. Markets are demanding and will not be satisfied simply with reasonable
costs. Of fundamental significance are security of property rights and guarantees
of enforcement of contracts. However, the range of mutually profitable relations
between the state and the world economy entities penetrating its borders may be
much wider and cover, for example, public delivery of educational services,
healthcare and promotion of research and development. Mutually non-
threatening cooperation between markets and government is therefore possible.
The view that abdication by the state of performance of economic functions is in
the best interests of global entities is rejected. The right kind of government
23
W. Szymaski, op. cit., p. 55.
24
D. Soskice, Divergent Production Regimes: Coordinates and Uncoordinated Market
Economies in the 1980s and 1990s, in: H. Kitschelt, P. Lange, G. Marks, J. Stephens (eds.),
Continuity and Change in Contemporary Capitalism, New York, 1997.
involvement in the economy, consisting in the narrowest degree in fostering a
business-friendly environment and conditions for social and economic stability,
could be highly productive.
Claims about the presence of transnational tendencies
25
in macroeconomic
policies and suggestions that states are powerless to make political choices, these
being restricted by the operation of markets and multinational corporations to
certain forms of fiscal policy and social policy, are not sufficiently substantiated.
There is no antithetical relationship between sovereign economic policy and
globalization. This is evidenced by the continuing diversity of national
capitalisms and its inherent capability to deploy adaptation strategies to respond
to globalization.
Does the Economic Logic of Globalization Point to Atrophy of the State?
Views about the twilight of the state are supported by re-evaluations of the
role of capital. The scale of the power and influence commanded today by
stakeholders in multinational corporations and owners of globally mobile forms
of money and by international organizations which promote the interests of this
group of entities are overestimated. In order to underscore the contemporary
powerlessness of nation-states globalists exaggerate and idealize the capability
of states to operate sovereign policies, especially in the economic sphere, in the
days before the onset of globalization. However, there are those who say that
states problems with macroeconomic management and achievement of high
levels of economic performance are simply a result of internal fiscal travails
caused by recession and have little to do with globalization trends. It is further
pointed out that conclusions about the vanishing autonomy of states are based in
some measure on a belief that states responses to globalization are growing
increasingly alike. Globalists who speak of a neoliberal diktat and requirement
that government withdraw from the economy overlook the existence of
differences in national economic policies. States are seeking their own paths to
success and adapting to the shifting conditions of the global environment.
The political case made for the decline of the nation-state should be considered
too sweeping and one-sided. It would be wrong to agree with assertions about
the erosion of state institutions. We should acknowledge the merits of relative
approaches in which the assumption is that global economy conditions act as
25
L. Weiss, Globalisation and the Myth of the Powerless State, in: R. Higgott, A. Payne (eds.),
op. cit., p. 427.
constraints primarily on the capacity to act of weaker states.
26
Such states (ones
with fragile public institutions and political authorities) may have problems with
remaining in control of domestic social and, above all, economic processes. In
other words, weak states are more liable to give in to the influence of supranational
entities, pressures from foreign investors, conditions laid down by international
capital, and policies proposed by strong states and international organizations.
It seems possible to speak of a kind of political provenance for the shrinking
state concept. Public authorities shift the blame on globalization when economic
development plans fail to deliver. These authorities defend themselves on the
ground that nation-state institutions are losing independence and the power to act
as a result of globalization. Inability to control global forces and supranational
interests and decisions, actions and trends beyond the reach of autonomous state
authorities is cited to vindicate the political impotence of the nation-state. In line
with this globalist logic states are incapable of independently shaping the level
of economic activity, employment or redistribution of wealth within their
territorysuch choices are forced upon them by mobile cross-border capital.
The role of the state is consequently restricted to providing, at the lowest
possible cost, the infrastructure and public goods demanded by business.
The globalists neoliberal and antipolitical rhetoric offers an easy
explanation for states reduction to the role of objects in globalization processes,
the decline of the state as a form of social organization, and the powerlessness
and ineffectuality of national policies. However, even the widespread belief in
the impossibility of pursuing an autonomous economic policy does not absolve
governments of their obligation to foster the social and economic development
of the nation-state. Economic globalization does not remove responsibility for
the condition of a state.
To overcome this state of political paralysis it is essential to embrace the
characteristically optimistic perspective of the global transformations school.
Putting it in a nutshell, government has to realize that it not only can but also
ought to be an agent of globalization since instead of defensive responses to
globalization what is needed is adaptive action.
27
Globalization is not an enemy
but a challenge for the state since it continues to be at once an opportunity and a
threat.
26
T.G. Grosse, op. cit., p. 193.
27
J. Kleer, Globalizacja gospodarki wiatowej a integracja regionalna, Warszawa, 1998, p. 58.
The State as Actor in Economic Globalization.
International Society of States
Fears of marginalization of the state in worldwide processes and treatment of
globalization as a complex of phenomena disempowering government stem from
a failure to appreciate the part that the state itself plays in setting in motion and
stimulating globalization. The fact is that the nation-state is a crucially important
entity which is both a facilitator of economic globalization and possesses the
capability to exert an influence on the direction and pace of global processes.
First of all, it needs to be pointed out that the intensification of the economic
aspects of globalization is directly connected with the economic policy of states.
Short of the requisite decisions, legislation and general political climate
globalization could not have spread on the scale it has now attained today. By
means of a triad of economic policiesderegulation, liberalization and privatisation
government is directly involved in creating an environment conducive to
economic globalization. By the same token it becomes an enabler of pursuit of
activities on a global scale by other international actors, corporations in the first
place, thereby imparting momentum to globalization.
It would, of course, be oversimplifying to say that all states are, or even
could be, actors exerting an influence on the shape and course of economic
globalization to the same degree since not all states have the ability to affect the
direction and pace of progress in economic globalization. Also, different
countries are impacted in differing degrees by pressures in the four main areas:
global financial markets, global competition, globalization of production and
business activity (including the operations of transnational corporations), and
globalization infrastructure (markets, institutions, regulatory frameworks).
According to some writers
28
the disproportionality of the global pressures to
which states are subjected to the capability of states both to resist these pressures
and to influence globalization confronts states with the necessity of choosing
between a pro- or anti-globalization line. The possible responses of states can (at
any rate, theoretically) take one of three general forms: a radical, a neoliberal or
a reformist stance. The radical stance is characterized by rejection of
globalization and resistance of what is associated with global markets. In
particular it spurns free-market principles, globalization of trade, finance and
28
Cf. Z. Sadowski, Rola pastwa w epoce globalizacji, in: B. Liberska (ed.), op. cit., p. 312;
B. Liberska, Wspczesne procesy globalizacji gospodarki wiatowej, in: B. Liberska (ed.),
op. cit., pp. 3233.
information, and homogenization of culture. The outcome of such a policy may
be adoption of a protectionist posture in international economic politics and
closing the door to cross-border trade and finance. The neoliberal stance consists
in accepting the implications of globalization and allowing market forces to take
up the new challenges. The corollary is a belief that global markets and
corporations are best at determining the course of world development and the
sole task of the state is non-interference with global competition: what is needed
is all-out deregulation, liberalization and privatisation. The third, reformist stance
derives from treating globalization as a challenge, a source of both opportunities
and potential benefits and threats and potential losses. This approach ensures the
nation-state its biggest, proactive role as a global actor. It follows that the chief
task of the state is to promote adjustments that augment the benefits of
globalization.
Hitherto there have been no satisfactory attempts to determine the
participation of individual states in global process which treat such participation
in a comprehensive way. Nor, thus far, have we had any advanced multi-factor
comparative studies of how global the advances made by political, economic,
cultural and social globalization in states the world over are. The first, though
still imperfect, attempts to measure the participation of states in globalization
were undertaken by A.T. Kearney, Inc. in association with the Carnegie
Endowment for International Peace. These institutions have devised a set of
measures for assessing the scale of globalization processes in different countries.
These measures form the A.T. Kearney/FOREIGN POLICY Magazine
Globalization Index. It is used to carry out surveys which are subsequently
published in Measuring Globalization. The report tracks the progress of
globalization of states in four categories of global integration: economic
integration, technological connectivity, personal contact, and political
engagement.
The chief aim of the report is to draw up a ranking of the worlds most
globalized states. Ever since these surveys began, the following countries have
always made it into the top ten: Ireland, Switzerland, Singapore, the
Netherlands, Finland, Austria and Canada. The United States was ranked 12th
(in 2001 and 2002), 11th (2003), 7th (in 2004) and fourth (in 2005). Up to 2004
Poland regularly slid down this ranking of participating in global processes,
from 25th (2001) to 27th (2002) to 32nd in 2003 and 2004, but in 2005 it
climbed to 31st place in the table (by way of comparison, the Czech Republic
dropped from 14th to 15th place relative to 2004). The top places in the 2005
ranking are claimed by Singapore, Ireland, Switzerland, the United States and
the Netherlands; in the bottom five (58th62nd) come Bangladesh, Egypt,
Indonesia, India and Iran.
There is a current of reflection in political science which offers an interesting
perspective on the subject of active participation by states in globalization. This
is the notion of an international society of states.
29
Simplifying, the state is
perceived as a kind of individual belonging to a society of all the worlds states
which provide one another with reciprocal legitimation. As a legitimate
sovereign institution representing a bounded territorial space (and its population)
the state participates (along with other states) in establishing international law
and developing a balance of power in world relations, employing for this
purpose diplomacy, among other tools, in the same way as a countrys citizens
assert their rights by establishing domestic law. The merit of such an approach is
that it makes it possible to perceive the state not only as a definite legal structure
but also in the context of multilateral interactions. The metaphor of the state as
social actor, though an intellectual oversimplification, is analytically useful as it
allows states exceedingly complicated external relations to be reduced to
rational dimensions that lend themselves to analysis.
The basic plane on which states can be perceived as social actors is
jurisdiction. States are identified through their sovereign authority on the basis
of which all their formal interactions are created. The norm is non-interference
in internal affairs of states and any deviation from this principle requires specific
validation and justification from the international community. According to
David Armstrong the norms established between statesinternational law and
less formal rulesultimately derive from the fundamental principle of
sovereignty. New states undergo a process of socialization and admission into
the society of states in which there ensues internalization of the key determinant
of state identity: territorial sovereignty.
Globalization has, therefore, to be understood not only as a set of processes
posing certain threats to states political and economic sovereignty but also as
more or less deliberate movement by states to the higher stage of formation of an
international society of states and their attainment of new forms of autonomy.
It could be said that thanks to participation in the international society of
states countries are able to replace national sovereignty with a qualitatively
29
Cf. D. Armstrong, op. cit., p. 529540.
different supranational sovereignty.
30
One dimension of such supranational
sovereignty is multilateralism in international relations which has of late been
hugely expanded. It has become an important means of exerting influence in
global economic relations. The World Bank, the International Monetary Fund,
the World Trade Organization, the Organization for Economic Cooperation and
Development, the Bank for International Settlements or the G7 Group are
examples of concerted efforts by states to structure international order in the area
of supraterritorial capitalism, that is, economic globalization.
As long as it avoids isolating itself from the global community of states and
seeks in it a place for itself and sources of leverage the state can be active
globalization actor. But this requires taking step towards internationalisation of
the state.
31
In a global governance system composed of international bodies
nation-states constitute key areas of representation. States with a stronger
political and economic voice ipso facto become the main global voters.
Participation in international society means that at least to some degree, however
modest, international actors pursue policy in the name of world public opinion
(chiefly the North countries) and these action gain the support of national
legislation and policies.
Regionalization as an Instrument of State Control over Globalization
A typical feature of globalization processes is that they are not constrained
by territorial or jurisdictional barriers. They spread in various directions across
state borders and impact the population of remote parts of the world. In addition
they generate pressure on individuals, groups, societies, governments,
institutions and international organizations to make them follow similar policies
and or sign up to more complex and coherent systems.
32
Parallel to globalization we have another, countervailing set of processes.
This is localization (processes leading to localisms) which springs from
pressures driving people, groups, societies, governments and international
organization to narrow their horizons and look for local quiddities in modes of
behaviour, methods and scope of action and move towards less sophisticated
forms of organization.
30
A. ukaszewicz, Globalizacja a Unia Europejska, Ekonomia, 2001, no. 3, p. 27.
31
Cf. L. Panitch, Globalization and the State, in: R. Higgott, A. Payne (eds.), op. cit.,
pp. 331337.
32
J.N. Rosenau, The Dynamics of Globalization, in: R. Higgott, A. Payne (eds.), op. cit., p. 7.
Globalization and localization are linked to differing conceptions of
territoriality. While globalization plays down the role of boundaries and
territorial identity, localization puts a high premium on frontiers and roots the
notion of territorial identity firmly in localization-related theories. Globalization
widens boundaries, localization contracts them. In the economic context globalization
denotes, among other things, production, trade and investment moving outside
national borders and the operations of actors becoming independent of strictly
territorially bounded conditions, whereas localization consists in reducing the
geographical scope of producers and consumers to smaller territories and
making them dependent on local factors. Piotr Sztompka, a Polish sociologist,
has concluded that the choice between globalization and local identity is one of
the ten major dilemmas and challenges of the 21st century.
33
That raises the
question whether globalization and localization are strictly antagonistic or there
is some formula for synthesis of the two. The regional integration blocs that
have become a vibrant feature of the world economy today are a form
reconciling the contradictions and similarities of globalization and localization
in the economic dimension.
In the literature the more or less accepted wisdom is that regional integration
groupings are a halfway house to full-scale globalization.
34
Regional integration
is, as it were, global integration lite, taking place on a limited scale (the limited
territory or range of activities subject to integration measures). Its progress is
managed by the integrationist blocs governing bodies appointed or elected by
the member states. Integration thereby becomes a regulated, domesticated copy
of global integrationa kind of globalization school. Regionalization
(formation of regional-integration groupings of states) thus combines what from
a nation-state perspective are two crucial though slightly contrasting functions:
protection from the adverse effects of globalization and promotion of advances
in globalization processes.
Regionalization is a form of active defence against threats emanating from
globalization. It is a way for states to organize into coalitions for the purpose of
enhancing their competitiveness and building up bargaining power in global
relations both vis--vis other economically or political strong states or alliances
33
P. Sztompka, Szok przyszoci. Dziesi dylematw XXI wieku, Wprost, 5 January 2003.
34
Cf., for example, M. Dobroczyski, Integracja Europy w obliczu przyspiesze globalnych,
Ekonomia, 2001, no. 1; N. Burgi, P.S. Golub, Has Globalisation Really Made Nations
Redundant?, Le Monde Diplomatique, April 2000.
thereof and with respect to other supranational actors, multinational corporations
in particular. That regionalization helps the integrating states to achieve
competitive objectives in the world economy is compellingly evidenced by the
European Unions adoption at its Lisbon summit (March 2000) of a strategy
whose underlying aim is economic modernization of united Europe so that it will
catch up in terms of levels of competitiveness with the two pillars of the world
economy, America and Japan. Regionalization is, first, a kind of defence against
the negative consequence of globalization and, second, a vehicle of globalization
contributing to the diffusion of global economic processes.
Regional integration is an institutionalized and (having been initiated by
cooperating states) to some degree controlled opening up of the common
territory of the countries joining a grouping to more intensive impacts by global
forces. For it has to be noted that such integration-driven measures as abolition
of internal trade barriers, establishment of a common external tariff or removal
of restrictions on the free movement of production factors within the bloc are not
only succeeding stages in deepening regional integration but also form part of
a complex of factors regarded as causes of globalization. This fact stems, for that
matter, from a simple relationship: globalization is, after all, a historically
specific form of integration of the world economy.
One can observe, therefore, a certain seeming contradictionstates seeking
to protect themselves from the downside of globalization move towards regional
integration which is itself a kind of internal globalization. This is, however, only
an apparent paradox since even if states have scant or inadequate influence over
the spontaneous global forces emanating from the world economy the
intra-group globalization set in motion remains under countries control and is
designed to bring them measurable economic benefits.
Because of this specific function performed by integration groupings acting
as a globalization bridgehead for advanced industrial countriesit can be expected
that states and inter-state public institutions will place greater emphasis on pursuing
regional integration programmes than more robust and wider- ranging economic
liberalization. While regional integration seems, as far as nation-state interests are
concerned, to have a higher priority than globalization per se a different perspective
is represented by transnational corporations. For international business entities
based outside the integrating territory entering its market entails the necessity of
factoring in the whole complex of political, economic, social, cultural and other
objectives to which a regional bloc is committed.
There seems to be a certain degree of complementarity between these two
integration trends. The success of regional integration groupings is certain to
encourage their territorial spillover, that is the inclusion of places outside the
area intensively impacted by internal globalization processes. The currently
observed territorial expansion of the European Union is corroboration of this
relationship. A further source of the complementarity of regionalization and
globalization is that regional integration is a strategy adopted by public authorities
aimed at reinforcing the decision-making role of states in international relations,
improving the competitiveness of national economies and thereby realizing the
economic and political benefits of globalization.
The transition from autarkic national economies to participation in the world
economy is a difficult and long-term undertaking. From this point of view
regional integration is a good response by states to global challenges.
Regionalization reconciles globalization with a moderate degree of localization
conceived as respect for local values and achievements. It is both a step towards
globalization and at the same time opens up, in regulated fashion, opportunities
to reinforce the local development model, centre-stages local competitive
advantage and protects not only the economic but also the social and cultural
distinctness of the integrating region. It is an important plane on which states
assert autonomy in globalization and thereby an effective influence on the shape
of the processes under way in the world economy.
New Dimension of Nation-State Autonomy
The argument between globalists and globalization sceptics over the nature
of economic globalizations influence on the shape of government often boils
done to discussion of whether it is globalization that is to blame for weakening
the authority and responsibility traditionally exercised by the state. This is to
lose sight of the more complex seismic shift in government authority in global
relations and the transformation of the states position in authority and responsibility
configurations. The fundamental meaning of the term globalization derives from
the characteristics denoted by the word-ending -ation, not -nation. This is by
no means linguistic hair-splitting but turns on the implications of these endings.
While the concept of internationalisation is based on the premise that the
central role in global relations is played by the nation-state globalization allows
us to think of global relations in a broader context and does not require us to
accept assumptions about the central role of the nation-state.
35
35
Cf. R. Woodward, op. cit.
Countries continue to be an extremely important, though not the sole, actor
in the globalization process. Global authority is not monopolized by states and
contemporary world politics cannot be perceived as a world of states but, rather,
as the domain of diverse actors (business enterprises, countries, international
organizations) with a different purview. States are not only on the receiving end
of the influence and impact of global forces, which exposes them to loss of
autonomy and social legitimacy, but also active entities shaping global realities
which seek to reap benefits from economic globalization, co-create the
international community and compete with each other for a better position in
international structures. There are also many signs that the future will belong to
regional integration groupings which constitute forums for individual
nation-states to make their voices heard and planes of common global interests.
Beyond all doubt the state is in the throes of a thoroughgoing
metamorphosis. But such transformation does not necessarily spell the demise of
autonomy. It follows, therefore, that atrophy of the state or its disempowerment
is per se not only a questionable phenomenon but also one that is negligibly
advantageous. The contemporary state, aware of the global processes under way
and, above all, concerned with ensuring sustainable social and economic
development, performs a number of functions whose abandonment would be
damaging not only to citizens but also to international business. Some of these
functions (which are of a political, economic, social and cultural character) are
nothing less than cornerstones of a globalizing world.
36
One has to agree with David Held when he writes that we are witnessing a
complex process of reconfiguration of political power.
37
Undeniably, in the
globalization era the state is not the same state as under the Westphalian regime.
It is fair to conclude that whether the state will survive as a form of social
organization is a less important question than what its future role will be. The
state is not ceasing to be an actor in international relations. But the dimension of
its autonomy is changing and a new challenge to its preservation is arising. The
future of the state is assured at least in the sense that it is not in process of
atrophy: it is more a matter of disaggregation of the state, its fragmentation into
36
Cf. E. Wnuk-Lipiski, op. cit., pp. 167179.
37
Cf. D. Held, Globalisation, Cosmopolitanism and Democracy: an Interview,
http://www.polity.co.uk/global/pdf/HELD.pdf; D. Held, The Changing..., op. cit.
segments forming parts of diverse international regulatory systems (in trade,
finance, human rights and security, among other areas).
38
Economic globalization presents new development opportunities but creates
a particularly difficult operating environment for weaker states which have to
undertake intensified efforts to gain political and economic legitimacy in the
new complex new world of global interrelationships. Developing countries are,
therefore, facing the necessity of asserting their presence in the global forum,
securing a voice in the international society of states in order to promote their
interests, participating in solution of global problems, contributing to the shaping
of the world landscape through legitimated action, and pursuing realization of
benefits for their populations. Paradoxically, it is, however, the least developed
(and in relation to global processes peripheral) countries that face the strongest
temptations to insulate themselves from global processes, which could lead not
only to economic autarky but even to a threat of these countries finding
themselves in developmental and socio-economic backwaters.
39
The inescapability of processes of adaptation by nation-states to global
challenges is supremely obvious and evident. There is insufficient evidence to
speak of the terminal condition of the nation-state. But there is a clear need of all
kinds of adjustments and makeovers of government in the institutional,
economic and social areas. Adaptation is the absolute essence of the modern
state.
40
Adaptation is the escape route by which fragile and globalization-
threatened states can assert autonomy. The future belongs to strong, self-
conscious and questing states. The biggest successes will be achieved by states
which are capable of reinforcing their traditional sources of influence with new
energies generated by cooperation and the engagement with other states,
corporate entities, societies and governments at both the supranational and local
level.
Today the central role of the state, and an expression of its autonomy, is
transfer of power and responsibility to international and supranational
institutions, such as regional integration blocs, regional and local economic and social
coordination and regulatory agencies as well as oversight of the use made of these ceded
38
R. Kuniar, Globalizacja, polityka i porzdek midzynarodowy, in: E. Haliak, R. Kuniar,
J. Symonides (eds.), Globalizacja a stosunki midzynarodowe, BydgoszczWarszawa, 2004,
p. 157.
39
Cf. E. Wnuk-Lipiski, op. cit., p. 152153.
40
L. Weiss, op. cit., p. 450.
prerogatives. Politics is becoming increasingly polycentric and no longer in the
exclusive domain of nation-states.
The responses of states to global pressures are not uniform: they differ
depending on the structural, institutional and political background factors.
However, most states adopt at least one of the two strategies discussed here and
consisting in alliance-building or consolidationupwards, through inter-state
alliances at the regional or international level, and/or downward through
government-corporate alliances in domestic markets.
States seeking ways of strengthening control over the external environment
and reconstruction of their power can be called catalytic states.
41
The catalytic
state does not for the purpose of goal-attainment rely solely on its own resources
but seeks a dominant or significant position in coalitions of states, transnational
institutions and groupings based in the private sector. As a catalyst such a state
endeavours to mark out lines of action and be the chief author of the successes of
a strategic alliance while remaining essentially independent of the other
members of the coalition irrespective of whether they are government, firms or
other entities. Such a state by no means abandons its specific goals or sheds its
identity, forging agreements on cooperation serving it as a means of increasing
effective control over the economy in the face of global change. The catalytic
state is, first, a form of defence against threats from global forces and a way of
enhancing its capacity for self-determination and ability to chart the directions of
development and, second, a dimension of statehood adequate to the
contemporary challenges to national autonomy stemming from globalization.
Aside from the process of internationalisation of the state and its
socialization with supranational communities a crucial form of indirect
reinforcement of states voices in globalization is action at the regional level.
Development strategy is acquiring increasing importance and regional
competitive advantages are gaining in significance.
42
Inter-state competition for
the benefits of globalization may prove more productive and profitable for all
involved if rivalry at the state level gives way to interregional development
strategies. They could lead to the emergence of interregional development axes
cohering around the most prosperous regions.
41
M. Lind, The Catalytic State, The National Interest, 1992, no. 27, p. 3.
42
A. ukaszewicz, op. cit., p. 27.
Treading in the steps of Peter Evans one should observe that an optimistic
hypothesis for development of statehood could spring from reversal of the
ideological pendulum.
43
Recent pressures for reduction of the significance of
the nation-state were a natural reaction to the earlier overrating of politicians and
states as managers. The currently ubiquitous excessive pessimism about the role
of the state could, however, produce serious reflection on the place of the state
development processes, in global phenomena and, in particular, the role that it
can play in economic globalization.
43
P. Evans, The Eclipse of the State? Reflections on Stateness in an Era of Globalization, in:
R. Higgott, A. Payne (eds.), op. cit., p. 422.

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