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Governing under Stress
Middle Powers and the Challenge of Globalization
By Marjorie Griffin Cohen, Stephen Clarkson Zed Books Ltd
Copyright © 2004 Marjorie Griffin Cohen and Stephen Clarkson
All rights reserved.
ISBN: 978-1-84813-695-3
CHAPTER 1
Introduction: States under Siege
Marjorie Griffin Cohen and Stephen Clarkson
This book is about how countries in the middle of the global power hierarchy confront the loss of control over their own futures through their experiences with globalization. It is about how people are governed within nations at a time when external forces have rendered existing institutions and practices inadequate and about how nations have accommodated new international powers in distinct ways. But it is also about the choices still to be made and what these choices will mean for democratic government as a global regulatory regime unfolds.
Globalization, globalism, and global governance
No word is currently more overworked than 'globalization'. It can describe many kinds of changes in the world, such as the intercontinental movements of peoples, the increasing interdependence of economies, the international transmission of diseases, or the transnational mobilization of criminal or terrorist organizations. But mostly the term has economic, ideological, and political meanings. Among political economists, globalization refers mainly to economic transformations that link together formerly separate national economies; a linking that is increasingly shaped by international mechanisms of governing. Its driving force is generally thought, by conventional economic analysis, to be integrally related to the trajectory of capitalism itself, although twentieth-century technological advances in computerization have accelerated the trend by enabling capital markets, production processes, and distribution systems to link the world in hundreds of nearly seamless corporate systems.
Neo-liberal globalism, the ideas that have conceptualized and rationalized these economic movements, has become a paradigm preaching a specific liberal doctrine of transformation. Often referred to as the 'Washington consensus', its notions of constraining governments in order to liberate markets is based on the American model of development and became a monolithic system of thought prescribing one formula for how the world's economic systems should work. It is also backed up by American military might that has been used on occasion to eradicate rival models. Enforced by such multilateral financial institutions as the International Monetary Fund and the World Bank, over which the US government exerts considerable influence, the Washington consensus became the template for economic and political deregulation in nation-states throughout the world, as though it would equally benefit all countries – from the richest state in the core to the poorest nation on the periphery.
Building on the framework of international financial institutions established after World War II to assure currency stability, regulate capital flows, and promote international trade, neo-liberal globalism has become codified, albeit so far in a fairly primitive form, in international economic law in order to establish new modes of transnational regulation to meet the needs of international capital. The primary objective of the new regulatory regimes is to create markets, and in doing this the focus for regulation is on the actions, or regulatory powers, of the state.
The European Community, which had evolved as a continental system of governance dedicated to preserving and promoting its members' traditions of socially responsible capitalism, moved in the 1980s towards a more market-centred, less regulated European Union (EU) to which was added a currency union. A truly continental governance regime was inaugurated for North America in 1994 when the bilateral Canada–United States Free Trade Agreement (CUFTA) was broadened to include Mexico in the North American Free Trade Agreement (NAFTA), which strengthened the rights of corporations operating across national boundaries. A year later almost a decade's worth of tortuous negotiations bore fruit with the creation, from the modest General Agreement on Tariffs and Trade (GATT), of the powerful World Trade Organization (WTO). The EU, NAFTA, and the WTO are the leading institutions comprising the global governance that, in turn, constitutes the political face of economic globalization and its ideology, neo-liberal globalism.
Global governance and the semi-periphery
This book shows how Australia, Canada, Mexico, and Norway are affected by neoliberal globalism and its counterpart institutions of global governance. Diverse though they are, these four countries share the characteristic of being closely integrated into the global economic order in a largely subordinate but partly autonomous position. While considerable analytical efforts have been expended to understand the effects of globalism on both the most and the least powerful nations in the world, the medium-sized powers, which are the focus of this book, have not been the subject of extensive scholarly efforts to conceptualize their position in the world order. They have, to be sure, been studied individually, and have often been described as junior partners, middle powers, hinterlands, dependencies, go-between nations, satellites, or staple-based economies – to list some of their monikers. Researchers trying to pinpoint their special status have noted they enjoy less autonomy than countries at the metropolitan centres of the power system, but have more political muscle and have achieved more economic 'development' than the most destitute states. Suspended somewhere between the very strong and the very weak, they act both as objects and as subjects. They have responded – as objects of influence – to international stimuli generated by metropolitan countries. As subjects, they have also exploited for their own benefit economic or political relationships with weaker countries and with their own indigenous people.
The conventional understanding of semi-peripheral states is based on notions developed in analyses of dependency (Wallerstein 1985). While identifying states in the core and periphery was fairly easy – the former being rich and the latter being poor – the distinguishing economic features of each varied considerably. One criterion related them to a range of commodities, with core countries producing industrial goods and peripheral countries exporting primary products. In this optic, semi-peripheral countries were those that had a balance of both types of production (Chase-Dunn 1990). However, this distinction does not capture the changes that have occurred as service industries and, more specifically, high-technology sectors have begun to determine the direction of the world economy. This and the spectacular rise of large transnational corporations made the economic distinctions between resource-based and industrial-based nations less clear-cut, particularly in an age where corporate ability to shift production between nations also shifts the power structures between nations.
The notion of semi-periphery focuses attention not just on the situation of dependency but also on how to overcome it. It affirms that some countries enjoy a certain measure of power that allows them a more autonomous relationship with the core. Dependency theorists tended to concentrate on how forms of subordination and exploitation changed as the world's capitalist economies became more integrated (Arrighi 1985). This approach was crucial for understanding the dynamics of power in an international context (Packenham 1992), although it seemed to condemn poor countries to perpetual poverty without offering them a means (other than revolution) to bring about substantial change.
Semi-periphery is a more dynamic concept because it suggests the possibility of movement – for instance from the periphery to the semi-periphery, as occurred at least with Mexico and with the Asian economies in the last quarter of the twentieth century. Our question in this book is whether such upward movement characterizes the current trajectory of globalization. As Satoshi Ikeda shows in Chapter 14, the overwhelming change in the position of countries throughout the world in the past twenty years, as measured by per capita national income, has been from the semi-periphery to the periphery. More countries are poor and more countries have less power than ever.
Since the concept of the semi-periphery is not as easily quantifiable as 'core' and 'periphery', it is more helpful to locate the economic and political power of semi-peripheral countries on a continuum. The four countries that are the subject of this book are very different in appearance but they share, in varying degrees, a history of being subjected to the influences of powerful core countries. In response, they developed policies aimed at achieving more political autonomy, a more diversified economy, and a more socially equitable distribution of incomes. However their semi-peripherality is seen – whether in social, cultural, economic, or spatial terms – Australia, Canada, Mexico, and Norway have generated both the consciousness of their subordination and the means of resisting it. In this way they are differentiated from the core, which may lack the consciousness that anything should be different, and the periphery, which may lack the required means to resist what is happening.
The new generation of international institutions – the WTO, EU, and NAFTA – have changed the conditions under which states must govern themselves. Usually these shifts in national power are examined either from the perspective of core countries in the 'North' or from that of the periphery in the 'South'. By studying globalization from the perspective of countries on the semi-periphery, we hope to generate insights on the political economy of governance under the conditions of globalization that cannot be obtained from the existing literature.
One theme is to explain what the new institutional contexts created by globalization mean as conditioning frameworks for countries in the semi-periphery. Arising from this, the second theme explores what opportunities for influence and change are available in the semi-periphery. While neither Australia nor Canada, nor Mexico nor Norway is a major force constructing the world order under globalism, each country is experiencing a process of reconstruction. Since the construction of a global society is just beginning, this process's tensions create a fluid situation that provides these countries with scope for some influence over the centre and some autonomy within their own frontiers. So while our authors focus on what has happened and the constraints imposed on states in the semi-periphery, they also indicate the possibilities for the future as new and different kinds of political spaces are created through global change. Both individually and collectively, our four cases could, with political will, pursue policies unique to their own needs and goals.
The contents
The four countries in this study have very different relations to the centres of power: Canada and Mexico are intimately tied to the United States of America. Norway is both more closely integrated with the EU and maintains considerably more autonomy in its relationship with its centre than do Canada and Mexico. Australia, while nominally more autonomous than the other three, has a precarious relationship with the centre and tends to be marginalized in unique ways.
The book begins with neither markets nor states, but people. In 'Globalization and the Social Question' (Chapter 2), Janine Brodie sets the context for examining national responses to global governance by raising the question of globality. Globality is the transnational social space that has been created by the failure of the neo-liberal state to resolve the problems of solidarity and cohesion. The social dislocations that arise from globalization make it imperative for governance to focus on human security. Establishing goals for social well-being must transcend the current fixation on short-term objectives of economic efficiency, capital mobility, and the creation of greater markets.
The next eight chapters provide paired discussions of a number of issues in our four semi-peripheral countries. Given the broad range of issues raised by our problematic, we have not attempted a parallel discussion of exactly the same issue in each country. Rather, each chapter, even when dealing with one country, also examines a specific problem. For instance, Øyvind Østerud (Chapter 3, 'Globalization in Norwegian: Peculiarities at the European Fringe') concentrates on how Norway, as a rich, semi-peripheral country, is affected by globalization and how decision-makers and political factions are responding to its major challenges. The relatively recent debate about globalization in Norway is set in the context of the constraints that globalization has imposed on this country's foreign policy, an issue not analysed elsewhere in the book. Østerud's assessment is that Norway under globalism will be shaped both by its affluence and by the dilemmas and ambiguities that have long been inherent in Norway's relations to the outside world. Ultimately the issue of access to resource rents will determine Norway's future under globalism.
Dag Harald Claes and John Erik Fossum in Chapter 4 ('Norway, the EEA, and Neoliberal Globalism') examine the deeply intrusive nature of their country's ongoing relationship with the European Union by documenting the functional policy areas where the Scandinavian outrider has been most influenced. While some EU decisions are not legally binding on Norway, they still influence the path Oslo has consistently chosen to follow. Many other regulations made in Brussels automatically take effect in Norway, thus compromising long-practised democratic traditions. The resulting slide towards neo-liberal policies demonstrates the power of the centre even over a wealthy semi-peripheral country like Norway, despite its having governments that were never committed to this ideology.
Mexico is by far the least affluent of our four states (see Ikeda, Chapter 14), but it has much in common with Canada in its close and subordinate relationship with the US. Teresa Gutiérrez-Haces in Chapter 5 ('The Rise and Fall of an "Organized Fantasy": The Negotiation of Status as Periphery and Semi-periphery by Mexico and Latin America') places Mexico's encounter with neoliberalism and continental free trade in the broader geographical and historical context of the fundamentally different import substitution strategy developed throughout Latin America following World War II. She details the consequences of rejecting an approach which enabled countries in Latin America to pursue autonomous political directions in favour of the neo-liberal policies that accompanied the open, export-dependent economy that was shaped by NAFTA.
Within this framework, Alejandro Alvarez in Chapter 6 ('Mexico: Relocating the State within a New Global Regime') argues that the international projection of Mexico as a successful model of neo-liberal restructuring leading to true democracy is based on deliberate misinterpretations that need clarification. He shows how the 'structural adjustment programmes' initiated in the 1980s became locked in with NAFTA and deepened with the democratic transition. Alvarez analyses the nature and scope of the new democracy but stresses its inability to change the economic model that has been imposed on Mexico. He explains the recurrence of financial crises, addresses the costs paid by Mexicans for 'free trade' and export oriented industrialization, and concludes with an analysis of the perverse dynamic of a de-statization strategy that is championed by the Mexican state itself.
Australia has a decidedly different relationship with the centre than do the other countries in this volume. Dick Bryan in Chapter 7 ('Australia: Asian Outpost or Big-time Financial Dealer?') shows how the Australian economy's integration within the global economy can be presented through two distinct and contrasting sets of characteristics. One image situates Australia on the edge of Asia, focusing on the volume of trade and industrial composition that results from this. The other optic emphasizes Australia's financial and investment links to Europe and North America. Bryan characterizes Australia as a state in search of its own economy. Unlike the other semi-peripheral countries in this study, which are highly conditioned by governance frameworks established by the centre, Australia's state agenda nonetheless facilitates corporate agendas, rather than steering them.
(Continues...)
Excerpted from Governing under Stress by Marjorie Griffin Cohen, Stephen Clarkson. Copyright © 2004 Marjorie Griffin Cohen and Stephen Clarkson. Excerpted by permission of Zed Books Ltd.
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