Contemporary Attempts to Govern Globalising Forces - Essay Example

?Is globalisation presently being governed? To the extent it is, how is this being done? For a definition of globalisation, we might defer to Held and McGrew’s (2002) succinct formulation: ‘a historical process which transforms the spatial organization of social relations and transactions, generating transcontinental or inter-regional networks of interaction and the exercise of power’ (p. 1-2). Having explored the economic, social, political and environmental implications of such transformations, many scholars propose the existence of an international system of governance, underpinned by key institutions, which works, successfully or otherwise, towards the regulation of human affairs. To some extent this is the case, but as we will see, the range of actors and processes comprehended by such terms as ‘globalisation’ and ‘global governance’ are perhaps too complex and too numerous to be encompassed in any account. In short, the aim of this essay is to explore the nature and efficacy of contemporary attempts to govern globalising forces, and to assess the methods used and the degree of success they have been met with. The term ‘global governance’ is bandied about in the literature a great deal, but different scholars seem to have attached a range of different, sometimes overlapping, and sometimes conflicting, meanings to it. As Dingwerth and Pattberg (2006) observed, ‘the concept of global governance has become ever more popular – and confusion about its meaning ever greater’ (p. 185). Writing on the same theme, Payne (2005) went so far as to claim that governance is one of the most used and abused terms in contemporary academic discourse, perhaps beaten to first place only by globalisation (p. 55). It is necessary to gain some clarity on this issue if we are to build a useful analytical framework for discussing the consequences and demands of globalisation. Dingwerth and Pattberg (2006) declared, exasperated, that ‘’Global Governance’ appears to be virtually anything’ (p. 185). However, using their review article as a helpful foundation, we can see global governance as an analytical framework which has succeeded ‘international relations’ – the traditional way of seeing interaction between sovereign states. While global governance refers partly to the institutional response to globalisation, and attempts by states to order globalising processes, it is surely something larger than this, and encompasses a series of phenomena which can be observed working above and below the level of intergovernmental cooperation. There are, for example, social and political movements which transcend state boundaries, often facilitated by the unique opportunities for communication afforded by the internet. There are also private networks and private corporations whose interests and activities span continents. Pressure groups such as Greenpeace and judicial actors like the International Criminal Court are only the most visible of millions of actors in the global arena. Weiss (1999), likewise, saw global governance as a response to the widespread dissatisfaction with existing theories of international relations, and especially the failure of such theories to adequately make allowance for the colossal increase, in numbers and importance, of actors independent of the state, and especially of the transformations brought about by new technologies, especially the internet. Rosenau (1995) understood all of this, and acknowledged that an understanding of global governance rests on a great deal more than an exploration of the formal institutions and mechanisms – bodies such as the United Nations - that have been established by governments to deal with globalisation. As he himself writes, it is ‘more than the formal institutions through which the management of international affairs is or is not sustained’ (p. 13). He extends the competence of global governance right down to every level of human activity, including interactions between families across borders. Dingwerth and Pattberg (2006) were surely right to interpret this contention as a statement of provocation aimed at other scholars working in the field, intended as the opening shot of a new debate on the sheer scale of globalisation (p. 190). Therefore, in any exploration of global governance and the management of globalisation, it is desirable to look beyond state actors if one is to understand the bigger picture. However, the number of potential actors involved in globalising processes, and who are influencing them, rapidly grows into many millions as one widens the meaning of global governance in this way. It is for this reason that old theories of international relations rapidly faded into irrelevance - ‘In terms of governance, the world is too disaggregated for grand logics that postulate a measure of global coherence’ (Rosenau 1995, p. 15). While it is important to acknowledge the huge scale of global governance, this also poses problems for a study such as this. In the past, it was possible to analyse bargaining and conflict between state actors and by doing so, create a coherent portrait of the direction of global affairs. The sheer number of actors and range of activities now occurring across borders, and the criss-crossing agendas and interests of all of those actors defies coherence, certainly defies being ordered into a neat analysis, and makes a comprehensive account of globalisation almost impossible. We are forced, by the sheer complexity of the issues at stake, to focus on specific aspects, and in this paper we will be focusing on the institutional response to globalisation at the highest level, in terms of bodies set up by governments worldwide in an attempt to regulate and control the direction of global development. For many commentators, the institutional response to globalisation represents little more than the seizure of the lion’s share of influence over international affairs by the western capitalist nations, and especially the United States. Many scholars even talk of US hegemony in a globalising world. For realists, As Held and McGrew (2002) make clear, governance beyond the state largely equates to the policies of the most powerful states, while Marxists emphasise the ‘critical interest’ of the United States (p. 12). Due to the prevalence of this argument, it is necessary to examine it in some detail. To a great degree, this argument tends to rely on the opinion that globalisation is essentially the spread of a market capitalist economy across the entire world, facilitated and pushed by the US and its cronies. Wade (2002) quotes the US national security advisor Anthony Lake, who asserted that during the Cold War, the US saw its task as the containment of ‘that big, red blob’ on the map – Communism – but that ‘Today...we might visualise our security mission as promoting the enlargement of the ‘blue areas’ of market democracies’ (p.202). This analysis is revealing, given that Lake is willing to admit that for America, a policy of encouraging market capitalism worldwide is seen as the concern of their defence and foreign affairs departments, and certainly supports the views of those who see US dominance in globalisation. For thinkers such as Wade and the Indian academic Arundhati Roy, superficially intergovernmental global economic organisations, and especially the IMF, the World Bank and the World Trade Organisation, are above all facilitators of the expansion of US influence. This is perhaps the crucial element of what we might term the ‘US hegemony’ argument, and one which will be examined in more detail. Organisations such as the World Bank, the World Trade Organisation and the International Monetary Fund (IMF) are the leading bodies seeking to regulate global economic affairs in a globalised world. If, as is contended, they are under the effective control of the US, then to a large extent, the question ‘How is globalisation being governed?’ can be answered ‘by United States policy’. Of course, it is in the interests of the United States’ international image to portray these institutions as representative of all nations, but a close examination of their workings will perhaps show a different picture. Wade explored relations between the United States government and the World Bank, arguing that the US had leaned heavily on the World Bank, and in particular had tried to force some of its highest officials into adopting its own policy in their official statements. Wade saw in the dismissal of the Bank’s chief economist, Joseph Stiglitz, and the resignation of editor of the World Development Report, Ravi Kanbur, ideal case studies proving that the United States held ultimate power in the World Bank, and was ultimately able to enforce its will there. As Wade notes, hegemony ‘refers to a dominant group’s ability to make others want the same thing as it wants for itself’ (p.201), and contends that the US has effectively eliminated any elements in the World Bank which oppose its own policy, and created a like-minded institution, so that only those states which agree with that policy have a real stake in its decisions. There is some compelling evidence to support this – the president of the World Bank has always been an American citizen, and the US has a staggering 17% of votes as opposed to Japan’s 6% and Germany’s 4.7%, thus making it the only member to enjoy a veto on some votes. A similar trend has been found in the functioning on the IMF. The IMF oversees the global economy in so far as it tries to regulated exchange rates and the balance of payments. Pauly (1999), in a study of this institution, found that ‘the Fund has effectively become the promoter of a putative consensus among its leading member states on intrusive norms of industrial regulation’, and even asks whether organisations such as the IMF, which were set up in the aftermath of the Second World War as vehicles for constructive and mutually beneficial cooperation between nation states, were gradually being degraded into weapons for the strong nations, and a means of exerting their dominance over the weak (p. 401). However, Pauly (1999) finds against this, and after making a comparison with the League of Nations’ economic policy in the interwar period, concludes that the IMF does search for international consensus. And of course, its injunctions have often been ignored. The IMF was one of the institutions established at the 1944 Bretton-Woods conference, at which the basic conditions of the post-war economy were set out. In its early years, its work mainly consisted of trying to stabilise exchange rates. Pauly (1999) concedes that when smaller states are in dire financial straits and approach the IMF to put together bailout plans to rebuild their economies, the IMF essentially has complete latitude to put conditions on what the funding given will be used for. In such circumstances, the IMF is obviously free to promote market capitalist policies. However, the IMF, while giving controversial advice throughout its history, has just as often been ignored, including by the smaller and less powerful states. The fact that it does not enjoy firm powers of coercion surely disproves the notion that the US is able to control globalisation. Pauly (1999), somewhat optimistically, concludes that the IMF rests ‘on a continuing and very much open search for consensus-in practice’(p. 417). The IMF’s system of governance is extremely unique, and a fuller explanation of its mechanics will permit a more measured conclusion. The IMF is governed by an executive board of 24 members which represents 184 countries. Obviously, in such a situation, some countries will be more powerfully represented than others, but one must also bear in mind that a board of 184 or more members would be incapable of effective functioning. Decisions might never be reached if nearly 200 members had to give their opinions first. The search for consensus would likely be profitless. The present system may not be perfect but Woods and Lombardi (2006) comment that the executive board is highly-thought of by many as a small but remarkably efficient decision-making instrument, especially when one considers the gravity of the issues put before it (p. 480). This is surely an example of where, in a globalised world, democratic accountability has had to be sacrificed in order to allow a body to function effectively. Woods and Lombardi studied the efficacy of the ‘constituency system’ – the informal arrangements through which those countries without direct representation on the executive board of the IMF make their policies felt. The IMF’s five largest members – the US, Japan, Germany, France and the United Kingdom, each appoint their own executive director. China, Russia and Saudi Arabia also each have their own seats. The remaining countries organise themselves into constituencies, ranging from the 12 countries represented by the director from the Netherlands, to the 24 represented by the director from Equatorial Guinea. Some of these groups form coherent regional blocs, and they have shifted about as individual members have sought more influence in different groups. Indonesia offers a good example. It first joined the group led by Italy in the 1950s, before moving to a constituency formed of the Islamic North African countries and Malaysia – countries closer to Indonesia in cultural terms – before moving into a regional grouping with South Korea, the Philippines and Vietnam, among others, in 1972. The method of governance within these constituencies vary. Some are led mostly by the chair-holding country, while others are more democratic within themselves. Others actually rotate the chair between members every couple of years. In some ways, the lack of democratic accountability in the IMF is understandable given the need for efficacy in regulating global economic affairs. Some countries have domestic mechanisms for questioning the actions of their representative to the IMF, but many have absolutely no way of holding their representative to account. However, the lack of democratic accountability is in some respects worrying. An executive director is elected to his or her post for a period of two years. Woods and Lombardi (2006) were understandably astonished upon finding that there were virtually no mechanisms internal to the IMF by which an executive Director could be held to account (p. 491). This situation is even more striking when one refers to the IMF’s legal counsel on this issue: ‘the fact that [a director] has been selected by certain member states does not create an obligation for him to defer to their views or to cast his votes in accordance with their instructions’ (Gianviti 1999, p. 48). It is difficult to think of any other aspect of life, save front line warfare, in which a representative of a democratic country would be given decision-making powers which cannot be held to account. Widespread concerns over the severe lack of democratic accountability in the top global institutions have become ever more prominent in recent years. Every international summit, and notably the conferences of the G8 leaders, seem to be plagued by the security concerns produced by masses of ‘anti-globalisation’ protestors. Elson (1994) states that there is now ‘an international debate about ways to reshape the governance of the international economic system so that it becomes more people-friendly’, and notes that globalisation has been widely criticised for ignoring ‘people’ (p. 511).However, while the United Nations Human Development Report in 1990 opened with the statement that ‘We are rediscovering the essential truth that people must be at the centre of all development’, little seems to have changed as far as the IMF and the World Bank are concerned. The democratic deficit in these institutions is both serious and worrying, but as discussed above, there is some question over whether democratic values have had to be sacrificed so that these institutions can function effectively. Returning to the theme of whether the US and other western powers have a stranglehold on such institutions as the IMF, it is worth noting than in the IMF, the US has an effective veto on some decisions because of its large proportion of votes. Questions including the sale of gold and changes in obligatory periods for repurchase require a supermajority of 85%. The US, with its 17% of votes, can obviously have the final decision on these matters. Indeed, a former African executive director at the IMF – Cyrus Rustomjee – has argued that countries with few votes in the IMF find it very challenging to lobby support for their policies, and often have to try to hold together an almost impossibly large coalition if they are to make their influence felt. Some countries, including the Benelux states, have been able acquire more power in the IMF by winning over more countries to their constituencies. However, even this poses its problems, as the more countries in a constituency, the more difficult it will become to reach a consensus on each issue brought before the executive board. Woods and Lombardi (2006) found that the median size of an IMF constituency is a manageable 8, but they range up to the 24-strong African group, in which decision-making must be somewhat complex. While the IMF therefore maintains an image of many states working together to make decisions on the global economy, it is clear that the western nations are more equal than others. Indeed, some coalitions of developed countries, and especially the G8 group of industrialised nations have now taken up a de facto position of management, holding as they do nearly half of the total votes (Woods and Lombardi 2006, p. 504). We have discussed some of the mechanisms by which western capitalist nations, and especially the United States, are able to govern some key aspects of the global economy. It is also worth looking at the ways in which this coalition is able to influence the political direction of much of the world through ostensibly economic institutions. For Smouts (1998), the World Bank has been responsible for the association of global governance with a concept of ‘good governance’, and has retailed the notion that ‘getting the prices right’ has to be accompanied by ‘getting the politics right’. This clearly creates a situation in which those nations which have the most leverage over the global economic bodies can also dictate a great deal about the world’s political systems. The World Bank and other donor institutions, much of whose funding is supplied by the developed nations, are able to attach conditions, including political conditions, to any loans or support given to troubled nations. It can quite easily be argued that through this, the more powerful nations have been able to erode the political integrity and independence of some developing countries. Due to such political concerns, the notion of an American empire has now returned for first time since the early 20th century. For many commentators, the US represents a new type of empire, unique in a globalised world, with its dominance based not just on expanse and military strength, but on its economic and technological power, and the global appeal of its popular culture. In this sense the American approach combines ‘soft’ and ‘hard’ power. In the 20th century, America has not used direct force to influence policies in Western Europe, but has instead relied on shared security goals, economic support and cultural policies. However, in Central America, Africa and Asia, coercion has been used to prevent results unfavourable to Americans, such as in Laos, Guatemala and Angola. The United States has repeatedly found itself directly intervening abroad, ostensibly ‘for the good of the world’. Perhaps we should characterise the US is a hegemonic power rather than an empire, with the implication that it has pre-eminence and leadership, without necessarily using raw coercion. It seeks loyalty to its policies, but does not directly rule overseas possessions. The US does indeed have global reach, with over 700 military bases worldwide, but the nature of US power varies –in Europe and Latin America it has sometimes been hegemonic, while in parts of the Caribbean it is arguably imperial. Nevertheless, it has been forced to accept dissent, such as from Cuba and Iran, and from France when it left NATO in the 1960s. Many commentators make much of the supposed dominance of a select group of wealthy nations in directing world affairs today, especially in the economic sphere. However, by looking at recent events in terms of what powerful states have realistically been able to do when faced with crisis, we might contend, as does Wilkinson, that while state behaviour has certainly become ‘increasingly circumscribed by burgeoning regional and international regulatory frameworks’, there are serious doubts as to whether current international mechanisms and systems actually work when they are called upon to do so. A brief glance at some of the serious humanitarian and political crises of recent decades – Darfur, the Rwandan genocide, decades of conflict in central African and the Middle East to name but a few – one is struck by the utter failure of a coherent and effective international response in the face of horrifying circumstances. Furthermore, the rise of a truly global economy has made parts of the world once economically isolated from each other peculiarly vulnerable to events in foreign markets. The IMF was able to do little in 1997-8, for example, to help relieve the financial crisis that gripped many of the Asian markets, and some would suggest that equally little effective and concerted action took place during the recent financial crisis. Just as international bodies seem often to have failed in preventing the spread of financial crisis from one country to another, so they have failed to stop the spread of infectious diseases, notably the HIV/AIDS epidemic that has spread worldwide in the past three decades. Looking at global affairs from this viewpoint, it is easy to doubt whether international institutions are remotely capable of dealing with the unique challenges of a globalised world. We must surely conclude that the processes we call globalisation are ultimately too manifold and widespread to be controlled by any source of power. It would be pertinent at this stage to make note of Smouts’ (1998) memorable comments on global governance: ‘It is apparent that the old image of a Westphalian system of states, each ruled from the top down by a government operating largely in command mode, will no longer suffice...It is equally apparent that world government remains but a fanciful prospect. What falls in between? We do not know’ (p. 79). References Wilkinson, R & Hughes, S 2002, Global Governance: Critical Perspectives, Routledge, London. Held, D & McGrew, A 2002, Governing Globalization: Power, Authority and Global Governance, Polity, Cambridge. Payne, A J 2005, ‘Governance’, in N Phillips (ed), Globalising International Political Economy, Palgrave Macmillan, London. Wilkinson, R (2005), The Global Governance Reader, Routledge, London. Gianviti, F (1999) ‘Decision-Making in the International Monetary Fund’ in IMF (ed), Current Developments in Monetary and Financial Law, International Monetary Fund, Washington D.C. Rustomjee, C (2005) ‘Improving Southern Voices on the IMF Board: Quo Vadis Shareholders?’ in B. Carin (ed), Enhancing the Accountability of the IMF, IDRC, Ottawa. Dingwerth, K and Pattberg, P (2006) ‘Global Governance as a Perspective on World Politics’, Global Governance, Vol. 12, No. 2. Weiss (1999) ‘Globalization and National Governance: Antinomy or Interdependence’, Review of International Studies, Vol. 2. Smouts, M-C (1998), ‘The Proper Use of Governance in International Relations’, International Social Science Journal, Vol. 155, No. 1. Rosenau, J N (1995) ‘Governance in the Twenty-First Century’, Global Governance, Vol.1, No. 1. Therien, J P (1999) ‘Beyond the North-South Divide: The Two Tales of World Poverty’, Third World Quarterly, Vol. 20, No. 4. Woods, N (2000) ‘The Challenge of Good Governance for the IMF and the World Bank Themselves’, World Development, Vol. 28, No. 5. Elson, D (1994) ‘People, Development and the IFIs: An Interpretation of the Bretton Woods System’, Review of African Political Economy, Vol. 62, No. 21. Pauly, L W (1999) ‘Good Governance and Bad Policy: The Perils of International Organisational Overextension’, Review of International Political Economy, Vol. 6, No. 4. Woods, N and Lombardi, D (2006) ‘Uneven Patterns of Governance: How Developing Countries are Represented in the IMF’, Review of International Political Economy, Vol. 13, No. 3. Wade, R (2002) 'US Hegemony and the World Bank: the Fight over People and Ideas', Review of International Political Economy, Vol. 9, No. 2. Read More