Governance in a Globalizing World

Sanchez, Omar

Nye, Joseph S., Jr., and John D. Donahue, eds. Governance in a Globalizing World. Washington, DC: Brookings Institution Press, 2000. Index, 368 pp.; hardcover $47.95, paperback $18.95.

Explaining and dissecting the phenomenon of globalization is a highgrowth industry. Amid the mountains of studies available in this genre, this is one of the few that deserves a place in the personal library of anyone interested in this most controversial of subjects. Few of the important dimensions of globalization are left untreated: national and international security, communications, cosmopolitanism, legal issues, transnational NGOs, international institutions, culture and identity, information policy, environmental issues are all covered in individual chapters. All the contributors are drawn from Harvard’s John F. Kennedy School of Government. Their collaborative effort has produced a most insightful volume, which usefully contradicts many (unsubstantiated) assertions that one hears or reads in the media-and indeed in much scholarly work.

One of the biggest myths concerning globalization is that it is irreversible. Far from it, say most of the collaborators here. The process, after all, hinges as much on deliberate political decisions as on technological trends. And the increased volatility and uncertainty that appear to be associated with increased integration may lead to a powerful backlash with serious policy ramifications. As Joseph Nye and Robert 0. Keohane warn,

chaotic uncertainty is too high a price for most people to pay for somewhat higher average levels of prosperity. Unless aspects of globalization can be effectively governed, it may not be sustainable in its current form. (p. 1)

The introductory chapter makes the useful analytical distinction between globalism (“a state of the world involving networks of interdependence at multicontinental distances”), globalization (an increase in globalism) and deglobalization (a decrease in globalism). The distinction is more than a semantic flourish, for it allows us to speak with clarity about the phenomenon of global interdependence-avoiding the old Humpty Dumpty trap in which something means “what I say it means.” It also reminds us that globalization is not new. While today’s phenomenon differs in some qualitative respects, other periods of history have witnessed periods of increased globalism. In the search for verbal exactitude and analytical clarity, a step forward would be made if the academic community made more widespread use of the terms globalism and deglobalization along with the known all-inclusive word.

The book has a clear three-part division. The first part examines trends in globalization, the second looks at its impact on domestic governance, and the third examines its governance. This review will focus on the chapters centered on economic globalization.

Economists Jeffrey Frankel and Dani Rodrik do a superb job of dismantling many preconceived ideas. Judging today’s world economic integration by the standard of perfect integration (a “straw man, but a useful one”), Frankel documents that developed countries are a long way from perfect openness. Next time we hear the tired motto that United States is deeply integrated into the world economy, we would do well to remember that if Americans were prone to buy goods and services from foreign producers as easily as from domestic producers, U.S. imports would equal 75 percent of the country’s GDP. In other words, “globalization would have to increase sixfold, as measured by the trade ratio, before it would literally be true that Americans did business as easily across the globe as across the U.S.” (p. 49). Frankel goes on to account for the factors contributing to home-bias in trade: distance and other geographical variables, linguistic and colonial factors, regional trade areas, political links, military relations, and domestic currencies.

Rodrik also points out that global economic integration remains, in his own words, “remarkably limited,” certainly much more than conventional wisdom has it. But the most thought-provoking conceptual insight in his chapter is contained in his idea of “the augmented trilemma.” The famous, standard trilemma of the open economy maintains that national economies cannot enjoy the benefits of monetary autonomy, capital mobility, and fixed exchange rates at the same time; in practice, they are forced to choose two out of the three. Rodrik introduces what he terms the “political trilemma of the world economy” (or augmented trilemma). The nation-state, global economic integration, and mass politics: only two out of these three are attainable. If the goal is true global economic integration and we want to maintain the nation-state, then mass politics faces severe restrictions. This is what New York Times columnist Thomas Friedman has called the “golden straitjacket.” Policy choice would be drastically limited if countries adopted policies with an exclusive view to attracting trade and capital inflows: low government intervention in the economy, flexible labor policies, low taxes, privatization, restrictive fiscal and monetary policies, and so on. In this hypothetical world, Rodrik says, mass politics would not have much of a place.

[T]he shrinkage of politics would get reflected in the insulation of economic policymaking bodies (central banks, fiscal authorities, and so on) from political participation and debate, the disappearance of social insurance, and the replacement of developmental goals with the need to maintain market confidence. (p. 354)

If, on the other hand, we want to preserve the nation-state along with mass politics, then the goal of an integrated world economy, with its attendant massive gains in economic efficiency (that is, wealth), is unattainable. This is, indeed, the “Bretton Woods compromise” reached by nation-states after World War II, a compromise that lasted until the 1980s. Countries “danced to their own tune,” following different development paths in accordance to the values and wishes of their electorates. Europe’s economies, while diverse among themselves, extended an ample social welfare net to their citizens; Japan combined export-led growth with protection in many areas; many less-developed countries lived under import substitution industrialization; and so on. Rodrik reckons that this compromise has now been abandoned because of the reach of international trade agreements, the ideological shift in favor of economic openness, and improvements in transportation and communication technologies that have undermined the old regime. A third possibility is that of global federalism, a world in which national jurisdictions would not get in the way of economic transactions and the power of national governments would be superseded by supranational legislative, executive, and judicial bodies.

While certainly the world today does not look like any of these extremes, this three-node picture of reality elucidates sharply the real tensions that exist between economic globalization, national jurisdictions, and liberal democracy. Indeed, it clarifies that, like it or not, difficult trade-offs face societies and policymakers the world over, and hard choices have to be made. Western Europe, for instance, may be said to be veering toward a regional federalism of sorts, aligning nationstate jurisdictions for the sake of increased economic integration. In general, we may well say that the great loser so far in the battle between these three competing elements is mass politics. This would explain talk of the “democratic deficit” facing the European Union project, for instance. This deficit is present (and widening) not only at the level of nation-states but also at the level of international governance.

The chapter dealing with international nongovernmental organizations (NGOs) and their relations with governments and the private sector is insightful and, given the passions that the issue of global civil society engenders, unusually well balanced. While acknowledging that NGOs have fostered valuable innovations in international practice, the authors raise important questions about the legitimacy (whom do they represent?) and accountability (to whom do they respond?) of these organizations. Indeed, as many scholars have remarked, the rise of NGOs in the international arena may not be the democratizing force it is often held to be. If NGO alliances truly represent a substantial portion of the world’s people, then they may increase the democratic accountability of international organizations, such as the World Bank, the IMF, or the WTO. But the authors display a healthy dose of skepticism (“this representativeness is a difficult claim to substantiate”) and add, “international NGO alliances might reduce democratic accountability if they promoted policies that ran against the interests of their constituents” (p. 287).

We do not have to look far to find cases. For instance, many of the industrialized-world NGOs that nominally stand for the Third World advocate policies that can hardly be said to contribute to reducing poverty; more often, they seem to militate against policies and institutions that do contribute to increasing prosperity. Two other criticisms are directed at civil society actors: they can focus on single issues to the exclusion of understanding the larger context, and they are often better at blocking than at implementing large-scale initiatives.

And yet, the invaluable contributions of some NGOs are all too evident. The actions of a handful of prominent development NGOs have had the positive effect of increasing the transparency and accountability of the World Bank, for instance. The famous Grameen Bank has given rise to an international microcredit movement that has allowed millions of the world’s poorest people access to credit. The anti-land mine movement, which received a Nobel Peace Prize, has fostered the extraction of thousands of land mines buried in the soil of many developing nations. Civil and political rights would be violated much more widely without the work of organizations such as Amnesty International or Human Rights Watch. It goes without saying that the world is a better place to live in because of the contributions of these and other NGOs.

We must be careful, however, to distinguish between the work done by specific, individual NGOs and what the proliferation (now in the millions) of all manner of them means for the cause of global democracy, given the aforementioned questions about accountability and representation. Moreover (and this point is still missed by some observers), “not all civil society actors are equally serious about achieving social missions or public purposes, nor [do] all subscribe to the values of tolerance, reciprocity, and nonviolence that some argue are central to the definition of civil society” (p. 278).

There are no weak chapters in this volume. They all give abundant food for thought and raise fascinating questions and issues that will challenge even the best-informed of readers.

Omar Sanchez

Oxford University

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