regionalization, multi-level governance, and globalization · 2015. 8. 5. · leslie...

Regionalization, Multi-Level

Governance, and Globalization

Peter Leslie Queen’s University, Canada

Paper presented at the Conference

Globalization, Multilevel Governance, and Democracy

3-4 May 2002

Kingston, Canada

Institute of Intergovernmental Relations

School of Policy Studies

Department of Political Studies Queen’s University Kingston, Ontario Canada K7L 3N6 (1) 613 533 6243 [email protected]

Leslie Regionalization, Multi-Level Governance, and Globalization Page 2

Regionalization, Multi-Level Governance, and Globalization

The central paradox of globalization is that rather than creating one big economy or one big poli ty … it also divides, fragments and polarizes. Convergence and divergence are two sides of the same coin, and the relationship between them is open to wide influence from state and other actors at many levels.

Phili p Cerny (2000, 137) The EU rejects the notion that unfettered market forces should dictate our way of li fe, our culture and ultimately the nature of our society and our core values. We are confronted therefore with the task of reconcili ng the way in which we manage our societies and values with the need to modernize and globalize…. Seattle crystalli zed the changes that trade policy is undergoing …. [Trade negotiations have] entered the realm of a wide range of domestic policies, from environment to health and consumer protection.

Pascal Lamy (2000)

Introduction This paper identifies factors relevant to some strategic choices facing countries of middle size, as they try to cope with the multiple challenges of regionalization and economic globalization. Its premises are simple and indeed obvious:

1. Globalization and regionalization are intertwined.

2. The United States (U.S.) and the European Union (EU) are simultaneously global and regional actors, and as such may be described as “economic great powers” . Japan, too, fitted this description through parts of the twentieth century, but may soon, in both roles, be eclipsed by China.

3. The member states of the EU, especially the larger ones, do not appear ready to relinquish the role that individually they play in the regional (greater-European) and global settings, but still , to a large extent are involved in “steering” both regionalization and globalization collectively, that is, through the EU and its institutions.

4. Other states face strategic decisions about how to position themselves in relation to the economic great powers, so as to gain advantage from – or be minimally damaged by – regionalization and globalization.

• Some may attempt to play a leadership role within regional groupings, and perhaps even to claim dominance in a regional setting – Brazil, as the prime mover of Mercosur, is the clearest case; South Africa and Russia may be others; and China (unless and until i t “makes the grade” as an economic great power) probably also fits this description.


• Some may aim to play an independent role on the world-economic stage (i.e., to

participate in processes of global economic governance as independent actors), while also participating in the formation of regional groupings without claiming leadership within them – Canada, as a member both of the G8 and of the NAFTA, probably typifies this set of states.

• Some, evidently too small or too weak economically to play much of a role on the world-economic stage, may strive for the formation of regional groupings such as the ASEAN in order to resist the emergence of a regionally dominant state; but conversely, as with the candidates for EU membership and those who see themselves as future candidates, they may choose to link themselves as closely as possible with the regional leader(s).

By grouping states in this way, I implicitly define the term “countries of middle size”. This large category excludes, at one end, the “economi c great powers”; at the other end, it excludes the last-mentioned group, those that cannot really aspire to become important players in the world economy, no matter how they choose to situate themselves in relation to other countries. In between these two extremes are those countries that have to decide what role to play at the regional level, and globally (in terms of global economic governance), in order to defend and advance their own interests.

Obviously, each country’s strategic choices in these matters will reflect the circumstances in which they find themselves. One would not expect, say, Canada, Norway, Italy, and South Africa to size up their options in similar ways. What makes sense for one may be foolish for another – and not only because of disparities in size, natural resource endowments, skill s development, and other features intrinsic to each. They simply face different opportunities. The differences reflect not only what they are but how they are situated in relation to other countries in the regional neighbourhood. The issues here are geo-political and geo-economic. Presumably, though, these factors are not so determining that they leave no room for maneuver – if that were so, there would be no reason to enquire into “strategic choices” at al l.

In this paper, I assume that processes of globalization and regionalization – and the relationship between the two – are pertinent to the choices that individual countries face. But those processes do not unfold only of their own logic; they are to some extent deliberately created, they are shaped by the actions and policies of states as well as by the workings of impersonal forces such as technology and markets. Also important, for this reason, is the fact that behaviour, or policy, is shaped in some degree by policy-makers’ perceptions of what is going on. For this reason, in this paper I pay attention both to perception and to observable differences in what is going on in different parts of the world. The paper thus outlines, in a first substantive section, four images of globalization; it then proceeds, in the next main section, to identify two forms of regionalization. Note the distinction: images and forms. Images are ethereal; they lie in the domain of the intellect, even if the intellect focuses on what lies “out there”. Forms of regionalization, by contrast, are features of empirical reality, distinguished from each other by the different types of relationships that arise among countries in regional settings. A basic supposition of the paper is that strategic choices depend in part on what


the policy-makers perceive globalization to be (also the driving forces behind it), and in part on their appraisal of opportunities and dangers, as affected by the place of their country within a regional as well as the global setting.

Four Images of Economic Globalization “Globalization” is a term frequently used without definition, as if its meaning were self -evident and consensual. It is neither. In fact, dipping into some parts of the vast literature on the subject, it quickly becomes evident that while many observers presume globalization to be economically and culturally homogenizing, others either refuse to make such an assumption,1 or, with Cerny (2000; cf.Castells 1996), argue that its inherent tendency is actually to “divide, fragment, and polarize”. Even at the level of description – never mind effects, or consequences, or ramifications – there is no agreement about globalization. Some see it as merely an advanced, relatively dense form of transnationalization or even a process of “inter -nationalization” that, if viewed in historical perspective, merely brings the world back to pre-1914 levels of trade and capital movements (for example, see Hirst and Thompson 1999). For others, to focus only on density of economic transactions is to neglect or deny what is truly novel, truly revolutionary, about today’s world. And what’s that? Well, say the fut urists, everything: the organization of production, the financial system, management styles, patterns of governance, communications and information technologies, and identities, thought-patterns, norms, and culture. The skeptical view is that this is all hype, like the evanescent “new economy”.

Amid uncertainty, it is helpful to take note of a few simple and obvious facts. One is that many people – politicians, business leaders, protestors at Seattle and Genoa and Droha – are convinced that “globalization” is a reality, it is upon us. A second is that different people, all convinced that globalization is for real, have quite different views of what it is and what it entails or portends. Third, regardless of such differences of perspective or interpretation, there can in fact be only one globalization, for the simple reason that there is only one globe (by contrast, regionalization, I argue, takes two main forms). However – and this is the fourth point to make – because globalization is an unfolding historical process, no one can say exactly where it is “headed”. Its development will presumably be shaped not only by factors such as technology and patterns of discourse but also by the actions of major players in the world economy: firms with global operations, international organizations such as OPEC or the IMF, and political entities (mainly states, but also the EU) that wield substantial economic power and perhaps – as is the case, especially, with the United States – military power as well.

Diversity of perspective on globalization, as well as uncertainty about its future trajectory, make it a contested concept. The term simply cannot be meaningfully employed either descriptively or theoretically, except by acknowledging different usages 1 Hay (2000) argues that because of institutional and cultural differences among nations, convergence is contingent upon national responses to it, and that it is regionalization, especially in the case of the EU, that is more likely to have homogenizing effect – although that too depends on the structure of regional institutions, and on cultural patterns typical of the region.


or understandings or, as I suggest, different images of it. The images sketched out here are partly descriptive or interpretive, and partly normative. They identify recent developments and present tendencies, and also preferences or hopes for the future, if (as suggested) human agency or purposive action has anything to do with the matter. Such images are necessarily subjective, internalized – and that is what gives them their importance. The fact that people see globalization in different ways, even if the images remain imprecise or cloudy, is important in itself. Arguably, images of globalization affect the behaviour of individuals, and shape policies and strategies of states, corporations, and organized interests.

Although there are various definitions, or implicit definitions, of globalization, all four images share some common features. All apparently highlight the spread of capitalism and market economies – in some form – around the world. There are several features of this. One is that, by contrast with decades of rivalry between market-based and politically-directed economies, it has become increasingly difficult for any state or group of states to choose a non-capitalist future, sheltering itself from the production processes, financial flows, and cultural products that radiate outwards from the world’s richest countries, especially the United States. A second feature is the increasing density of international trade and investment flows, facilitated by a series of still-continuing negotiations under the auspices of the WTO and other institutions contributing to global economic governance. Third, there is the penetration of national economies by an international financial system that, given its relatively high degree of institutionalization and the huge volumes of capital crossing national borders, has substantially reduced the autonomy of national states in economic policy. And fourth, there is a sharp accentuation of earlier trends towards the “de -localization” or “trans -nationalization” of production processes, such that products often cannot be said to be manufactured anywhere in particular; a complex international division of labour obtains, in which the production and assembly of components is dispersed among several different countries, and service functions and even managerial tasks are farmed out internationally. These four features of globalization are, of course, mutually reinforcing.

The various images of globalization, while similar in these respects, attribute its emergence or occurrence to distinctive causes; they have different views on the extent of homogenization that globalization brings about; and (especially important for this paper) they present different understandings of the political dimension of economic globalization. By this I mean that they hold to different views on the question, whether globalization occurs regardless of what governments may do, or whether, conversely, globalization (at least in its economic aspect) occurs essentially because governments act to bring it about. Also, to the extent that political action does indeed support (or is thought to support) economic globalization, there are very different perspectives on the governmental activities and policies, or on processes of economic governance, that underlie it. These differences in perspective are highlighted in the fourfold classification I present of images of economic globalization, as outlined in the next four sub-sections.


First Image: Anarchical Globalization

Under any conception of globalization, suppositions or observations about power relationships are an essential feature. But power need not be governmental or even political. In a first image of globalization, attention is directed not to the role and activities of political entities – states, or organizations comprising several states, as in the case of the EU or OPEC – but to the activities and strategies of corporations with transnational operations, often global in scope. Emphasis is placed on global corporations’ absence of national loyalties or even of a national base. The y are said to be able to move operations anywhere, and to be ready to do so. Their bargaining power enables them to demand of national states that they relax or remove constraining regulatory frameworks, reduce taxes, enact anti-union laws, and provide subsidies in the form of infrastructure, training services, and so forth. Where possible, demands for supportive policies are directed to governments at the municipal or other subnational levels.

This is a liberal or neoliberal,2 “business school” perspective on processes of globalization. Its most high-profile expositor and popularizer is Kenichi Ohmae, for whom stateless corporations have become the prime movers in the world economy. Ohmae argues that one consequence of new patterns of corporate organization and production strategies is that national governments have become powerless in economic matters except in a negative sense: they are able to distort and impede the rational process of resource allocation by global firms. When governments attempt to regulate the economy, say Ohmae and other neoliberals, not only do they demonstrate how ineffectual they are in accomplishing what they intend, their interventions have real consequences that are strongly detrimental not only to corporate interests but, for that very reason, to the economic interests and well-being of their own populations.

Ohmae’s work is a paean to technology, or to the corporate managers who have learned how to turn technological innovation to their advantage. He argues that new communications and information technologies, together with the falling cost of transportation, enable major corporations to locate each aspect or phase of their operations in those parts of the globe where it is most efficient to do. Even management functions can be decentralized, with the consequence that a transnational corporation’s head office may be little more than a shell; in fact, it becomes difficult to describe any

2 Is there a difference between “liberals” and “neoliberals”? Perhaps the most obvious difference is merely a difference of usage or perspective. Those who want to see government play a minimal role in the economy tend to describe themselves as liberals, while their critics call them neoliberals. In this sense, these two terms are merely tags that identify the view of the observer, more than that which is observed. But I think they do actually denote different ideological or theoretical positions: liberals, whether of the nineteenth century or of the present-day, tend to affirm the importance of politically-established frameworks for market activity, whereas neoliberals tend to be more critical of any form of governmental involvement in economic affairs, except those activities that support corporate interests and aim to enhance “competitiveness” in international markets. See the discussion, below, of political frameworks for economic activity, especially the part referring to the position taken by Milton Friedman – probably regarded by many as the father or progenitor of neoliberalism, but in my opinion quite appropriately described in the way he described himself, as a “liberal” tout court.


country as the “home” of such firms, except nominally. They are thus able to play states off against each other for favourable treatment (low taxes, good physical infrastructure, effective workforce training, and the provision of health care and other social services for workers, etc.).

In these circumstances, even the United States, the countries of western Europe, and Japan – Ohmae calls them “the Triad” – are forced to adapt their domestic economic policies to meet the demands of corporations that could easily choose to move operations elsewhere. In general, states find it counter-productive to attempt to impose restrictive regulations on businesses or business activities; the public sector must be pared to a minimum, except for those activities that serve the interests of capital. As states deregulate, national borders recede in significance – a notion that Ohmae captures, with irritating (because simplistic) hyperbole, when he writes of a “borderless world” (1990). National regulations stop at national borders (not completely, but the idea has meretricious appeal), whereas information passes across them at the speed of light, without even noticing them.

At the same time as national states lose power to global corporations, local or regional governments may play an increasingly important facilitative or supportive role. Thus the decline of the nation-state is accompanied by the rise of “region states” (Ohmae 1993; Courchene 1998), which Ohmae has described (1995, 80) as “natural economic zones” that in some cases lie within a single state, and in others straddle national borders.3 One may note, in this connection, the increasing salience of cross-border regions, a phenomenon supported by cooperative action among the relevant local or regional governments, although not within a common legal or regulatory framework unless created supranationally. Thus, in this image, globalization is associated with the dispersal and hollowing out of governmental power, as is suggested also by the word-splice “glocalization”. This term, the Oxford Dictionary of New Words (1991) notes, has been “adopted in Japanese business for global localization, a global outlook adapted to local conditions;” it points to an intensified sense of locality and heightened local initiative within a global context. More generally, the term captures the essence of the contradictory trends (centralizing, decentralizing; homogenizing, diversifying) that are so much in evidence under globalization {see also \Robertson, 1995 #2283, 28}.

“Glocalization” apparently appeals to market -ideologues for its implicit denial of the idea that a politically-established framework for market activity is needed, in order for the price system to organize production and exchange efficiently. This inattention to the economic functions of government, or to the need for any form of economic governance, is what leads me to characterize the image of globalization presented by Ohmae and his followers as “anarchical”. I choose this term, because anarchism as a

3 “Region states” is a puzzling term, since so little attentio n is paid to the capacity of these entities for authoritative action. A better term might be “non -state regions” that possess (in Ohmae’s words) a well -developed “infrastructure of communications, transportation, and professional services essential to participation in the global economy”. These are attributes that enable them to do well in “the contest for a finite pool of inward investment” with the consequence that, as entities with some fiscal but virtually no regulatory capacity, they become “powerful e ngines of development”.


political theory claims that social order can be achieved without formal rules and thus without instruments of enforcement or coercion; the same idea, applied to the economic realm, sees production as a cooperative process; it also depicts markets – venues for competitive behaviour that is socially beneficial – as natural, spontaneous, and self-regulating. Politics is out of the picture, except as an activity that distorts resource allocation and, because misconceived, reduces aggregate welfare. Thus, I argue, there emerges – in reference to the extension and intensification of market activity on a world-wide basis, enabled by new technologies – the concept of “anarchical globalization”. It happens also to be neoliberal, but I choose not to employ the simpler term “neoliberal globalization” for a very straightforward reason. Briefly, the policy prescriptions characteristic of liberalism or neoliberalism (privatization, deregulation, tax reduction, and efforts to dismantle or redesign the welfare state) are also consistent with other images of globalization, which are far more attentive to politics and political function. These other images of globalization are distinguished from anarchical globalization not on the basis of ideology or policy prescription, but of conceptions of power and political function in the international system.

By contrast with Ohmae and authors of similar persuasion, writers as diverse as Karl Polanyi, Milton Friedman, Charles Kindleberger, and Phili p Cerny – diverse in terms both of social theory and ideological persuasion – have taken the view that there are essential political preconditions for the emergence, well-functioning, and stabili ty of a market-based economy. In other words, well-functioning markets are neither natural nor spontaneous, and certainly not naturally stable. This is true of domestic markets, and thus equally of international or global ones.

Polanyi (1957 [1944]) stressed, in some respects echoing Marx, that the social obligations characteristic of pre-capitalist society, and especially (in Britain) the Elizabethan poor law, had to be abolished in order for a capitalist labour market to arise: to increase labourers’ dependency on the market, the penalties of pauperism had to become more severe, forcing people to earn their livelihood through employment. The more general point is that government involvement in the economy, whether directed towards establishing a framework for the efficient operation of markets, or aimed at altering market outcomes, is seldom neutral in its effects vis-à-vis different groups, classes, or regions. The extent of social dislocation that was an integral feature of the development of capitalism – for example, through the wider definition of property rights, and the transformation of communal property into private property – is well known. Today, neoliberalism, with its further extension of property rights (especially in intellectual property) and its deliberate fraying of the social safety net, has effects similar in kind although of course different in degree to what occurred with the emergence of an industrial, capitalist economy (cf. Cerny 1990, discussed below).

Friedman (1963) emphasized that there are things that the market cannot do for itself, for example, define property rights, enforce contracts, establish a medium of exchange (create money), counteract monopoly, and define and penalize fraud; thus the organization of production and exchange through the market requires a well-functioning framework that cannot be established by any other means than through political authority.


In extension of this idea, by the 1990s, it became conventional wisdom that the necessary policy framework is not the work of governments alone; non-governmental organizations (NGOs, or quangos – quasi-autonomous non-governmental organizations) have an essential role to play; networks to some extent supplant hierarchies. But governments are, nonetheless, inescapably central players in creating the set of rules under which markets operate, or operate well. Indeed, it seems plausible to suggest that, while governments are frequently criticized for trying to direct or control the economy in ways they are ill-equipped to do, it is likely that political action – especially regulation at the national level – has done more to support or underwrite market activity than it has to suppress, supplant, or distort market processes. (“Distortion” implies forms o f interference with what Adam Smith described as “man’s natural propensity to bargain…[etc. – check]”, that is, displacement of the invisible hand that tends to the public welfare without the involvement of any public agency.)

Kindleberger (1973), addressing the need for market stability internationally, as a condition of the stability of domestic markets as well, affirmed that it was necessary to have a single country able and willing to take on the duty (an expensive one, hence altruistic) of stabilizer. This was a position subsequently described (and criticized) by Keohane (1980) as “the theory of hegemonic stability”. I shall refer again, below, to the concept of hegemony; for now, I want to emphasize that whatever the shortcomings of the theory that Kindleberger sketched out and Keohane formalized, the problem of stability within the international economic system, and also the underlying issues of power, and the self-interested obligation of strong countries towards the weak, remain vitally important. This subject is an extension of the previous one: as the density of market transactions across national borders has increased, the need for a political framework for the operation of the economy has not disappeared, it has merely shifted to a new level. This does not mean that the old forms of national regulation must now be reproduced supranationally: the new technologies that have supported globalization have also made many of the techniques and instruments of economic governance ineffectual or counter-productive in terms of the objectives aimed for. What it does mean is that a different kind of political framework for the operation of markets that transcend international borders, and may indeed be global in scope, is needed. How to accomplish this in the absence of the hierarchical structures that have been thought, no doubt with some exaggeration, to characterize the Westphalian state, is the major problem or challenge of governance within the global economy, and perhaps regionally as well.

In this context, the more recent work of Philip Cerny (1990; 2000), is of considerable interest. Cerny argues that globalization – while partly political – does not create “one big polity”. Rather, it incorporates nation -states into far more complex governance structures. Such structures incorporate major market players, both domestically and transnationally, as well as political authorities at multiple levels both below and above the national one. Thus, Cerny affirms, in the latter years of the twentieth century states became increasingly constrained in their capacity to shape internal economic and social structures; the range of political and economic functions states can now effectively perform has shrunk considerably. In fact, by comparison with the states of western Europe during the postwar period (to the mid-’seventies) the contemporary


state has lost much of its earlier capacity to promote the general well-being of its citizens or, in the sense described by Polanyi, to protect society against the corrosive effects of ever-more-intrusive markets. Thus the state, today, has become (as Cerny puts it) “residual”; by this he means ,, it can claim only partial loyalty from its inhabitants. Nonetheless, like American state governments (a useful comparison, he suggests, as these are political entities that cannot control their borders), national states still have an important role to play in promoting the competitiveness of their industries (cf. Castells 1996).4 The “industrial welfare state” has been replaced by “the competition state” (1990; 2000). However, the competition state does not act within a rules-free environment, any more than firms in competition with each other at the national level have acted or could have acted without reference to a legal framework that only political agency could create. In brief, the competition state acts within an international or global framework to which Cerny makes frequent reference, although he makes no attempt to describe its structure.

Cerny, along with many others, thus rejects the implicit anarchism that characterizes the work of the enthusiasts of corporate wisdom and beneficence. In this sense, one might say that there are really only two images of economic globalization, one that is inattentive to and seemingly denies (or simply does not think about) the importance of political frameworks, and another for which the idea that world-wide market activity requires political underpinnings is evidently to be taken seriously. However, within this “political foundations” group thre e different tendencies may be identified, each characterized by a particular view of power relationships and rule-making within the international or global economic system. Thus, instead of one non-anarchical image I identify three. Each is characterized by a particular – perhaps only vaguely stated, perhaps only implicit – theory or model of economic governance. I label these images, respectively, hegemonic, collusive, and multilateral/multicentric. Each, as I shall later explain, has a distinctive view of regionalization and its significance.

Second Image: Hegemonic Globalization

It appears consensual, and anyway it would be hard to deny, that international rules regarding trade and investment have become steadily more constraining on national governments. The reduction and “binding” of tariffs through successive rounds of negotiation under the GATT/WTO is now just one of the salient features of the world trading system. Trade agreements at the global and regional levels continue, of course, to cover tariffs and quantitative controls on the importation of industrial products, but the importance of these items has receded into the background, relative to other matters:

4 According to Castells (1996, 90), “… it is precisely because of the interdependence and openness of [the] international economy that states must become engaged in fostering development strategies on behalf of their economic constituencies.” He adds (p. 105), “…competitiv eness in the new global economy … seems to be highly dependent on the political capacity of national and supranational institutions to steer the growth strategy of those countries or areas under their jurisdiction, including the creation of competitive advantages in the world market for those firms considered to serve the interests of the populations in their territories by generating jobs and income. [Emphasis in the original, in both quotations.] While declaring (p. 97) that economic policy issues are marginal to the purposes of his book, Castells outlines an economic role for the state quite comparable to that described in greater detail by Cerny.


trade in services, trade in agricultural products, subsidies or alleged subsidies and the imposition of countervailing duties, anti-dumping measures, public procurement rules, intellectual property rights, and rules regarding foreign investment, including the principles of “national treatment”, compensation for expropriation, and the compulsory opening up of investment opportunities for foreign capital. Underlying this change is the fact that whereas, in the early post-World War II period when the GATT was created, trade and investment were considered alternative strategies for penetrating foreign markets, in the last few decades they have become complementary.5 Increased trade and increased foreign investment go together, and support each other. In consequence, the term “free trade agreements” has become a misnomer; “trade” has become shorthand for “trade -and-investment” – and the investment aspect implies pervasive market rules applying across national borders, thus limiting the policy autonomy6 of national states.

In this situation, two interrelated issues come to the fore. One is, how the rules get formulated and enforced; the other is, who benefits most from them (meaning: which states, and within individual states, which producer groups and classes gain greatest advantage from them). Liberal doctrine, or the ideology of free trade, holds that benefits are mutual and perhaps even equalizing (the poor benefit most). It assumes also that the world is characterized by interdependence, which induces states – as they come to recognize the extent of their interdependence, and the benefits to be gained from the further extension of market relations) to agree to the advance or deepening of international trade-and-investment regimes. A dissenting (“critical”) view holds that benefits accrue disproportionately to the rich; the extension of markets is income-polarizing, not equalizing. The critical view asserts, further, that the world is characterized by wide disparities in power, that these result in relations of dominance and dependency, and that, correspondingly, international trade-and-investment rules are formulated by the rich in their own interest. The poor go along with such rules, essentially because they have no choice: they need investment and they need access to foreign markets, and they have to accept the terms on which these are on offer.

This crude antinomy between liberal and “critical” doctrine undoubtedly oversimplifies. It is for this reason that I have turned to the literature on hegemony, 5 Up until, say, the 1970s, a national manufacturer might choose to penetrate a foreign market in either of two ways: to produce at home, and export a portion of what was produced, or to establish a set of foreign subsidiaries that would import components and produce essentially the same products under licence from the parent firm. Of course the two strategies could be used together, and they typically were (indeed, for some products, they still are). The “subsidiaries” strategy was attractive, especially, in relation to a foreign market partially sealed off by high levels of tariff protection, especially on the final stages of production, such as assembly operations. This situation contrasts with the one that typifies globalization: here goods are produced for world markets, including the home market, through internationally integrated production processes. Under such conditions, the expansion of trade and investment, especially foreign direct investment, go together, and “free trade” necessarily covers also services and a multitude of investment issues. 6 Conventional usage would probably be to write, “limiting the sovereignty of national states.” However, I think it helpful to recognize that there are many situations in which states preserve sovereign powers, but are effectively constrained in the ways they use them. In such cases, “policy autonomy” or simply “autonomy” is arguably the more accurate term.


discredited as it is widely regarded as being, in order to characterize an image of globalization that takes account of disparities in economic power among nations, though without necessarily seeing international economic relations as fundamentally exploitative. Are they, indeed, exploitative? That is a question on which it is prudent, I believe, to remain agnostic, whether the context is global, or – as will become evident in a later section of the paper – regional in the “macro” or “world -regions” sense (Europe, East Asia, etc.).

To a large extent, the term “hegemony” is now taken to mean what Keohan e (1980; 1984) said it meant when he outlined (and attributed, as earlier noted, to Kindleberger) a “theory of hegemonic stability”. This theory generalizes from two historically specific situations – British dominance of the world economy in the latter nineteenth century, and American economic dominance around the middle of the twentieth. The theory holds that if an international liberal economic order is to subsist and to flourish, a single dominant state, a hegemon, must undertake to support and enforce the rules of an open monetary and trading system. In the absence of a hegemon, as guarantor of the system, various states will attempt to pursue their own interests in ways that are detrimental to the interests of others (that is, competition among them will be destructive). Since the inevitable result of such “non -cooperation” is collapse of ordered international economic relations, entailing costs for everyone, hegemony is described as a public good, which the hegemon supplies – necessarily at some cost to itself. Only an exceptionally rich and powerful state has the means to do this. Thus hegemony rests on considerable disparities in wealth and power within the international system, and lasts only as long as the world' s leading economic power is able and willing to shoulder the burden that rule-enforcing demands.

A different view of hegemony is presented by Arthur Stein. Stein (1984) argued that in the two cases where a hegemonic leader had emerged, “free trade” – supposedly a public good supplied by the hegemon – was negotiated rather than imposed. Neither Britain nor the United States, says Stein, ever attempted to force others to observe the rules of a liberal international system; all these hegemonic states could do, and all they did, was to offer a very attractive bargain to another specific group of states: these states gained unimpeded access to the markets of the hegemon, but only in return for partial liberalization of economic exchange among themselves. Under the terms of this bargain, these countries could continue to discriminate against the hegemon to some limited degree – something that both Britain and the United States, in their heyday, could afford to put up with. The bargain, then, was asymmetrical, in a way that benefited the non-hegemonic states: it did not demand fully reciprocal trade concessions. In effect, the hegemon was able, while its relative position remained untouchable, to buy stability in the world system. In both cases the motive was political or security-related. However, also in both cases, the eventual erosion of the hegemon' s relative economic power meant that it lost the capacity to bear the costs of sustaining the system, through the asymmetric bargain it had originally proposed. Eventually the hegemon was forced to defend itself against discrimination by the other participants. It did so by taking a series of decisions, which it imposed unilaterally, with the aim of spreading the costs of maintaining the system (i.e., it sought to convert an asymmetrical bargain into a more symmetrical one).


A still l ess benign view of hegemony is sketched out by Bruce Cumings, for whom hegemonic systems are necessarily less than global, and (among the states encompassed by the system), implicitly hierarchy-preserving. Cumings (1984) describes hegemony as “the demarcation of outer limits in economics, politics, and int ernational security relationships, the transgression of which carries grave risks for any nonhegemonic nation.” Unfortunately he does not say what the “grave risks” are, but presumably they amount, together, to the danger of exclusion (which comes in varying degrees): restricted or uncertain access to the hegemon' s markets, non-availabili ty of foreign direct investment and the technology of which investment may be the carrier, and non-availabili ty of credit or excessive cost of credit. These risks or disabili ties reflect the instruments at the disposal of the hegemon, through which hegemony is established, namely, (a) to control access to a large market (notably, the hegemon' s own market, but possibly also the markets of other states participating in the hegemonic system – e.g., through treaties of economic association, as with the EU), (b) to control access to investment and technology, and (c) to control access to credit. In addition, of course, the hegemon may establish or support its dominant position by wielding military power and employing coercion or the threat of coercion (for example, to gain access to resources or to ensure the openness of transportation links such as sea lanes), but arguably – here I introduce a conceptual distinction that I believe clarifies important issues – in so doing it acts as imperial power and not, strictly speaking, as hegemon.

Hegemonic power may be distinguished from imperial power, I suggest, by seeing them as different forms of domination, as defined by the economist François Perroux. Kindleberger, referring to Perroux, wrote (1976, 33): “Domination was said to ex ist when any action of A affected B, but none of B’s action required adaptation in A. Domination can occur in countries, among firms in an industry, among intellectuals in a social group, in any sort of relationship.” One should note that, so defined, domination in the international arena is not necessarily harmful or disadvantageous to “state B;” it is simply the broadest category of unequal relationship among states. Domination, I suggest, may be primarily political and military, or primarily economic, or a thoroughly imbricated mixture of the two (each being, in its own way, coercive). When domination or control takes mainly the politico-military form, the structure that binds the two states together may be described as imperial; when coercion or control is mainly economic, the structure is hegemonic.

• Imperial powers, then, dominate through direct control, often established militarily, and perhaps supported by political instruments such as governorships and the (partial) exercise of legislative and executive powers in the subject territory. Economic exchanges between the imperial power and its colonies or dependencies, and between such colonies or dependencies and other states, take place under conditions set by the imperial power. For example, prices may be set by administrative decree, exports may be limited in quantity or by destination, the imperial power may demand privileged or exclusive access to natural resources, certain forms of production or even of settlement may be prohibited, the transportation of goods may be controlled, and access to capital may be rationed. The theory underlying such controls appears to be invariably mercantili st.


• Hegemonic powers exercise a less direct form of domination; relationships are

primarily economic, even when political or security-related objectives underlie the creation of hegemonic relations, or a hegemonic system. While there appears to be no standard or widely-accepted definition of hegemony, at least in this economic sense,7 a hegemonic power (a hegemon) appears to be best described as a state that has both the capacity and the will to establish and maintain – by the selective offering and withholding of prospective economic benefits – an international economic order based on market exchange, or the relatively free movement of goods, services, and capital (but generally not of labour).

This is essentially what the United States did at the end of World War II , as has frequently been described. However, the abili ty of the US to continue playing the role of hegemon is conventionally thought to have declined or disappeared during the 1960s, especially during the Vietnam war, and to have been dramatically revealed by President Nixon’s emergency economic measures in 1971 (including an import surcharge, and refusal to continue exchanging, on demand, gold for dollars). Since then, the economic fortunes of the U.S. vis-à-vis Europe and Japan have had a roller-coaster ride. Most significant for the purposes of the present discussion, however, is the fact that throughout this time, notwithstanding its enormous trade deficit, the US has continued to be the main agenda-setter for international negotiations on trade and investment. It has been able to drive those negotiations – not, of course, to single-handedly determine their outcome – because of the continuing importance of US markets, US technology, and US foreign direct investment (even though, on balance, capital flows have been inwards rather than outwards).

Protectionist tendencies in Congress have strengthened the President’s hand in international economic negotiations, as other countries have been reminded of their vulnerabili ty to the application of anti-dumping duties, countervail, and safeguard measures. Since the imposition of such measures is contingent upon determination of injury to domestic producers and/or unfair trading practices by the exporter, their application involves substantial exercise of discretion by US authorities, which in turn has enabled the US to gain added leverage in world trade, and to constantly expand the scope of international economic negotiations. It is to a large extent because of American pressure that such negotiations now cover agricultural as well as industrial products, services and related regulatory issues, intellectual property, permissible or prohibited subsidies (e.g. in the form of infrastructure, development grants and easy credit, favourable tax treatment, preferential or low-cost access to state-owned natural resources, subsidized transport, export credits, etc.), investment rules and investor rights, and environmental and labour standards. The steady extension of the range of subjects

7 "Hegemony" is also used loosely, by many authors, to denote politi cal or military domination. Note also the rather different concept of Gramscian hegemony, which is cultural or ideological; while it may help establi sh or support hegemony in the economic sense, economic domination is not of its essence. The Gramscian concept of hegemony has been applied to international relations, in a way different from but full y compatible with my usage here, by Robert Cox (1983). [Add newer references.]


covered by international economic negotiations, which has been welcomed by economic liberals more or less everywhere, provokes a hostile reaction from those who regard the current and ever-expanding rules and norms of international economic relations as unduly intrusive, and, especially, as polarizing in their effects on the international distribution of resources and incomes.

For example, this is what I take to be the significance of Pascal Lamy’s rejection, cited at the outset of this paper, of “the notion that unfettered market forces should dictate our way of life, our culture and ultimately the nature of our society and our core values.” This attitude, indeed, explained the EU’s merely conditional support for a new WTO round at the organization’s 1999 meeting in Seattle. At that meeting, the EU failed to bridge the evident differences between the United States and a group of economically weaker countries. The participants in the Seattle meeting wanted globalization to proceed on different tracks, or to encapsulate different social and economic goals, and the EU was unable to define a mutually acceptable middle way that would reconcile modernization and globalization on the one hand with collective management of “our societies and values” on the other. Of course, the Seattle protesters went much further. They decried neoliberalism and globalization as an assault, simple and pure, on the world’s poor.

At Seattle, Genoa, and Droha – and in many fora preceding them – the United States has pressed forward with an agenda of economic liberalization which has meant, in substance, that US conceptions of “fair trade” and appropriate treatment of foreign investors should prevail worldwide. Of course it could not, on its own, determine the content of international regimes governing trade and investment, or establish by fiat the substance of the multiform policies declared to be “trade -related”. M ost observers seemingly take the view that this fact shows, in itself, that the US has been unable during the last quarter century to act hegemonically, if indeed it ever did.

Adding plausibility to an opposing view are two considerations. First, as affirmed (persuasively, in my view) by Stein, neither Britain nor the US, even at the apogee of its economic power, ever attempted to impose or enforce unilaterally a preferred world trade and monetary order. The “world” economic system was, in both cases, a ne gotiated one. What arguably made the system, in each case, a hegemonic one was the fact that the world’s major economic power was, by virtue of its capacity to offer or to withhold economic benefits to others, uniquely placed to shape the content and outcomes of the negotiations that created it. Second, the two main economic rivals of the US in the last half-century, Japan and the Europe of the EU, have shown considerable reluctance to proceed down the road that the US has mapped out. Both have fought a form of rearguard action against American initiatives, but both have ended up agreeing to a large part of what was demanded of them. Once they acquiesced, no other country was able to resist, even though groups of middling economic powers (countries of middle size) were able, in some respects, marginally to shape the course and the outcomes of negotiations.

It thus seems plausible to suggest that globalization in the sense so far described may be equated with (if I may adapt a phrase conventional in another context) the steady “widening and deepening” of the world financial and trading system created under US leadership after World War II. Nonetheless, some will object to the phrase “hegemonic


globalization” on the grounds that the United States has ceded to Europe – and, it used to be said, to Japan – a substantial proportion of its former power, and others will object on the grounds that hegemony is a concept that should be discarded altogether. I would agree with this, if I could think of another term that would capture so many dimensions and issues in international economic relations, as the literature on hegemony does. What is unfortunate is that “hegemony” is too readily associated with the justifiably discredited theory of hegemonic stabili ty, perhaps always a straw man of Keohane’s stuffing, or that (in more popular usage) it carries connotations of gunboat diplomacy and great-power intimidation. Other ideas appearing in the literature on hegemony are of considerable interest, and retain their value as pointers to unresolved intellectual issues that are vital for any understanding or assessment of globalization (and, as I shall later discuss, of a particular form of regionalization): to what extent or under what conditions an “economic great power” gains the capacity to act hegemonically (as primary rule-maker for an international system), what factors may induce it to do so or to try to do so, whether or not hegemons typically act altruistically or (conversely) with the intent of preserving and consolidating hierarchy within the international system, and – perhaps most interestingly – whether hegemonic systems are inherently self-undermining or programmed to bring about their own decay, in the long run.

Whatever the controversies over the concept of hegemony and its suitabili ty in the application I propose for it, I wish to stress that one of the images of globalization not only focuses on the steady consolidation of world capitalism but interprets this as a consequence of gross disparities of economic power among national states. It also, significantly, presumes that corporations with global operations do usually preserve a national base even if they organize production world-wide, in order to take advantage of low-cost locations for certain operations, with a view to beating the competition in their home markets and global markets alike. (In other words, a hegemonic image of globalization necessarily rejects the concept of “stateless” corporations, even if their operations are to a large extent “footloose”.) To attempt to quantify the economic power of the United States and of other players – including, most obviously, the Europe of the EU – may be fruitless. What is important, however, in this image of globalization is that the widening and deepening of the world capitalist order is brought about through negotiation among highly unequal players, and under substantial pressure from one of them, the United States. The remaining two images of globalization that I shall present are based on quite different “readi ngs” of power relationships within the global system.

Third Image: Collusive Globalization

The hegemonic image of globalization portrays a world in which a single state has the capacity to shape the agenda of international economic negotiation, and in large measure to ensure outcomes that reflect its priorities and interests. Suppose, however, that the capacity to do these things does not lie in the hands of a single state, but rather, is shared by a group of the world’s leading capitalist powers. They become, jointly, the primary rule-makers in the international system. To imagine this, one has to suppose a certain coincidence of interest among the rule-makers. Necessarily, that common interest is defined vis-à-vis that of some other group or set of interests. The latter may be “footloose


corporations”, or they may be national states less privileged than those that play the primary role in global economic governance. The two cases are clearly very different. But in both of them there is still , by hypothesis or supposition, an “us-them” distinction. The group that gains rule-setting power does so by acting together in their own interest, or to advance shared objectives. For this reason, I call such an image of globalization and global economic governance, collusive.

Under a benign interpretation, collusive globalization creates rules that curb the capacity of international/global corporations to act against a generalized “public interest”, conceived on a global scale but also applying within states individually. For example, environmental regulations that not even the wealthiest and technologically advanced countries could impose by themselves, for fear of impairing their competitiveness or the competitiveness of employment- and wealth-generating sectors within them,8 may in principle be agreed upon by a group of “economic great powers” acting together. (This is what, with regard to climate change, was attempted at Kyoto.) The logic here is the same as has frequently been invoked at the regional level, particularly within the EU – the logic of preventing the much-discussed “race to the bottom” in areas where there is a public interest to be defended. What is necessary, globally as at the regional level, is to get all the major players onside, and to create adequate means of enforcement (if only by threat of retaliation), so that states outside the rule-making group cannot with impunity flout the norms or principles of international regimes. This idea is reminiscent of the literature on hegemonic stabili ty, but there are two important differences: the range of objectives to be achieved through a common system of economic governance is broader, and governance is achieved by a group of two or more states acting together, rather than through a single state’s flexing of economic muscle.

A more hard-nosed interpretation of collusive globalization presumes that the members of the rule-making group, while they have their differences and disputes, nonetheless have important interests in common, and act together to advance them. Basically, they gain advantage from seeing that international trade agreements are in place that will stabili ze competitive conditions in world markets under terms that consolidate world capitalism, and thus hold promise of preserving the lead that the more advanced states have vis-à-vis the less developed ones. This is a “north-south” perspective, according to which the world’s leading capitalist powers have succeeded in

8 This quali fication of the term “competiti veness” is included in order to take account of the assertions of Paul Krugman (1997), that individual firms or even industries may be internationally competiti ve or non-competiti ve, but whole countries cannot be so described. In relation to states or national economies, relevant concepts are productivity and comparative advantage. By definition, all countries have areas of comparative advantage; in low-productivity economies, these tend to be labour-intensive industries – such industries will be competiti ve internationally, provided wages are low enough. Countries that do not innovate suffer a relative decline in productivity and thus in li ving standards. Cf. Cohen et al., { , 1985 #2168, 1; cited in \ Castell s, 1996 #1604, 87} : “Competiti veness has different meanings for the firm and for the national economy. A nation’s competiti veness is the degree to which it can, under free and fair market conditions, produce goods and services that meet the test of international markets while simultaneously expanding the real incomes of its citi zens. Competiti veness at the national level is based on superior productivity performance by the economy and the economy’s abilit y to shift output to high productivity activities which in turn can generate high levels of real wages.”


settling differences amongst themselves, and then in imposing on other countries a rules-based world economic order biased in their own favour. At times the rules may seem to be motivated by a general public interest, or it may be claimed that this is so, but it should be remembered that so long as rules are equally restrictive on all firms, capitalist enterprises can live with even quite dense forms of regulation. Thus the term “collusion” may plausibly apply both to relations among the world’s leading capitalist states, and between this group and the corporations that have their base somewhere within that same group of states, either one or several. What is important under collusive globalization is to block loopholes that would permit “unfair” competition among firms, or among national locations for firms.

Further clarity about collusive globalization, explaining also why I think it important to distinguish this image from the hegemonic one, may be achieved by noting that collusion requires a common policy, and that in practice there is likely to be convergence on the neoliberal model. In this opening decade of the twenty-first century, the key players, obviously, are the US and the EU. Is the EU steadily headed towards neoliberalism through its consolidation of the single market, its common competition policy, its reforms to the common agricultural policy, and EMU? Only by presuming so – and thereby downplaying the importance of its initiatives in the fields of regional development, social policy, and employment – can one imagine the degree of cooperation between the U.S. and the EU that the collusive image implies. Such cooperation would have considerable significance not only for rules-bias (favouring the already privileged), but also for regionalization in different parts of the world. Under collusive globalization, cooperation between the two “economic great powers” would also further advance the consolidation of economic power at the regional level. Specifically, the collusive image of globalization implies that the U.S. leaves the EU a free hand in consolidating its position as a regional hegemon (here I anticipate later sections of the paper), or even supports it in this role, and that the EU similarly respects and supports the United States’ efforts to extend its control not only within North America under the NAFTA, but throughout the Americas under an FTAA. Empirical findings that are inconsistent with this hypothesis would suggest that globalization is either hegemonic, or multilateral/multicentric.

Fourth Image: Multilateral/Multicentric Globalization

Within a hegemonic image of globalization, there is, at least for the most part, a close linkage between corporations and their “home” state; the world is a world of state hierarchies, which support and also rest on their national corporations. Under collusive globalization, the relationship between the state and business enterprise is not as close; many corporations are transnational, or are part of a transnational enterprise, and the world’s leading capitalist states jointly create conditions that support their operations. But the world is still a hierarchical one; the leading capitalist states share a dominant position within the world economic order, and, consequently, the rules of international economic exchange are biased in favour of the wealthy and technologically advanced. Under the last of the four images of globalization I present in this paper, an image I call multilateral/multicentric, there are still, of course, international and interregional


disparities of wealth (even increasing disparities, an incontestable empirical fact), but the rules of the international economic order do not entrench them. Interdependence9 receives more attention in discourse than privilege, non-governmental organizations participate alongside state actors in creating international regimes; and global economic governance is achieved less through the exercise of power, whether politico-military or economic (i.e., imperial or hegemonic), than through complex processes of interaction within multiple networks.10 As Jan Nederveen Pieterse (1995) puts it, describing “globalization as hybridization”:

What globalization means in structural terms, then, is the increase in the available modes of organization: transnational, international, macro-regional, national, micro-regional, municipal, local. This ladder of administrative levels is being criss-crossed by functional networks of corporations, international organizations and non-governmental organizations, as well as by professionals and computer users. Part of this is what has been termed the “internationalization of the state” as states are “increasingly engaged in multilateral forms of international governance”. This approxi mates Rosenau’s conceptualization of the structure of “ post-international politics” made up of two interactive worlds with overlapping memberships: a state-centric world, in which the primary actors are national, and a multi-centric world of diverse actors such as corporations, international organizations, ethnic groups, churches.

9 In a classic work, Robert Keohane and Joseph Nye (1977) take care to distinguish interdependence from symmetry; they are attentive to disparities in power but insist that even the most powerful are typically vulnerable in some degree to disruption of international patterns of exchange and international agreements. They write (pp. 10-11): “We must … be careful not to define interdependence entirely in terms of situations of evenly balanced mutual dependence. It is asymmetries in dependence that are most likely to provide sources of influence for actors in their dealings with one another. Less dependent actors can often use the interdependent relationship as a source of power in bargaining over an issue and perhaps to affect other issues. At the other extreme from pure symmetry is pure dependence (sometimes disguised by calling the situation interdependence); but it too is rare. Most cases lie between these two extremes. And that is where the heart of the political bargaining process of interdependence lies.” 10 Cf. Beate Kohler-Koch, (2000), who sketches out three “world views” which she thinks may implicitly be adopted by members of the foreign relations committee of the German Bundestag. She distinguishes a world of states, a world of societies, and a world of networks (Staatenwelt, Gesellschaftswelt, Vernetzungswelt). The point of her categorization is to see if the discourse of these parliamentarians can be adequately characterized with reference to these categories, implying their participation in the construction of the world according to their understanding of past events and future possibilities. The four images of globalization I put forward here are better suited to explain strategic behaviour of states rather than the social construction of (international or global) reality. They relate to the three Kohler-Koch “world views” as follows: (a) the anarchical image is background to the task of “civilizing” capitalism or counteracting and controlling the behaviour of stateless corporations; the assumed importance of doing this is what leads her to formulate alternative world views, which are essentially implicit theories of how to achieve global economic governance, and who/what the main actors are; (b) the hegemonic and collusive images are variants of a Staatenwelt, within which states are the main actors and pursue national interests; and (c) the multilateral/multicentric image is akin to her Gesellschaftswelt, within which non-national interests are pursued alongside national ones, and non-governmental organizations participate alongside state actors, but states preserve their traditional position as the most important players in the world system. Kohler-Koch’s Vernetzungswelt is a world in which states have lost their key position as international actors domestically; they do not govern, they are merely sites for institutionalized negotiation among non-state actors, and they have no special qualities or characteristics within a “networked world”. My images of globalization do not include any analogue to a Vernetzungswelt.


The multilateral/multicentric image of globalization I put forward here is

multicentric in the sense just described, and it is multilateral in the sense that international economic agreements are presumed to be arrived at through negotiations in which there are many participants with an effective voice, at least on some issues. There is no single dominant state (no hegemon), and no directoire of the most powerful or of the already privileged. Of course, no one would pretend that Bolivia, say, has a voice in the WTO equal to that of the United States; but under a multilateral/multicentric image of globalization the low-income, technology-poor states do, together, have a real chance to influence outcomes. Their power in the global system derives from the fact that because the wealthy, technologically developed states are vulnerable in some degree to disruption of existing patterns of supply (there may be alternatives, but accessing alternative sources of supply entails costs).

Globalization in this sense, or perceived in this way, is based on the newfound predominance of an “informational economy”, an economy that is, in the words of Manuel Castells (1996), “global but not planetary”. I think by this he means that while no one should imagine that distinct national economies have been merged into one, it is important nonetheless to be attentive to the emergence of a far more complex, diversified structure than existed in the past, a structure not contained within pre-set boundaries, either national or regional. Castells argues that national economies have become segmented into outward-looking, globalized sectors and, on the other hand, other sectors in which firms lack such ambitions and abilities. He affirms also that the world economy has become divided into a group of states that have such sectors, and another group of states that do not. Thus, according to Castells, (1996, 95-6, 99, emphasis in the original), new information and communication technologies have created a situation where

… the dominant segments and firms, the strategic cores of all economies are deeply connected to the world market, and their fate is a function of their performance in such a market. The dynamism of domestic markets depends ultimately on the capacity of domestic firms and networks of firms to compete globally.

. . . . . . . . . . . . . . . . . . . . .

Furthermore, the quasi-total integration of capital markets, [also resulting from the spread of new information technologies] makes all economies globally interdependent.

In consequence:

The global economy emerging from information-based production and competition is characterized by interdependence, its asymmetry, its regionalization, the increasing diversification within each region, its selective inclusiveness, its exclusionary segmentation, and, as a result of all these features, an extraordinarily variable geometry that tends to dissolve historical economic geography.

For Castells, firms are networks, and there are networks of firms; power is functionally and organizationally dispersed (multi-centric), and the political framework for the operation of the informational economy is created through multilateral negotiations – a fluid, kaleidoscopic patterning of relationships among countries, regions, and NGOs/quangos. Globalization is stratifying, diversifying, exclusionary, and – to that extent – exploitative, inherently unstable, with potential for re-ordering of shifting relationships of power.


Globalization, so understood, is more a resultant of impersonal forces (markets,

technological change, changes in patterns of discourse) than it is a process shaped by the actions of specific players, including the “economic great powers”. Nonetheless, the need for some kind of politically-created framework of rules, permitting the extension of markets and the utili zation of new technologies in processes of production, is not obviated.

Processes of regionalization are of importance in the construction of such a framework. That is because, as is argued in the next section, regionalization is likely to affect relations of power within the international system. Indeed, regionalization is not only an inherent feature of recent changes in the world system, but also – to the extent that regional integration is formalized in common rules and perhaps common institutions – a means of “steering” the process of globalization, whether in the direction of a hegemonic, a collusive, or a multilateral/multicentric structure. It is, I think, by exploring those “steering” effects that one best understands the relationship between the two complementary, mutually supporting processes discussed in this paper, globalization and regionalization. However, in order to tease out exactly what that relationship is, requires us to take a careful look at regionalization, in two major forms.

Regionalization, Hegemonic and Plurilateral Regionalization has traditionally been discussed in the literature either as a process of formal regional integration and institution-building, especially with economic objectives (there being several stages), or as a process that involves the formation of regional identities, or as a double process involving both institution-building and identity formation. The neofunctionalist school, in particular, suggests that the one may lead, through spill overs, to the other (Haas 1958, and many others). It is also noteworthy that many of the more recent contributions to the literature tend to focus especially on the more subjective aspect of regionalization. Thus, Björn Hettne (1999, xvi-xvii) describes “the new regionalism” as:

… a multidimensional form of integration which includes economic, politi cal, social and cultural aspects and thus goes far beyond the goal of creating region-based free trade regimes or security alli ances. Rather, the politi cal ambition of establi shing regional coherence and identity seems to be of primary importance. Some notable differences between ‘old’ and ‘new’ regionalism are thus that current processes of regionalization are more from ‘below’ and ‘within’ than before, and that not only economic, but also ecological and security imperatives push countries and communities towards co-operation within new types of regionalist frameworks.

Elsewhere in the same volume (1999, 9), Hettne writes:

The process of regionalization from within can be compared with the historical formation of nation-states, with the important difference that a coercive centre, or at least the open use of force, is lacking in processes of regionalization. This presupposes a shared, noncoercive project among the potential members of the region in the process of formation. But this is not a suff iciently clear criterion. The difference between regionalism and the infinite process of economic integration is that there is a politi call y defined limit to the former process. This is a historical outcome of attempts to find a transnational level of governance which reinforces certain shared values and minimizes certain shared perceptions of danger. Like the formation of ethnic and national identities, the regional identity is dependent on historical context and often shaped by confli cts. And li ke nations and


ethnies, regional formations, as here defined, also possess a subjective quality, and can consequently be seen as ‘imagined communities’ (Anderson, 1983).

As was characteristic of the earlier literature on regional integration, including that contributed by neofunctionalist writers, Hettne here focuses on a pre-defined group of states which have recognized that they share certain common purposes, and he affirms that the region-building process is non-coercive, at least in the sense that the open use of force is not involved. The similarity with the earlier literature does not stop there, as Hettne also assumes that the development of a common decision-making (and implementation) capability, requiring the building of a fairly complex institutional structure, is an essential feature of regionalization – just so long as institutionalization does not pass a certain threshold, presumably that of creating a federal state.11 Finally, he assumes that the joint pursuit of shared goals may lead to the emergence of a region-level political identity and (presumably) political loyalty.

Another point of similarity, in fact probably the basic one, is that the form of regionalization that is implicitly the focus of attention in these literatures may be described as plurilateral rather than hegemonic. It is not that the literature sees regionalization in one way, as plurilateral, but I see it differently, as hegemonic. Rather, I argue that, while each case of regionalization is distinct – as in all historical processes, events follow a unique trajectory – comparisons among them are facilitated by identifying two main forms. And I also argue that one of the things that is most interesting about the European case is that the two forms or regionalization have gone forward together, mutually supporting and influencing each other. They have been complementary, causally related, and this may also be so elsewhere than in Europe. For this reason, the neglect of hegemonic regionalization, as I shall describe it below, is arguably a significant limitation of the literatures both on regional integration and on the new regionalism.

The two forms regionalization are easily distinguished. Plurilateral regionalization occurs when several states band together for certain purposes, essentially in the manner, and with the consequences (observed or hoped for) already sketched out. Hegemonic regionalization occurs when smaller or economically weaker states cluster around a regional “economic great power” that ac quires the ability, in practice, to become rule-maker for the larger group. The analogy here with hegemony at the global level is precise.

One of the most interesting things about plurilateral and hegemonic regionalization, or the distinction between them, is that the two processes – even if proceeding together – have different consequences in terms of political structures and power relationships. Briefly, plurilateral regionalization involves the building of

11 Hettne says nothing to suggest that federalization is an unlikely or impossible outcome of regionalization; he just does not address the issue. His focus, though, is on regionalization, which implies definitional limits.


compound polities, where hegemonic regionalization proceeds through the creation of much looser regional systems.12

• Compound polities may be described in the following way: they are entities that are relatively highly institutionalized; significant decisions of authoritative character are made at different levels, by central and non-central governments; and boundaries – internal and external – are clearly demarcated. Federations are the most obvious form of compound polity, but the category stretches from regionalized (but still “unitary”) states all the way to confederal, supranational, or suprastatal entities. According to this conceptualization, the EU, like several of its member states, is a compound polity; its boundaries fall along the line surrounding its fifteen member states (the EU-15).

• Regional systems are agglomerations of states clustering around a core state or compound polity – an “economic great power” that, by virtue of its size and wealth, has the capacity to become the primary rule-maker for the system. Satellite states – those that feel the gravitational pull of its economy – tend to model their domestic economies along similar lines. They become rule-takers. As within the global system, there is negotiation, but especially at the regional level, negotiation is one-sided; one player dominates. Thus, regional systems contrast with compound polities in that they are more weakly institutionalized, and their boundaries are imprecise. If regional systems are to be thought of in terms of the states that comprise them, as opposed to geographical areas exhibiting relatively dense patterns of economic exchange, the states concerned may well participate in differing degrees. The core is more easily identifiable than the outer edges.

As already intimated, in Europe over the last half-century the process of regionalization, or economic and political integration, has involved the building of both a compound polity, the EU, and a larger regional system that includes and surrounds it. The boundaries of the European regional system, while evidently pushing outwards, are not truly definable. Its structure is strongly asymmetric, especially in the political sense, as is evident in the content of various treaties of association. Under these treaties, the EU quite overtly sets the rules for economic exchange within the European regional system, requiring adherence to large parts of the acquis communautaire. It thus, to a significant degree, controls patterns of economic organization within states that have become heavily dependent upon it. However, the significance of the association agreements is far from being uniquely economic. They represent, in some cases but not all, interim arrangements potentially leading to membership, and this gives them a political significance and even an overtly political content that, in North America, the NAFTA does not have. Thus, by virtue of the economic gravitational force of the EU, felt throughout Europe and even beyond, and through the instrumentality of treaties of association, the EU is properly regarded as creator of a multi-faceted European regional system.

12 The distinction I make here between compound polities and regional systems, as well as much of the analysis in this section of the paper, is based upon my “The European regional system: a case of unstable equilibrium?” (Leslie 2000)


Similarly, although in a looser and less formal or rigorous sense, in the western

hemisphere the United States has become rule-maker for a broad regional system. To some extent, the North American Free Trade Agreement (NAFTA) is the instrument that brings this about. This is an agreement that proclaims the principle of national legislative independence, an affirmation that is not necessarily to be taken at face value. That is because the principle is of unequal practical application. For the United States, it means that economic governance is a wholly domestic matter, whereas for the other two signatories – Canada and Mexico – it is clear that economic governance increasingly must take account of American policy and economic practice. (Witness the American tendency to allege that states with property rights or regulatory practices or taxation systems different from those prevailing in the US itself are engaging in “unfair” trading practices, or are “tilting the playing fie ld” – in which case, trade remedies or at least international negotiations typically are called for.) Even if the NAFTA is extended southwards to include Chile and other states of Central or South America, being thus transformed into a Free Trade Area of the Americas (FTAA), this situation could not be expected to change, as the NAFTA does not have institutions with joint policy-making capacity. No one, certainly not in the United States, contemplates their creation within an FTAA.

The structure of the NAFTA reflects the fundamental political asymmetry of the regional system. Alleged violation of principles written into the agreement may give aggrieved investors standing in national courts and the right to claim damages; it may also trigger consultations between governments, but where such consultations do not yield mutually satisfactory results, the enforcement of NAFTA principles cannot be accomplished, except through retaliation. The NAFTA creates only one type of institution with binding powers, a dispute-settlement mechanism through which the national law of each member state, not a set of agreed principles or NAFTA-wide law, may be applied. A state that loses a trade dispute can amend its legislation, unless consultations or the threat of retaliation persuade it not to do so. However, given disparities in power, amending the law is an expedient more open, in practice, to the United States than to either Canada or Mexico. In consequence, the U.S. – by virtue of its size (and thus the attractiveness of its market) – is able to exercise a substantial degree of control over domestic economic governance within the NAFTA area, and probably throughout the Americas. It does so through a combination of financial/credit arrangements, and the application of discretionary trade instruments (safeguard measures, “voluntary” export restraints, and countervailing and anti-dumping duties). The fact that other countries’ access to US markets remains insecure, even under the NAFTA, forces them to adapt any policies promoting or channelling economic development, or regulating the operation of domestic markets, to accord with US conceptions of the appropriate role of government in the economy.

Underlying the distinction between plurilateral and hegemonic regionalization, or between compound polities and regional systems, is another important issue: that of enforcement – the extent to which compliance with a given set of rules or norms is demanded, and how compliance is secured. Under plurilateral regionalization, to the extent there is joint decision-making there must also be joint or supranational


enforcement. It is possible, of course, to imagine cooperation without joint decision-making, in situations where it is recognized that non-cooperation entails disadvantages or imposes costs on all participants.13 However, joint decision-making implies something more rigorous than this: the formulation of explicit rules binding on all, and/or the conferral of authority upon an agency that is able, in dealings with third parties, to make credible commitments on behalf of the whole group. In such cases, the question of enforcement cannot be swept under the rug. In some way, external rules must be internalized, or be recognized to have force superior to that of domestic law – and that means that national courts have to validate supranational authority or faithfully observe international commitments. This situation contrasts with enforcement through fear of retaliation, if rules or norms are flouted or disregarded. In such cases the rules or norms may not be precisely or explicitly formulated; there may be uncertainty as to their content, or uncertainty even as regards their existence. The penalties for breaching them may also be unclear. At least as significantly, retaliation is available to the powerful but, in much lesser degree, to the relatively small or weak. Thus hegemonic systems, regionally as well as globally, tend to be retaliation-based. C

regionalization, multi-level governance, and globalization · 2015. 8. 5. · leslie...

Documents