Globalization and Global Governance

Popular writing on globalization suffers from at least two flaws. The first is wooliness about the underlying phenomenon. Definitions of globalization abound, but they are often unsatisfying, in part because they are so imprecise. Is globalization chiefly about trade and finance? Is it about “the death of distance?” Or is it really about cultural homogenization and “Starbucks-ization”?

The second flaw is an overabundance of hype. Claims of novelty are ubiquitous, and the tenor in the more popular writing on globalization is that it is profoundly new, different, and unsettling. The champion of this view is the New York Times columnist Thomas Friedman, but there are many others.

In the academy, by contrast, writers tend to throw cold water on these claims. Globalization is not really all that new, say historians. Consider the period before the First World War, a veritable golden age of globalization, in which, as John Maynard Keynes famously wrote,

a man could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit…he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages.

For many historians this early wave of globalization differs not that greatly in magnitude from the current wave; some even think we have just begun to surpass the achievements of the late 19th century.

Globalization is not all that deep, say economists. Trade within countries dwarfs trade among them. One widely-noted study found that businesses in British Columbia were twenty times as likely to buy goods from (fairly distant) Ontario than from just across the border in Washington State. The United States and Canada are certainly not highly protected economies; the irresistible implication of this is that the world is actually not flat, but instead fairly bumpy.

Globalization is not really all that revolutionary, say political scientists. Rather than one giant market in which governments race to the bottom, helpless before behemoth multinational corporations, or are subject to the “golden straitjacket,” to use another Friedmanism, governments remain quite in control. This line of contrarianism is where Daniel Drezner’s argument, built on his fine new book, All Politics is Global: Explaining International Regulatory Regimes, comes in.

Drezner is not the first to say that states still hold the reins of the global economy. But he does present one of the most comprehensive treatments of the balance between state power and global forces, and he fairly successfully demonstrates that the “straitjacket” is more like a supple tracksuit.

Drezner’s primary focus is the web of regulatory regimes that now govern — or seem to govern — so many policy arenas, many of which were previously purely local in nature. This web of international regimes represents a true change in world politics — there were not nearly so many fifty years ago — but there is often less to them than meets the eye. As he argues, many contain “sham standards” that appear to provide a set of rules, but in actuality are so loose and ambiguous that they have no real effect.

His key claim, however, is that international regulatory rules are the creation of the great powers. The big markets, primarily the United States and the European Union, dominate the process of rulemaking at the global level. What this means is that rather than footloose capital driving policy choices, governments remain behind the wheel.

In the main this argument is persuasive. Too often globalization is described as a force that effectively strips states of their governing power, sidelining them in favor of a welter of private actors ranging from firms to non-governmental organizations. In fact, governments are pretty nimble. And when political pressures are high, they (at least, the great powers) manage to deflect globalization’s pressures without much difficulty.

So Drezner’s chief claim is that nothing has really changed — at least, nothing that would require a new paradigm of world politics. The substantive topics may be new, but in a globalized world cooperation and conflict among nations remains the same as ever, he says. But is this really the case?

I think the answer yes, but it is a bit more ambiguous and complex than he suggests. Take the role of non-governmental actors, or NGOs (sometimes called “global civil society”). Some NGOs make a lot of noise, and are very involved in United Nations conclaves and activities of that sort. And NGOs are now fixtures in many of the global regulatory regimes that govern the global economy. To some this clearly signals the waning of state power; as Dan notes, a common assumption in globalization writing is the decline of state autonomy in the face of non-state actors of various stripes.

But despite talk about an emergent “world civic politics,” NGO influence on policy outcomes is pretty limited. States have proven very capable of keeping NGOs out of the policy process when they choose to. When governments are eager for the sort of policy advice, or media heat, that an NGO can bring they can open up the policy process. Yet states can also close it down fairly easily.

This shouldn’t obscure the fact that the nature of politics does change when non-state actors become a major presence in policymaking, and this can have long term implications. For example, Drezner discusses the worldwide access to medicines campaign that revolves around patent protection and life-saving AIDS-related drugs. This campaign was driven by a combination of new international rules on intellectual property (enshrined in the World Trade Organization, and backed by its sanctioning power) and the frightening growth of the global AIDS crisis.

Although he acknowledges it is “a semi-deviant case” for his argument about state power, Drezner claims that the policy changes that took place with regard to access to medicines were really driven by changing definitions of security within the American government, not the pressures of the activist community. While I don’t find the details of his explanation fully persuasive, the more important point is that there clearly was significant back-and-forth between activist NGOs and governments, and this back-and-forth is indeed a feature in other global policy arenas Drezner looks at as well.

Why is this story about NGOs and policymaking important? It is not that NGOs determine, or greatly influence, discrete international policy decisions. Rather, it is that once the international policy process starts to look like the domestic one — both because traditionally domestic topics have gone global, and because many interest groups are now chiming in and jockeying for position — expectations about the nature of the policy process shift. Critics expect more openness, more transparency, more accountability; in other words, a process more like domestic governance. The lack of these features is often decried as a “democratic deficit.”

The rhetoric of transparency and democracy-deficits can be powerful. In the EU it has become a major point of debate, and while its strength shouldn’t be overstated, concerns about process have, rightly or wrongly, helped slow the pace of integration in the EU. Perhaps the same will be true at the international level. More concern with openness and accountability could lead to less global governance, or at least a slower rate of increase in global governance, than we see now. It is equally likely that we will simply see more of the features of domestic governance replicated at the international level. What do these features portend?

A useful analogy when thinking about the politics of global governance is that of the federal government. When Washington was a small town, and the federal government much smaller than it is today, we didn’t have legions of lobbyists working K Street and national organizational headquarters crammed into every office building in Washington, DC. As the power of the federal government to regulate the national economy grew in the 20th century, however, lobbyists and various interest groups rapidly set up shop in Washington. These non-state actors became omnipresent and at times quite influential.

Yet one could hardly argue that the federal government began to wither away in the 20th century. Quite the contrary — the presence of all these non-state actors was a testament to greatly enhanced government power. The power of the central government to regulate and control was, in fact, never stronger.

Who lost power in all this? It was not the federal government whose autonomy was diminished by the arrival of a host of non-state actors. Rather, to some degree it was the individual states, and to a large degree it was the individual, who was now subject to a panoply of regulatory rules that never existed before. In many cases these constraints on autonomy were necessary, because society was far more dense and because technology created new externalities that demanded regulation. The underlying lesson, however, is an important one for libertarians to ponder. The rise of interdependence and NGOs in American society didn’t signal the end of the state; it signaled the growth of the state.

Kal Raustiala is a professor at the UCLA School of Law and the UCLA International Institute, and serves as director of the UCLA Ronald W. Burkle Center for International Relations

Also from This Issue

Lead Essay

  • The Persistent Power of the State in the Global Economy by Daniel W. Drezner

    Drawing from his recent book, All Politics is Global: Explaining International Regulatory Regimes, Tufts University’s Daniel Drezner explains that “for many issues that comprise the daily substance of our lives … the politics have gone global.” However, he argues, the intellectual response to this development has been out of proportion to its real extent. When great powers coordinate on regulatory standards, that may be enough to shift the rest of the globe. But, as Drezner illustrates from examples ranging from the Internet to genetically modified foods, when the costs of adjustment are too high for states with economic heft, global regulatory coordination tends not to be forthcoming. In the end, we get neither a “race to the bottom,” nor liberation from the state through jurisdictional competition. “Globalization is not irrelevant to global governance,” Drezner concludes, “but it is not transformative either.”

Response Essays

  • Globalization Is Transformative by Ann Florini

    Ann Florini, director of the Centre on Asia and Globalisation at the National University of Singapore and senior fellow at the Brookings Institutions disagrees with Daniel Drezner’s claim that global governance remains dominated by a few great state powers. “We’re heading for a multi-polar system where very different kinds of states, at very different levels of development, will matter,” Florini argues. And, she maintains, “ ‘regulation’ is no longer done only by governments.” For example, corporations, not states, put international protection of intellectual property rights on the table, but it was small states and pressure from civil society groups that eventually determined effective policy. Florini suggests Drezner’s analysis is confused by an over-simple idea of the interests of great states. “How states define what their interests are is one of the most important ways globalization is affecting outcomes in global rule-making.”

  • While “Great States” Sleep by Jeremy A. Rabkin

    Jeremy A. Rabkin, professor of law at George Mason, writes, “one can accept almost everything [Drezner] says in his essay and still think the challenges we face now are different, in important ways, from the patterns we had become accustomed to in the past.” The collapse of communism and the discrediting of socialism has led to a world in which “states now are so entangled in international regimes – because so entangled in international exchange – that the accepted rules of international economic conduct are now recognized to be very important.” Though the U.S. can in principle block international rules contrary to its overall interests, domestic interests jump at the chance to push their narrow agendas, it is often easier to go along than to fight, and some marginal changes occur simply through neglect. But “marginal changes can add up to sizable effects in the aggregate.”

The Conversation