November 2012

The Dynamic of Globalization

Written by Professor Ruud Lubbers and Jolanda Koorevaar (1998)

INTRO

Globalization is an abstract concept. It does not refer to a concrete object, but to (an interpretation of ) a societal process. Therefore the concept cannot be defined easily. To make clear what one means with 'globalization' it is necessary to explain the whole theory in which ones use of the concept is embedded. For some, globalization refers to Americanization, for others it is about the growing importance of the world market, yet others use it to describe a cultural or an ideological reality: globalization as the victory of 'market plus democracy'. For most authors, globalization is a complex concept that involves political, economic and socialcultural changes. Usually, globalization is also meant to refer to the consequences it   has. Thus, globalization is often seen not just as a 'one way process', but as a dialectal dynamic. In this chapter we will discuss our definition and theoretical interpretation of the globalization process.

 

DEFINITION

Globalization is a process DEFINITION Globalization is a process in which geographic distance becomes less a factor in the establishment and sustenance of border crossing, long distance economic, political and socio-cultural relations. People become aware of this fact. Networks of relations and dependencies therefore become potentially border crossing and worldwide. This potential internationalization of relations and dependencies causes fear, resistance, actions and reactions. In this definition both the objective and the subjective aspect of globalization are captured. On the one hand geography is made less relevant thanks to new technologies, strategies of economic actors and policies of national and international  political actors. On the other hand globalization gains strength because of the fact that people of flesh and blood acknowledge the possibilities opened up by technologies, strategies and policies. When they act in accordance with globalization, they make it happen. At the same time the fears, ideas, actions and reactions caused by the globalization process are a reality as well.

Geographic distance is becoming less an important factor, it is not ‘fading away’. The earth does not really shrink, but relative distances do. Therefore worldwide (networks of ) relations can be established. As a consequence people, goods and symbols can be ‘liberated’ from their geographic context. In a fully globalized system they flow freely around the world, thus people and societies are no longer ‘protected’ by borders.

We also speak of potentially worldwide networks, potentially, because socio-cultural realities will influence the ‘logic of globalization’. An inward looking culture, isolationism, dictatorial political regimes, a fragmented international order, defensive regionalization etc. can change the globalization dynamic significantly.

 

WHAT'S NEW?

Globalization can be said to be centuries old. The first Homo Sapiens were nomads, traveling from one place to another; Indian tribes travelled ages ago from Mongolia to Northern America; products of the Innuit have been found at old sites from Australian Aboriginals; the story of Jesus has been told around the world from the beginning of our era. It's clear: flows of people, products and symbols have existed for a very long time.

The special thing in our globalizing world is that dependencies within global networks are so great and interactions so dense that they form a sphere of themselves. The global institutional order has gained strength of itself, has its own logic more or less independently from the local configurations it encompasses. The movements and interactions in global space are now patterned and institutionalized to such an extent that local societies have to explicitly react and relate themselves to the global configuration.

The existence of this global configuration has consequences for national societies and actors. The institutional arrangement of national state, national culture and national economy does no longer hold as an 'ideal model' for societies. Once
societies acknowledge globalization, societal, political and economic actors have to act and react upon it. These reactions are intertwined: political policies affect economic strategies which affect social reactions and vice versa. Thus, in the globalizing world we do not only have to cope with the dependencies between local configurations and the semiautonomous global networks, but we also have to pay attention to the intertwined actions and reaction from actors in the three  societal spheres at different interconnected geographic levels.

 

DYNAMICS

To conceptualize this we need to abstract from reality. In describing and explaining the dynamic of globalization it is clarifying to distinguish between: The prime movers of globalization. And the consequences and the rebound effect of the globalizing world in which territorial borders become less relevant.

 

THE PRIME MOVERS

To describe the prime movers it suffices to distinguish between two main causes of globalization. The first is 'globalization as a consequence of technological innovation'. This encompasses mainly information and communication technology (ICT). ICT has such an impact on mobility and communication that the 'technological revolution' implies a 'social revolution' and a decisive shift from industrial capitalism to a post-industrial conception (and reality) of economic relations. Alvin Toffler called this the Third Wave.

The second prime mover of globalization is the hegemony of the neo-liberal ideology. This is about the triumph of the market-ideology, the economization of life, mass-consumption and entertainment, deregulation and so on. It is a global ideological breakthrough in which democracy is considered to be a twin of the market-economy and these together are supposed to form a winning team. Of  course there has been and still is an enormous interaction between technological and ideological globalization. This interaction has led to globalization of and by economy.

The reality of globalization can be understood by focusing on the two prime movers: 'new technology' and 'hegemony of neo-liberal values'. Of course, the hegemony of neoliberalism became especially visible and got an extra dimension after the end of the Cold War. The model of free market plus democracy became more convincing because of the collapse of the 'empire of the evil'. The fall of the Berlin wall seemed to be the long awaited last victory of the Western winning  team. However, the popularity of Thatcherism and Reagonomics started before that, while the economization of life, the on-going individualization,  materialism and also the problems of the social-democratic 'welfare states' started already in the early seventies. Seen in that light, the collapse of communism was one important momentum in a process of 'neo liberal victory' that was already underway.

One could also claim that it is not so much ideological or technological, but economic developments and turbulences that caused globalization. The internationalization of economic processes, both in production and  consumption, the consequent emergence of a world market and Trans-National Corporations (TNCs), worldwide capital flows, growing economic interdependence between countries and so on gave birth to globalization. Borders ceased to be meaningful, states lost power to economic actors who had become 'footloose'. The dynamic of the free world market thus forced us into globalization. This interpretation is actually quite popular, but inadequate. The internationalization of economic life could not have gained so much strength without  state policies and policies of intergovernmental organizations (IGOs) supporting it. The neo-liberal ideology invited policymakers to liberalize markets, to deregulate economies and to privatize state-firms. Then, technological innovations, ICT in particular, made it possible for economic actors to take full advantage of the possibilities opened up in the free markets. ICT made it possible to let capital flow around the world within a split-second. Both ICT, the miniaturization process and the earlier transport revolutions made it attractive to produce several parts of a product in different continents, to later bring them together and then distribute them to consumer markets worldwide. Producing, selling and buying were less confined to actual geographic markets and production places as ever before. Lending and borrowing, investing and speculating became 'around the globe' activities. This was because the neo-liberal ideology urged policy makers to take away any 'market barriers' and because technological innovations made it possible for goods, money, symbols and people to cross borders fast and cheap.

In our view therefore it was not the economy that forced the world into globalization, it was human made technology and human made plus accepted ideology by which a collectivism of people forced itself into the process of  internationalization. Or more precisely forced itself into creating a more and more borderless world, less and less characterized by territories with as a consequence a new 'geography of power' (see paper Sassen, 1998). This process than gained power of itself and became a no longer controllable force. In sociological terms we might state that globalization is a perfect illustration of the Thomas-theorema: 'if men define situations as real, they are real in their consequences'. The acceptance of neo-liberal ideology, made people act in accordance with it, to the extent that the world became a world working according to the logic of that ideology. Globalization is then the 'Durkheimian social fact' caused by  neo-liberalism and made possible by technological innovations of the last half of this century.

Although the hegemony of neo-liberalism can be considered a driving force behind globalization, it cannot be said that all consequences of globalization were wanted or even foreseen by protagonists of that ideology. Neo-liberal ideology for example is based on the concept of democracy (with the nation as a political entity, the state as the exclusive authority within specific borders, with legitimacy of authority organized within national borders based on a constitution and the trias politica. In this model the international space is organized within an interstate system). Neo-liberalism took for granted the blessings of this system: via the democratic states both in- and external security would be guaranteed, the market both national and global would be organized and so on. However, due to globalization democracies based on territorial nation states began to fail.

We will come to this later. The important point here is that neo-liberalism can be seen as a cause of globalization, but this does not mean that all the consequences of globalization therefore fit in the neo-liberalist 'agenda'.

 

THE CONSEQUENCES AND THE REBOUND EFFECTS

The consequences follow from the fact that the traditional tasks of states are being less fulfilled. This is partly so because states, by acting in accordance with neo-liberal ideology and in adapting to globalization, have transformed themselves from ‘neo-Keynesian guardians of the national public good’ to ‘neo-liberal guardians of international private capital’ respectively of the functioning of a worldwide market system. On the other hand, since the globalization process has now gained strength of itself, states are also becoming objectively less powerful, less capable of fulfilling traditional ‘social’ tasks like redistributing welfare and protecting the environment. Furthermore, they are becoming less capable of fulfilling tasks necessary for international capital itself: securing property-rights and ownership, securing social order, fighting criminality, safeguarding peace and so on.

State authority is bound to a specific territory. With globalization, borders become permeable, more and more processes now have a trans-boundary character, some cannot even be localized (they come from ‘virtual reality). It is hard, if not impossible for states to regulate these processes that have sometimes quite worrisome effects on national economies, societies and/or politics.

As we’ll see in a later chapter, states do regain some of their governancecapacity by pooling authority on a higher geographical level, in regional political institutions and in IGOs. Still, we can say that the governance capacity and the will
to govern is diminishing. This threatens quality of life in the globalizing world in several ways. It particularly causes four ‘governance deficits’: a social, democratic, ecological and security deficit.

 

SOCIAL DEFICIT

There exists a social deficit in two ways. First, globalization invites states to create ‘national comparative advantages’ with regard to other states, in favor of TNC’s and investors. Trying to create a competitive national economic climate, states run the risk of getting involved in a ‘race to the bottom’. Welfare arrangements are dismantled; taxes on capital gains, income out of capital and on easily geographically transferable income are lowered; subsidies with which the weak are empowered are lowered. Income gaps within countries thus grow.

Globalization also raises an international ‘fairness-issue’. There is an intrinsic relation between the economic space and the social space, when it comes to redistribution aspects. An organized marketeconomy provokes social questions  concerning redistribution aspects of the gross national product. This is understood to be fair and compelling, whatever the characteristics of the redistribution mechanisms. Now economic space is globalizing, so the social question is globalizing as well. Thus, globalization invites to broaden (territorially) the redistributive questions, while at the same time globalization weakens the potential for redistribution because of the primacy of the market and the weakness of the  state.

Another social problem is that it is troublesome to create enough jobs for every potential worker on the right level. This is due to two factors. Firstly due to technological innovations labour market structures are changing: low-wage jobs for the low-educated become scarcer, the amount of low paid jobs for higher educated grow. This causes a mismatch between available labour and demanded labour. Those with a lack of vocational training are excluded. It becomes difficult for them to catch up. At the same time, because of globalization, the supply of labor from less developed countries affects the market position of all those who are not scarce. In short, only the strong can keep their relative income position. Even
middle class people are losing out in comparison with those who have income out of capital and those who can take profit from their positions in management, scarce labour and training in new technologies.

At the same time in the less matured economies numbers of people are still excluded, living in poverty or being exploited. This is not only about income. An additional problem is the very bad labour conditions some of the labourers have to work in. Especially in the so-called free trade zones in Sri Lanka and Mexico, but pretty much everywhere in the former third world, labour conditions are unacceptably low according to Western standards. Child labour is practiced, safety  measures are minimal, working hours very long, pay minimal, the freedom to form labour-organizations non-existent. Of course it is in those countries that Western companies can manufacture cheaply and from where they can buy cheap parts and services. This all is already very painful in real facts and figures. The experienced social deficit is even larger. In the West people can now see the injustice done to workers and poor in the less developed countries. Out of this arises a general feeling of discontent. In the less developed countries people get a glance, via tourism, advertisement and TV, of the ‘rich life’ in the West. It is not too speculative to suppose that this aggravates feelings of ‘relative  deprivation’. Social space thus becomes more ‘one’ because of transboundary communication and information.

 

DEMOCRATIC DEFICIT

Next to the social, there is also a democratic deficit, this notion captures two problems. First, national democracies are weakening. The state is less effective in realizing societal values and therefore politics becomes less credible. Politicians and citizens often believe and vocalize that government has to be based on ‘the voice of the market’ instead of the ‘voice of the people’.

The interstate/IGO system deepens the democratic deficit. Sovereignty of the people as guaranteed by national parliaments is limited to national policies. The more these policies are being embedded in and dependent on the supra-national
juridical-political surrounding, the less meaningful parliaments can be. On the international level, there is no representation of the people. With international treaties, parliaments only have the right to veto. Furthermore, international  organizations usually have no parliament at all and if they do (the EU), parliamentary power is restricted. In short, the more the international and supra-national level gains in importance for worldgovernance, the less power there is for national parliament and the bigger the democratic deficit will be.

 

SECURITY DEFICIT

Thirdly, we have to speak of a security deficit. A threat to the global social order in today’s world is the violence within failed states : Rwanda, Congo, Yugoslavia, Ethiopia, Somalia, Sri-Lanka, and so on. It is difficult for the international   community to interfere, partly because of the nature of civil war,partly because of the -divided- nature of the international community and partly because interference in civil wars is limited by the UN-Charter to those situations that endanger the international stability.

This security deficit causes the refugee-problem. People from failed states seek asylum in safer areas. The number of refugees is growing very fast and for the receiving countries it is often impossible to determine whether an asylum seeker is a political or an economic refugee. Although the richer countries seem to complain hardest about the refugee-problem, usually it is the (often poor) surrounding countries that have to receive the most people. Security is furthermore  threatened by the growth of international criminality and ‘national survival criminality’;

 The first being conducted by professional criminal organizations making good use of ICT and mobility, The second being conducted by members of the global underclass excluded from the fruits of globalization. Both threaten the social order, but they ask for very different measures.

 

ENVIRONMENTAL DEFICIT

Lastly, there exists an environmental deficit. Our natural environment is deteriorating fast. This is caused by the negative external effects of economic production and consumption. With global economic growth,  external effects grow as well. The situation is also less well manageable, since states hold on to different environment standards. In the global economy it is economically attractive to apply as low standards as possible  not only in relation to environment, but also to health and labour conditions), so there is a certain downward pressure. Because the state is focusing on ‘economic governance’, environmental issues tend to be neglected. Besides, many environmental problems are not national, but
global in character. National states do not feel responsible for them, while there is no powerful international body that can effectively protect the earth against the ‘self- destructive consumerism’ of the human species.

The developments of and reactions against those deficits are also part and parcel of the globalizing world. Next to the consequences of globalization in terms of deficits, we can also see rebound effects, these are counterreactions to globalizations:

  • People react against the globalization of American images and values by stressing their own roots and local identity.
  • People react with fear against the alienation caused by the further abstraction globalization of life brings.
  • The cry for values beyond materialism gains voice within Non-Governmental Organizations (NGOs), religious movements and New Social Movements (NSMs).
  • People react against the primacy of technology and economy by (re)exploring emotions and spiritual values.
  • People react against un-safety by looking for scapegoats, by demanding ‘protection from the terrifying foreign’ be it foreign   refugees, foreign cultures, foreign products or foreign investors.
  • The fear for the foreign materializes within extreme nationalist groups and conservative political parties. It is interesting to see that some of those institutions, strengthened by globalization, gain governance-capacity beyond the state within
  • globalizing society.
  • People react against universal materialism by stressing non-materialistic values.
  • These ‘counter-reactions’ give the globalization process its dialectical character. Some of these reactions get an institutional structure.
  • People react against the pooling of governancecapacity on supra-national scale, by demanding decentralization and decisions nearby.
  • The need for the spiritual and supra-natural, gains substance within religious movements.

 

CONCLUSION

Globalization is about two prime movers:
01. Globalization by and of technology;
02. Globalization by and of ideology (American Values).

Globalization is also about two types of consequences, consequences in terms of the democratic, social, environmental and security deficit because of less territorial borders and the consequences in terms of attitudes and
new institutions rebelling against globalization.

This matrix: 'two by two' is two dimensional and dialectical. It is about thesis and anti-thesis. Because we cannot yet clearly assess the strength of the prime movers and the consequences, we cannot predict exactly the outcome of the process.

The complexities of the process called into life by human technology, human ideology and human conduct are so great that the human mind, despite all the technological support available to it, cannot predict its course.