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Globalism isn't newit's thick or thin. And today it's thickening, argue the authors, giving rise to increased density of networks, greater "institutional velocity," and ever more transnational participation. Here is an excerpt from their introduction of the recently published Governance in a Globalizing World, an edited collection of essays.
Thick Globalism: What's New?
When people speak colloquially about globalization, they typically refer to recent increases in globalism. Comments such as "globalization is fundamentally new" only make sense in this context but are nevertheless misleading. We prefer to speak of globalism as a phenomenon with ancient roots and of globalization as the process of increasing globalism, now or in the past.
The issue is not how old globalism is, but rather how "thin" or "thick" it is at any given time. As an example of "thin globalization," the Silk Road provided an economic and cultural link between ancient Europe and Asia, but the route was plied by a small group of hardy traders, and the goods that were traded back and forth had a direct impact primarily on a small (and relatively elite) stratum of consumers along the road. In contrast, "thick" relations of globalization involve many relationships that are intensive as well as extensive: long-distance flows that are large and continuous, affecting the lives of many people. The operations of global financial markets today, for instance, affect people from Peoria to Penang. "Globalization" is the process by which globalism becomes increasingly thick.
Often, contemporary globalization is equated with Americanization, especially by non-Americans who resent American popular culture and the capitalism that accompanies it. In 1999, for example, some French farmers protecting "culinary sovereignty" attacked McDonald's restaurants. Several dimensions of globalism are indeed dominated today by activities based in the United States, whether on Wall Street, in the Pentagon, in Cambridge, in Silicon Valley, or in Hollywood. If we think of the content of globalization being "uploaded" on the Internet, then "downloaded" elsewhere, more of this content is uploaded in the United States than anywhere else. However, globalization long predates Hollywood and Bretton Woods. The spice trade and the intercontinental spread of Buddhism, Christianity, and Islam preceded by many centuries the discovery of America, much less the formation of the United States. In fact, the United States itself is a product of seventeenth- and eighteenth-century globalization. Japan's importation of German law a century ago, contemporary ties between Japan and Latin American countries with significant Japanese-origin populations, and the lending by European banks to emerging markets in East Asia also constitute examples of globalization not focused on the United States. Hence, globalism is not intrinsically American, even if its current phase is heavily influenced by what happens in the United States.
Globalism today is America-centric, in that most of the impetus for the information revolution comes from the United States, and a large part of the content of global information networks is created in the United States. However, the ideas and information that enter global networks are downloaded in the context of national politics and local cultures, which act as selective filters and modifiers of what arrives. Political institutions are often more resistant to transnational transmission than popular culture. Although the Chinese students in Tiananmen Square in 1989 built a replica of the Statue of Liberty, China has emphatically not adopted U.S. political institutions. Nor is this new. In the nineteenth century, Meiji reformers in Japan were aware of Anglo-American ideas and institutions but deliberately turned to German models because they seemed more congenial. For many countries today, as Frederick Schauer shows, Canadian constitutional practices, with their greater emphasis on duties, or German laws, restrictive of racially charged speech, are more congenial than those of the United States. And Kamarck's chapter shows that the current wave of imitation of government reform started in Britain and New Zealand, not the United States.
The central position of the United States in global networks creates "soft power": the ability to get others to want what Americans want. But the processes are in many respects reciprocal, rather than one way. Some U.S. practices are very attractive to other countrieshonest regulation of drugs, as in the Food and Drug Administration (FDA); transparent securities laws and practices, limiting self-dealing, monitored by the Securities and Exchange Commission (SEC). U.S.-made standards are sometimes hard to avoid, as in the rules governing the Internet itself. But other U.S. standards and practicesfrom pounds and feet (rather than the metric system) to capital punishment, the right to bear arms, and absolute protection of free speechhave encountered resistance or even incomprehension. Soft power is a reality, but it does not accrue to the United States in all areas of life, nor is the United States the only country to possess it.
Is there anything about globalism today that is fundamentally different? Every era builds on others. Historians can always find precursors in the past for phenomena of the present, but contemporary globalization goes "faster, cheaper and deeper." The degree of thickening of globalism is giving rise to increased density of networks, increased "institutional velocity," and increased transnational participation.
Intensive economic interdependence affects social and environmental interdependence, and awareness of these connections in turn affects economic relationships. | |
Robert O. Keohane and Joseph S. Nye |
Economists use the term "network effects" to refer to situations in which a product becomes more valuable once many other people also use it. This is why the Internet is causing such rapid change. Joseph Stiglitz, former chief economist of the World Bank, argues that a knowledge-based economy generates "powerful spillover effects, often spreading like fire and triggering further innovation and setting off chain reactions of new inventions .... But goodsas opposed to knowledgedo not always spread like fire. Moreover, as interdependence and globalism have become thicker, the systemic relationships among different networks have become more important. There are more interconnections among the networks. As a result, "system effects" become more important. Intensive economic interdependence affects social and environmental interdependence, and awareness of these connections in turn affects economic relationships. For instance, the expansion of trade can generate industrial activity in countries with low environmental standards, mobilizing environmental activists to carry their message to the newly industrializing but environmentally lax countries. The resulting activities may affect environmental interdependence (for instance, by reducing cross-boundary pollution) but may generate resentment in the newly industrializing country, affecting social and economic relations.
The extensivity of globalism means that the potential connections occur worldwide, sometimes with unpredictable results. Even if we thoroughly analyzed each individual strand of interdependence between two societies, we might well miss the synergistic effects of relationships between these linkages between societies.
Environmental globalism illustrates the point well. When scientists in the United States discovered chlorofluorocarbons (CFCs) in the 1920s, they and many others were delighted to have such efficient chemicals available for refrigeration (and other purposes) that were chemically inert, hence not subject to explosions and fires. Only in the 1970s was it suspected, and in the 1980s proved, that CFCs depleted the stratospheric ozone layer, which protects human beings against harmful ultraviolet rays. The environmental motto, "Everything is connected to everything else," warns us that there may be unanticipated effects of many human activities, from burning of carbon fuels (generating climate change) to genetically modifying crops grown for food.
As William C. Clark's chapter shows, environmental globalism has political, economic, and social consequences. Discoveries of the ozone-depleting properties of CFCs (and other chemicals) led to this issue being put on international agendas, intranational, international, and transnational controversies about it, and eventually a series of international agreements, beginning at Montreal in 1987, regulating the production and sale of such substances. These agreements entailed trade sanctions against violators, thus affecting economic globalism. They also raised people's awareness of ecological dangers, contributing to much greater transnational transmission of ideas and information (social globalism) about ecological processes affecting human beings.
Another illustration of network interconnections is provided by the impact, worldwide, of the financial crisis that began in Thailand in July 1997. Unexpectedly, what appeared first as an isolated banking and currency crisis in a small "emerging market" country, had severe global effects. It generated financial panic elsewhere in Asia, particularly in Korea and Indonesia; prompted emergency meetings at the highest level of world finance and huge "bail-out" packages orchestrated by the International Monetary Fund; and led to a widespread loss of confidence in emerging markets and the efficacy of international financial institutions. Before that contagious loss of confidence was stemmed, Russia had defaulted on its debt (in August 1998), and a huge U.S.-based hedge fund, Long-Term Capital Management, had to be rescued suddenly through a plan put together by the U.S. Federal Reserve. Even after recovery had begun, Brazil required a huge IMF loan, coupled with devaluation, to avoid financial collapse in January 1999.
The relative magnitude of foreign investment in 1997 was not unprecedented. Capital markets were by some measures more integrated at the beginning than at the end of the twentieth century. The net outflow of capital from Britain in the four decades before 1914 averaged 5 percent of gross domestic product, compared with 2 to 3 percent for rich countries today. The fact that the financial crisis of 1997 was global in scale also had precursors: "Black Monday on Wall Street in 1929 and the collapse of Austria's Credit Anstalt bank in 1930 triggered a worldwide financial crisis and depression. (Once again, globalism is not new.) Financial linkages among major financial centers have always been subject to the spread of crisis, as withdrawals from banks in one locale precipitate withdrawals elsewhere, as failures of banks in one jurisdiction lead to failures even of distant creditors. Nevertheless, despite the greatly increased financial sophistication of this era compared with the interwar period, the crisis was almost totally unanticipated by most economists, governments, and international financial institutions. The World Bank had recently published a report entitled "The Asian Miracle" (1993), and investment flows to Asia rose rapidly to a new peak in 1996 and remained high until the crisis hit. In December 1998 Federal Reserve Board Chairman Alan Greenspan said, "I have learned more about how this new international financial system works in the last twelve months than in the previous twenty years." As David Held and others argue, sheer magnitude, complexity, and speed distinguish contemporary globalization from earlier periods.
There are also interconnections with military globalism. In the context of superpower bipolarity, the end of the cold war represented military deglobalization. Distant disputes became less relevant to the balance of power. But the rise of social globalization had the opposite effect. Humanitarian concerns interacting with global communications led to dramatization of some conflicts and military interventions in places like Somalia, Bosnia, and Kosovo. At the same time, other remote conflicts such as Southern Sudan, which proved less accessible, were largely ignored. At the tactical level, the asymmetry of global military power and the interconnections among networks raise new options for warfare. For example, in devising a strategy to stand up to the United States, some Chinese officers are proposing terrorism, drug trafficking, environmental degradation, and computer virus propagation. They argue that the more complicated the combinationfor example, terrorism plus a media war plus a financial warthe better the results. From that perspective, "Unrestricted War" marries the Chinese classic The Art of War by Sun Tzu, with modern military technology and economic globalization.
The general point is that the increasing thickness of globalismthe density of networks of interdependenceis not just a difference in degree from the past. Thickness means that different relationships of interdependence intersect more deeply at more different points. Hence, effects of events in one geographical area, on one dimension, can have profound effects in other geographical areas, on other dimensions. As in scientific theories of "chaos," and in weather systems, small events in one place can have catalytic effects, so that their consequences later and elsewhere are vast. Such systems are very difficult to understand, and their effects are therefore often unpredictable. Furthermore, when these are human systems, human beings are often hard at work trying to outwit others, to gain an economic, social, or military advantage precisely by acting in an unpredictable way. As a result, we should expect that globalism will be accompanied by pervasive uncertainty. There will be a continual competition between increased complexity, and uncertainty, on the one hand; and efforts by governments, market participants, and others to comprehend and manage these increasingly complex interconnected systems, on the other.
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Five Questions for Joseph Nye
HBS Working Knowledge content developer Sarah Jane Johnston conducted an email interview with Joseph S. Nye about his new book (with co-author John D. Donahue), Governance in a Globalizing World.
Johnston: What impact will the recent events in New York and Washington have on governance in the global community, in particular, on national and international security?
Nye: Since 1945, the charter of the United Nations has proscribed the use of force by states except in self-defense or as authorized by the UN Security Council. Obviously, there have been breaches of this injunction and the concept of self-defense has often been stretched. In Kosovo, the NATO countries appealed to humanitarian law and morality to justify their bombing of Serbia despite a Russian veto in the Security Council. Russia and China bitterly dissented.
September 11 was a use of force by a non-state actor that was more devastating than Japan's attack at Pearl Harbor. It has turned attention to a new dimension of military globalization that does not involve states. Suddenly, the American government was seeking coalition partners for a war against terrorism, and both Russia and China, faced with terrorist concerns of their own, made supportive statements after the American bombing of the Taliban regime and Al Qaeda terrorist network in Afghanistan. The fact that technology is putting in the hands of individuals and groups the capacity to wreak destruction that was previously only in the control of governments is making states rethink their approaches to security.
Q: Do you have any predictions on how this major event will influence governance in the future?
A: The UN already has a number of conventions against terrorism, and there were no dissents in the Security Council when the United States made its case there. The European Union has undertaken new regulations, including a common definition of terrorism that will create a common policy and make extradition easier.
The fact that terrorismthe non-state use of force against innocent people for political effectpresents a threat to most states and that there is no way to solve the problem unilaterally has brought about increased cooperation. Some states support terrorism as a weapon of the weak against the strong, but they are a minority. Terrorism is to this century what piracy was to an earlier era. Eventually it was brought under control.
Q: What about the impact on developing Middle Eastern countries?
A: The Middle East is not the only source of terrorism. After all, Timothy McVeigh was a home-grown product. But the failure of economic growth, the demographic pressures, and the absence of popular government in much of the region makes it a breeding ground. In addition, there are strong cultural tensions between fundamentalists and modernizers in reaction to the social globalization that is occurring. In some ways, rather than a clash of civilizations, what we are witnessing is a civil war within Islam that attacks governments in the region as well as the United States.
Q: What lessons would business leaders find most interesting?
A: Business leaders should realize that globalization has many dimensions. By and large, the economic globalization in which they are involved tends to have beneficial effects in countering poverty and spreading capabilities around the world. But there are also ecological globalization (for example, global warming); military globalization (of which terrorism is an example); and social globalization (the spread of ideas and culture through media ranging from Hollywood to the Internet.) One of the dangers of the visible inequality that accompanies globalization is that it fosters an anti-globalization reaction that might curtail the beneficial aspects but leave the world with only the detrimental dimensions. Corporate good citizenship (such as supporting UN Secretary General Kofi Annan's Global Compact) is a wise investment in the future.
Q: What are the objectives for your "Visions of Governance Program in the 21st Century?" What direction is the project taking?
A: The 20th century was a century of centralization of functions around governments. Totalitarian movements were the extreme results of this tendency. The 21st century is an era of diffusion of governance activitiesthe way we organize our collective activities. This diffusion means that some functions are now being carried out at a local level or at a supranational level, and some are being carried out in the private and non-profit sectors. We are trying to understand how the changes resulting from globalization, marketization, and information technology are transforming government and what that means for the future of democratic societies.