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During recent decades globalization became a matter of great importance among scholars. It has been much discussed whether globalization is a product of XXth century or had it existed previously, but the fact is that the process is getting much more attention from the academic and political world now. However, not only increased awareness of consequences of globalization is a subject of discussions, but also the position of its main actors, i.e. nation-states within interdependent world is negotiable. Despite claims about this concept being irrelevant in the modern world politics, this essay tries to prove that true political power still lies within nation-states by focusing on the five key elements of political power: economy, legal and law-making frameworks, national security and, on the assumption that national identity and culture is the link between government and territory, on culture.
Is the exclusive link between territory and political power being broken by globalization?
During recent decades globalization became a matter of great importance among scholars. It has been much discussed whether globalization is a product of XXth century or had it existed previously, but the fact is that the process is getting much more attention from the academic and political world now. However, not only increased awareness of consequences of globalization is a subject of discussions, but also the position of its main actors, i.e. nation-states within interdependent world is negotiable. Despite claims about this concept being irrelevant in the modern world politics, this essay tries to prove that true political power still lies within nation-states by focusing on the five key elements of political power: economy, legal and law-making frameworks, national security and, on the assumption that national identity and culture is the link between government and territory, on culture.
Origins of national sovereignty
It is worth discussing the very origins of globalization so as to notice if it is a new challenge to national power. One of the difficulties with the argument regarding national sovereignty being under attack from globalization is the presumption that there was once a golden age of state sovereignty, when they had absolute control over their territory and the movement of people and resources through its borders. But the fact is that nations depended on recognition by other nations. The formal establishment of relation between political power and territory goes back to XVIIth century, to creation of the new Westphalian world order. The Peace Treaties of Westphalia and Osnabruck in 1648 established the legal basis of modern statehood; it has formed the normative structure or constitution of the modern world order. At the heart of Westphalian settlement was agreement among Europe’s rulers to recognize each other’s right to rule their territories without fear of being intervened by the powers from outside, it became the doctrine of sovereign statehood with time. The Westphalian Constitution gave birth to the modern states system, welded the idea of territoriality with the notion of legitimate sovereign rule (Baylis et al; 2011:23). Westphalian sovereignty located supreme legal and political authority within territorially delimited states. Creation of supra-national post-war institutions such as League of Nations and the subsequent United Nations challenged the Westphalian system and state sovereignty per se, and formed the post-Westphalian order disempowering states.
Three waves of globalization
However, globalization is not a new phenomenon in history; it would be misleading to take it as a product of free trade and modern technology. Some scholars agree that the first wave of world globalization occurred with discovery of America, expanding world borders, boosting trade and spreading the continent’s goods worldwide. As a matter of fact, this wave did not shift power away from certain states, neither it threatened political sovereignty, it rather encouraged emergence of the strongest nations with limitless navy resources. Distribution of political power of states in Europe of the XVth century could be hardly said to be shifted, it was not a zero-sum game: emergence of Spain, England, Portugal and Italy as major sea powers did not mean an exact threat to nation-states. The second wave came with the emergence of imperialistic system from mid-XIXth century to the end of the Second World War. Although influence of the superpowers on their dominions is an undisputable fact, by no means it was erosion of state power. If the first two waves of globalization were concerned with spread of trade, the third wave from 1960s onwards was a new epoch in human affairs. Just as the Industrial Revolution defined a new age in the world history in the XIXth century, so now the microchip and the satellite are the icons of globalized world (Baylis et al; 2011:23). These three waves are mentioned not to question the very existence or importance of globalization process, but to emphasize the persistence of states’ power throughout them, thus making the concept of “death of the state” appear irrelevant. The Church did not disappear when feudalism declined (Baylis et al; 2011:24), and thus globalization cannot make the states vanish, at best it can make the states to be caught up in webs of power limiting their activities by altering context in which they operate.
Economics
One of those alterations is emergence of new actors on political stage, such as multinational corporations (MNCs). MNCs are said to be undermining national economies and thus the extent to which political authorities can operate freely within their boundaries, especially in those states with developing industries. There has been a growth in the importance of foreign direct investment (FDI) since 1980s, at the world level it has more than doubled. The developing states rely a lot on FDI as the main stimulus to their development. The data provided by Buelens (1999:51) indicates that only relatively insignificant part of MNCs investment goes abroad, the companies remain home-centred in terms of their assets, sales, subsidiaries and profits. Neither MNCs were noted to have dramatically changed in their relationship between domestic savings and investment with the former remaining steadily bigger. What remains crucial to domestic development strategies is domestic savings, which still account for the bulk of the financial resources available for domestic investment in all advanced and developing economies. Willy-nilly companies are forced to operate within the legal framework their mother country provides without much chance of making significant influence on policies. MNCs do not usually operate outside national jurisdictions, whether at home or abroad. Rather, they depend on state structures to guarantee stable property rights and predictability in the state’s policy (Krasner; 1985). Thus MNCs still rely a lot on their home bases as the centre of their economic activities despite all the speculations about globalization.
Another aspect to be mentioned about MNCs’ appropriation of political power is the fact that states actually get what they asked for: it have been policy choices that have driven the move towards greater interdependence and internationalisation rather than globalization. States wanted greater participation by foreign investors in their government debt markets to make it easier to finance larger fiscal and internal balances, the power that would erode local monopolies, volatile asset prices etc. (Goldstein and Mussa, 1993:42). The possibility to keep relative independence from FDI and conserve power of regulation still lies with states, as the case of Japan suggests. Short-term and even long-term interest rates are set nationally and are fundamentally driven by the decision of important state authorities; there has been no growth in the importance of overseas production to GDP in Japan (Buelens; 1999:154). Despite a slow trend toward liberalization, Japan has only eased barriers against foreign multinationals when circumstances were in Japan’s interests (Holton; 1998:96). It is thus unfair to blame globalization for penetration into states’ markets as it was a conscious choice of states, not an unavoidable consequence of globalization governments had to accept.
Cultural response
As a response to globalization, massive nationalism movements took place all around the world. If the idea of nation-state was outlived and the true political power of a nation laid somewhere outside its boundaries, then nationalism movements, stressing importance on national identity, culture and sovereignty, would hardly be expected to be of such popularity. It is culture of the nation-state that forms sense of national identity, and the latter is the creator government. Despite certain changes globalization brings to the concept of governance, it is the nation-state that acts as a key defender of civil rights, security and even culture. Process of change is reciprocal: not only globalization modifies governing process, but also nation-states make globalization adapt to local circumstances and norms. For instance, global producers failed to create a standardized consumer with manipulative tastes (as an example, McDonald’s introduces vegetarian menu for Indian customers due to local religion). According to sociologist Anthony Smith (1990), culture is much harder to globalize as it represents our attachment to history and gives a sense of national identity, it cannot be easily inculcated as failure of the Esperanto language proved. Cultural resistance patronized by state led to significant elements of localization and regionalization (Boddewyn et al.; 1986).
Law-making power
Probably the strongest argument against a state is its loss of capacity to freely produce laws, without having to obey to international actors (NGOs, supra-national organizations) and rules. What is usually ignored by such critics is the fact that globalization did not create any legal “no-man’s land” nor condemned national legal systems to impotence. On the opposite, the overwhelming share of new transnational and international conflicts is resolved in a national legal framework. Incidents that have occurred outside the US, particularly, human rights abuse or violations of environmental worker protection standards are being challenged before US courts with increasing frequency (Chibundu; 1999:45). These developments demonstrate that national courts, governments and legislatures react to changed spatial relations – above all concerning relocation, physical absence and bridging distances – with new conceptions concerning the extraterritorial reach of national law. The international apparatus is not an external organization based on delegated authority; it consists of national organizations linked together for international work. Despite increased interconnectedness, “international economic policy is at its core a function of welfare-democratic and thus nation-state power relations” (Rieger & Leibfried; 2003:7). Since private entities have no formally recognized voice in the arena of international politics, they have to rely on their governments to represent their interests. The global cross-border mobility is also usually easier to regulate at a national level. National law will maintain its status quo in the international arena for as long as no global cartel or competition law exist, and its importance can hardly be overestimated.
Role of supra-national organizations
Certainly, supra-national organizations cannot be ignored when talking about the shift of power away from states. Increasingly effective public action to control the economy needs to be co-ordinated between states and, as in the case of trade openness or common economic standards, overseen or implemented by supra-national bodies like the EU or the WTO. States simply wish to maximize their self-interest and enter into collective arrangements with other states. The Third World states claim to be overtaken by the Western organizations, however, it can hardly be called disempowerment of developing countries as there had never been sovereignty as a permanent condition, unlike in Western states. The post-war period led to establishment of the UN and foundation of such regulatory bodies is the IMF or World Bank. Despite acting globally, neither of organizations was projected to usurp the states’ sovereignty in the name of the new global order (Holton; 1998:116). The UN Conventions on human rights or on the rights of certain groups of people do not represent transnational legal initiatives that are binding on all member states, rather they emerge by consent of majority of members and can be implemented by sovereign nations if they wish so. Influence and pressure may be placed on those refusing to obey, but it goes no further (Holton; 1998:116). Joining supra-national organization does not necessarily weaken states, rather it can strengthen them by stabilizing the external economic environment and thus giving them greater scope to pursue national policies, if national elites and electorates are willing. States, therefore, can be seen as self-interested actors getting the best from globalization process. They engage into global organizations in pursuit of their personal gains, seeking to build new coalitions and expand the scope of reach of their power and influence.
National security
The last point to be made about political power within states’ territory relates to national security. Establishment of such organizations as the UN and NATO means integration of certain member states into one military unit, what formally reduces role of a single state. However, in fact it is not true. After development of nuclear weapons, Herz concluded that the state was obsolete a security-providing unit, saying that “the nuclear age seemed to presage the end of territoriality and of the unit whose security had been based upon it.” (Herz; 1969:76). This prediction was wrong as states adopted nuclear deterrent positions and the national security function grew in importance even more during the Cold War. Another prediction was that of costs of war outweighing benefits economic co-operation would bring, which also proved to be wrong when trade was opposed to true security approaches during the arms’ race. These two approaches failed due to underestimation of states’ ability to adapt to changing orders. State managed to maintain its supremacy as a security providing institution largely because it has the most recourses, it can command the highest levels of loyalty and has powerful incentives to show resilience when facing competition from similar units. America’s role as a world’s policemen also plays a role in state’s security as it provides great co-operation possibilities for weaker states (for example, missiles defence shield in Eastern Europe), thus ensuring that power balance is maintained. Even if realism in the world politics succumbs to economic co-operation, United States-China relations can deteriorate if in a long term China does not increase its openness and grips all the gains. The major powers can also utilize globalization as a means of bolstering security competition. When economic crisis in 2008 occurred, the differing national responses to the global collapse have revealed important tensions between close economic partners that may undermine further collaboration, (eg. England and Germany). Polanyi (19) claims that when adverse consequences of liberal market economy effect the state, it called out countervailing response by making it stronger than before (Norrin & Paul; 2010:176). Therefore, it is too soon to write off the national security state on the grounds that it still maintains its main function: protection of citizens. Every political or social formation has to adapt if it wants to survive, and interdependence in this case is the form of adaption.
It is obvious that states still keep significant amount of power at a national level. There is still a clear distinction of the domestic arena from international one, so that international processes, events and impacts are formed by national processes (Buelens; 1999:141). Challenges to nation-state by globalization are not new and have been happening since formation of the Westphalian order, and the state managed to overcome them. Economic operations would be impossible without state control as international actors still need a legal framework they could operate within. Free market does not solve all the problems by itself; it still needs help of a state. Neither governments would get legitimate power if people lost their cultural identities and stopped identifying themselves with particular nations or groups, and thus there would be no one to form global governance. Legal and law making aspects prove to be of great importance when considering whether the central power shifted from nation-states as they still reserve the key functions for national governments. Political power expanded, though was not unlinked with territory of a state.
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