volume 3 (2000) issn 1480 – 6339 globalization theme …coming young scholars writing on the theme...

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Volume 3 (2000) ISSN 1480 – 6339 GLOBALIZATION THEME ISSUE Editors Adrian Ang and Kari Jobin Guest Editor Axel Hülsemeyer FOREWORD v Adrian Ang and Kari Jobin NOTES ON CONTRIBUTORS viii INTRODUCTORY ESSAY 1 Axel Hülsemeyer ARTICLES Globalization and Structures of Power: A Weberian Inquiry 9

Christian J. Churchill Globalization at the Meso Level of the Nation-State: The Case of 27 Canada’s Third Sector

Izzat Jiwani Regionalism and Integration in Sub-Saharan Africa: A Review of 47 Experiences, Issues and Realities at the Close of the Twentieth Century

Joseph K. Manboah-Rockson Globalization and the Political Loyalties of Individuals: 69 Europe in Transition

Mikko Vähä-Sipilä To Globalize or Not to Globalize? The Effects of Economic Integration 91 on the Domestic Stability of Developing Countries, 1985-1992

Scott Walker SUBSCRIPTION AND ORDERING INFORMATION 110 NOTES FOR CONTRIBUTORS 111 STYLE GUIDE 113

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The publication of Innovations has been made possible

in part through grants provided by:

University of Calgary General Endowment Funds: Special Projects Fund

Faculty of Social Sciences Department of Political Science Graduate Students’ Association Political Science Association

Innovations would like to thank the following individuals for their assistance in making this project

possible: Mark O. Dickerson Professor Emeritus

Department of Political Science University of Calgary

Mebs Kanji Ph.D. Candidate


Andrew Sherriff International Alert

London, United Kingdom

Valerie Snowdon Administrative Assistant


Jennifer Stewart Ph.D. Candidate


Karen Winzoski M.A. Student


Globalization 2000: Convergence or Divergence?

would like to thank the following sponsors:

University of Calgary

International Grants Committee

Special Projects Fund International Centre

Distance and Distributed Learning Centre

Dean of Social Sciences Dean of Graduate Studies

President’ s Office Graduate Students’ Association

Gazette

Faculty of Management Department of Political Science

Department of Economics

Department of Sociology Department of Anthropology Department of History

TELUS Distinguished Visitors’ Program

Consul General of the United States of Amer ica for Alberta, Saskatchewan, Manitoba, NWT

Academic Affairs Office, Canadian Embassy, Mexico

Secretar ìa de Relaciones Exter iores, Mexico

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Innovations is registered with an International Standard Serial Number (ISSN) at the National Library of Canada. Innovations is a member of the Canadian Association of Learned Journals. Innovations is typeset in Times New Roman font and it is printed by The University of Calgary Printing Services. All correspondence concerning Innovations should be sent to: The Editor(s) Innovations: A Journal of Politics Department of Political Science University of Calgary 2500 University Drive, NW Calgary, Alberta Canada T2N 1N4 Tel: (403) 220 5920 Fax: (403) 282 4773 Email: [email protected] Web address: http://www.ucalgary.ca/~innovate

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Foreword

On behalf of the Editorial and Management Board of Innovations: A Journal of Politics, we are pleased to welcome readers to our year 2000 edition. In this issue we present the work of up-and-coming young scholars writing on the theme of globalization.

We decided to commemorate the new millennium by focusing on the very salient and timely theme of globalization, which occupies the attention of so many political and social scientists.

This has also been a key issue for graduate students in the Department of Political Science at the University of Calgary, some of whom coordinated and hosted a graduate student conference on globalization in September 1999 entitled, Globalization 2000: Convergence or Divergence? The papers in this volume represent some of the scholarship which emerged from the G2000 conference.

In our effort to embrace the theme of globalization, we first present an introduction to the study of globalization in political science by one of the organizers of the G2000 conference, and our special guest editor for this edition, Axel Hülsemeyer. Mr Hülsemeyer assesses the conference, its theme, and the importance of graduate student scholarship in areas such as globalization, which remain on the cutting edge of our discipline.

Our first paper, by Christian J. Churchill, Globalization and Structures of Power: A Weberian Inquiry, examines globalization through the lens of Weberian “structures of power.” The paper seeks to develop a clearer understanding of globalization on the basis of its manipulation as a source of profit and power. Having done this, the paper then attempts to develop potential solutions to many of the structural problems of globalization.

Following this, Izzat Jiwani’s paper, entitled Globalization at the Meso Level of the Nation - State: The Case of Canada’s Third Sector, investigates the relationship between globalization, the pressures it places on domestic institutions and the impact this has on citizenship in Canada. As the forces of globalization continue to influence the manner

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in which governments administer public and social services in Canada, the social citizenship rights of Canadians are being redefined. Ms. Jiwani argues that Canada’s third sector must be re-strengthened in order for Canadians to maximize the benefits of globalization.

Joseph K. Manboah-Rockson’s contribution to this issue is entitled Regionalism and Integration in Sub-Saharan Africa: A Review of Experiences, Issues and Realities at the Close of the Twentieth Century. Mr. Manboah-Rockson examines the sustainability of efforts toward integration in sub-Saharan Africa and the deleterious influence of globalization on these efforts. The paper demonstrates that in sub-Saharan Africa, where economic policy has long been influenced by regionalism, globalization is having a damaging effect. States in this region are now faced with powerful pressures to homogenize their economic policy with the sole purpose of attracting foreign investment and the numerous benefits associated with the influx of western technology. The paper critically evaluates the impact of globalization in sub-Saharan Africa and is suspicious of its influence on regionalism in Africa.

Mikko Vähä-Sipilä’s paper, entitled Globalization and the Political Loyalties of Individuals: Europe in Transition, analyzes the formation process of European political loyalties and the subsequent impact of globalization upon conceptions of national citizenship. This paper addresses the question of the recently ‘ displaced’ political actor and the changing socio-political signals which are relevant to the disintegration of the legal definition of national citizenship. These signals are instrumental in the growing importance of the individual political experience as it now plays an important role in the definition of political loyalty.

Finally, Scott Walker asks the question, To Globalize or not to Globalize? The Effects of Economic Integration on the Domestic Political Stability of Developing Countries, 1985-1992. This paper evaluates the consequences and/or benefits of globalization for states that succumb to its pressures. More specifically, Mr. Walker is interested in developing countries and the correlation between trade and financial liberalization and the level of domestic political stability. Through a study of 65 countries, Mr. Walker asserts that the link between economic openness and domestic stability is significant and, therefore, embracing globalization may be crucial for developing countries.

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The production of this journal would not have been possible without the support of numerous individuals. We would like to thank the many reviewers who gave so generously of their time and the many talented and committed students without whose assistance the production of this edition would not have been possible. Adrian Ang Kari Jobin M.A. Student Ph.D. Student Department of Political Science Department of Political Science

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Notes on Contr ibutors

Axel Hülsemeyer is a doctoral candidate in the Department of Political Science at the University of Calgary, working in the area of International Political Economy. He received his undergraduate degrees in Economics and Political Science from the University of Hamburg, Germany and his M.A. in Political Science from the University of Potsdam, Germany. He is working on a Ph.D. dissertation entitled “Globalization and the Institutional Adjustment of States: Federalism as an Obstacle?” It examines the extent to which constitutional frameworks influence the political-institutional adjustment of nation-states and the process of economic globalization. His work has been published in Review of International Political Economy. Chr istian J. Churchill recently received his Ph.D. in the Department of Sociology at Brandeis University. His dissertation, “The Calling: Bureaucracy, Technology, and Ideology in the Telefundraising Industry,” is a study of the institutional psychology of three telefundraising companies and of the rationalization of fundraising in American society. He received his B.A. in sociology and literature in 1991 from Marlboro College in Vermont. Izzat Jiwani is currently a doctoral student in Sociology at York University in Toronto. She earned her Master’s degree from the University of Saskatchewan in Adult Education. Her doctoral dissertation concerns the issue of power and control in the devolution of public services to the third sector. It addresses the principal question of how the location of the power and control of devolved public programs affects the third sector’s capabilities for service provision and its role as an intermediary between the state, the market, and citizens. In her research, she focuses on the restructuring of long-term care policy in Ontario as a case study. Her interest in the devolution of public programs stems from her extensive experience in Canadian policy analysis at the federal, provincial and municipal levels, and policy implementation in the third sector. Her primary areas of interest are health care, social policy, citizenship, and civil society. Joseph K . Manboah-Rockson is a doctoral candidate in Political Studies at the University of Cape Town, South Africa. His doctoral dissertation deals with policy implications of the Economic Community of West African States. He received a Master’s degree in Political

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Science from Baylor University, Texas, and a Baccalaureate degree in International Business Administration from Wichita State University. Mr. Manboah-Rockson is currently working with the Texas Department of Criminal Justice. Mikko Vähä-Sipilä is currently an M.A. Student in Political Science at the University of Tampere, Finland, and his main research interest is European integration. He is about to submit his thesis that focuses on the political thought of Jean Monnet. Vähä-Sipilä has also studied Sociology at Oxford Brookes University in England. Scott Walker is a doctoral student and Teaching Fellow in the Department of Political Science at the University of North Texas. He received a Master’s degree in Political Economy at the University of Texas at Dallas and a Bachelor of Arts degree in Government from the University of Texas at Austin. His areas of interest include political economy, human rights, development, and democratization.

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INTRODUCTORY ESSAY

‘Globalization 2000’ – From Planning to Fruition In September 1999, an international conference took place at the University of Calgary, entitled Globalization 2000: Convergence or Divergence? The articles contained in this issue of Innovations are revised versions of some of the papers presented at the conference. In this introductory essay I wish to outline briefly the rationale underlying the G2000 conference. It seems to me that what made the project different from similar events can be cast in both substantive and organizational terms. I will reflect on both aspects in turn. The term ‘globalization’ has quickly become a catch phrase in both the academic and public debates, which are often conducted with ideological undertones. The questions asked and examined appear to fall into three groups. First, is globalization an old or a new phenomenon? The debate on this issue is largely academic, conducted between macro-sociologists and anthropologists on one side, and liberal economists on the other, with political scientists frequently caught in the middle.1 Second, is globalization ‘ good’ or ‘bad,’ i.e., do its benefits outweigh its costs or vice versa? Clearly, it depends on whom one asks. The NAFTA debate in the United States, for instance, was conducted between the perceived ‘winners’ and ‘ losers’ of freer trade, the latter by its proponents considered a necessity given the perceived pressures of the global economy. Third, and related, is the process of globalization inevitable or can it be channelled, and maybe even resisted? The recent protests at the WTO meeting in Seattle, as well as at the Spring meetings of the World Bank and the IMF in Washington (‘Seattle II’ ) suggest that some regard globalization – at least in its current guise – as ‘bad’ and feel obliged to resist it, regardless of the means. Answers to the above questions largely hinge on the definition of globalization used. It appeared that any meaningful discussion must start here, and we identified four aspects of the term. Economic globalization refers to the familiar technological advances in communications and

1 For an interesting review essay in this respect, see Leslie Sklair, “The Nature and Significance of Economic Sociology,” Review of International Political Economy 4:1 (1997): 239-47.

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transportation, enabling the “ easing of international trade.” 2 Political globalization addresses the adjustment of nation-states to this new environment, primarily the extent to which these entities can still fulfil their function of providing public goods. Some have suggested that the traditional welfare state will ultimately be replaced with a “ competition state,” with governments acting more as business brokers, rather than being concerned with redistributing income.3 However, political globalization is not only a more or less inevitable consequence of its economic component but also its cause. The free flow of financial transactions is not conceivable without states releasing capital controls; technological advance is a necessary but by no means sufficient condition for the advent of the ‘ global economy.’ In this sense, the “paradox” of globalization is that national governments helped to unleash the forces to which they now see themselves having to adapt, potentially losing some legitimacy in the eyes of their citizens along the way.4 Social globalization traces the ‘winners’ and ‘ losers’ of globalization within and across societies. We seem to be accustomed to images of a business elite being at home in every major city and spending much of its time commuting between them. Yet, the vast majority of the population may, in the best case, benefit from globalization through the collection of air miles, and, in the worst case, lose their jobs due to the imperatives of global competition. This divergence between winners and losers is particularly compounded at this point in the transition economies of Central and Eastern Europe.

Finally, cultural globalization assesses whether and, if so, to what extent individuals might shift their loyalties from their home countries to some other sub- or supranational entity. On the one hand, the

2 Jeffry A. Frieden and Ronald Rogowski, “The Impact of the International Economy on National Policies: An Analytical Overview,” in Internationalization and Domestic Politics, eds. Robert O. Keohane and Helen V. Milner (New York: Cambridge University Press, 1996). 3 Philip G. Cerny, “Globalization and the Changing Logic of Collective Action,” International Organization 49:4 (1995): 595-625; see also Axel Hülsemeyer, “Changing ‘Political Economies of Scale’ and Public Sector Adjustment: Insights from Fiscal Federalism,” Review of International Political Economy 7:1 (2000): 72-100. 4 Philip G. Cerny, “Paradoxes and the Competition State: The Dynamics of Political Globalization,” Government and Opposition 32:2 (1997): 251-74.

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European Union, for instance, has its own flag and anthem - symbols of identification similar to those of nation-states. Are citizens beginning to view themselves less as Germans, Italians or French, and more as Europeans? On the other hand, we also observe increased nationalism, especially in the successor states of the Soviet Union. Under which conditions are similar patterns evolving in other countries? In addition, what role does environmental degradation, for example, play in individual responses to globalization.5 These four aspects of globalization are explored by different fields within the social sciences. The interplay of economic and political components, if not examined in isolation in their respective disciplines, is primarily the research area of International Political Economy.6 It explores the ‘state of the state;’ that is its capacity to provide continually the public goods that citizens of welfare states in the OECD world have grown accustomed to since the 1950s. Regional integration has been considered as one political-institutional response by states in reaction to economic globalization.7 While the social aspects are largely the field of Sociology, the impact on the potential value and identity changes of the individual are frequently the concern of political scientists of the behavioural persuasion. In this context, it can be observed that the globalization ‘discourse’ actually suffers from a two-fold isolation. First, scholars in the various disciplines involved exchange arguments mostly among themselves. If one studies the economic and political aspects of globalization, one is rarely in consultation with someone exploring the individual implications, and vice versa. Second, the debate is necessarily conducted by the established academics in their respective fields, while the next generation of social science scholars has little chance to interact

5 Ronald Inglehart, Modernization and Postmodernization: Cultural, Economic, and Political Change in 43 Societies (Princeton, NJ: Princeton University Press, 1997); Neil Nevitte, The Decline of Deference: Canadian Value Change in Cross-National Perspective (Peterborough, ON: Broadview Press, 1996); Mebs Kanji, “North American Environmentalism and Political Integration,” American Review of Canadian Studies 26:2 (1996): 183-204. 6 For a good introduction, see Herman Schwartz, States vs. Markets: Globalization and the International Economy (London: Macmillan, 2000). 7 William D. Coleman and Geoffrey R. D. Underhill, eds., Regionalism and Global Economic Integration: Europe, Asia and the Americas (London: Routledge, 1998).

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with those that frame the debate. Both observations are by no means unique to the study of globalization, but are rather reflective of scholarship in the social sciences, if not of the research enterprise in general. Finally, studies on globalization can be distinguished between those concerned with the causes of this phenomenon and those focusing on its implications; the latter constituting the majority of examinations that have emerged so far. All of these categorizations are of course analytical tools, or Weberian ideal types, while in practice they necessarily overlap. Yet, the above considerations were the background for the Globalization 2000 conference. The intent of our conference was to organize globalization research in a systematic fashion and simultaneously to facilitate cross-fertilization both in terms of disciplines and research experience. The idea for the conference developed about 18 months prior to the event. Time was spent mostly developing and systematizing the conference topic and writing numerous grant applications, in order to secure funding for the project. We sent out the Call for Papers, asking for the submission of proposals that clearly identified the theoretical framework, empirical evidence, and implications of their research on the basis of the categorizations mentioned above. More than 70 proposals were submitted. The choice of selection had then to be determined on three criteria. First, the commonality of the above categorizations is that they lent themselves to organizing the conference according to the three levels of analysis typically used in the social sciences, namely the macro (or systemic), meso (or intermediate) and micro (or individual) levels. Hence, proposals had to fit in one of those categories, and the articles in this journal are listed accordingly. Second, in keeping with the topic of the conference, it was our intention to invite presenters from as broad a geographical span as possible. Consequently, the papers contained in this theme issue of Innovations are from graduate students in Canada, the United States, Finland, and South Africa. Finally, the thematic selection of panel topics, and hence paper proposals, had to be determined to a considerable extent by the likelihood of the conference organizers being able to attract particular academic experts to serve as panel chairs and/or discussants. It was our

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plan to have eminent scholars introduce the topic of globalization in their respective panels in a 15-minute presentation. We were fortunate that Dr. Herman Schwartz from the University of Virginia, who had come across our Call for Papers, happened to be a Fullbright Fellow in Calgary at the time of the conference. Then, Dr. Phil Cerny from the University of Leeds (now University of Manchester) agreed to come to Calgary. After these initial successes, a snowball-effect seemed to occur. Other academics that we approached appeared to take our project more seriously than might have otherwise been the case. Hence, we were subsequently able to attract Drs. Leslie Sklair from the LSE, Bill Coleman from McMaster University, and Marcos Kaplan Efron from Mexico. Finally, as the conference began to near, two eminent academics, Drs. Neil Nevitte from the University of Toronto and Ronald Inglehart from the University of Michigan, who joined us via satellite, said that they would also participate. I wish to take the occasion to thank all these scholars for their active contribution to our endeavour. As keynote speakers, we were able to attract the Honourable Stockwell B. Day, Provincial Treasurer of the Province of Alberta (thanks to Dr. Ted Morton, University of Calgary); the Honourable Stéphane Dion, Canadian Minister of Intergovernmental Affairs (thanks to his assistant Jennifer Robson); and Senator Nick Taylor, who graciously agreed to fill in on short notice for the Honourable David Kilgour, Secretary of State for Africa and Latin America, who was called to negotiate in a hostage crisis in Ecuador just days before the conference. In addition, we wish to thank the following individuals and businesses for their support: Rob Anders, MP; Keith Archer, Associate Vice-President (Research), University of Calgary; Denise Brown, Latin American Studies, University of Calgary; Len Bruton, Vice-President (Research), University of Calgary; Wayne Cao, MLA; Barry Cooper, Department of Political Science, University of Calgary; Gary Dickson, MLA; Gloria Eslinger, International Centre, University of Calgary; Irena Kirek and David Wood, Distance and Distributed Learning Centre, University of Calgary; Nancy MacBeth, Leader of the Opposition in Alberta; Don Massey, MLA; University of Calgary; Chuck Mawer; Deepak Obhrai, MP; Betty Rice, United States Mission to Canada; Paul Vallentine, Auditor General’s Office of Alberta; Karen Kryczka, MLA;

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LeRoy Johnson, MLA; Murray Smith, MLA; Duffie Van Balkom, Associate Vice-President (International), University of Calgary; April Walters, Programme Coordinator, Faculty of Management, University of Calgary; as well as our conference hotel “The Highlander;” Big Rock Brewery, Cava Cafe and the University Club. Although globalization is a topic heavily embraced in both the public and academic realms, practitioners and academics do not have seemed to find a way to consider the respective other ‘ group’ as relevant for one’s own activities. Therefore, we started the conference with a business roundtable, chaired by US Consul General Lisa Bobbie Schreiber Hughes. We are indebted to her as well as to the roundtable participants, Dr. Eugene Beaulieu (Department of Economics), Drs. Vernon Jones, David Saunders (Dean) and Allan Cahoon (Faculty of Management), Mr. Perry Englot (HSBC Bank of Canada), Mr. Julio Arboleda (Howard Mackie), and the Honourable Harvie André (CANOP Worldwide Corp.). The conference would not have been able to take place without the active participation of numerous academics from the University of Calgary. We are grateful in this respect to Dr. Terrence White (President, the University of Calgary), who hosted the opening reception; Dr. Stephen Randall (Dean, Faculty of Social Sciences), who acted as Master of Ceremony at the conference dinner at the Calgary Petroleum Club; and Dr. Roger Gibbins (President, Canadian Political Science Association) for chairing the final roundtable. We are equally thankful to Drs. Bohdan Harasymiw, Jim Keeley, and Ron Keith (Department of Political Science), Dr. Bill Zwerman (Department of Sociology), and Dr. Alan Smart (Department of Anthropology) for their participation as panel discussants and roundtable participants. Dr. Brian Gaines (Dean, Faculty of Graduate Studies) delivered the closing remarks of the conference. Lastly, this conference would not have been possible without the assistance of a number of individuals, whom I wish to thank sincerely for their contribution to keeping the task manageable and making this conference happen. Bill Roberts took a lot of his spare time to develop and maintain the conference’s webpage. Dianna Kyles and Wim van der Woude drove the conference vans. Nav Kanji sorted out our printing problems with the conference brochure, Adrian Ang was our “go to” person whenever problems arose, and David Quayat helped attract

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undergraduate students to attend the event. The G2000 Organizing Committee is especially deserving of thanks as they were the backbone of the entire event. Included in this committee were, Cameron Brooks, Kari Jobin, Wilhelm Rosado, Mollie Royds, Andrew Sherriff, Mebs Kanji and myself. I would also like to thank Jodi Cockerill, Carey Hill and Jurgen de Wispelaere who provided useful input to the committee in the early stages of organization. The Department of Political Science’s Administrative Assistant Valerie Snowdon served as our financial saviour in her dealings with University Payroll. Finally, Judi Powell, one of our departmental secretaries, graciously agreed to be the conference’s secretary and, therefore, the G2000 ‘hub,’ spent countless weekends and nights with all the organizational aspects and correspondence that inevitably came with the project. We contributed actively to her stress level with our own partial disorganization. We cannot thank Judi enough for having put up with us until the end! The moral of this introductory essay is to encourage other graduate students not to shy away and be overwhelmed by the many obstacles that lie in the way of any project that seeks to, in however small a way, make a constructive academic contribution. Yet, in keeping with the motto of a large sports clothing and equipment manufacturer: Just do it!

Whether we have been successful in this endeavour is for the reader to decide, based on the contributions contained in this issue of Innovations.

Axel Hülsemeyer Ph.D. Candidate

Guest Editor

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Globalization and Structures of Power: A Weber ian Inquiry1

CHRISTIAN J. CHURCHILL

Brandeis University

Abstract - This paper examines globalization through the framework of Max Weber’s essay “ Structures of Power.” The paper argues that globalization is characterized by political and economic entities using debt, the nation-state, and organizational networks as the means to maximize profit and power. It suggests that an examination of globalization through this framework provides a clear idea of what globalization is and how to solve its structural problems.

Among a plurality of co-existing polities, some, the Great Powers, usually ascribe to themselves and usurp an interest in political and economic processes over a wide orbit. Today such orbits encompass the whole surface of the planet.

- Max Weber, “Structures of Power” 2 Introduction Globalization functions on personal, political, and economic levels. It has been active and deepening for at least the last fifty to one hundred years. The ubiquitous influence of high-speed finance, mass culture, and mass communication is a reality from which almost no sector of the planet is left unexposed. From the moment that World War

1 The author would like to thank Larry Carney, Arthur J. Vidich, Stanford M. Lyman, Gerald E. Levy, Leslie Sklair, James F. Keeley, Charles Gattone, the participants in the Summer 1998 Institute for the Analysis of Contemporary Society at the New School for Social Research, and the participants at the Globalization 2000 conference at the University of Calgary in September 1999 for their advice and critiques on various drafts of this paper. George Ross and Dessima Williams in the Department of Sociology at Brandeis University also provided important advice and direction. Any flaws herein are, of course, the sole responsibility of the author. 2 Max Weber, “Structures of Power,” in From Max Weber: Essays in Sociology, eds. and trans. H. H. Gerth and C. Wright Mills (New York: Oxford University Press, [1914] 1946), 161.

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One unsheathed the horrors of mass conflict between the great powers, the international scene has been unable to ignore the effects of international economic and political collusion. The main sociological questions of globalization are, from where does power in the global system emanate, how is this power maintained, who benefits from it, and who suffers from it? In looking at globalization as a social problem, we must consider this question of power, for it is chiefly through the control and use of power that social problems are created, perpetuated, and resolved. For those at the top of global power structures, this may not appear to be a social problem. For those at the bottom, however, existing from day to day on meagre wages, a deteriorating natural environment, and the consequences of military conflicts, global power dynamics present more problems than opportunities. To the extent that peasant publics are lifted out of poverty by the availability of jobs at the outposts of multinational corporations, this relief is often temporary and seldom offers a means to substantive social change. Put in other terms, an ethical discussion of globalization must reflect upon and seek solutions to human suffering across the planet. We will approach globalization from the perspective of Max Weber’s essay “Structures of Power.” Written at the beginning of the twentieth century, Weber’s essay emerged from a context of declining colonial powers and ascending commercial interests. These rising commercial interests employed methods of extracting resources and exploiting labour which paralleled those of colonial nations. The historical juncture in which Weber’s essay appeared is important for two reasons. First, colonialism not only established the economic patterns for what we now term globalization, it also established the means of political control and the patterns of sudden intercultural overlap which both bind and unravel the world today. Second, the fundamental nature of colonial rule was rentier ownership of capital, material resources and wealth. This feudal model of land use and ownership set the political and sociological pattern for control of overseas colonies by European powers from the sixteenth to nineteenth centuries.

Rentier social and legal patterns formed the legal structure of the Anglo-American colonies. When the colonies broke with Britain, the driving force of the revolution was the American land-holding class whose financial gain was derived from the annulment of British property

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claims and taxes. Laws in the United States governing private property, land ownership, and corporate structures are ethically and legally rooted in the rentier tradition of the original colonies. Today’s global system of commerce and finance reflects these roots. This essay will focus primarily on American government and corporate behaviour. Certainly, globalization has moved the locus of economic and political power from the United States to a more diverse scope of actors and institutions. American power continues to be predominant, though, and it does so through less obvious mechanisms than were used in the Cold War. We also see in the behaviour of the American government and corporations during the Cold War, the origins of the behaviour of dominant political and financial entities today.

This essay contends that globalization originated from colonialism. With this as an analytical starting point, we turn to three main facets of globalization which are derived from Weber’s framework: 1) debt as structures of power, 2) the nation-state as structures of power, and 3) global networks as structures of power. Debt as Structures of Power

Each historical epoch is characterized by a momentous event which chroniclers refer to when describing the period. For the early French republic, that event is the storming of the Bastille. For the United States from the mid-nineteenth to the early twentieth century, it is the Union victory in the American Civil War and the Industrial Revolution. For American society of the 1950s through the 1980s, it is the Allied victory over fascism in World War Two. The defining moment for the epoch of globalization is the fall of the Berlin Wall and the subsequent demise of the Soviet Union. During the Cold War, social critics identified communist and capitalist powers as the enemies of freedom and personal autonomy. After the Cold War, there is little tolerance for public criticism of capitalism as the mechanisms of world finance receive general praise. Dissent exists but is made inaccessible by the continually consolidating corporate engines of the mass media. A focus on markets has dominated the social and political thought of the twentieth century. The left defined the market as the

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enemy of freedom while the right defined the market as its source. In public discourse, meanwhile, democracy has been equated with the “ free” market economy. Yet “ free” markets do not exist in a pure form. Markets exist under the aegis of government control. Governments determine which publics have superior access to the capital upon which greater wealth is built in turn. Max Weber’s description of colonial “ tribute” indicates a connection between the rentier, absentee ownership of colonial powers and the political control of debt exercised by the First World over the Third World today. Weber suggests that this means of control not only benefits the elite of the “Great Powers” but also provides material advantage to their workers:

For under the present economic order, the tribute to “creditor nations” assumes the form of interest payments on debts or of capital profits transferred from abroad to the propertied strata of the “creditor nation.” Were one to think these tributes cancelled….[t]his would influence the labour market of the respective workers in an unfavourable manner.3

Since the Great Depression of the 1930s and the global recovery in the aftermath of World War Two, international organizations such as the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank have taken a central role in world finance. Free trade agreements between industrial nations such as the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) have also bound world markets together. This has occurred in such a way that the “ tribute” of debtor nations, whether in the form of interest payments on loans or the provision of cheap labour, largely supports the balance of power in the world today.

Throughout the Cold War, the United States prevented leftist regimes from coming to power in debtor nations. These regimes were often subverted by American- backed authoritarian regimes which prevented mass rebellion against creditor control. With the fall of the communist powers, however, the threat to capital is no longer the Kremlin, but democracy itself. If Third World nations elect regimes

3 Ibid., 170.

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which speak directly to the interests of their people, whose economic systems groan under the weight of debt and imposed poverty through cheap labour, the industrialized, creditor nations will be faced with an emergency in the form of a potential loss of payments and control over labour. To prevent this, the creditor nations must operate successfully on two fronts: 1) they must convince their own people that their exertion of power and economic prerogative throughout the world is directly related to their domestic well-being and to their state’s power position on the world stage; and 2) they must determine how to control the debtor nations without having to resort to dictatorial means. Weber writes of the need to convince the populations of dominant nations that they have a stake in world market dominance:

Every successful imperialist policy of coercing the outside normally – or at least at first – also strengthens the domestic “prestige” and therewith the power and influence of those classes, status groups, and parties, under whose leadership the success has been attained.4 In the United States, the organs of public discourse pressure the

population to see its status, prestige and fortune as directly bound up with the extension of American power across the globe. The American defeat in Vietnam has become a reference point for all efforts to convince the American public of its need for global power. Since then, the popular legitimacy of all overt uses of American force has hinged on its ability to reclaim the prestige lost in Vietnam.

American strikes against terrorist nations in the 1980s were characterized as confirmation that Vietnam had not weakened American resolve. The 1983 US invasion of Grenada was said to have dispelled the stigma of defeat in Vietnam. The US invasion of Panama in 1989 was portrayed in more comical tones as US forces surrounded Manuel Noriega with trucks blaring American rock music.

In 1991, the ‘Vietnam syndrome’ was evoked during the Persian Gulf War. As with Vietnam, the Persian Gulf War ‘entered’ American homes nightly. Instead of images of dead American soldiers, the public saw controlled footage of “smart bombs” hitting targets in clinical detail.

4 Ibid., 170.

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The loss of thousands of innocent Iraqi lives in the service of the interests of the oil industry was obscured by the flag-waving jingoism of yet another “victory” in place of the defeat in Southeast Asia. These attempts to erase the stigma of the Vietnam War appeal to the American public’s desire for international status and prestige. The economic motives behind the use of force, meanwhile, are obscured. Appeals to the military status of the nation illustrate Weber’s notion of debt as a structure of power. For even though threats to the flow of tribute from debtor nations may legitimate the use of armed force, the use of force must be backed by public will.

Throughout the Cold War, developed nations often functioned as agents of private capital. This was advertised as helping developing nations strengthen their infrastructure. When the Cold War ended, international financial institutions became vehicles for multinational capital in previously state-centred economies. Their requirement that debtor nations abandon state-centred policies and programs promulgated the ideology of free market regimes and required developing nations to ignore the suffering of their indigenous populations. As Robert Cox points out, in the last twenty years “a hyper-liberal form of capitalism has gained ascendancy” and, with the help of the IMF and the World Bank, it has been presented as a requisite market form for nations which desire help from Western and Northern nations and their financial institutions.5 In 1976, the Labour government in power in the United Kingdom, in order to cut public spending, required IMF assistance.6 International programs which ameliorate poverty in a capitalist context follow a pattern visible in the US when government agencies collude with private interests in the financing of welfare state initiatives. The missions of international financial agencies are often to provide those at the bottom of the economy with the means to improve their standing. In the spirit of the United Nations International Children’s Emergency Fund (UNICEF), the idea of such help is to provide a “hand-up” rather than a “hand-out.” Nonetheless, according to Stephen Gill,

5 Robert Cox, “Critical Political Economy,” in International Political Economy: Understanding Global Disorder, ed. Bjorn Hettne (Atlantic Highlands, NJ: Zed Books, 1995), 37. 6 Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle Between Government and the Marketplace that Is Remaking the Modern World (New York: Simon & Schuster, 1998), 104.

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“ [a]ffluent urban dwellers in the Third World…have been the primary beneficiaries of aid flows and World Bank loans.”7 As with many American domestic social programs where government monies intermingle with private ventures, the help often evades those most in need. Debt is directly related to the rentier pattern of absentee ownership. In the development of the nation-state, one sees the gradual consolidation of feudal powers in order to establish larger powers with greater reach of conquest. This development connects the emergence of France under Charlemagne to Germany under Bismarck. As the Industrial Revolution altered world power structures, it replaced the state with the private corporation as the seat of world economic power. The tidal drift in thus consolidation of power has continued, but now in terms of ever-increasing consolidations of corporate power.

While ownership of corporate dividends is clear, the ownership of corporate blame is not. Though management is blamed for profit losses, blame for human suffering caused by corporate behaviour is assigned less frequently or specifically. Sometimes the corporate body is blamed, and particular managers may occasionally receive punishment for legal violations. However, the corporation remains viable and thereby protects owners and their assets. Ultimately, the system is portrayed as the cause of suffering under globalization. Yet the system is also excused in the name of free market capitalism.

Absentee ownership has become the dominant paradigm of the world economy. It is enacted through international credit and investment schemes. It lives or dies on the chance that the underlying assumptions which legitimate speculation and credit remain valid.8 The Nation-State as Structures of Power

[P]olyarchy as a distinct form of elite rule performs the function of legitimating existing inequalities, and does

7 Stephen Gill, “Theorizing the Interregnum: The Double Movement and Global Politics in the 1990s,” in International Political Economy: Understanding Global Disorder, ed. Bjorn Hettne (Atlantic Highlands, NJ: Zed Books, 1995), 73. 8 Cf. William Greider, One World, Ready or Not: The Manic Logic of Global Capitalism (New York: Simon & Schuster, 1998).

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so more effectively than authoritarianism….When US policymakers and organic intellectuals speak of ‘promoting democracy,’ they do not, as a matter of course, mean promoting popular democracy. But more than this, they mean the suppression of popular democracy, in theory and in practice.9

Theories of globalization frequently predict the death of the nation-state. To be sure, this is an extreme view, but it finds adherents both inside and outside of academia. Two reasons for this are: 1) intellectuals foresee the take-over of the central functions of the state by corporations, and, out of a general distrust of the motives of private capital, they fear the consequences of this for society; and 2) private enterprise perceives a nation-state with diminished regulatory powers as germane to the increase of profit. Business tends not to challenge the military role of the nation-state, however, in maintaining social control. The “national interests” of the multinational corporation’s country-of-origin are invoked when military intervention is deemed necessary. Alberto Fujimori’s dissolution of democracy in Peru and Mexico’s crackdown on rebels in Chiapas are examples of government intervention which are not resisted by private interests. It stands to reason that corporations are reassured by military and government control. However, the interests of the population at large are ignored in these circumstances. The mass media, especially in developed nations, does not report the negative impact of these actions. As major newspaper, television, and publishing corporations consolidate and are absorbed by larger conglomerates, the editorial inclination to suppress criticism and negative reporting on military suppression in the interests of capital is likely to increase.

A world economic crisis may provide the only impetus to restore the ability of governments to intervene in economic affairs. Yet if such a crisis occurs, the industrialized and developed nations of the world lack the patrician class which saved capitalism in the 1930s. American President Franklin D. Roosevelt represented an aristocrat peculiar to American society. Because of his gregarious appeal and his assured upper class demeanour, Roosevelt was able to restore the fundamentals

9 William I. Robinson, Promoting Polyarchy: Globalization, US Intervention, and Hegemony (New York: Cambridge University Press, 1996), 51, 62.

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of capitalism through government controls. Few such figures exist today. This could leave the developed world adrift if a world economic crisis does occur.

Third World nations, meanwhile, remain vulnerable to dictatorial regimes if a general economic collapse occurs. Their infrastructures, formed mainly on a Mediterranean bureaucratic model,10 may lack the strength to resist authoritarianism. Much as developing nations resist environmental regulations because of their perceived hindrance to economic growth, so too might they resist democratization in the face of economic disintegration. Their priority in such circumstances would be the maintenance of the social order. Afghanistan’s Taliban regime and Pakistan’s 1999 military coup illustrate this tendency when economic distress is primarily local. The tendency would certainly be more widespread in the event of a global economic collapse. The developed world, meanwhile, is apt to support Third World authoritarian regimes which promise to protect financial assets in the face of disorder. An economic collapse which would cause these problems on a global scale may never occur, or it may now be in the latter stages of gestation.11

The Weberian model of the nation-state provides a view of social cohesion and political relations which can explain the world’s current elasticity. It also provides a way of understanding how globalization might be transformed by a general economic crisis, since Weber’s model shows how private interests maintain the power of the nation-state. Weber’s model identifies two spheres of national cohesion: 1) solidarity determined by common values; and 2) solidarity determined by political associations. These spheres show how the nation-state exists within globalization. Weber’s spheres of cohesion also allow us to imagine how the nation-state may change from a geographically-bound model to something more dynamic yet more out of control. Finally, the Weberian model demonstrates that the nation-state remains a viable unit

10 Joseph Bensman, “Mediterranean and Total Bureaucracies: Some Additions to the Weberian Theory of Bureaucracy,” International Journal of Politics, Culture and Society 1 (1987): 62-78. 11 Cf. Greider, One World; David C. Korten, When Corporations Rule the World (West Hartford, CT: Kumarian Press, 1995); Richard J. Barnet and John Cavanaugh, Global Dreams: Imperial Corporations and the New World Order (New York: Simon & Schuster, 1994); and Roger Altman, “The Nuke of the 90’s,” New York Times Magazine, 1 February 1998, 34-5.

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of analysis in examining phenomena like international terrorism, multinational corporations, and the emergence of supra-national confederations like the European Union (EU), the Association of Southeast Asian Nations (ASEAN), and the Caribbean Community (CARICOM). The word “nation” can evade definition. It is assigned contrasting meanings by different competing interests. Weber suggests:

In the sense of those using the term [“ nation” ] at a given time, the concept undoubtedly means, above all, that one may exact from certain groups of men a specific sentiment of solidarity in the face of other groups. Thus, the concept belongs in the sphere of values.12

In these terms, a nation exists either where groups are compelled into union by an outside force or where groups are united by common beliefs. Weber suggests that if members of the ‘Jewish Diaspora’ in the United States were asked whether the Jewish people constituted a nation, “ their answers would vary in nature and extent.” 13 Weber also suggests that “The Negroes of the United States, at least at present, consider themselves members of the American ‘ nation,’ but they will hardly ever be considered so by the Southern Whites.” 14 While values cause groups to cohere, the nation-state cannot exist without the galvanizing force of politics. Weber describes how “political associations” are the final means by which “national sentiment” coheres.15 This occurs in democratic regimes when value-related groups organize as political parties. As parties develop “platforms” in which contrasting values are reconciled, interests are protected and collective action is accomplished. The process also occurs when authoritarian regimes force value-related groups to submit to the regime or form networks of collective resistance. For Weber, the concept of a nation is “ fluid” :

In any case, the differences in national sentiment are both significant and fluid and, as is the case in all other

12 Weber, “Structures,” 172. 13 Ibid., 174. 14 Ibid., 174. 15 Ibid., 174.

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fields, fundamentally different answers are given to the question: What conclusions are groups of people willing to draw from the ‘ national sentiment’ found among them?16

This model accommodates nations consolidating in coalitions of proximate power blocs. The nations in those blocs determine their geographical parameters on the basis of political associations between value-groups. If this continues, the concept of the nation-state will need to expand to include collections of states whose domestic policies and laws are more or less autonomous, which identify individually by cultural qualities, but which act together as consolidated economic and military engines. Yet the Weberian model can also accommodate a world in which a localized backlash against the forces of consolidation causes political and economic fragmentation. Under this scenario, the Weberian model provides for numerous political associations forming through the value-orientations of groups which feel stripped of control in the global order. Presently, globalization is a combination of these scenarios.

The perspicacity of Weber’s model of “nation” increases when it is overlaid with his concept of debt as structures of power. For it is in the illustration of the nation-state as combined structures of group power intersecting with the power of debt that we see a more comprehensive grid of power structures. These structures form the phenomenological and structural framework of globalization. Since the end of the Cold War, world powers have switched their support from dictatorial regimes to free market democracies.17 Prior to this shift, US foreign policy and intelligence agencies promoted authoritarian governments like those of Ferdinand Marcos in the Philippines, the Shah in Iran and Augusto Pinochet in Chile. The United States supported many right-wing governments regardless of their oppression of indigenous publics. El Salvador’s political shift in the 1980s provides illustration. The right-wing National Republican Alliance (ARENA), backed by American money and force, came to power in El Salvador in 1983 after the nation’s civil war. ARENA ruled by ‘ democratic’ means through the

16 Ibid., 175. 17 Cf. Robinson, Promoting Polyarchy.

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next decade and a half. In 1997, the opposition Farabundo Marti National Liberation Front (FMLN) took control of mayoralties in major cities across El Salvador and made significant gains in parliament. This, however, was after intense struggle against ARENA which had American financial backing and military support. FMLN gains were also resisted by owners of the maquiladora (sweatshops) which account for much of El Salvador’s economic infrastructure.

The maquiladora have become for El Salvador what late nineteenth and early twentieth century garment factories were for the US before the emergence of fair labour laws. One egregious practice of the maquiladora was “Christmas firings.” By constitutional mandate, employers in El Salvador were required to pay employees a Christmas bonus equal to a percentage of their yearly wages. To avoid this, the maquiladora fired thousands of workers before Christmas and hired them back after the holidays. Additionally, El Salvador’s ARENA President Armando Calderon Sol promised American manufactures that labour unions would be kept out of Salvadoran factories (Sol was replaced in March 1999 by ARENA candidate Francisco Flores). Meanwhile, the United States Agency for International Development (USAID) continues to promote the “ free trade zones” throughout El Salvador, within which the suppression of unions abounds. The replacement of state-centred economies with free markets has been celebrated around the world. The main beneficiary of this freedom, though, is the marketplace. The citizens of developing nations, though offered the vestiges of democracy, are given little control over their political and individual fates. In the opening of free markets, human freedom is often forgotten. In the shadow of global capital, peasant societies can hope to accomplish little for their own good.18

In his book Promoting Polyarchy, William I. Robinson describes “polyarchy” as “a system in which a small group actually rules and mass participation in decision-making is confined to leadership choice in elections carefully managed by competing elites.” 19 Robinson indicates that although democratic institutions may exist in The Philippines, Chile, Nicaragua and Haiti, the democratic process is largely ceremonial. Local

18 Cf. Barnet and Cavanaugh, Global Dreams; Korten, When Corporations Rule; Greider, One World. 19 Robinson, Promoting Polyarchy, 49.

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and transnational elites control the process by determining which candidates and parties receive the money and armed power to promote their campaigns. Once these candidates are elected, they must adhere to the agenda of the elite that includes continued use of and payment of international debt. Robinson’s model fits Weber’s because it accounts for the overlap of debt and the nation-state. Debt as structures of power requires value-related groups and political associations to cohere so the payment of debt does not cease. As financial crises emerged in Mexico in the 1980s or Asia in 1997-98, massive “bail-out” packages were floated by governments and international agencies. These bodies are the public agents of vested interests which require the continued existence of debts in order to remain legitimate.

Occasional calls for a clearer vision of potential problems in globalization arise from both ends of the political spectrum. Roger Altman, a member of the American financial and political establishment, describes the latent consequences of “ [a]verage daily world-wide trading in financial instruments [which] now may exceed $1 trillion.” 20 David C. Korten, a former faculty member of the Harvard University Graduate School of Business, criticizes the global financial system in his book When Corporations Rule the World. In addition to examining macro problems, Korten focuses on micro crises confronting Third World populations. He describes the damaging human consequences of multinational corporations extracting maximum human and material resources while swaying the policies of governing bodies toward less regulatory intervention.21 Globalization is fraught with humanitarian and financial problems. While it is unclear what the solutions to these problems might be, there is no foreseeable end to the lowering of trade barriers and tariffs. The prospect of a world government taking control is troubling even if it is unlikely to occur. Such a body would necessarily engage in authoritarian rule to create coherent political associations out of the multitude of conflicting value-related groups.

20 Altman, “The Nuke of the 90’s,” 34. 21 Korten, When Corporations Rule the World.

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Thus, policy solutions must recognise multiple value-related groups, the coherent social networks within these groups, and the need for governing structures which command accountability from global financial powers. Networks as Structures of Power Social systems arise from the interlocking of mutually affective groups. The defining quality of modern social and economic systems is their use of interlocking directorates and associations for the maintenance and extension of power.22 These systems of power have existed throughout history, and modern corporate and government bureaucracies extend their dominance through them. Because bureaucracies function on a rational model, the non-rational character of social networks gains greater power because it is not accounted for in the bureaucracies’ standard procedure.

The social network operates inside the bureaucracy, but it is always outside of the rules. Those who wield power understand this. The power broker knows that old school ties can secure a deal more certainly than having to go through the standard procedures and established channels. The latter exist more or less to legitimate deals which have been accomplished through other means. In American society, the student who has proceeded from preparatory school to private higher education and then to a career in academia, the arts, business, or government will understand the relevance of social connections to his or her success and to broader social processes. This de facto coalition is more explicitly interlocked at the highest levels of finance, government and education.23 In the United States, the de facto American aristocracy has been the object of conspicuous emulation by the new middle classes since the

22 Cf. Thorstein Veblen, Absentee Ownership and Business Enterprise in Recent Times: The Case of America (New York: Augustus M. Kelley, [1923] 1964); and C. Wright Mills, The Power Elite (New York: Oxford University Press, 1957). 23 Cf. Mills, Power Elite; E. Digby Baltzell, The Protestant Establishment: Aristocracy and Caste in America (New York: Random House, 1964); and Arthur J. Vidich, “Networks and the Theory of Modules in the Global Village,” International Journal of Politics, Culture and Society 11 (1997): 213-43.

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early twentieth century.24 The introduction of electronic mass media increased this emulation.25 The White Anglo-Saxon Protestant (WASP) elite and the celebrity class provide visible examples of moneyed conspicuous consumption to the mass audience. The celebrity class, often unwelcome in the private realms of the WASP elite, is publicly invited to mingle with European landed aristocrats and Americans of moneyed descent, with little regard for ethnic background.26

On the world scene, the transnational elite of media celebrities, government functionaries, business operatives, and landed families legitimates itself to a world audience by creating vicarious experiences of exoticism, eroticism, and leisure. This elite avoids the image of ‘decadent parasites’ by vicariously including the public in its escapades through the mass media.

There is, though, a more pragmatic function to the decadence and celebrity status of the transnational elite. The young, ascendant elite of the developing world are drawn to this international jet set in part for the glamour and economic freedom permitted it, but also for the power which this group is known to possess.

It is clear to Western politicians, diplomats, and business leaders that the Third World elite, while perhaps poor cousins, are in their own right vital extensions of First World absentee owners. For it is the Third World elite which enables the system of maquiladora to continue in El Salvador, the supply of black-market babies to flow from Russia and Colombia, and which enables Western business executives to navigate

24 Cf. Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (New York: Penguin Books, [1899] 1979). 25 Cf. C. Wright Mills, White Collar: The American Middle Classes (New York: Oxford University Press, 1951); Herbert Marcuse, One-Dimensional Man: Studies in the Ideology of Advanced Industrial Society (Boston: Beacon Press, [1964] 1991); and Jacques Ellul, The Technological Society (New York: Vintage Books, 1964). 26 Cf. Mills, Power Elite; Baltzell, Protestant Establishment; Vidich, “Networks;” Joseph Bensman and Arthur J. Vidich, American Society: The Welfare State and Beyond, rev. ed. (South Hadley, MA: Bergin and Garvey, 1987); Lawrence Otis Graham, Our Kind of People: Inside America’s Black Upper Class (New York: HarperCollins, 1999); see also the weekly society pages of the New York Times.

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their way through the bureaucratic mazes which characterize business deals in much of the developing world.27

This conspicuous dimension of the international upper class at play is an indication of a multicultural democracy of Big Business spawning its own jet set “society.” A combination of studied aristocratic gentility, multicultural exoticism, and emulated new middle class expressionism characterizes this new international leisure class.28 In this combination of the leisure class, diplomats, and

businessmen and women, one sees in part how the networks of global business and politics are interconnected. In most bureaucratic organizations, the means of command and control are set up in a hierarchical fashion. There is a central authority figure at the top of the organization with a board of directors or trustees who operate in synch with him or her. Depending on the organization, that board will either have more or less power than the chief executive, and will exist either as an advisory group or a dictatorial committee. From the top of the organization descends an ever-increasing series of more complex and inter-linked offices and departments which focus on increasingly micro aspects of the work of the organization. It is at this lower realm, at the tensile end of the extended finger of the organization, that the customer meets the clerk, the student meets the bursar, the passenger meets the porter, the undergraduate meets the teaching assistant, the reader meets the book, and the slave meets the overseer.

Throughout the organization, however, unofficial connections moderate uses of, and access to, power. Those who see the organization only as a series of established channels might survive and even thrive in a specific position. They will, however, not achieve great influence within their particular organization. More importantly, they will also be blind to the crucial role of informal connections between members of separate organizations.29 Global structures of power are now articulated through these inter-organizational connections. It is only through the

27 Cf. Yergin and Stanislaw, The Commanding Heights. 28 Gerald E. Levy, “Thorstein Veblen and Contemporary Civilization,” International Journal of Politics, Culture and Society 8 (1994): 26. 29 Vidich, “Networks.”

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exploitation of these connections that policy solutions to human suffering in the global order may be accomplished. Conclusion

There is little in world history that resembles the force or effect of what we now call globalization. The political and financial orders of the future will look to the latter half of the twentieth century to understand the foundations of those orders. The backward glance may be from a position of despair. Historians and sociologists of the future who examine the current era may be looking out from the rubble of a world which imploded under the combined pressures of a global financial crisis and related military conflicts. Or the world may continue steadily on its present path. International organizations and nation-states may increasingly blend together and meld into a worldwide unit of financial arrangements which increase wealth at the top while broadening the scope of poverty at the bottom of society. The Weberian model for understanding power structures, however, will apply to whatever power dynamics that might arise. Through that model, we can see how nations and organizations mutate to accommodate various power arrangements. By using the Weberian model to identify the patterns of credit control and political alliances throughout the world, we can understand the present more fully by understanding its connection to the past.

The flexibility of the human race, however, is not infinite. The basic physical and psychological staples we require to remain sane and alive are being threatened. The global order seems largely unconcerned with these needs. At present, the primary concern is with the maximization of profit and the infinite relaxation of barriers to free trade in the pursuit of profit.

For the overwhelming majority of the world’s population at the bottom of global power structures, the question is not, can we maintain our power, but rather, can we survive at the discretion of those who currently hold power? The answer to this latter question is a dubious perhaps. History, however, may already provide a more precise and troubling answer to this question.

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Globalization at the Level of the Nation-State:

The Case of Canada’ Third Sector

IZZAT JIWANI York University

Abstract - This paper examines how globalization-inspired policy and institutional changes bring about a redefinition of citizenship and a reconstitution of modalities of political and collective action. By examining the case of Canada's third sector, it is argued that the combined forces of globalization and neoliberal ideology are resulting in the mercerization and co-optation of the third sector into a quasi-autonomous government body to deliver public services. In the process, social citizenship rights of Canadians are being redefined. As well, the state’s concern for freeing itself of interest group politics in order to push its market-oriented policies is resulting in restricted avenues of democratic participation for Canadian citizens. In an era of market hegemony, it is imperative to strengthen the third sector’s role as intermediary between the market, state and citizens to ensure that globalization works for people and not for profit alone. An alternative to the existing welfare and labour market approaches is needed which would embody the principles of social responsibility, democracy, and transparency, and yet be innovative enough to meet the challenges of the new global order.

Introduction Non-market relations at the meso level of society are key to gauging the nature and depth of the globalization process as it affects the daily lives of real people. The past decade has seen an increase in academic debates on the effects of globalization and neoliberalism on nation-states. Globalization is a phenomenon which is characterized by massive transnational flows of capital and labour, and dominated by multinational corporations. This, combined with advances in new technology, particularly in communication, has spurred social changes in nation-states. These social changes seem to affect the economic, political, cultural and environmental aspects of social life. However, the

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globalization paradigm in academic literature has yet to address how current shifts in governance are fundamentally altering nation-states at the domestic level. The third sector consists of intermediary institutions lying between the market and the state that are non-profit in nature, and are primarily involved in service provision and in mediating between the state and its citizens. Social policy changes in nation-states as a result of globalization have accentuated the reforms to the welfare state. The third sector, which had been involved in some form of public services in most democratic welfare states, began to face many challenges as a result of the retrenchment of the welfare state. The impact of this on the sector varies from country to country, depending upon the nature and depth of welfare state retrenchment and the relationship between the third sector and the state. Given the lack of adequate empirical information on the sector and the great diversity within the sector, it is difficult to fathom the extent of the impact on the sector itself. The third sector performs essential and diverse roles in the welfare state. The institutions of the third sector connect citizens to each other and to political, economic, and cultural systems. One valued role of the third sector is to provide a forum for democratic participation of citizens in the public policy process. A wide range of individuals, such as the poor, who might not otherwise have been able to access the state on their own, can do so through the third sector. In addition, research by Robert Putnam has shown that the associations and networks found in the third sector build trust and co-operation, which are important components for the effective functioning of the economy, politics and society.1 This social capital building role of the third sector is important for social cohesion, together with the sector’s role of protecting citizens from the excesses of the state. In Canada, as in some other countries, the third sector has had a significant additional role in fostering the citizenship identity of Canadians. Over the years, the third sector has become an integral part of the political economy of countries throughout the world. In fact it “ constitutes a powerful economic force in settings as diverse as highly

1 Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993).

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centralized France and Japan and highly decentralised Germany and the United States.”2 The third sector is an important stakeholder in the nation-state, and it is therefore critical to understand the interface of globalization with the third sector. This raises two overarching questions: how have the imperatives of globalization permeated the domestic level in nation-states; and is there convergence or divergence in the third sector because of globalization? These are important questions that require a larger comparative study. However, given the limitations of existing scholarly research on the third sector, smaller contributions to these questions could come from case studies of various countries to see how the imperatives of globalization play out in third sectors. This paper is a modest attempt at understanding the impact of globalization on the real lives of citizens. The central question addressed in the paper is: how do globalization-inspired policy and institutional changes bring about a redefinition of citizenship and a reconstitution of the modalities of political and collective action? By using the case of Canada, this paper will attempt to show how the combined forces of globalization and a convergence toward the neoliberal ideology are fundamentally transforming the third sector. In this process, social citizenship rights of citizens are being redefined and the democratic sphere of Canadians is being reduced. Historically, the third sector has existed since the formation of the nation-state, but scholarly research and public debates have not paid much attention to it until recently. Therefore, there are few definitive concepts, theoretical frameworks, or classifications of this sector. The sector has been conceptualized by social scientists as an intermediary between the organized economic interests of market and labour, and the political interests of state agencies and their constituencies. Alternatively, the third sector has been viewed within the framework of institutional choice as a result of either market or state failure. The increasingly complex interactions between the formal and informal public and private economies in the current global environment require a more comprehensive framework to study the third sector. The political economy approach is deemed best to address the central

2 Lester Salamon and Helmut Anheier, The Emerging Non-profit Sector: An Overview (Manchester and New York: Manchester University Press, 1996), 115.

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question of this paper as it not only refers to economic and political systems, but it also refers to historical legacies as well as social, cultural, and ideological systems. From the political economy perspective, the third sector is located within the complex structures of unequal power relations, in a specific historical time, marked by political ideology and dominant economic interests. The sector is seen as characterized by the tensions arising from the domain between the government and the market, called the free space, in which collective democratic and social rights are pursued or need to be pursued3. The third sector has contradictory roles in the capitalist welfare state: it is viewed as both necessary for a capitalist society mitigating inequalities of society arising from the unequal distribution of economic resources, and also as the result of struggles for equality and justice by the working class and other interest groups. The above political economy approach is informed by the analytical frameworks of feminists as well as emerging voluntary organizations. Feminist theorists have positioned the role of the state at the centre of the restructuring debate.4 Some emerging analytical frameworks on the non-profit sector view the role of politics and the design of dominant political institutions as important factors in determining the nature of the voluntary sector.5 The centrality of the state in determining the political economy of third sector institutions is critical to understanding sectoral dynamics at the national and international levels. Using the state-centred political economy approach, the state is viewed as having relative autonomy over its policies toward the third sector. The state-centred approach suggests that the third sector is

3 This concept of “free space” or the third sector is influenced by Robert K. Fullinwider, ed., Civil Society, Democracy, and Civic Renewal, (Lanham, MD: Rowman & Littlefield Publishers, Inc., 1999); Jürgen Habermas, The Structural Transformation of the Public Sphere (Cambridge: MIT Press, 1989). 4 Issabella Bakker, ed., Rethinking Restructuring: Gender and Change in Canada (Toronto: University of Toronto Press, 1996). Bakker argues that there was nothing within the sphere of public finance that prevented the state from promoting growth and equity. Janine Brodie, Women and Canadian Public Policy (Toronto: Harcourt Brace & Company, 1996). 5 Jennifer Wolch, The Shadow State: Government and Voluntary Sector in Transition (New York: The Foundation Centre, 1990); Steven Smith and Michael Lipsky, Non-profits for Hire: The Welfare State in the Age of Contracting (Cambridge: Harvard University Press, 1993).

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important to democratic welfare states since the essence of democratic ideology is the liberty to act collectively, on a voluntary basis, to advocate social change. It is this theoretical perspective that guides the analysis in this paper. Canada is a good case study for examining the impact of globalization at the meso level of the nation-state, as it is very vulnerable to the vagaries of global economic markets. It is a trading nation that is heavily reliant on imports for its manufacturing industry when compared to other major industrial countries, which exposes it to the fluctuations in international markets.6 The Canadian state faces tensions at its domestic levels, which are manifested in its decentralized federalism and in issues of linguistic, regional, and social pluralism. Some scholars have argued that globalization and the neoliberal ideology have “worked to magnify the pre-existing cleavages” in Canada.7 In addition, in the past three decades, the third sector in Canada has been undergoing a major transformation in its role and its relationship with the state. A direct comparison between this study and studies of other countries poses major empirical challenges given the diversity of third sector-state relationships globally. However, the analytical framework of this study may be adapted to examine how globalization and/or the social policy changes implemented under the rubric of globalization are affecting third sectors in other countries. Such studies would provide important insights into the relationship between social policy changes and globalization. This paper addresses the broad changes in the third sector at the national level in Canada and their subsequent impact at the local level, while recognising diversity in the sector at provincial and municipal levels. The paper is divided into two sections. The first section provides the historical context of the third sector. It identifies the historical role of the sector in providing a sphere for democratic participation and in fostering Canadian identity. The next section addresses the interface

6 Keith Banting and Richard Simeon, “Changing Economies, Changing Societies,” in Degrees of Freedom: Canada and the United States in a Changing World, eds. K. Banting, G. Hoberg, and R. Simeon (Montreal: McGill-Queen’s University Press, 1997), 23-70. 7 Stephen McBride and John Shields, Dismantling a Nation: The Transition to Corporate Rule in Canada, 2d ed. (Toronto: Fernwood Publishing, 1997).

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between the domestic sphere of nation-states and globalization by examining the impact of social policy changes on the third sector. The Histor ical Connection: Citizenship and the Canadian Third Sector In Canada, in the absence of state- or employer-funded benefits in the mid-nineteenth century, self-help and mutual assistance groups emerged largely through the effort of working class groups, which were generally based on ethnicity or religious affiliations.8 In addition to these groups, isolated philanthropic activities were also being carried out by the wealthy who felt it was their responsibility to assist the poor. However, the availability of this form of assistance was never guaranteed. The nature of charitable organizations “waxed and waned” and “ fostered crisis-oriented” approaches to community services.9 This was hardly the golden era of volunteerism as claimed by neoliberals, in that the civil institutions of the third sector were only able to meet the social service needs of citizens in a paternalistic, sporadic, and temporary manner. The post-war era was characterized by economic growth and the expansion of state social welfare programs in most western democratic countries. The Canadian government instituted several programs based on a mix of universal and means-tested assistance. For Canadians living in a large, decentralized federal state, these programs became a symbol of their national identity. The development of the welfare state did not eliminate or reduce the growth of the third sector. In a number of countries, such as the United States and the Scandinavian countries, there was unprecedented growth in the third sector; most of the growth in the sector has occurred recently.10 In Canada, the number of registered charities more than tripled between 1969 and 1996.11 The strong growth

8 Janet Lautenschlager, Volunteering: A Traditional Canadian Value (Ottawa: Multiculturalism and Citizenship Canada, 1992). 9 Dennis Guest, The Emergence of Social Security in Canada, 2d ed. (Vancouver: University of British Columbia Press, 1985). 10 Lester Salamon, “The Results Are Coming In,” Foundation News 25:4 (July/August, 1984): 16-23; Stein Kuhnle and Per Selle, Government and Voluntary Organizations (Vermont: Ashgate Publishing Limited, 1992). 11 Kathleen Day and Rose Devlin, The Canadian Non-profit Sector, Canadian Policy Research Networks (Ottawa: Reneouf Publishing Co. Ltd, 1997). In

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of the third sector in many countries is directly attributed to governmental support.12 In Canada, government funding constitutes the largest proportion of the revenue of charitable organizations at 60.2 per cent in 1994.13 The Canadian post-war consensus was built on the principles of active state intervention in the market to maximize economic stability, and the provision of publicly guarded social welfare for all citizens as a right of citizenship. It also included the necessity of public support for community organizations in the third sector, and an accessible public sphere for Canadians of all backgrounds. This post-war consensus formed the basis of the Canadian citizenship regime. Jenson defines the citizenship regime as including “ the institutional arrangements, rules and understandings that guide and shape state policy; problem definition employed by states and citizens; and the range of claims recognised as legitimate.” 14 Marshall traces the evolution of citizenship rights historically from state recognition of civil rights to political rights, and finally to social rights.15 For Canadians, social rights were of critical importance, as they guaranteed all citizens the right and freedom to participate in society with state support to alleviate impediments to participation such as poverty and other inequalities. Thus, it defined the relationship between the state, the market, and the civil society. The Canadian citizenship regime was a matrix of historical construction, composed of economic, social, and political factors. The displacement of one of the constructs displaces the coherence or functioning of the

1998, there were 75,455 registered charities according to Revenue Canada’s Charitable Division. In addition, there are over 100,000 other non-profits not registered as charities (Jack Quarter, Canada’s Social Economy [Toronto: James Lorimer & Company, 1992]). The total revenues of registered charities in 1994 was CAN $90.5 billion (Michael Hall and Laura Macpherson, Provincial Portrait of Canada’s Charities: Research Bulletin 4 [Toronto: Canadian Centre for Philanthropy, 1997], 2). 12 Salamon and Anheier, Emerging, 63. 13 Hall and Macpherson, Provincial Portrait. 14 Jane Jenson, “Fated to Live in Interesting Times: Canada’s Changing Citizenship Regimes,” Canadian Journal of Political Science 30 (December 1997): 631. 15 Thomas Marshall, Class, Citizenship, and Social Democracy (Chicago: University of Chicago Press, 1977).

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matrix.16 Pressures from globalization for convergence have changed this matrix of Canadian citizenship. Third sector organizations were very much a part of the Canadian citizenship regime. The Canadian government sought the partnership of various voluntary groups to foster the Canadian identity and to organize training for citizenship. The Department of the Secretary of State provided financial assistance to voluntary organizations as early as 1951 to deliver programs to foster Canadian citizenship.17 These voluntary organizations, including Social Services and those involved in various social movements, represented constituencies such as people with disabilities, cultural and racial minorities, aboriginals, and women. Globalization, the State, and the Third Sector Globalization precipitates socio-economic changes, but any convergence or divergence in nation-states due to policy changes depends on two main factors: the dynamics at the domestic level and the strategies adopted by states in restructuring their policies. The rapid integration of the global economy in the recent two decades was accompanied by the spread of the neoliberal ideology, particularly in the United States, Canada, and the United Kingdom. The focus of this ideology is to replace the active welfare state that had emerged in the post-war Keynesian era with the free market doctrine. The essential features of neoliberalism are to reduce the state, increase market mechanisms, and emphasize individual rather than collective approaches to economic and social problems.18 Successive governments in Canada since the 1980s have used the rubric of globalization to implement largely neoliberal policies. Reconstructing Social Programs: A Convergence of Ideology Public social programs in Canada provide significant support to a broader range of the population and provide more varied means-tested

16 Janine Brodie, “Glocal Citizenship: Lost in Space?” (paper presented at a conference, Rights to the City, held at York University, Ontario, June 26-28 1998). 17 Leslie Pal, Interests of State: The Politics of Language, Multiculturalism, and Feminism in Canada (Montreal and Queens: McGill – Queen’s University Press, 1993). 18 McBride and Shield, Dismantling, 18.

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programs than the United States, another liberal democratic welfare state.19 An important feature of the Canadian welfare state is that to Canadians, social programs signify the social and economic rights of Canadian citizenship, and provide a site for national identity in a loose federal state system. The notions of collective responsibility and social justice underpin Canadian social programs, although the Canadian programs are not as generous as those of social democratic states. In Canada, social programs are provided by a mix of three tiers of government (national, provincial, and municipal), the private sector, and the third sector. The Canadian third sector is a smaller stakeholder in the provision of social programs when compared with the state sector, and its essential role is in social development and advocacy. The government sector is largely involved in the national and regional provision of health, education, and social services, either directly or through transfer payments. The provincial and municipal governments are also key providers of social programs. Thus, the private sector is generally involved in providing more specialized but limited programs such as long-term care and home care. There appeared to be a comfortable, albeit far from perfect, symbiotic relationship between the three sectors until the major restructuring of social policies in the 1980s. The discourse of deficit reduction and global competitiveness has been used by successive Canadian governments to retrench the welfare state by dramatically reducing social spending and by decentralising, contracting out, and privatizing public services. Social programs have borne an enormous share of the reduction in state expenditures since they have been constructed as contributing to the high accumulation of public debt. In reality, the combination of high interest rates, lower employment rates and economic growth rates has been largely responsible for the rise in public debt.20 The neoliberal ideology postulated that the public services that were supposed to help the poor and the needy were only enriching the bureaucracy that was responsible for administering the programs. Thus, the third sector institutions that were relying on state funding were seen as part of the broader public service malaise, and consequently had their state funding reduced. 19 Gøsta Esping-Anderson, The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990). 20 Bakker, Restructuring.

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The rise of interest group politics in civil society, particularly equity-seeking groups was seen as defining the state’s social policies. These groups were also seen as a threat to the government in its newer thrust toward market-dominated policies. Despite the business sector’s lobbying for favourable policies and regulations, and public subsidies, it was not seen as a part of interest group politics. The non-profit sector’s vital role as a forum for democratic participation by Canadian citizens, especially those that are marginalized, is being subsumed under the concern for freeing the state from interest group politics. At the same time, the state saw an opportunity to redefine third sector service institutions and use them for delivering some of the public services, which it was withdrawing. The Canadian State undertook several measures in order to meet its agenda based on a global market ethos and neoliberal ideology. Shifting Responsibility Downward The convergence toward a smaller state has resulted in many countries, including Canada, shifting the provision of public services onto lower tiers of governments and the third sector. In Canada, shifts in social policy are compounded by the complexities of the Canadian federal system, which is also undergoing change. Social policy in Canada is jurisdictionally divided between the federal and provincial levels of government, and in some areas it is heavily embroiled in debates on agreements and cost sharing. The Canadian federal government provides resources for the provision of social services to the provinces through transfer payments and cost-sharing arrangements. However, since 1995, federal transfer payments to the provinces for health, post-secondary education, and welfare programs have been dramatically reduced. The federal government has been devolving some programs to the provinces, which in turn passes on these cuts to the municipalities. The implications of these shifts in policy between different tiers of government for the third sector are confounding, since the sector receives financial support from each level of government. The action of devolving responsibility to lower tiers is not necessarily only about budget constraints, but it is also about the new moral order of neoliberals wherein individuals, families and the community should take responsibility for their own problems. The shifting of social services to lower tiers shifts the costs of these services

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and often comes without increased budgets.21 Moreover, this shifting is done with little understanding that third sector organizations first need the appropriate resources, which come largely from the state sector, to build their capacity to take on major public services. However, for Canada, the role of the federal government in social programs is crucial in fostering the national identity and in promoting equity across the country for all citizens. Repackaging Philanthropy The neoliberal ideology asserts that state intervention in public programs hampers charitable giving, and at the same time, it promotes the virtues of the voluntary sector. As a clear case of convergence of social policy ideology, in the 1980s the Reagan administration in the United States, the Thatcher government in the United Kingdom, and the Mulroney government in Canada all reduced government funding to third sector institutions. This reduction in funding was accompanied by the expectation that the sector would survive on voluntary labour and charitable donation. The cuts to the sector were done with little understanding of the sector's heavy reliance on state funding, and even less knowledge about charitable giving in these countries. In Canada, the third sector receives very limited charitable donations. For example, nationally, only 14 per cent of revenues come from ‘private giving,’ and regionally this varies from 9 per cent to 18 per cent.22 With regard to voluntary labour supplementing reduced government funding, it has been pointed out that levels of voluntarism have not grown at the same rate as the expansion of services in the third sector. Reasons for this have not been studied in detail, but may be attributed to longer working hours and a general alienation from public life.23 In addition, the new work arrangement of low-wage, temporary, or contract jobs has fragmented the social order. Moreover, globalization has accelerated capital mobility, thus reducing commitments from corporations to local communities.

21 Michael Hall and Paul Reed, “Shifting the Burden: How Much Can Government Download to the Non-profit Sector?” Canadian Public Administration 4:1 (1998): 1-20. 22 Hall and Macpherson, Provincial Portrait. 23 Robert Wuthrow, Acts of Compassion (Princeton, NJ: Princeton University Press, 1991).

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Not all countries converged in reducing financial support for the third sector because of globalization. The French Socialist government of the 1980s used a divergent strategy. It used the third sector as a more positive social policy tool by creating a Charter of Social Economy. The Charter formally acknowledged the existence of a non-profit sector. The third sector became the vehicle through which the government administers welfare and employment programs.24 However, the impact of this change in policy on the third sector’s role in France has to be determined. Mercerization of the Third Sector The use of purchase-of-service agreements for the delivery of services allows governments to “downsize” the state apparatus by contracting private or third sector organizations to deliver services. Purchase-of service has become the primary method of financing and delivering personal social services in the United States,25 and this method is increasingly being utilized in Canada as the state’ s policy of public programs directly converges with that of the United States. In Canada during the 1980s, the Social Credit government of British Columbia devolved service delivery to the non-profit and private sectors. Privatization is contrary to the principle of universal access to services (in health care), which has been a cornerstone of the Canadian identity. Furthermore, privatization is not necessarily efficient; research in the United States has shown that for-profit management does not appear to improve the efficiency of health care institutions.26 While purchase-of-service agreements allow organizations in the third sector to remain afloat, they deprive the third sector of the freedom to act independently. Non-profit organizations must weigh the consequences of disagreeing with government policy against obtaining future contracts.27 This further constrains the ability of the third sector to monitor public policy and advocate on behalf of the marginalized. States

24 Lester Salamon and Helmut Anheier, Defining the Non-profit Sector: A Cross National Analysis, (Manchester: Manchester University Press, 1997). 25 Ralph Kramer, “Voluntary Agencies and the Contract Culture: Dream or Nightmare?” Social Service Review 6:1 (1994): 33-60. 26 Health and Welfare Canada, Privatization in the Health Care System: Assertions, Evidence, Ideology and Options (Ottawa: Health and Welfare Canada, 1985). 27 Smith and Lipsky, Non-profits for Hire.

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that utilize purchase-of-service agreements or contracting out to deliver human services may find that social services will come to be largely in the domain of the private sector. Richardson and Gutch, in their study of the contracting of social services in the United Kingdom, argue that the real threat of contracting may be competition from for-profit organizations.28 They suggest that in the United Kingdom non-profits are vulnerable to for-profit competition without having the same level of charitable subsidy as in the United States. This is perhaps also true for the Canadian third sector, which receives limited charitable donations. A good example of how mercerization of the third sector can occur when public programs are opened up for competition is the Community Care Access Centres (CCACs), which were established in Ontario in 1996 by the provincial government in order to provide centralized long-term care services. The CCACs contract out services based on the market model of competition, in which non-profit and for-profit organizations compete. As a result, some non-profit organizations, which were previously providing services, are being pushed out of business29 by for profit organizations. The other strategy of mercerization of public services is to compel the deliverers of public services to adopt a market model of provision of services. If they do not meet a “market test,” they are vulnerable to allegations of being ineffective or inefficient.30 While there is a definite need for third sector organizations to become more effective and efficient, using the measure of a “business bottom-line” does not work in measuring care, empathy and human services.

28 James Richardson and Richard Gutch, “Fears betrayed: Initial Impressions of Contracting for United Kingdom Social Service,” in The Privatization of Human Services: Public Policy and Practice Issues, eds. M. Gibelman and H. Demone (New York: Springer Publishing Company, 1997). 29 The latest incidence was reported in The Toronto Star, “Home-care Nurses Rally Draws 250 to Queen’s Park” (26 August 1999, A4). The article reported that the Victorian Order of Nurses had lost its contract for home-care services to a for-profit organization in the Windsor-Essex area of the province of Ontario. 30 Lester Salamon, “The Non-profit Sector at a Crossroad: The Case of America,” VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations 10:1 (1999): 5-24.

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Counteracting Convergence and Divergence The global economy shapes the general context within which the nation-state develops its policies, but it is the domestic social and political environment that may ultimately have a direct impact on social policy. In Canada, successive governments at the federal level, regardless of their political ideology, have favoured neoliberal policies. Some provincial governments, such as those in Alberta, British Columbia, and Ontario, have followed the same ideology. A number of constraints have been placed on these governments at the domestic level, which have tempered drastic policy shifts, and the third sector has played a prominent role in placing these constraints. The third sector in Canada has become diverse since the post-war era. It includes an increasingly wider range of groups representing cultural and racial minorities, women, the disabled, seniors, low-income families, and historical communities of aboriginals and francophones. These groups have been staking claims for improved social rights. They have been demanding inclusion in the policy and decision-making processes. In the post-war era, the Canadian federal government actively supported public policy participation of these groups usually through the provision of funding. This provided a unique opportunity for many groups, particularly the marginalized, to engage in public policy debates. These advocacy groups provided a certain degree of constraint on a government intent on converging more fully toward the market ethos of the global economy. Consequently, the federal and provincial governments sought varied strategies to counteract advocacy groups. One common strategy was to reduce funding to advocacy groups and to discredit these groups as ‘special interest’ groups. As such, citizen groups representing the interests of their membership are seen as representing a parochial view and benefiting only a small constituency consequently, undervaluing their opinions. This then justifies a reduction in state funding. Moreover, service provision is being given preference over advocacy in funding decisions. An essential part of democracy is the right to monitor and respond to policy issues and debates, but this has become a challenge for the Canadian third sector. In Canada, organizations registered with Revenue Canada as charities are not allowed to participate in “political advocacy.” The definition of “political advocacy” is being used to the advantage of current neoliberal

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governments in Ontario and Alberta. Such attempts to thwart advocacy indicate that only a select and privileged few are encouraged to voice opinions and needs. For Canadian citizens, particularly the poor and marginalized, access to the state is becoming increasingly constrained and their democratic sphere is being reduced considerably. Reconstructing Citizenship Rights The relationship between the state and the third sector is critical to the growth and viability of the sector. In Canada, numerous studies have shown that the voluntary sector’s viability is dependent on state support through both policy and funding.31 Since the 1980s, the funding cuts to the Canadian third sector, implemented because of the convergence toward neoliberal ideology, have created a great degree of uncertainty and difficulty for the sector. In Metropolitan Toronto (Ontario), the cumulative effect of cuts by federal, provincial, and municipal levels of governments has resulted in the widespread cancellation of programs, reduced services, the increased frequency of user fees, and reduced paid staff hours. Reduced funding limits the ability of organizations effectively to interface in public policy matters, and also inhibits the sector’s role in fostering Canadian citizenship. The third sector has been a point of access to the state for citizens in Canada; with reductions in services, access to the state, which is a democratic right of representation, is reduced for citizens, particularly for those who are most vulnerable. Surveys by the Social Planning Council of Metropolitan Toronto highlighted that the programs and services experiencing the biggest impact as a result of the cuts were those for vulnerable and marginalized populations such as low-income families, women, refugees, and immigrants.32 Furthermore, their subsequent further marginalization is

31 Paul Leduc Browne, Love in a Cold World: the Voluntary Sector in an Age of Cuts (Ottawa: Canadian Centre for Policy Alternatives, 1996); Social Planning Council of Metropolitan Toronto, Voluntary Sector at Risk: Trends in Government Support of the Voluntary Sector (Toronto: Social Planning Council of Metropolitan Toronto, 1981); Day and Devlin, The Canadian Nonprofit Sector. 32 Social Planning Council of Metropolitan Toronto, 1995 Community Agency Survey Metropolitan Toronto (Toronto: Metro Community Services, Social Planning Council of Metropolitan Toronto, and City of Toronto, 1996); Social Planning Council of Metropolitan Toronto, Voluntary Sector at Risk: Update

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problematized as a social order issue. For example, the lack of adequate programs and facilities for the mentally ill has resulted in many of these citizens becoming homeless; as ‘street people,’ they become a social order problem that must be taken care of by law enforcement agencies. In the new moral order based on the market ethos, it seems that those citizens who are perceived as economically non-productive members of a society have their social citizenship rights redefined and reduced. International convergence toward the increasing use of user fees for social welfare programs is one of the key products of globalization and neoliberal policies. A study conducted by the Johns Hopkins Comparative Non-profit Sector Project of seven countries throughout the world found that user fees were the single most important source of revenue.33 The Canadian third sector has had to resort to user fees in some service areas in order to supplement reduced government funding; a clear outcome of convergence. User fees connote that those who are economically able to pay for the services have access to them, and others who cannot afford the services are not of concern to the state. The conceptualisation of post-war citizenship that gave all citizens the right to a certain quality of life, free from the impediments of poverty and inequality, now no longer seems to apply. Conclusion Is globalization responsible for the financial cuts to the third sector and for the increase in user fees? A liberalized climate for international capital is a key characteristic of globalization. It is thus responsible for spurring the restructuring in national economies. The Canadian government made the choice of reducing social spending in various areas probably because globalization provided an ideal excuse to reduce the state’s role in public services. The deficit discourse in Canada was constructed as being largely due to “out-of-control public programs.” As argued convincingly by Stanford, spending on public programs had reached its peak in the mid-seventies “when budgets were still routinely balanced and public debt as a share of GDP was lower than

1983 (Toronto: Social Planning Council Metropolitan Toronto, 1983); Social Planning Council, Voluntary Sector at Risk. 33 Salamon and Anheier, The Emerging Nonprofit Sector.

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at any other time in the post-war era.”34 The deficit discourse “played a crucial role in legitimizing the abdication of government responsibility for social injustice.” 35 The state has other alternatives to reducing funding for public programs in order to manage its fiscal problem, including raising taxes, a more visible method of obtaining revenue. In Canada’s case, the state’s decision to reduce social spending, devolve programs, and reduce funding to the third sector all seem to give priority to the market over the state’s post-war consensus on social rights and social justice for all citizens. This decision was based on the neoliberal ideology that lower taxes attract investment and provide a more competitive business environment, which is favoured by the national and international markets. However, as Weiss points out, there is little macroeconomic evidence that lower taxes attract investment.36 Has globalization resulted in the convergence of social programs between the United States and Canada? There is no definitive answer to this question. The restructuring discourse of social programs and services in the early 1980s has created a complex pattern of convergence and divergence between the two countries. According to Banting, “ the broadest trend has been incremental divergence, with the traditional differences between the two countries growing more marked in certain areas - for example, in health care, in the broad balance between universal and selective income transfers, in the role of public pensions, and in the redistributive impact of the state.” 37

34 Jim Stanford, “The Rise and Fall of Deficit Mania: Public-Sector Finances and the Attack on Social Canada”, in Power and Resistance: Critical Thinking About Canadian Issues, 2d ed., eds. W. Antony and L. Samuelson (Halifax: Fernwood Publishing, 1998), 39. 35 Lisa Phillips, “The Rise of Balanced Budget Laws in Canada: Legislative Fiscal (IR) Responsibility,” Osgoode Hall Law Journal 34:4 (1996): 722. 36 Linda Weiss, The Myth of the Powerless State (Ithaca, NY: Cornell University Press, 1998). 37 Keith Banting “The Social Policy Divide: the Welfare State in Canada and the United States,” in Degrees of Freedom: Canada and the United States in a Changing World, eds. K. Banting, G. Hoberg, and R. Simeon (Montreal: McGill-Queen’s University Press, 1997), 303.

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In terms of the role of the third sector in Canada, there are indicators of a convergence with the role of the third sector in the United States. In Canada, a gradual co-optation of the sector into a quasi-autonomous governmental body is occurring through such mechanisms as purchase-of-service agreements, conditions attached to funding, use of the market model of accountability, reduced funding, and competition with the private sector for public service contracts. In the current environment, in which the nation-state’s autonomy in many policy areas is being ceded to power structures outside its borders, the role of monitoring public policies that affect its most vulnerable citizens is very essential. This role remains largely in the domain of the third sector, but it remains to be seen whether increased advocacy will be tolerated by the state. Nevertheless, the third sector must play a critical role in ensuring that the market does not supersede Canadian society’s post-war conception of the collective good and social justice. At the same time, third sector organizations need to grapple with issues of fiscal solvency, accountability, and management. Otherwise, these issues will continue to obscure the critical role of the sector in monitoring and advocating on behalf of policy issues. The question of “social responsibility” is still viable for states in the current era of global competitiveness. One of the primary purposes of the state is to ensure that the national and international economies enable the majority of its citizens to enjoy a good quality of life. The Keynesian welfare state was founded in a particular historical, political, and economic time period when it was deemed most useful for the state to intervene in the economy and to provide social welfare support to its citizens. It also rested on the premise of a gendered model of the workplace and household. There has been a breakdown in the support structure and systems associated with the Keynesian welfare state in the past few decades. In particular, there has been a breakdown of the mode of family wage, which has been replaced increasingly by dual income families to support a nuclear family. The return to Keynesianism is not a viable option because of the massive structural changes in the forms and practices of the state as well as changes in the political economy. The Canadian value system continues to demonstrate support for many of the concrete benefits of the Keynesian era. However, it is suggested here that an alternative to the existing social welfare and labour market approaches is needed which would incorporate the

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strengths of the welfare state and yet be innovative enough to meet the challenges of the new global order. The principles of social responsibility, democracy, and transparency are fundamental to alternative governance. Otherwise, when the market “goes too far in dominating social and political outcomes, the opportunities and rewards of globalization spread unequally and inequitably - concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others.” 38 Without a strong third sector, there is a danger that the infirm, the elderly, and the poor will have nowhere to turn to. It is equally important to have a strong national government that supports and promotes social citizenship so that there is a comprehensive public framework for redistributive social security that is geared toward the varied needs of citizens to protect the poor and others who are adversely affected. The state can continue to promote social responsibility and collective good through providing some services directly and other services through stable financial and regulatory support to third sector institutions. It is often forgotten that globalization does interface with real people and communities in the nation-state. In the new globalized society there is a real danger that third sector institutions will be increasingly co-opted by the dominant political and economic structures, which will result in a fragmented and weak civil society. Therefore, it is important to examine the impact of globalization on the third sector so that policies can be created which ensure that globalization works for people, and not solely for profit. It is difficult to generalize from the Canadian experience alone about a sector that is characterized by both regional and global diversity. The dynamics between globalization and the domestic sphere vary from nation to nation. However, the key notions of democracy and social justice, which are so closely associated with the civil institutions of the third sector, are deemed to be universally valued. In today’s world of ‘borderless’ nations, increased social fragmentation, and political alienation, the third sector offers the social glue that brings citizens together through shared understandings. Therefore, it is imperative that

38 United Nations Development Programme, “Globalization with a Human Face,” Human Development Report 1999 <http://www.undp.org/hdro/99.htm 1999>.

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efforts be made to strengthen the third sector’s role as an intermediary between the market, state and citizens in order to address the profound and complex problems affecting society today.

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Regionalism and I ntegration in Sub-Saharan Afr ica: A Review of Experiences, Issues and Realities at the Close of the Twentieth

Century

JOSEPH K. MANBOAH-ROCKSON University of Cape Town

Abstract – Globalization, the ‘border-less world’ or the ‘end of geography’ is an important theme of the post-Cold War discussion of the nature of international order. Although rarely tied to any clearly articulated theory, it has become a powerful metaphor in the sense that a number of universal processes are at work generating increased interconnection and interdependence between both states and societies. Increasingly common are images of a global flood of money, people, values, and ideas overflowing the old system of national barriers seeking to preserve state autonomy. Two areas are discernible in this regard: First, territorial boundaries are becoming less important. Second, traditional understandings of sovereignty are being undermined and individual regions are being viewed within a broader global context. This paper investigates the impact of the changing global conditions on regional integration efforts in Sub-Saharan Africa. The underlying argument in this paper is that there are a number of ways in which globalization works against the emergence of regionalism in sub-Saharan Africa. Changes in the global economy such as technology and productive systems, and especially the impact of information technologies have meant that regional industrial policies and the promotion of regional champions are no longer considered adequate. Therefore, the assertion of this paper is that globalization is undermining the sustainability of integration efforts within Sub-Sahara Africa. Globalization works against regionalism where states are increasingly facing powerful pressures toward the homogenization of economic policies solely to attract foreign investment and technology and to compete in a closely-knit market arena. Consequently, regionalism in Sub-Saharan Africa is being de-emphasized due to the emerging centripetal forces of globalization.

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Introduction At the close of the twentieth century, sub-Saharan Africa is shaped by a great variety of dynamics. The dynamics range from governments trying to sustain their individual economies to forming regional institutions for enhanced economic development. Regionalism on the continent is considered a ‘condition sine qua non’ to the extent that it can make a contribution to economic development. In economic terms, integration among countries in Africa is intended to expand the opportunities for investment in order to benefit citizens and to contribute to harnessing the resources of African countries in a move toward sustainable development.1

In most of Africa, achieving plurality of regionalisms and regionalizations characterizes the landscape. They interact simultaneously in a complex game with other processes, such as globalization, nation-state-building and issues of security and stability, which suggests that understanding these phenomena will be enhanced by using sub-regions as units of analysis. This paper provides an overview of a multilevel perspective to analyze the origins, dynamics and consequences of regionalism(s) in sub-Saharan Africa in various fields of activity. In doing so this paper draws on the concept of ‘ new regionalism,’ 2 which has been proven to be a useful, albeit open-ended, analytical tool for understanding the dynamics shaping emerging regions in sub-Saharan Africa. The content of the new regionalism approach will not be repeated here, but a few clarifications seem appropriate since the study of regionalism is both contested and emotionally charged. The task at hand is to understand the processes of transformation that are shaping sub-Saharan Africa in a globalizing, multidimensional and multilevel perspective, using an eclectic theoretical mixture of strands of international relations/international political economy theory, regional

1 S. K. B. Asante, “Development and Regional Integration since 1980” in Economic Crisis in Africa, eds. Adebayo Adedeji and Timothy Shaw (African Perspectives and Development Problems and Potentials, 1985). 2 B. Hettne, A. Inotai and O. Sunkel, The New Regionalism: Implications for Global Development and International Security (Helsinki: UNU/WIDER, 1994), 75-94.

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integration theory and development theory.3 It is not the level of regional co-operation and integration per se which is in focus here, but rather the ‘whys’ and ‘ hows’ of regionalisms and regionalizations, i.e., the increasing and decreasing levels of ‘ regionness’ and to what extent sub-Saharan Africa is coping with the pressing issues of globalization. There are two main overlapping ways of understanding regionalism: the role of the region toward the rest of the world, and the internal dynamics of a particular region.4 Although a regional world order is not necessarily favoured here, it may have resulted in sources of conflict for some regional schemes, as well as the exploitation and de-development in some parts of the African continent. However, it is equally important to understand why and how a region will disintegrate and stifle development under globalization. The point of departure here is that globalization is an interesting phenomenon that still requires further research. We make assumptions that states (i.e., governments) are important actors in the process of regionalization. This assumption will be given due attention, as it is necessary to transcend conventional state-centric, top-down, de jure perspectives of regionalization, or ‘ formal’ regions. We need to take into consideration non-state actors, bottom-up, de facto forces emanating from the market and from civil society. More specifically, those of the ‘ informal’ or those emanating from spontaneous forces. The distinction here is important because the various processes are not necessarily mutually reinforcing. By the same token, the ideology of regionalism should be distinguished from the process of regionalization. In the case of most of Africa, the choice is an increasingly stark one between continued incorporation into the world system or disengagement: between the perpetuation of outward-looking growth and the adoption of some form of self-reliant strategy for development. The repercussions of these choices have affected and continue to affect national planning, regional integration, continental unity and the impending globalized order we are talking about. Given the importance of these choices for peoples, regimes, and states – in Africa and elsewhere – there is the need for more informed decisions about

3 Ibid., 37-44. 4 Aina Tade Akin, “Globalization and Social Policy in Africa,” Working Paper Series, Codesria (1996).

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globalization and its impact on sub-Saharan African countries, because of Africa’s economic susceptibility to global economic melt downs.

This paper is outlined as follows. First globalization is discussed. A review of the processes of change at various levels shaping sub-Saharan Africa as a continent follows. The analysis of globalization is concretized in the following two sections by a focus on the process of transformation shaping the region and the developmental regionalism respectively. With regard to the former, the focus is on the multidimensional and multilevel nature of regionalism (the level of regional co-operation and integration schemes) currently affecting the region. The analysis of the latter on developmental regionalism suggests that contemporary regionalism in sub-Saharan Africa needs to be understood in relation to the structural transformation of the global economic order taking place as well as the restructuring of the nation-state in the region. The strings are then drawn together and the experiences, reality and issues on the transformation and the self-reliant developmental strategy are discussed. What are the challenges, experiences, stresses and strains of regional integration efforts, as countries in sub-Saharan Africa strive to translate articulated objectives of regional integration into concrete results? What can be done regarding the global forces encroaching on sub-Saharan Africa? Conceptualizing Globalization ‘Globalization’ can mean many things to different people. It is dualistic in nature and causes a great deal of confusion. Its dichotomy is derived from greater socio-economic, cultural and political interconnectedness between international actors on the one hand, and fragmentation and disintegration on the other.

Globalization is associated with the worldwide spread of modern technologies of industrial production and communication of all kinds across the frontiers of trade, capital, production and information. This increase in movement across frontiers is itself a consequence of the spread of new technologies to hitherto pre-modern societies. Globalization also implies that nearly all economies are networked with other economies throughout the world, with the exception of countries such as North Korea and Afghanistan, which have managed to cut

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themselves off from the rest of the world, but at some cost, both in human and economic terms.5

Globalization is an historical process. It does not require that economic life be equally and intensively integrated throughout the world. As a seminal study of the subject reports, “globalization is not a singular condition, a linear process or a final end-point of social change. Nor is globalization an end-state toward a process whereby all economies are converging. More to the process is that globalization is neither or (yet in) a universal state of equal integration in world-wide economic activity.” 6 Moreover, the increased interconnection of economic activity throughout the world accentuates uneven development between different countries. It exaggerates the dependency of ‘peripheral’ developing states such as sub-Saharan Africa on the advanced countries.

The discussion of globalization is not only characterized by important theoretical and political silences but also by a further set of four interrelated absences that non-Western scholars have identified.7 These are as follows: the failure to connect contemporary issues of power and politics in a global context to the history of geopolitical relations between West and non-West or North and South; the lack of any serious treatment of neoliberal discourses of development as they are applied in peripheral societies as one powerful modality of a will to a global order; the non-inclusion of any serious treatment of the newer forms of Western intervention in third world societies including those under a United Nations aegis; and a pervasive indifference to theoretical knowledge that is being produced outside the West. Despite a most interesting discourse on the subject of globalization and its impact on regional integration in Africa and elsewhere, scholars who navigate a ‘non-Western,’ non-Eurocentric position in their discourses contribute to the production of ‘non-West theoretical knowledge’ on globalization. They do reflect most of the above-stated absences in their works, however it is the position in this

5 John Gray, False Dawn: The Delusions of Global Capitalism (London: Granta, 1997), 1-6. 6 Ibid., 17-28. 7 Aina Tade Akin, Claude Ake, and Samir Amin, Globalization and Social Policy in Africa, Working Paper Series, Codesria (1995).

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paper that such ‘knowledges’ are useful and relevant. This paper is a pioneering attempt to confront and broaden the impact of globalization on the economic, political and social aspects of countries’ attempts to manage development at their own pace. The major difference between the West-centred ‘ knowledges’ and others on globalization lies in the emphasis and insights, which are seen in different elements and dynamics. The majority of the ‘West-centred’ analyzes emphasize the ‘ time-space compression,’ ‘shrinking world,’ new technologies, integrated markets, global interdependence and global flows, although ‘non-western knowledges’ struggle with two related sets of elements described below.8 The questions of inequality, unevenness and injustice embodied in the New World Order (NIEO) are of utmost importance given their pervasiveness. This is political, economic and cultural in nature. Many of the contributions involve experiments in understanding what this inequality means for political and economic sovereignty, and for national and international security.9 Related to this phenomenon, and illustrated concretely by the economic restructuring process embodied in the Structural Adjustment Programs (SAPs), is the question of what globalization means for economic development and whether the programs constitute developmental possibilities for African economies.10

There is finally the set of concerns that seems to grow daily, focused on the social, economic and political implications and consequences of the global restructuring of capital through the SAPs.11 It is in the SAP literature, particularly in non-West scholarship, that one

8 Roger Burback, Orlando Nunez and Boris Kagarlitsky, Globalization and its Disorders: The Rise and Fall of Modern Socialism (Chicago: Pluto Press, 1997). 9 Samir Amin, Capitalism in the Age of Globalization: The Management of Contemporary Society (London and Atlantic Highlands, N.J.: Zed Books, 1997), 17-66; Claude Ake, A Political Economy of Africa, (Longman: Harlow, Essex, 1981), 16-31. 10 Claude Claude, Democracy and Development in Africa (Washington, D.C.: Brookings Institution, 1996), 77-109. 11 World Bank, “Accelerated Development and UN Committee for Program and Co-ordination, Proposed Revision to the System-wide Plan of Action for African Economic Recovery and Development, Thirty-fourth Session” E/AC.51/1994/7, (1994), 7.

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finds the broad range, depth and diversity of the concerns raised here, with an important element of the globalization problematique. Understanding the Processes: Regionalization and Globalization

The content of the renewed trend toward regionalism throughout the world has changed radically. The new regionalism we are experiencing is a truly worldwide phenomenon. In general, the old regionalism had specific objectives, aims and content, and often had a simple and narrow focus on free trade arrangements and security alliances.12

The new regionalism in its numbers, scope and diversity during the last decade is comprehensive, multifaceted and multidimensional, implying the change of a particular region from relative heterogeneity to increased homogeneity with regard to a number of dimensions. The most important dimension is that of policies toward economic development, security, political regimes and culture. The convergence along these dimensions may be a natural process, politically driven or, most likely, a mixture of both. While the old regionalism was often imposed, directly or indirectly, from above and outside, very much in accordance with the bipolar Cold War power structure - so-called ‘hegemonic regionalism’ - and/or as a simple copy of the European Community (EC), as is the case of regional integration schemes in sub-Saharan Africa. The new regionalism, on the other hand, involves more spontaneous processes that often emerge from below and within the region itself, and more in accordance with its peculiarities and problems.

At the close of the twentieth century it is crucial to understand that the new regionalism is a complex process of change taking place simultaneously at various levels of analysis: the global system level; the level of interregional relations; and the internal structure of the region (including the nation-states, sub-national ethnic groups and trans-national micro-regions). However, it is not possible to state which of the levels dominate, because the processes at the various levels interact and their relative importance differs from one region and period to another.

12 Richard Falk, “State of Siege: Will Globalization Win Out”? International Affairs 73 (1997): 316-24.

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Much of the contemporary debate these days centres on the intriguing relationship between globalism and regionalism. There are many perceptions of and opinions about both of these processes and how they relate to each other. There are no clear-cut answers as to what extent they mutually support and reinforce each other. According to deMelo and Panagariya and Fawcett and Hurrell, the relationship tends to be symbiotic rather than contradictory.13 While others emphasize a dialectical rather than a linear relationship among the processes of regionalism and globalization.14 However, the conclusion that can be drawn from this mutuality is that regionalization and globalization are constitutive processes within the broader context of the global system currently undergoing change. As such, we are dealing with differing layers of these processes. Forms of Regional Integration

The increased importance of interregional relations is also characteristic of the current wave of globalization. Since we are dealing with a world-order phenomenon, the behaviour of one region has an impact on the behaviour of others, the most obvious being integration schemes in sub-Saharan Africa. The new wave of regional integration in this part of the world is taking shape despite political conflicts that are affecting their growth into viable regional blocks such as NAFTA, APEC, the Indian Oceana Rim (IOR), and the European Union.15 As regionalism (in the broad sense) covers too many phenomena to be useful as an analytical tool, it is broken down into specific categories. Drawing on recent literature,16 we will distinguish analytically between the following forms of regional integration: intergovernmental regional co-operation and state-promoted regional integration; market-and

13 Andrew Hurrell, “Regionalism in World Politics: Regional Organization and International Order” in Regionalism in Theoretical Perspective, eds. Louise Fawcett and Andrew Hurrell (Oxford: Oxford University Press, 1995). 14 B. Hettne, A. Inotai and S. Osvalo, eds., Studies in New Regionalism, 4 vols. (London: Macmillan, 1998-1999). 15 Joachim Hirch, “Global Capitalism versus Democracy” in Globalization, Class and the Question of Democracy, eds. Leo Panitch and Colin Leys (U.K. and NY: Merlin Press and Monthly Review, 1999). 16 Several scholars treat these definitions in a similar manner, however they are often incompatible.

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society-induced regionalization; regional convergence and coherence; and regional identity. ‘ Intergovernmental regional co-operation’ refers to an open-ended process, whereby individual states act together for mutual benefit in certain fields, such as infrastructure, water and energy, and to solve common tasks. This form of integration is best understood from the perspective of the interests of individual member states. Intergovernmental regional co-operation may be formal and involve a high degree of institutionalization, but it may also be based on a much looser and ‘ informal’ structure. It constitutes one component of all the regionalization processes that are analyzed in this paper. ‘State-promoted regional integration’ is a deeper form of joint action, which refers to a process whereby the individual states voluntarily merge and mingle, wholly or partly, into a single regional economy and political system.17 State-promoted regional economic integration refers mainly to the policies designed to abolish barriers to the mutual exchange of goods, services, capital and people. Regional integration in the political sphere involves a minimum degree of transfer of sovereignty or functions to supranational organs.18 However, the Organization of African Unity (OAU) as a body and the various sub-regional schemes are yet to show evidence of the realization of such an enterprise in terms of achieving an African Economic Community by the year 2025.

According to Hurrell,19 ‘market-and society-induced regionalization’ refers to the growth of the often-undirected processes of social and economic interaction and interdependence. This type of regionalization may be affected by intergovernmental regional co-operation and state-promoted regional integration, but is crucial to separating analytically the processes from one another; a distinction that is not often made. The actors and driving forces of the latter are obvious, while in the former they come from markets, private trade and

17 Joseph Nye, Peace in Parts: Integration and Conflict in Regional Organization (Boston: Little Brown and Company,[1971] 1978). 18 Supranationality here refers to the bypassing or transferring of member states’ decision-making authority, implementation of rules and functions traditionally exercised by the government. 19 Hurrell, “Regionalism in World Politics,” 21-27.

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investment flows, the networks of private firms, transnational business networks, citizens, non-governmental organizations (NGOs) and other types of social networks contributing to the formation of transnational regional economy and civil society. Here again, the activities and interaction of the countries in Africa and such engines of sustainable integration as their activities demonstrated in the integration process within the European Union have been minimal. ‘Regional convergence and coherence’ are also needed to understand the process of increasing regionalism. As Hurrell points out, this phenomenon can be understood in two ways: when the region plays a defining role in the relations with the rest of the world; and when the region serves as the organizing basis across a wide range of issues within the region.20 Of course there are different paths to regional convergence and coherence. Besides explanations at the regional level of analysis, convergence may occur either as a consequence of structure and behaviour at the domestic level. For instance, during the past few years, economic and political systems in sub-Saharan Africa have converged and become more compatible with the ideals of SAPs of the International Monetary Fund. This convergence has become necessary either because of domestic policy convergence or externally imposed conditionalities, or by way of regional co-operation and integration. But the failure of SAPs and the questions regarding the benefits derived by developing countries have temporarily halted this kind of convergence. ‘Regional identity’ is a contested concept but it cannot be ignored. It plays a much more significant role in the new regionalism when compared to the old in sub-Saharan Africa. Thus, it is evident that many parts of the world including sub-Saharan Africa have seen a marked increase in regional awareness and regional identity. This shared perception of belonging to a particular community can be explained by internal (domestic and regional) as well as external factors. To a certain extent, all regions are ‘ imagined’, subjectively defined and by nature, cognitive constructions. There is also an inherent ‘sameness’ in many regions shaped by pre-Westphalian empires and civilizations.21 To be successful, regionalization requires a certain degree of homogeneity or compatibility of culture, identity, and fundamental values. In Africa, 20 Ibid., 444. 21 Samuel P. Huntington, “The Clash of Civilizations,” Foreign Affairs 72 (1997): 3.

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there are questions of such homogeneity or compatibility because of the residual colonial mentality of francophone and anglophone countries’ link with France and Britain - their colonial metropolis. The Globalization predicaments for sub-Saharan Afr ica

There are several internal and external reasons for Africa’s complex socio-economic and political problems. The first is that democracy was denied to Africans for about a century, and that any opposition to European rule was ruthlessly crushed. The second is that owing to the international division of labour, the continent has always been at the periphery of world political and economic systems. The third is Africa’s lack of economic, scientific, and technological infrastructures, and the fourth is the cultural dimension of poverty, underdevelopment, injustice, and authoritarianism.

Certain trends and dynamics are noticeable in the study of globalization as it affects regional integration schemes in sub-Saharan Africa. To a great extent, they often define how research questions are posed and the nature of policy formulation and initiatives. Yet, like the definitions above, they cannot be taken at face value. They require not only further analysis but also an understanding of the directions in which a failure properly to appreciate their character and property can lead us. The basic analogy here is that certain streams within international relations and international political economy and in combination with certain streams in development theory, affect the sustainability of sub-Saharan African countries in their intended integration as coherent regional blocs. Such strands provide a base from which to start global theorizing.

First, globalization has a local resonance in terms of development through regional integration in sub-Saharan Africa. It is the growing irrelevance of a ‘nation-state approach’ to integration and the premature dominance of a ‘world approach’ by the forces that are totally divorced from all recent and external action programs that sub-Saharan African countries have assigned a major role. These programs include: the Monrovia Strategy (1979), the Lagos Plan of Action (LPA) and the

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Final Act of Lagos,22 the World Bank’s 1981,1983 and 1984 publications23 and those of the European Economic Community,24 Africa’s Priority Program for Economic Recovery (APPER), Africa’s Submission to the Special Session of the United Nations General Assembly on Africa’s Economic and Social Crisis, and the United Nations Program of Action for African Economic Recovery and Development (UN-PAAERD), and these have all failed to yield measurable results. Second, the basis of co-operation for both functionalists and neo-functionalists is that co-operation should be initiated in the technical and basic functional areas. This process will then gradually spill over within and across sectors. According to the neo-functionalists such as Haas,25 the process would spill over and lead to increased political integration, supranationality, and a redefinition of group identity around the regional unit. In sub-Saharan Africa, the functions, which need to be linked together in a network of organization for this functionalist principle to work, are non-existent. As institutionalization is in its early stages, many sub-regional integration organizations in Africa are only mechanisms for organizing and servicing meetings and for maintaining contacts, while others concentrate on national matters. In Africa, such institutional structures and mechanisms should not be misconceptualized as they are based on a multilateralism of economic enterprise. They are no more than facilitating instruments; the success or failure of which will be measured by the extent to which the intended objectives/targets are achieved within the time frame set by the participating countries. In

22 Organization of African Unity, Lagos Plan of Action for the Economic Development of Africa: 1980-2000 (Geneva: Institute for Labour Studies, 1981), 128. 23 World Bank, Accelerated Development in Sub-Sahara Africa: An Agenda for Action (Washington, D.C.: World Bank, 1981); World Bank, Sub-Saharan Africa: Progress Report on Development Prospects and Progress (Washington, D.C.: World Bank, 1983); World Bank, Towards Sustainable Development in Sub-Sahara Africa: A Joint Program of Action (Washington, D.C.: World Bank, 1984). 24 John A. C. Conybeare, Dale L. Smith and James Lee Ray, eds., The 1992 Project and the Future of Integration: Europe (Armonk, NY: M.E. Sharpe, 1993); European Community, The European Community and Africa (Brussels, 1984). 25 Ernest B. Haas, Beyond the Nation-State (Stanford: Stanford University Press, 1964).

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short, there is not yet a consensus among states or a convergence of the various regional blocs in sub-Saharan Africa.

The third is dependency theory and the familiar division of the world into centre (or core) and periphery. The primary goal of dependency theory is for members of any regional integration scheme in Africa to reduce reliance on the outside world and to create conditions that will make self-sustained, autonomous development possible. In the African setting, such development can only come about through the transformation of productive structures. However, the forces of globalization will delineate such a dependency at a stage of higher integration and interdependence of the world, where the ‘delinking’ option is ruled out in place of the involuntary marginalization of African economies. Despite the regional identity and awareness in sub-Saharan Africa, particularly those within Asia and that of the European Union, sub-Saharan Africa has yet to witness governments willing to pool their resources for the common good of the sub-region.26 Finally, regionalism in sub-Saharan Africa is between immanence, that is, theorizing about development as ‘ inherent’ in history, and an intention, or political rhetoric, of the leaders to ‘develop’ their individual countries. These intentions continue to breed unrealistic voluntarism, particularly as development has become globalized and out of reach for the main actor – the states of the African continent.

On the whole, the economic communities in Africa were set up to play a vital role in the socio-economic transformation of the African economies and help to alleviate mass poverty through sustained recovery and growth. But there are a number of questions that need to be addressed. For example, to what extent have the African countries been willing to take the measures necessary to give practical effect to their declared objective? Why is there a striking contradiction between each sub-region’s general emphasis on the need for economic integration in Africa and the scanty evidence of practical success? Why has regionalism been less successful in Africa than elsewhere? What have been the challenges, experiences, stresses and strains of these integration schemes as they strive to translate articulated objectives into concrete 26 Economic Commission for Africa, “Proposals for the Implementation of the Abuja Treaty Establishing the African Economic Community,” E/ECA/CM/19/7 (1993), 1-18.

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results? The problem level of analysis is the region, soon to be consumed by the forces of globalization and as a political actor, and becoming increasingly less important in the emerging world order. The I nter locking problems of Globalization on sub-Saharan Afr ica

The analysis arising from the discourse on globalization is about the dynamics, contradictions and intricacies of capitalist production, consumption, accumulation, distribution and exchange. Globalization has various facets and perspectives ranging from the economic, technological, information, cultural and political. The crucial questions are: what is the place of Africa and its approach to regionalism in all this? Has African regionalism been envisioned to play any positive role in the globalization project? How does the globalization project define or picture Africa’s new wave of regional schemes and whose interests are likely to be served, if Africa decides to embrace globalization?

The ideals of globalization, just like all other socio-economic projects of the West, neither understands nor addresses the African reality. The point that needs to be made is that globalization is not rejected merely because it is a capitalist concept. The intended convergence process of globalization without allowing for the needs of Africa's political, economic and social developmental needs is rejected because the issues and audience it addresses are not African.27 There are many other pertinent issue-areas that globalization cannot address. The forgoing analysis illustrates and justifies these assertions.

First, neoliberal economics cannot explain the nature and causes of the poor performance of African economies, just as it cannot do the same for relative growth. It is shocking to note that the health of an economy is still being measured through the computation of GDP and per capita income. Per capita income does not tell us anything about poverty, household income, especially that of the peasantry, and other differentiated social categories of the rural areas also cannot provide the needed measurements. It cannot even identify the proper tools and classificatory scheme to study such people and their social and economic 27 Abubakar Momoh, “The Anatomy and Pathologies of Globalization: An Afrocentric Problematisation of Philosophy and Substance” (paper presented at the 12th biennial Congress of African Association of Political Science, Dakar, 1999), 1-22.

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location in the capitalist economy.28 African trade remains oriented predominantly toward the rich North, perpetuating the dependence of the continent on exports. Although intra-regional trade is on the rise, accounting for 8.4% since 1993, Africa still trails other regions in this particular area: Western Europe (72%) Eastern Europe (46%), Asia 48% and North America (31%).29 As trade liberalization remains the major step toward the formation and consolidation of a free trade area, customs union and common market, a globalized world in which barriers are dismantled is detrimental to sub-Saharan Africa in view of the slow pace of maximizing gains from trade liberalization.

In sub-Saharan Africa, the Economic Community of West African States (ECOWAS), the Economic communities of the Great Lakes Countries (CEPGL), the Mano River Union (MRU), the Preferential Trade Area of Central Africa (PTA) and the Southern African Development Community (SADC), have been attempting to strengthen and consolidate their trade liberalization schemes, but at the moment without adequate results. All these regional integration schemes are looking to promote and enhance economic development through close collaboration in all fields of economic activity.

However, the impact of globalization - which implies the growth of a functional world market both penetrating and dominating so-called ‘ national’ economies - will destroy the ‘nationness’ of the fragile African economies, most of which are barely in functional order. Adherents to neoliberalism and globalization do not understand the operating principles of African economies. Globalization, therefore, does not have the same meaning for the people of the industrialized north, and the people of Africa. The major point here is that globalization has no theory of justice or equity, which means it cannot address the poor who constitute the global majority. Second, is the issue of divestiture and privatization as part of the economic logic of globalization. The issue of divestiture and privatization in Africa entails a few private companies and Multinational Corporations (MNCs) taking over the assets of states. The policies of the IMF and World Bank’s ceiling on government spending have already led 28 J. de Melo and A. Panagariya, New Dimensions in Regional Integration (Cambridge: Cambridge University Press, 1993). 29 United Nations World Trade Figures for 1999.

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to the termination of most African economies’ investment capabilities. The dollarization of the African local economies (a case in point is Ghana), and the regulatory and forced devaluation imposed by the international financial speculators have in themselves resulted in inflation. A case in point is Nigeria, where the Nigerian economy has been labelled a “rogue state.” This, in turn, has resulted in lay-offs, wage freezes, de-indexation of wages, and has caused the governments to eliminate minimum wage legislation and also to eliminate cost of living adjustments in collective bargaining agreements.30 Third, globalization raises fears that the sovereignty of Africa’s nation-states could be undermined. For, if sovereignty is defined as the ability of African states individually to exercise control without outside interference, then their nations, which are in embryonic stages will clearly experience diminishing sovereignty. These phenomena are troubling, as African countries have to convince themselves that pooling their resources will promote autonomous industrialization within the countries through the development of large intermediate and capital foods industries, the promotion of multinational enterprises, and especially the development of strategic natural resources within the sub-regions.

As part of a planned strategy by the African countries to achieve full integration by 2025,31 the impact of globalization continues to affect the quality of democracy on the continent. African government responses to globalization or the search for joint solutions to global policy dilemmas are bound to have a further negative impact on sovereignty. For instance, participation in international organizations or the adoption of international agreements, which do not favour integration, limit policy options available to governments. They may even require modifications in long-standing and highly valued domestic policies and practices. The involvement and continued relationship of French-speaking countries in West Africa to their colonial metropolis is a clear example. France is one such ‘ colonial monster’ which still practices a degree of economic and political integration with its former colonies in West Africa, who are members of ECOWAS, in pursuit of a cohesive regional development policy. 30 Michael Chossudovsky, The Globalization of Poverty, (London and New Jersey: Zed and Twn, 1997). 31 Organization of African Unity, Lagos Plan of Action.

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In sub-Saharan Africa, the emerging global free market works to

set sovereign states against one another in geo-political struggles for dwindling natural resources controlled by colonial institutions. The effect of a laissez-faire philosophy, which condemns state intervention in the economy, also impels states to become rivals for control of resources that no institution has any responsibility to conserve. Similar to this is the current state of economic development theory demonstrated by the policies of the IMF and the World Bank regarding SAPs. Neither would the world economy that is envisaged and organized as a global free market be able to meet the universal human need for security in terms of ethnic conflicts and random cases of ethnic racism on the continent. The end result for African governments would culminate in their inability to protect their citizens and discharge their duties as engines for the realization of the now famous Abuja Treaty of 1994, which aims at the achievement of an African Economic Community (AEC) by the year 2025. A regime of global laissez-faire would prevent African governments from discharging this protective and development role; a failure of which will further plunge the continent into greater political, social and economic instability with varying consequences for the West. Fourth, globalization is changing the way in which African governments operate in global commerce. The globalization of financial markets is just one aspect of this changed environment. The challenge to African policy makers is made more acute by a host of other ‘ internationalizations’ under way, in such areas as crime, communications, drug smuggling, population movements, and product and service markets. International actors and events that national governments cannot hope to control, either individually or collectively, increasingly affect the so-called domestic issues that African governments are confronted with. This has evoked fears that national policy autonomy – or even national sovereignty – is being undermined. For sure, globalization raises many challenges for African policy makers. The structures of government and policy-making systems need to be adjusted if governments are going to function effectively in a global policy environment. Moreover, greater attention must be paid to the impact of globalization on the functioning and quality of democracy. Toward this end, globalization will stif le progress because national governments will have no real option but to attempt to band

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together. If they try to modernize as the process of globalization forces most states to do, Africa will be robbed of its hopes to pursue and initiate a comprehensive and timeless development theory. As Hirst and Thompson put it, “globalization is a myth suitable for a world without illusions, but it is also one that robs us of hope…for it is held that Western social democracy and socialism of the former Soviet bloc are both finished.” 32 I could not agree more with Hirst and Thompson's assertion that the political impact of “globalization” on countries in sub-Sahara Africa will definitely result in the pathology of over-diminished expectations.

Just as globalization is about power relations and the construction33 of hegemonic order, these analyzes rely on constructs that reflect and express a view and realization of that power, of the world, of those who construct it and the place from which they perceive it. The constructs express what Hirst calls the “myths and realities of the global economy and what that translates to development theories in the developing world. In other words, it must be realized that even when the so-called ‘periphery’ is being discussed, the dominant globalization discourses are themselves entangled and embroiled in the very contradictions and complexity of the world we try to understand. In that process, even in constructing analytical modes, globalization theories imagine and envision the world within a limited scope which is place-determined in terms of privileging a particular Eurocentric (Northern) positioning or understanding, which undervalues, ignores or rejects non-European, non-Northern visions and knowledge. Backed by the very global order being studied, these discourses succeed in imposing on the rest of the world, particularly the South – being African economies - their outlines of the visions and imaginations of the globe. This in itself reflects the uneven power relations or the influences discussed here.

Ohmae suggests that such an anomaly provides an interesting and useful critique of these ‘Western visions of the global.’ “These ‘global perspectives’ tend to conceal a limiting, enclosed and particularly centred position that is characterized by historical and geopolitical

32 Paul Hirst and Thompson Graham, Globalization in Question: The International Economy and the Possibilities of Governance (Cambridge: Polity Press, 1996). 33 Paul Hirst, “The Global Economy: Myths and Realities,” International Affairs 73: 5 (1997): 16.

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amnesia.”34 This attitude of forgetfulness is conducive to the preservation and continued development of a distorted ‘world view’ , since it allows for the historical erasure of imperial politics, and in addition, represses the record of contemporary forms of western power over the non-western forms, which some authors refer to as the ‘ new imperialism.’

In short, whatever the terminology, the process of regional integration in Africa is now inextricably linked to that of economic development.35 Like the integration schemes launched in the 1960s, which essentially underscored the reality that regionalism was eminent and was a necessary complementary strategy to national and, regional economic self-reliance, the new regionalism approach in the 1980s has been fraught with a growth of bureaucracy and institutions. The principal reason is the lack of anything to trade, particularly when the unrecorded trade (smuggling) is ignored. African markets account for a small volume of intra-African trade and command any likelihood that the mere removal of trade barriers would produce a rapid expansion of such trade to enhance development should they attempt to ‘ globalize.’ Furthermore, the lack of progress of most integration schemes in Africa is the reflection of the discontent of participating governments with the design and results of the sub-regional market integration schemes. Suffice it to say that these schemes do not provide demonstrable benefits to the participants, thereby negating their hopes of integrating their economies for enhanced development.

The lack of commitment to regionalism in Africa has manifested itself in member countries developing their own strategies, plans and priorities independently. The impact of globalization is thus manifested in a shift from a world of distinct national economies attempting to pool such economies together into a viable integration for development, to a global economy in which production is internationalized and financial capital flows freely and instantly between countries.

Although African countries continue to speak of collective action for regional integration, no single state has yet designed its national plans to be consistent with the promotion of effective integration for development. Also, most African leaders have not been able to 34 Kenichi Ohmae, The End of the Nation-State: The Rise of Regional Economies (London: HarperCollins, 1995), 367. 35 Asante, “Development and Regional Integration since 1980,” 75-99.

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distinguish between long-term development requisites and short-term political tactics; a situation responsible for the frequent rise and fall of sub-regional groupings on the continent.36 Regionalism in sub-Saharan Africa has become a result of two things: either African states still believe that they can develop autonomous, self-sustained economies in an independent manner, or that they do not fully understand the dynamics involved between the linkage of national interest and that of community interest should they opt for globalization. This is particularly reflected in their response to the international community. The Need for Structural and Institutional Change

In recognition of the above problems with regionalism in Africa, a reform of the world economy that would accept a diversity of cultures, regimes and market economies as a permanent reality is needed. A global free market belongs to a world in which Western hegemony seemed assured. Global relations are easily identified in terms of visible institutions, such as colonial administrations, transnational corporations, world banking and labour organizations, and are constructed within an already existing global field. Thus colonial administrations reinforce and institutionalize an already existing global hierarchy.37

Like all other variants of the Enlightenment utopia of a ‘universal civilization,’ globalization presupposes Western supremacy. It does not square with a pluralist world in which there is no power that can exercise the hegemony of Britain, the United States and other Western states possessed in the past. It does not meet the needs of a time in which Western institutions and values are no longer universally authoritative. It does not allow the world’s manifold cultures such as those in Africa to achieve modernization that is adapted to their histories, circumstances and distinctive needs.

If African governments are going to function effectively in an interdependent world, some adjustment in the machinery of government is required. Yet, despite increased recognition of the need to adapt to a ‘New World,’ African government structures remain largely rooted in the 36 Assertions frequently made by S. K. B. Asante, regarding the cohesiveness of regional integration schemes in sub-Saharan Africa. 37 Henrique F. Caroso, “Globalization and International Relations,” (paper presented at the University of Witswaterstrand, South Africa, 1996).

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past. In the absence of particular sub-regional strategies, change is occurring slowly and in a relatively piecemeal fashion. Individual government institutions, in particular the sectoral specialists who work in them, are themselves adapting to a globalized environment by developing their own transnational linkages. By blurring institutional and policy boundaries, globalization is challenging African governments’ capacities to provide effective and coherent policy responses to the impact of globalization. Conclusion

At the close of the twentieth century, regionalism in sub-Saharan Africa faces an enormous uphill battle in which Africa will have to organize in order to arrest a threatening process of marginalization and ‘peripheralization,’ as a result of the forces of globalization. At the same time, their regional arrangements are as fragile and ineffective as their states and – this weakness notwithstanding – they must first of all tackle acute poverty and domestic violence. Their overall situation thus makes ‘security regionalism’ and ‘ developmental regionalism’ more important than the rather irrelevant creation of a new phenomenon of globalization. Globalization becomes relevant only when some strength vis-à-vis the rest of the world has been achieved by integration schemes in sub-Saharan Africa.

As Palmer claims, Africa’s new form of regionalism is linked with nationalism and domestic factors.38 Regionalism cannot be understood as a distinct alternative to national interest and nationalism, but is often better explained as an instrument to supplement, enhance or protect the role of the state and the power of the government in an interdependent world. In this vein, nation-states in Africa today lack the experience and capacity to handle global challenges to national interests, and they respond increasingly by ‘pooling individual sovereignty,’ and in the process destroying the hopes of regionalization on the continent. At the same time, they give up sovereignty and may ultimately end up as semi-independent parts of a larger political community.

38 N. D. Palmer, The New Regionalism in Asia and the Pacific (Lexington, MA: 1992), 2.

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Despite the benefits of globalization, such benefits will not come easily for African governments, nor will the challenges be met without adjustment. There are concrete issues for them to consider and address. These can be separated into two categories. First, there is a need for adjustment in the structures or machinery of individual governments to enable the totality of African governments to function effectively in an interdependent world. Second, governments must examine the impact of globalization on national and international policy-making processes, and the relationships between various policy actors therein, so as to protect and strengthen the basic democratic underpinnings required for national and global governance.

Regionalism in sub-Saharan Africa is the most concrete African initiative in this direction to arrest the fundamental causes of African economies’ decline. These include regional inequalities and intractable problems of politicization, which lead to institutional tension and decay. Thus, the lessening of the high degree of external dependence on forces such as globalization is a precondition for achieving basic structural development goals that most African countries desperately need at this time.

Viewed within the context of the New International Economic Order, and the forces of globalization, sub-Saharan Africa’s integration schemes must be regarded as an integral part of a wider desire of the international political system to eliminate, or at least to reduce, the inequalities inherent in the present international economic system with which it is incompatible. What African nations need is the chance to transform themselves into democratic regimes – at least regimes which can manage to avoid interstate as well as intrastate conflicts. For, if they organize themselves for the sake of being better able to control and obtain access to the rest of the world with respect to resources and markets they will lessen their susceptibility to external influence and play a more influential role in the globalized economy.

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Globalization and the Political Loyalties of I ndividuals: Europe in Transition1

MIKKO VÄHÄ-SIPILÄ

University of Tampere, Finland

Abstract - This paper deals with certain aspects of how political loyalties in a globalizing Europe are being exposed to pressures for change. The viewpoint is that of a ‘displaced’ individual political actor, and the aim is to locate those socio-political signals that are relevant to the formation process of political loyalties. The central argument is that as the legalistic conception of national citizenship is losing some of its significance, the individual experience of instant political influence becomes important.

Introduction

This paper seeks to shed light on the question of how globalization will affect the political loyalties of individuals in Europe, particularly in the European Union (EU). The analysis will revolve mostly around theoretical problems concerning the legitimacy of traditional parliamentary democracy and the consequent individual reactions, and some concrete examples will be provided. The underlying argument in this paper is that European societies are in the midst of a period of transition: a shift towards a globalized political framework in which the very basis for political legitimization and citizen influence has to be reconceptualized. This transition is not a novel phenomenon, and arguments somewhat similar to those presented in this paper have been made before. What I shall try to provide, however, is a timely analysis of some of the most interesting trends in political loyalties characteristic in Europe today.

1 The author would like to thank Juha Kokkala, Erja Yläjärvi, and Antti Vähä-Sipilä, for their useful comments and linguistic help in the preparation of this paper.

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I will approach the research question by observing the most interesting political discourses characterizing contemporary Europe, and analyzing certain socio-political impulses linked to globalization that are relevant from the point of view of political loyalties. Operating mostly on the level of discourse can lead to highly abstract conclusions, therefore I will attempt to draw a coherent picture by bringing in a sufficient amount of practical examples to support the more theoretical discussion.

The immense heterogeneity of European political life makes it difficult to give any exhaustive answers to the problems surrounding the formation process of individual loyalties. Furthermore, when pondering the genesis of political loyalty, it has to be kept in mind that loyalty is not always rational. Instead of trying to provide universal explanations to the research problem, I will concentrate on a limited set of tendencies typical of this period of transition, such as the decay of the concepts of national sovereignty and democracy, the heterogenization of civil societies, the emergence of supranational structures (namely the EU), and the growing importance of non-governmental organizations (NGOs) and movements. At the end of this paper I will place special emphasis on the role of environmental movements in the globalizing Europe.

In the contemporary world, social problems are being redefined as global problems. According to Malcolm Waters, this undermines the sovereignty of the state in three different ways: it redirects individual political preferences, delegitimizes the nation-state as a problem-solver, and creates new international organizations to which some degree of state sovereignty is surrendered.2 These tendencies are the ones that receive the most attention in this paper.

The level of economic globalization in the EU is higher than

anywhere else in the world. Measured by the proportion of direct international investment to the gross domestic revenue, the countries most dependent on the global economy in 1995 were Sweden (37.5 per cent), Belgium (25.5 per cent), Ireland (16.3 per cent) and the Netherlands (15.5 per cent).3 Indeed, it is most convenient to conceptualize globalization as a trend mostly connected with economic and financial issues, where nation-centricity and controllability are 2 Malcolm Waters, Globalization (London: Routledge, 1995), 111. 3 Raimo Väyrynen, Globalisaatio: Uhka vai mahdollisuus? (Jyväskylä: Atena, 1998), 102.

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gradually losing their importance. However, globalization also includes political, cultural, and environmental aspects.

Economic, political, and cultural globalization can be seen as individual phenomena, as the latter two can only partially be derived from the material aspects of society.4 But it is difficult to define precisely the particular effects globalization has on politics. Does it have a deterritorializing (or reterritorializing) effect on the institutional dynamics behind the political order, or will it drive political units towards protectionist isolation? And what are the implications for individual political loyalties? Is globalization going to result in growing divergence or convergence? The most useful starting point for the analysis is the traditional cornerstone of the European political system: the nation-state. The I mplications of Globalization on the European Nation-state

During the period of dominance of the nation-state in European politics, political loyalty has come to mean interaction between the state and the individual citizen. Simply put, the relationship between the citizen and the state can be described as an exchange in which the citizen offers the state her/his loyalty and, in return, receives both physical and psychological safety. The physical safety mainly takes the concrete form in the sovereignty of the state, the claim of areal, legal, and economic integrity. Thus, the state protects its citizens, keeps an eye on the fruition of national interests, and produces prosperity. A much more complex process is providing the citizen with a sense of psychological safety. It is based on the collective experiences of the individual’s culture, and realized by the state through its quasi-monopoly of information to produce national narratives from which the individual is able to form a national identity for her/himself. In this way, the state turns itself into an object of legitimate loyalty. The nation-state is, on a very basic level, exclusive. Emphasizing ‘otherness’ in relation to outsiders is the most important fuel of nationalism, and territorial uniformity and integrity play a very important part in maintaining a psychological image of this ‘otherness.’

4 Ibid., 12.

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The set of principles created by the system of nation-states, especially the idea of national sovereignty, has produced a number of national units that claim strong political, cultural, and economic independence in relation to the surrounding world. However, the globalization process is breaking these units as it generates horizontal, cross-national connections between individuals and collectives that support similar kinds of values and interests.5 Sovereignty is a constructive principle of the modern interstate system. However, as the world enters an age of interdependence, old notions of territoriality and independence lose some of their meaning. National boundaries are becoming increasingly less relevant, as money, ideas, images, and social problems move freely across national borders.6

“ [I]n conjunction with heightened levels of capital and information mobility, changes in the international financial system, and associated reconfigurations of cultures and identities, the national state is becoming necessarily superseded by local, regional, and transnational forms of governance”, and there is an “apparent incapacity of national states to manage societies in the same manner as they did before the 1970s”.7 Globalization corrodes the very basis of the state system by blurring the borders between states and profoundly calling into question the legitimacy of their actions and the general relevance of national governance. Deterritorialization and the clouding of political authority relationships along with the general weakening of political power in relation to economics expose political loyalties to changes that can be surprisingly large in scale and fundamental in nature.

But what is the role of the individual amidst all this? To begin, the fundamental change in political loyalties can be illustrated with a simplified figure, the centre of which is the individual as a political actor. A distinction can be made between a traditional and a globalized view on the formation of individual political loyalties:

5 Väyrynen, Globalisaatio, 140. 6 Commision on Global Governance, Our Global Neighborhood: The Report of the Commission on Global Governance (Oxford: Oxford University Press, 1995), 68-70. 7 Murray Low, “Representation Unbound: Globalization and Democracy,” in Spaces of Globalization: Reasserting the Power of the Local, ed. K. R. Cox (London: The Guildford Press, 1997), 242.

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Figure 1: The shift from a traditional to a globalized political framework.

N a t i o n - s t a t e

I n d i v i d u a l c i t i z e n

D i s p l a c e d i n d i v i d u a l

N a t i o n - s t a t e E U

N G O s

M o v e m e n t s V a l u e b a s e s

P o l i t i c a l l o y a l t i e s i n t h e t r a d i t i o n a l f r a m e w o r k

P o l i t i c a l l o y a l t i e s i n t h e g l o b a l i z e d f r a m e w o r k

The figure attempts to illustrate the nature of the pressure for

change caused by the globalization process, which affects the political loyalties of individuals. The left side of the figure describes the traditional legitimation of political authority, built on national sovereignty, where the nation-state has the monopoly on political loyalty. The right side presents a situation that arises when globalization, with its different dimensions, erodes the basis for the authority of the state and forces the individual to reconsider her/his relationship with different political actors.

The figure greatly simplifies the complex process of political loyalty formation, but here it serves the purpose of graphically analyzing the distinct characteristics of the ongoing change. The following sections take a detailed look at what the changing of political loyalties of individuals at a core level is about. The Traditional Political Framework

In the traditional conception of political loyalties, the individual as a political actor is distinctly a citizen; she/he is characterized by national responsibilities such as voting and (for, at least, male citizens) the readiness to defend the national integrity and legal order by putting his own life at stake, if need be. From the point of view of individual

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loyalties, citizenship should not be understood solely as a legal concept, because the nationality of an individual is much more than a mere label. It is often a significant part of the social, political, and cultural identities of an individual.

In an era dominated by nation-states, the importance of

citizenship as a marker of political loyalty has been extremely pronounced. The dominant discourse of that age (and partly of the present day) has been nationalism, and this is precisely why the individual is described particularly as a citizen in the traditional framework; the individual does not have to question her/his loyalty as the nature of authority relationships is very clear and unidimensional. From this standpoint, political power is strongly personified in national leaders. In this kind of situation, authority can be easily defined, as well as the legitimate channel of influence, namely the ballot box. Political discourses are dominated by narratives that draw a picture of the state as an economic, cultural, and political community in which the citizens are the ones who, in principle, ultimately dictate the policies. This traditional view still prevails strongly in political discourse. It is striking that while the very basis for national parliamentary democracy is being eroded by the globalization process, nation-states are still often being manifested as self-contained, sovereign units.

A brief reference to Max Weber’s classic definition of state serves to illustrate the traditional conception of the inter-state system: “a state is a human community that (successfully) claims the monopoly of the legitimate use of force within a given territory.” 8 The individual is expected to function inside the state structure, following the established forms of representative democracy. As has been noted, globalization exposes these traditional ways to violent pressures for change. Economic globalization questions the ability of states to exercise effective government, and globalized communication does away with the last remains of national information monopolies. And when legal citizenship does not provide individuals with clear answers to the multidimensional problems brought to the agenda by globalized communication, individuals turn to different solutions.

8 Max Weber, From Max Weber: Essays in Sociology, eds. and trans. H. H. Gerth and C. Wright Mills (London: Routledge, 1991), 78.

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Loyalties in the Age of Globalization

Theses on the ‘death of the nation-state’ are widely known. However, it is problematic to talk about the disintegration of the loyalty relationship between the individual and the state when an alternative political authority to replace the state has not been found – at least not yet. Despite this, we can specify numerous trends that suggest that the unambiguous loyalty-hegemony of the state is under threat and parts of it have actually already vanished. Tell-tale signs of this can be found by inspecting the growth and disintegration of the European civil society, the spread of NGOs and political movements, the emergence of supranational authorities, as well as the crisis of political legitimacy based on democracy.

Whereas the individual in the framework dominated by nationalistic discourses is a citizen, in the globalized framework she/he is, to use Niklas Luhmann’s conception discussed further by Zygmunt Bauman, displaced. The individual “cannot be fully subsumed under any of the numerous subsystems which only in their combination constitute the fullness of his life process … that makes him an individual.” 9

Hence, there appears to exist a kind of disorder of authority in the globalized framework: the nation-state faces numerous competitors in the race for the political loyalty of individuals. These potential objects of loyalty are both institutional and abstract in nature. On the one hand, the role of European states is clouded by the EU; on the other hand, a plethora of political movements and trends claim to be more legitimate and more politically and practically relevant to the individual than the state. With the de facto weakening of the power and authority of the nation-state caused by the globalization of political and social problems, the leaning of loyalty on wider value bases instead of mere political entities becomes possible. As a consequence, loyalty relationships are unclear and fluctuating; indeed, the individual in the eye of all this change can truly be called displaced.

The shift in loyalties touches mainly those who are politically active, as opposed to those who do not use their vote or otherwise

9 Zygmunt Bauman, Modernity and Ambivalence (Cambridge: Polity Press, 1991), 95.

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participate in political life. In the traditional framework, the level of the individual’s political activity did not have the same kind of importance as it did in the globalized one. National democracy, using its institutional authority, encourages citizens to use traditional, established forms of political action, but in a globalizing Europe, the individual has to make a great effort to obtain the feeling of truly affecting political processes. The feeling of interactivity is of great importance when forming and maintaining political loyalty relationships. The relationship between the citizen and the state is losing credibility in the globalizing world, as the state is increasingly unable to provide for the citizen is asking for. As a result, the illusion of collective participation is also fading. Loyalty to Europe? Hardly!

According to Manuel Castells, systems of nations are “ functionally powerless and institutionally bureaucratized.” 10 Recent examples of the inefficiency of supranational structures are the political impotence of the United Nations in the conflicts of Rwanda, Yugoslavia, and Somalia and the failure of the International Monetary Fund to predict or prevent the economic collapse in Indonesia.

But could the European Union possibly be an exception to this rule: a community with both the political ability and the will to act as a legitimate supranational authority that would offer the individual a significant object of political loyalty? The European integration process with its (neo)functionalist bias is an interesting parallel project of globalization. It is unique in the history of politics as an experiment in integrating the economics and political systems of established sovereign actors into a single institutionalized framework. The integration process is very important politically as it, to a large extent, weakens the authority of nation-states and thus jeopardizes their ability to legitimize loyalty relationships with their citizens. It is quite another matter altogether whether the EU can offer a credible alternative for new political loyalties.

The EU is an example of a community built following the guidelines of a liberal legitimation model. Another model of

10 Manuel Castells, The Informational City: Information Technology, Economic Restructuring, and the Urban-Regional Process (Oxford: Blackwell, 1989), 352.

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legitimation, communitarian, is typical of nation-states. Liberal legitimation is achieved by following the principles of a constitutional state: the state must protect the rights of the citizens. The liberal model has as a starting point an autonomic and rational individual, whereas the communitarian model maintains that the individual is a member of some social community, and her/his moral obligations cannot be reduced to an autonomic choice.11

In order to develop a deeper socio-political community, the EU should obtain the legitimation that currently still belongs, for the most part, to the nation-state. However, liberal legitimation brings some problems. The fact that an individual is seen as detached from her/his social relationships may lead to ‘alienation’ and the loss of identity. Even if the EU succeeded in creating a Europe-wide constitutional state system, people are not ready to support and defend a society that is not based on anything other than certain legal arrangements.

Thus, the liberal legitimation that the EU is founded on would not itself be sufficient to move the loyalties of citizens from nation-states to the Union, because the EU only offers a formal relationship between people and the administrative institution.12 But what kind of transformation should the EU experience in order to become a meaningful political community? The only viable alternative may be a deep social change that would necessitate leaving behind the kind of safety achieved by the use and display of weapons, the state-centric model of organization, and the economic principles based on continuous growth. This new paradigm would include redefinition of local democracy, sustainable growth in harmony with nature, decentralized government, and emphasis on the civil society instead of state-centricism.13

In fact, as more and more European countries move towards defence systems based on contract armies, national antagonisms related with defence politics diminish. This eases the transition into a common European defence system, which can be considered one of the many

11 Eerik Lagerspetz, “Kansallisvaltio ja poliittinen legitimiteetti. Kansallisvaltio ja kapitalismin kehitys,” in Kansallisvaltion tulevaisuus Euroopassa, ed. A. Rosas (Turku: Åbo Akademis kopieringscentral, 1997), 60-64. 12 Ibid., 65-68. 13 Jyrki Käkönen, Euroopan Murroksia (Tampere: Tammer-Paino, 1994), 32-35.

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essential preconditions for the formation of a community around the EU that would be the primary object of loyalty for its members. But conscription is still a reality in most European countries, and this is why some thought should be given to the question of whether pro patria mori is a force behind the political loyalties of the individual in contemporary Europe. After all, being prepared to die and kill for one’s country is the most extreme manifestation of national loyalty.

To be prepared to defend one’s country in a violent manner can be based on different motives: for example, the ultimate object of loyalty can be the legal order of the state, or it can be the territorial integrity of the nation. Interestingly, these are both features that are losing their significance due to the globalization process. It can be stated that though the readiness to sacrifice one’s life for one’s country had, at least on a symbolic level, great importance in the golden age of the nation-state, loyalty is now based on different factors: the governmental loyalty relationships of the present are legitimized with democratic procedures; the ethos of democracy remains extremely strong in contemporary Europe. However, due to globalization and some endogenous processes, even democracy does not have the same meaning as it once did. The Unattainability of Democracy

Simultaneous with the growth of the individual’s ability and potential to perceive her/his aspirations and interests as a political actor, her/his actual possibility of achieving goals related to them via the democratic system seem to be diminishing gradually. There is a blatant contrast between the increasing political awareness of the civil society and the deterioration of the legitimacy of democratic structures.

The actual relevance of parliamentary elections with regard to other channels of political influence can be questioned. The proliferation of non-governmental organizations during the last couple of decades presents a potential power in the mobilization of political forces separate from the government. This undermines the legitimacy of legalist democracy based on vague ideals of national sovereignty.

NGOs have existed for a long time, but “ the size, diversity, and international influence of civil society organizations have grown

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dramatically during the past five decades.”14 The number of international NGOs has multiplied since the 1960s, although it has to be kept in mind that the growing numbers do not necessarily directly imply growing influence. In any case, it is clear that NGOs are now treading the same terrain with the nation-states. Political loyalties can no longer be integrated into a harmonious whole by traditional political citizenship because various kinds of differentiated political groups offer individuals instant experiences of influence and participation, and they respond to citizens’ immediate needs and ambitions better than the conventional democratic structures. Many pieces of work, including the Report of the Commission on Global Governance, suggest that democracy as we know it may have become out-dated:

Many people expect more from democracy. Two minutes in a voting booth every few years does not satisfy their desire for participation. … The widening signs of alienation from the political process call for the reform of governance within societies, for decentralization, for new forms of participation, and for the wider involvement of people than traditional democratic systems have allowed.15

“There are … powerful expressions of growing political

alienation worldwide, as people observe the state’s incapacity to solve their problems”.16 The fact that the political system of the nation-state is gradually losing its significance as the primary object of political loyalty is partially confirmed by the decline in turnout percentages in national parliamentary elections in the EU. In Finland, the turnout has been falling continuously for the last 20 years: from 81.2 per cent in 1979 to 68.7 per cent in 1999.17 In the United Kingdom, the turnout in 1997 dipped from 75.4 per cent in 1992 to 69.4 per cent, after having stayed over 70 per cent through the 1960s, 1970s, and 1980s. Some decreasing turnout percentages can also be detected in, for instance, Germany,

14 Commission on Global Governance, Our Global Neighborhood, 32. 15 Ibid., 37. 16 Manuel Castells, The Information Age: Economy, Society, and Culture. Volume 2: The Power of Identity (Oxford: Blackwell, 1997), 345. 17 Statistics Finland’s election result service, <http://www.stat.fi/tk/he/vaalit/vaalit99/index_en.html>.

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France, Ireland, and The Netherlands.18 There are exceptions: for example, in Spain there are no signs of voting passivity.

Of course, a simple causal relationship cannot be established between the decreasing turnout percentages and the deterioration of parliamentary democracy, but the statistics do offer some hints of present European trends. Other interesting tendencies can be discerned in European politics that cannot always be studied statistically.

For example, the character of European politics is becoming increasingly administrative. There is a distinctive feature in national political discourses in Europe: something that might be called ‘politics without alternatives,’ which is one of the most visible tendencies in national politics caused by the globalization process. National strategies are more and more often explained by political inevitability; governments imply that they merely respond to global signals and there is very little room for alternative policies. Examples of this are the national strategies concerned with unemployment: when faced with high unemployment rates, governments are powerless and incapable of taking any drastic measures in order to improve the situation. It is widely admitted that there is not much the governments can do but to govern effectively and wait for the global tide to change. The problem is that no matter how cunning a national strategy is, in the end it is not enough to act in a national context for the problems are often global in nature. So, what is left for the governments to do is to try to soften the implications of globalization without any hope of really influencing the process itself. One of the key questions brought to the agenda by globalization is: do national strategies really matter in a world in which politics seems to become increasingly subservient to the dictates of the global agents of the finance world? In such a situation, the individual reaction is understandable: why should anyone be bothered to behave as an active and voting citizen when the most burning problems seem to lie beyond the reach of democratically elected bodies?

At present, markets dominate politics, because political units are underdeveloped and hopelessly old-fashioned with regard to the 18 The International Institute for Democracy and Electoral Assistance, Voter Turnout from 1945 to 1998 – A Global Report on Political Participation, <(http://www.idea.int/turnout/>.

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globalizing world. Politics are territorialized and stagnant, whereas markets are deterritorialized and able to adapt to changing situations. In the global arena, politics is the loser.

Does this mean the end of national parliamentary democracy as we know it? There are individual signs of this kind of an outcome, but it is too early to declare the state dead. Despite the fact that public sectors in Europe are being reduced and some of the functions of the state are being shifted to the background, the state still has some significance.19 But can democracy be saved? Major institutional reforms will have to take place if parliamentary democracy is going to be spared from turning into mere theatre.

The development of information technology is often seen as having the potential to create more legitimate democratic structures – in order to counterbalance the social and political divergence created by the globalization of the very same technologies. However, political passivity and lack of time place obstacles in the way of successful participatory politics. Furthermore, efficient and stable governance requires protection from ‘Gallup democracy’ . This is why it is unlikely that democracy can be saved by direct participation alone. Rather, if the legitimacy of parliamentary democracy is seen as worth being revitalized, it would be crucial to increase radically and equalize citizens’ access to information. As globalization dims the role and meaning of national democracy, developing local democracy would be one solution to the problem of increasing citizen influence. But the smaller the administrative entities get, the harder it is to find enough administrative competence, particular expertise, and political activity in order to build efficient and functioning democratic structures.

As has been seen, the revitalization of effective democracy is often regarded as the most important solution to the legitimation crisis of politics in general. However, democracy alone is not an answer to everything. The significance of democratic control in nation-states must not be exaggerated, and the idealization of the capacities of voting democracy has to be avoided.

19 Väyrynen, Globalisaatio, 145.

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Changes in the Civil Society: from Sacr ifice to Responsibility?

It is worth giving some more thought to the significance of NGOs in the formation of individual political loyalties, for they seem to play a major part in the shift from politics of sacrifice to politics of responsibility. As has been seen, some NGOs are incredibly quick and efficient in mobilizing people for demonstrations and protests. For instance, the civil uproar caused by the NATO bombardment of Yugoslavia in the spring of 1999 reflected the growing difficulty of controlling reactions in a civil society. In the United Kingdom, opinion was perhaps the most polarized of all. The British government made great efforts in order to justify the inevitability of the campaign in which it was taking part, and the most popular tabloid papers in the UK supported the war efforts virtually without adopting a critical perspective. Despite all this, British civil society responded with criticism and protest, both from the grassroots level and in academia. Without commenting further on the success of the politics of the British government, it can be noted that this heterogenization of individual attitudes was characteristic of the shift that is taking place in European civil societies. National attitudes can no longer be moulded into a single opinion. The Yugoslavia conflict was not the first example of a situation like this, but it made a particularly strong impact on European political discourses. One especially interesting view of the whole conflict was the mantra reflecting uncertainty and fear, almost like a cry for the world that was no more, that continuously surfaced in British debates and letters to the editor in newspapers: We are one nation, one people, and we must have one will. In situations of crisis, the individual is called for sacrifices, and those who intentionally choose to step away from the front do a disservice to the nation-state and its political authority.

Such discussions most often seem to take place in societies in which the triumphs and/or traumas of past wars are an integral part of the national discourse and identity. In the UK, for example, the experiences of World War II practically constitute the ideological backbone of the ‘national consciousness’ , and in such a situation, it is not surprising that the shift from a traditional political framework to a globalized one is painful.

A question of a very basic nature has been posed: “ In moving to a post-sovereign politics, might one not shift the focus of political loyalty

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and identity from sacrifice to responsibility?”20 The above discussion on the Yugoslav conflict partially revolved around a very similar thought. In addition to the uproar of civil society being a protest against a ‘dictatorial’ and legalistic authority, it was a manifestation of a kind of universal pacifist discourse. As data communications crosses every geographical and cultural border, it becomes increasingly difficult to shield citizens from the horrors of war. Being aware of the immediate human consequences of violent political decisions confronts the individual with difficult choices. In European societies, especially those with a strong legalistic tradition, the insistence of national political uniformity has remained on discourse level as if somehow built-in, even though the transition to a post-sovereign situation has been going on for a long time in everyday politics. The stagnant opinion and value climate is sure to cause disturbances in societies as different crisis situations and political irritants force individuals to rethink their loyalties and polarize the differences between discursive groups.

The effects of globalization are often disruptive, but they can also be unifying. One indication of this is the noisy arrival of ‘ new’ political movements. Political Movements as a Reaction to the Cold Logic of Globalization

“What is new today is that the interdependence of nations is wider and deeper. What are also new are the role of people and the shift of focus from states to people. An aspect of this change is the growth of international civil society.” 21 The legalist tradition proves powerless and static when it comes to responding to new kinds of ethical and value-based problems created by the globalization process. One view is such that in a globalized world, political loyalties stem from value bases and ethical principles.

It has been argued that as global markets create social instability and uncertainty, political agents need a common constructive principle. However, it is not clear what this principle should include. It could, possibly, be about the recognition of universal political and social human 20 Jean Bethke Elshtain, “Feminist Themes and International Relations,” in International Theory: Critical Investigations, ed. J. Der Derian (London: Macmillan, 1995), 353. 21 Commission on Global Governance, Our Global Neighborhood, xiv.

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rights that would soften the negative effects of global economic competition. In general, the ethical dimensions of globalization have not been widely discussed, although economic globalization underlines the need for global ethics. There remains a huge difference between the ideology created by economic globalization and universal moral principles.22 The global economic and political system could not be much further from an ethical humane welfare democracy that many hold on to as an ideal. That is why it often seems highly unrealistic and irrelevant to speculate on universal ethics and high principles as possible solutions to global problems. But when studied more closely, it can be noted that the emerging European civil society is, to some extent, already characterized by an ethos that could be labelled as ‘global consciousness’ .

The label itself is probably somewhat beside the point, as what is being discussed here is not so much a new level of consciousness as much as the shift of discourses from a particularistic level to a more general, even universal one. Individuals have to face global realities and evils that earlier were left outside their realm of experiences. Isolating oneself in a limited circle of zero-sum interests grows more and more difficult as globalizing political and social discourses knit the whole world into a tight ball, sending it on its way to a shared destiny. “ [T] here is a worldwide culture in which people respond to global issues and think in terms which are the products of global communication both through the mass media, and in terms of personal interaction. A universal discourse has arisen with multiple interlocutors based in different regions and cultures.”23

In practice, this so-called global consciousness mostly takes the concrete form of demands for environmentalism and the universal respect for human rights. Discussions on these subjects nearly always bring up two NGOs, Amnesty International and Greenpeace, whose activities are largely based on taking certain specified maladies into the open in spectacular fashion. This speaks for the fact that in today’s world, ‘global consciousness’ can only be created in a framework constructed by the media. 22 Väyrynen, Globalisaatio, 61. 23 Martin Albrow, introduction to Globalization, Knowledge and Society: Readings from International Sociology, eds. M. Albrow and E. King (London: Sage, 1990), 8; emphasis added.

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From the point of view of national political mobilization and territorially restricted governance wider access to information forces governments to face serious challenges. The ‘ rationalist’ school of thought would probably disagree, but when social and environmental evils are specified and made public by groups and movements using globalized information networks, it becomes increasingly difficult for an individual to refuse to feel any kind of empathy. In the traditional socio-political framework dominated by restricted media the ‘out of sight, out of mind’ principle was much easier to apply. In general, global information networks produce better-informed individuals. Popular indifference and ignorance are, at least to some extent, slowly replaced by a situation in which people are ‘ forced’ to take a stand. Consequently, growing political awareness results in an increased rethinking of loyalties.

“Media images of human suffering have motivated people to express their concern and their solidarity with those in distant places by contributing to relief efforts and by demanding explanations and action from governments.” 24 Political movements, especially those opposed to certain effects of globalization, may indeed be the most probable alternative with regard to the birth of new political loyalties. Globalization can be understood as a ‘ liberal political project’ .25 The process is in harmony with market liberalism because it both deepens and widens the field of business activities. But as global neoliberalism increases social inequality, there is a cross-national civil society emerging to resist this kind of development. Groups and movements separate from governmental structures have shown themselves capable of opposing certain ‘unwanted’ effects of globalization. For instance, the Multilateral Agreement on Investment (MAI) negotiated by the Organization for Economic Cooperation and Development (OECD) countries since 1995 was seriously criticized and challenged by a variety of environmental, trade unionist, human rights, and developmental groups and movements on the grounds that the liberalizing effects of the agreement would shift power from citizens to multinational businesses. The negotiation process was interrupted as a result of the opposition.

24 Commission on Global Governance, Our Global Neighborhood, 31. 25 Väyrynen, Globalisaatio, 138.

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The Case of the Green Movement Many observers seem to approach the environmental movement through the ‘utopian’ views that the movement maintains, and that is why the concrete effects of the green phenomenon on a society are often left unnoticed. In this section, I would like to place emphasis on the practical significance of the green political movement. It is popular to label the movement as marginal or even irrational. However, the classic liberal view on individuals as rational, self-seeking political actors is not sufficient; one cannot detach an individual from her/his social environment and value bases. Obviously, the green movement has not grown out of altruism either. Instead, there are different motives for action – some selfish and some not: concern about global warming, anti-capitalism, redistributive demands, ethical arguments (animal rights, anti-consumptionism), critiques of globalization, and so on. The movement was partially born as a counter-reaction to globalization, and its basic principles take as a starting point the well being of the whole planet instead of narrow, particular interests. Whereas in the 1980s, according to Artur Meier, the contradiction between the world peace movement and the multinational military-industrial complex was the central social conflict on the global level,26 in the 1990s the adversaries in the most significant global social conflict were multinational corporations and the environmental movement.

The ecological movements born during the last two decades are manifestations of trends of thought based on a combination of pragmatic thinking and ethical values. From the point of view of the experience of collective participation that acts as the basis of loyalty relationships, particularly the green movement is a factor that could unite people not only on the level of a faceless institutionalized framework, but also on a practical one. Thinking green requires corresponding actions on the level of everyday life; this is why the ecological ideology can touch people deeply when we consider the matter from the perspective of individual experience. As with ideologies dependent on morality and ethics, the ecological ideology is also pronounced in its globality. 26 Artur Meier, “The Peace Movement: Some Questions Concerning its Social Nature and Structure,” in Globalization, Knowledge and Society: Readings from International Sociology, eds. M. Albrow and E. King (London: Sage, 1990), 259.

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The striving for effectiveness and pragmatism are emphasized in the practical activity of the environmental movement. This issue-oriented attitude “has given environmentalism an edge over traditional politics: people feel that they can make a difference right now and here, without mediation or delay. There is no distinction between means and goals.” 27 As it was noted earlier, in the globalized political framework it is the individual experience of instant political influence that becomes important. The environmentalist movement provides precisely these experiences, and this is why it offers a serious challenge to traditional political loyalty relationships.

The solution suggested by the ecological movement to the problematic environmental and social side effects of uncontrolled globalized market forces is most often the development of local and participatory democracy. The ideological roots of the movement are partially close to the theories of anarchism, and attempts to renew radically the dominant institutionalized administrative structures are characteristic of it. Despite the visibility of the extra-parliamentary activities of the green movement, its relevance in party politics is also considerable. “When it comes to changes in the heavier structures, the State formation itself, it goes without saying that this can only be done by using central political machinery, possibly through parliaments and political parties” as “ individual capacity is almost nil” .28 Attempting to control and contain the globalization process is one of the most important themes in the program of the organized party-political wing of the environmental movement. In a pamphlet of the Green Group in the European Parliament, globalization is named as a threat to both protection of the environment and the whole concept of the welfare society. As a result of globalization – according to the Greens – power has escaped democratically elected political bodies and found a new home in the hands of the market forces, and the Greens are opposed to this kind of development.29

27 Castells, The Information Age, 130. 28 Johan Galtung, “The Green Movement: A Socio-Historical Exploration,” in Globalization, Knowledge and Society: Readings from International Sociology, eds. M. Albrow and E. King (London: Sage, 1990), 244. 29 The Green Group in the European Parliament, Vihreät ja globalisaatio (Forssa: Nordmanin Kirjapaino, 1999).

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European environmentalist parties have been the political success story of the 1990s: at the moment, environmentalist parties are in the government in Germany, France and Finland, and the Greens are the fourth largest group in the European Parliament. The emergence of the green alternative on the political map seems to have helped national democracy reclaim part of the legitimacy it once had, as the ‘ dynamic ethicality’ represented by environmentalist parties partially fills the value vacuum brought along by the post-sovereign era.

The green movement has, to some extent, been assimilated into the established power structures, and at the same time, its stances have also become more moderate. Hence, especially in relation to the forming of the political loyalties of the young generation, it is more relevant to inspect what is taking place around the radical manifestations of the environmentalist movement. Radical European environmentalism has not been a marginal social phenomenon for some years now; discussions on, for instance, animal rights have moved into the public arena. What is characteristic of the situation, however, is the charged polarization between the radical reaction and the conservative one. In some societies, a dialogue between the authorities and the environmental activists has been established, but the movement still partially operates outside the institutionalized society. In the globalized political framework, the inclusion into society of movements questioning the established power and economic structures is very difficult, because their scope of action and principles are not in any way tied to administrative or geographic entities.

The political triumph of the green movement is not inevitable. Its strong ideological image is perceived as threatening, and distrust manifests itself as counterradicalism among the authorities, politicians, and even ordinary citizens. The neo-conservative reaction rising among young people can be seen as a reaction to the set of values represented by the leftist and partially anarchist green movement. A situation like this leads to a notable polarization of political loyalties at a young age.

The green movement differs from many other rising forms of group culture in that the notions unifying it include a common set of values and possibly the most important factor of all: political activity. This activity takes place largely outside parliamentary democracy, at the grass-roots level. However, this does not diminish its significance, as the

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individual’s most important political choices may not be made in a voting booth anymore but, for instance, at the food department of a supermarket. In a globalizing world, the most important way an individual defines her/himself politically is not necessarily as a voter but as a consumer. Examples of the collective power of consumers are numerous boycotts that have forced massive corporations to reconsider the bases for their actions. The best-known example is probably the boycott launched in 1995 against Shell Oil for reasons related to human rights. The potential for new political movements to create new patterns of mass-consumption and production must not be underestimated. For example, vegetarianism may – in the long run – pose threats to the conventional methods of meat production (although this may seem highly unlikely when considered from the traditional ‘meatist’ point of view), and hence this nutritional/ethical trend may also have practical and potentially far-reaching economic policy dimensions. In general, it can be stated that different socio-political movements, with a special emphasis on the green movement, are in key positions in the process of forming new political loyalties. Globalization dissolves the areal basis of traditional authorities, and loyalty relationships become more abstract than before. We move from a legal basis to an intricate situation coloured by differing conceptions and values, where the political loyalties of individuals are founded on the basis of experiences of legitimacy and practical political influence. Conclusions: Political Loyalties in a State of Flux

The disconnecting of political activity from its areal basis and established structures is one of the most significant implications of globalization. The dominance of the global economy over parliamentary decision-making and the lack of efficient supranational structures result in a situation where politically active individuals are forced to reconsider their loyalties; the individual experience of legitimacy becomes more important than traditional legality based on monolithic institutional arrangements. This means growing divergence in the field of individual political loyalties.

As has been seen, questions of democracy hold a central place in the study of political loyalties. Nation-states have long been the unchallenged arenas for democratic action, but now the

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deterritorializing/reterritorializing logic of globalization poses threats to national systems. Traditionally, the state has been seen as the only legitimate areal base for political action and conflict, and the system of nation-states has been the constitutive part of the ‘politics of place.’ But when challenged by the globalization process, those concerned with the fate of democracy are forced to search for new solutions, and as a result, a step away from areal politics may take place. However, “ [w]ithout the politics of place, social and political life looks messy and uncertain.” 30 Therefore it is unlikely that major democratizing reforms can be carried out without accepting a certain amount of uncertainty – and even chaos – as a part of the globalized society. In the globalized political framework, an open society cannot function unless there is a shift away from the ideal of total control.

The significance of individual political activity is more pronounced today than it was in the traditional political framework. As experiences of political influence cannot be achieved via the established institutional structures alone, globalization forces the individual to face a choice between passivism and radicalism with regard to each separate political question that she/he comes across. The level of the individual’s practical and emotional identification to the issue in question often defines the threshold for political action. Consequently, it is quite problematic to talk about political loyalties as if they were unidimensional or unchanging. Rather, in the globalized framework, the political loyalties of individuals are in a state of flux; with the fading of legalist democracy, there seems to be no definite point of reference that would provide individuals with an uncontested object of loyalty. Political loyalties are temporary, unclear, changing, and overlapping with each other.

30 Low, “Representation,” 257.

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To Globalize or Not to Globalize? The Effects of Economic

Integration on the Domestic Political Stability of Developing Countr ies, 1985-1992

SCOTT WALKER

University of North Texas

Abstract - Are countries risking dire political consequences by succumbing to the pressures of the globalization phenomenon? This study attempts to explain the effects of trade and financial liberalization in developing countries on the level of domestic political stability. Using a sample of 65 countries from the developing world from the time period of 1985-1992, this paper uses a pooled-cross-sectional time series design to explain variations in the instability across space and time. The analysis finds that trade and financial openness exhibit downward pressure on the level of political instability. The model also finds evidence that higher levels of economic development are linked to higher levels of stability. The link between economic openness and domestic stability may show the path by which developing countries may achieve the stability of their developed counterparts.

Introduction: Globalization and the World Economy

In recent years we have witnessed an explosion in the amount of cross-national economic activity. Trade across borders has increased dramatically as national economies previously geared toward internal markets have become highly export-oriented. Similarly, financial liberalization, in the form of relaxation of capital controls and the spread of global capital markets to all corners of the world, has increased drastically in the recent past. This financial liberalization has led to a boom of investment in states that were formerly closed or neglected by the world financial system. A great deal of scholarship undertaken during this decade has devoted an enormous amount of time to the process of economic and political globalization. Moreover, the term ‘globalization’ has been applied to describe many phenomena, from the spread of religious and cultural values to the diffusion of technology and

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communication. Indeed, many social scientists have attempted to define this somewhat amorphous term.1

One of the central questions regarding globalization asks whether it is a benign or harmful phenomenon, and the purpose of this paper is to attempt to answer this question empirically. This paper accepts the definition of globalization to be “ the degree to which nations are economically and politically incorporated into the overall international system.” 2 Since my research focuses on the effects of increased levels of trade and capital mobility on the stability of developing countries, this paper will concentrate on the economic half of this definition.

Some perceive globalization as a process that is irreversible or not subject to empirical analysis. For the purpose of this study, however, globalization will be conceived of as a conscious (although not necessarily completely independent) decision by states to pursue more open economic policies. As such, it must be considered possible for a country to reverse that level of openness. This study of globalization is thus performed at the intermediate level of analysis, meaning that the nation-state (rather than transnational forces or individuals) is the unit of study. States are not considered to be unitary actors. Instead, national response to globalization may be conceived of as the interaction of policymaking decisions made by national leaders and the response of domestic actors to these policies.

A noticeable shortcoming of the recent wave of research is that it focuses almost exclusively on the modern industrialized economies. While the literature on globalization is rich in the examination of

1Paul Hirst and Grahame Thompson, Globalization in Question: The International Economy and the Possibility of Governance (Cambridge, MA: Polity Press, 1996); James H. Mittleman, “The Dynamics of Globalization” in Globalization: Critical Reflections, ed. J. H. Mittleman (Boulder, CO: Lynne Rienner, 1996); and Ian Clarke, Globalization and Fragmentation: International Relations in the Twentieth Century (Oxford: Oxford, 1997). 2 Wesley T. Milner, “Globalization, Economic Freedom, and Human Rights: Can We Have it All?” (paper presented at the annual meeting of the International Studies Association, Minneapolis, MN., 1999). I would like to thank the author for providing the data on capital controls and for providing the inspiration for writing this paper.

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monetary unions, central bank decisions, currency arrangements, and global markets, it fails to attempt to explain these factors in non-industrialized and developing areas.

Organization for Economic Cooperation and Development (OECD) countries and the Asian “ tigers” have experienced noticeable integration with the world economy, and generally these countries appear to be very similar to each other on a number of fronts: they enjoy high levels of economic prosperity; their governments tend to respect the rights of their citizens; their institutions are either highly democratic or in a relatively advanced state of transition; and (with a few exceptions) they enjoy relatively low levels of domestic unrest. Therefore, one may say that, in addition to high levels of economic integration, these countries have experienced a convergence with regard to their social and political statuses. One cannot expect to observe great degrees of variation with regard to these factors across developed countries. However, in Less Developed Countries (LDCs), both the level of economic ‘ globalization’ as well as the domestic social, political, and economic conditions vary widely. To social scientists, who enjoy a great degree of variation in their data, the study of the effects of globalization on LDCs should be quite interesting. The great problem, however, has been that until recently there has not been enough data available to provide sophisticated analyzes of this type.

While there has been a great deal of speculation, much of it ideologically tinged, as to whether the increased acceleration of LDCs into the global economy is good or bad, there has been very little in the way of empirical analysis. The recent improvement in the quality of social, political, and economic data on these countries will hopefully change this lack of quality analysis.

As LDCs open their doors to the global economy, will they experience the same prosperous, pacific convergence experienced by developed countries? The purpose of this research is to ascertain whether increased openness of countries in the developing world to the global economy is leading to greater domestic stability. Hopefully, the greater variation in domestic social and economic conditions that is present in LDCs will provide fruitful ground for research on the effects of globalization.

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A number of efforts have been produced with regard to the relationship between exposure to the global economy on the one hand and human rights3 or income distribution4 on the other. To this point, however, no work has focused on the link between economic openness and levels of domestic unrest.

Because this study represents a first step in the examination of the relationship between economic integration and instability, and due to the fact that it is among the few quantitative studies to focus on the effects of global integration in the developing world, it represents an innovation in the study of the phenomenon known as globalization. Economic Globalization: A Path to Domestic Tranquillity? Is the globalization trend benign or harmful to the healthy functioning of developing states? Many have questioned the ability of the state to maintain its autonomy as it integrates with the global economic system, especially in the areas of fiscal and monetary policy.5 Economist Ethan Kapstein writes:

Every age has its defining terms. In our day, one of those terms is “globalization” , which conveys the widely held belief that we are living in a borderless world. Sovereign states appear incapable of controlling transnational flows of goods and services (much less flows of people), and in many places the state itself is collapsing.6

3 Katherine Barbieri and Christian Davenport, “Pacific Inducement or Terrorist Impulse: Investigating the Relationship Between Trade-Dependency and the Violation of Human Rights,” (paper presented at the annual meeting of the American Political Science Association, Boston, MA., 1997); and Scott Walker and Kyung-Tae Kang, “The Effects of Global Economic Integration on Violations of Personal Integrity Rights, 1980-1992,” (paper presented at the annual meeting of the Western Political Science Association, Seattle, WA., 1999). 4 Ana-Mari Hamada, “Global Linkages: Financial Liberalization, State Structure, and Income Distribution,” (paper presented at the annual meeting of the Southern Political Science Association, Atlanta, GA., 1998). 5 Eric Helleiner, States and the Reemergence of Global Finance: From Bretton Woods to the 1990s (Ithaca, NY: Cornell, 1994). 6 Ethan Kapstein, Governing the Global Economy: International Finance and the State (Cambridge: Cambridge University Press, 1994), 7.

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As a result of this decline in autonomy, governments may find it difficult to “maintain a domestic consensus of ‘ fair’ income distribution when they seem to have declining room for manoeuvre because of external restraints.”7 Globalization creates new and potentially destabilizing interest group coalitions, and the state must find a way to keep the distributional effects of economic integration from leading to domestic political unrest. For instance, Frieden argues that globalization increases competition between the capital and labour sectors.8 Additionally, in a globalized economy much of the capital that places demands on domestic institutions is controlled by outside forces. The fact that governments in LDCs may sometimes pursue policies that reflect the preferences of international capital rather than those of their own citizens may lead to discontent and unrest.9 Although potential threats to stability accompany increased integration into the world economy, it is possible that globalization may in fact have a pacifying effect on the domestic political situation.10 There are at least two potential theoretical justifications to explain why the opening of an economy may lead to greater pacific relations among its peoples.

The first vein of thought comes as a natural outgrowth of liberal theory. Economic liberals have long seen trade as a force for economic as well as political growth. Trade provides positive moral benefits by harnessing the more distasteful characteristics of human nature, such as greed, and channelling them into productive ventures. Increased gains from trade may provide individuals with goods and services that were not previously available. Thus, trade will have a pacifying effect on individual citizens. With regard to increased capital outflows, it may at first seem undesirable to allow money that could potentially be invested

7 Vincent Cable, “The Diminished Nation-State: A Study in the Loss of Economic Power,” Daedalus: Proceedings of the American Academy of Arts and Sciences 24:3 (1993): 22. 8 Jeffry Frieden, “ Invested Interests: The Politics of National Economic Policies in a World of Global Finance,” International Organization 45:4 (1991): 31. 9 Peter B. Evans, “Foreign Capital and the Third World State,” in Understanding Political Development, eds. M. Weiner and S. Huntington (Boston: Little, Brown, 1987). 10 Barbieri and Davenport, “Pacific Inducement,” 7.

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in a country to be able to leave. However, investment tends to flow into places with fewer restrictions, and the ultimate result of fewer controls on capital flight may in the long run increase investment in LDCs and thus improve the quality of life of people in those countries where controls have been relaxed. Allowing for greater capital inflows may provide badly needed investment in areas such as infrastructure and housing, and allow for creation of jobs for the growing populations in LDCs. In short, the benefits of increased global trade and investment may lead people to become more satisfied with their personal circumstances, and therefore less likely to protest or otherwise disrupt the peace. Increased gains from trade may provide individuals with goods and services that were not available to them before.

A second reason for the pacifying effect of increased economic globalization stems from the fact that important actors within the state will seek to lock in the gains of trade. Following in the footsteps of Immanuel Kant, this argument would logically hold that governments would seek to reduce tensions within their boundaries in order to ensure continued investment in their economies and to solidify the gains from trade with the rest of the world. Since unstable social and political situations tend to scare off investors, governments will work to ensure social harmony. Empirically, there is some evidence linking greater levels of economic openness to greater levels of respect for human rights by governments.11 This attempt to outline some of the reasons for why economic globalization may be beneficial to domestic stability is not meant to replace a more explicit process of theory building. However, these logically consistent attempts to explain one effect of economic globalization may represent the beginnings of more explicit, theoretical reasoning in this area of research. An Empir ical Analysis of the Effects of Economic Openness How might one empirically test the hypothesis that open economies lead to greater tranquillity in the domestic arena? One possible solution is to compile a series of hypotheses regarding

11 Walker and Kang, “Effects of Global Economic Integration.”

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determinants of political instability. This strategy, outlined by Blalock, requires the to researcher place these hypotheses into a theory-driven model that will be estimated using empirical data.12 The question at hand is “ why do some developing countries experience higher levels of unrest than others?” Therefore, a model needs to include the “explained” or “dependent” variable, instability, as well as the globalization variables mentioned above. In addition, a host of alternative explanations for the variation in instability across countries and time are included as statistical controls.

Instability. The dependent variable, domestic instability, will be measured by event-count data that is collected from the countries included in the study in the form of Reuters News reports. These reports are coded by a computer program known as the Kansas Event Data System (KEDS) program, and then are summarised in a data set known as the Protocol for the Assessment of Nonviolent Direct Action (PANDA).

PANDA is an event count data set wherein one may aggregate events according to year, country and type. I have coded three types of events to create values for instability. These three classifications are included in the calculation of this events-based measure:

1. Communal Strife and Ethnic Conflict — events of factional and regional fighting; ethnic conflict; and civil war not otherwise specified.

2. Peace, Violence, and Terrorism — events of hostage taking

and rescuing; kidnapping; massacres; extermination; death threats; killings, cease-fires; truces; dismembering; gun control; and violence not otherwise specified.

3. Political Legitimacy — events of competing claims of

authority and legitimacy; anti-government movements; calls for resignation; giving up sovereignty; ceding of power;

12 Hubert M. Blalock, Jr., An Introduction to Social Research (Englewood Cliffs, NJ: Prentice Hall, 1970).

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revolutionary change; and rebellions not otherwise specified (the conflict or issue is over the governing system itself).13

PANDA codes each action that falls under these categories from

a score of zero, indicating negligible physical violence, to six, which records reported deaths. All events are summed for each year. The instability score for a particular country/year ranges from 0 to 1091. Among the potential causal variables of instability, the “globalization” variables are discussed first, followed by other variables that may explain the movement in the dependent variable.

Globalization. Two measures are operationalized that jointly capture many of the important aspects of economic globalization. The first measure is capital controls. The fewer capital controls that a country employs, the more “globalized” we may say it has become, since it has opened its economy to the vagaries of capital inflows and outflows that can be expected from greater integration into the world economy.

A second measure that can be used to represent an important aspect of the globalization process is trade openness, which is operationalized by the ratio of the sum of imports plus exports divided by gross domestic product. For reasons outlined in the last section, it is hypothesised that the greater the level of financial openness and trade openness in a particular country, the lower the level of instability experienced by that country.

In addition to the globalization variables, which are the independent variables of interest in this study, I include several variables to serve as statistical controls in the model.

Population Size. It is possible that the size of a country is related to the level of instability. Perhaps there are more opportunities for conflict in larger states because of the number of potential interactions among individuals and groups. In addition, a large population leads to an increase in the demands on a country’s natural resources, which in turn may lead to environmental deterioration and further reduction of

13 Doug Bond and Joe Bond, Protocol for the Assessment of Nonviolent Direct Action (PANDA) Codebook for the P24 Data Set (1995).

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available resources. This cycle of increased demand and resource depletion may lead to high levels of domestic unrest.14 Therefore, I hypothesize that the larger the population size of a country, the greater the level of instability. Population data is available from the Penn World Tables.15

Population Growth. Perhaps rapid population growth can put a strain on resources, which in turn can create more demands on the state in terms of allocating these resources in a manner that satisfies all of the individuals in that society. Poe and Tate hypothesize that the state may employ terrorist measures in order to quell the increasing demands for resources, which one might argue could lead to a spiralling increase in the amount of instability in a country.16 Thus, I hypothesize that an increase in the rate of population growth in a country will lead to a greater level of instability.

Economic Standing. Some theories hold that the level of economic development in a society can positively affect citizens’ level of satisfaction with the ruling regime. This implies that levels of political instability may be lower in those countries where economic standing is higher.17 In addition, numerous examples of previous research have found that the level of wealth and repression are negatively correlated.18 Thus, I expect that an increase in the level of economic standing will lead to a decrease in the level of political instability. The level of economic standing is operationalized by using the Gross Domestic Product for a country. Data is available from the Penn World Tables.

Economic Growth. Olson theorizes that there is a relationship between economic growth and instability. Economic change has the

14 Conway Henderson, “Population Pressures and Political Repression,” Social Science Quarterly 74 (1993): 322-33. 15 Alan Heston and Robert Summers, Penn World Tables 5.6, 1992. 16 Steven C. Poe and C. Neal Tate, “Repression of Human Rights to Personal Integrity in the 1980s: A Global Analysis,” American Political Science Review 88 (1994): 857. 17 Neil J. Mitchell and James McCormick, “Economic and Political Explanations of Human Rights Violations,” World Politics 40 (1988): 476-98. 18 Conway Henderson, “Conditions Affecting the Use of Political Repression,” Journal of Conflict Resolution 35 (1991): 120-42; Mitchell and McCormick, “Economic and Political Explanations.”

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potential to spur civil unrest as groups find themselves adversely affected by the manner in which economic and political power are redistributed.19 Rapid economic progress may not satisfy the even more rapidly increasing expectations of the population,20 and may also create divisive class differences in the society.21 Therefore, I hypothesize that either a positive or negative change in economic growth will lead to an increase in the level of instability. Economic growth is measured by annual percentage change in Gross Domestic Product.

Democracy. It might be hypothesized that democratic regimes are more responsive to the demands of citizens, thus eliminating the motivation for groups or individuals to challenge the authority of the regime. Poe and Tate theorize that democracy may provide an outlet for removing undesirable leaders before they become too threatening to the interests and human rights of the population, which may in turn clamp down on the level of instability in a country.22 Dixon argues that the rules, procedures and guidelines for “bounded competition” in democratic countries will socialize citizens to recognise that disputes should be resolved through bargaining and compromise rather than by violent means.23 Therefore, I expect that an increase in the level of democracy will lead to a decrease in the level of instability. Regime type is measured using an eleven-point scale known as the Polity III Democracy Scale,24 with zero representing the lowest openness of political institutions to public participation and ten representing the highest level of institutional openness.

Military Government. It may also be the case that military governments, once established, can suppress unrest through suspension of public protests and other restrictive measures. Thus, it is hypothesized

19 Mancur Olson, “Rapid Economic Growth as a Destabilizing Process,” Journal of Economic History 23 (1963): 529-552. 20 Ted Robert Gurr, “The Political Origins of State Violence and Terror: A Theoretical Analysis,” in Government Violence and Repression: An Agenda for Research, eds. M. Stohl and G. A. Lopez (Westport, CT: Greenwood, 1986). 21 Henderson, “Population Pressures,” 126. 22 Poe and Tate, “Repression,” 857. 23 William Dixon, “Democracy and the Peaceful Settlement of International Conflict,” American Political Science Review 88 (1994):15-17. 24 Keith Jaggers and Ted Robert Gurr, Polity III: Regime Type and Political Authority, 1800-1994, 2d ICPSR Version (1995).

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that the presence of a military government in a country will lead to a decrease in the level of instability. To measure this phenomenon, a variable indicating the presence or absence of a military government can be included in the data set. Data indicating the presence or absence of military governments are available from Poe and Tate.

Lagged I nstability. Inertia from previous time periods can affect events in the current time period. In other words, it may be possible to explain some of the variation in the level of domestic instability in a given year merely by knowing the value of instability in the previous year. The inclusion of this ‘ lagged dependent variable’ (so named because it uses the previous year’s value of a variable as an explanatory factor for the current year’s value) is also useful for technical reasons specified in the estimation section below. A Model to Predict Variation in I nstability Levels Using the variables that have been defined above, it is possible to build a model that attempts to explain the relationship between the dependent variable (that which is to be explained) and independent variables (that which is to explain). This relationship may be explored using regression analysis, a technique that finds statistical relationships between dependent and independent variables. In other words, regression analysis is an attempt to find statistical relationships between a phenomenon that one hopes to explain and a series of possible variables that one suspects may “explain” that relationship. Regression analysis is a technique that is appropriate when the researcher is using data that includes scalar numbers.

The statistical method used to estimate this model is a pooled-cross-sectional time series analysis. This is a technique used for analyzing data sets that include both temporal (i.e., more than one year of observations) and spatial (i.e., more than one country) elements. This type of estimation method is powerful because, unlike standard regression techniques, it can capture the variations in the dependent variable across sixty-five countries and eight years, allowing the researcher to more precisely assess the relationship between the independent and dependent variables than is true with other regression techniques.

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Often, time series models arrive at incorrect estimates for the effects of variables due to the presence of serial correlation, which means essentially that the time element has not been properly captured in the model.25 In order to solve the problem of inaccurate estimates, this model has included a “ lagged dependent variable” , which is to say that a value in a previous time period has been included in the variable whose variance this research hopes to explain.26 The description of the components in the model is outlined below: INSTAB = Constant + INSTAB{ -1} + POPSIZE + POPGROWTH +

ECOSTANDING + ECOGROWTH + DEMOC + MILGOV + FINOPN + TRADEOPN

Where:

INSTAB = The dependent variable whose movement we hope to explain. It is calculated by adding together a series of news events that indicate political unrest.

INSTAB{ -1}= The value of the dependent variable “ lagged” back on period. Included to capture the amount of variation in the dependent variable that can be attributed to the history of the dependent variable itself as opposed to other factors.

POPSIZE = Size of population in thousands.

POPGROWTH = Annual % population change.

ECOSTANDING = Gross Domestic Product in Thousands of $US.

25 Charles Ostrom, Jr., Time Series Analysis Regression Techniques, 2d ed. (Thousand Oaks, CA: Sage Press, 1990), 7-26. 26 Nathaniel Beck and Jonathan N. Katz, “What To Do (And Not To Do) With Time Series Cross-Section Data,” American Political Science Review 89 (1995): 634-647.

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ECOGROWTH = Percent change in annual population growth.

DEMOC = Score on the eleven-point Polity III Scale of Openness of Democratic Institutions.

MILGOV = Indicates presence or absence of a military government.

TRADEOPN = Trade Openness, defined as: ((Imports + Exports/GDP)*100).

FINOPN = Financial Openness, based on presence or absence of six capital controls

A Br ief Discussion Regarding the Selection of Cases in the Data Set The data that will be used to estimate the model are taken from 65 countries in the developing world. The selection of countries is based purely on data availability. Because of the nature of the particular estimation process employed here, all data needs to be present in order to include a particular country in the study. The result is that some regions are not well represented in the sample of countries. No countries from the former communist world are included, because during part of the time period of the study (1985-1992) they were still employing command economies. Likewise, countries that have undergone any type of disruptive civil or international war are not included in the sample because of incomplete data. The eight years of the study are a good start, but unfortunately again there were barriers to collecting data for more years. The PANDA data set, which is used to calculate the instability variable, only goes back to 1984; so if one wishes to include a lag, the first year that can be included in a regression is 1985. Likewise, the data for capital controls used to measure the level of financial openness only extends to 1992 (I plan soon to expand the data set forward in time several years). Hopefully, in the future, this data set can be expanded to include many more time points and countries.

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THE EVIDENCE TABLE 1. POOLED CROSS-SECTIONAL TIME SERIES ANALYSIS OF DETERMINANTS OF DOMESTIC INSTABILITY, 1985-1992 Panel

Corrected Coefficient Std. Error Population Size (Thousands) 0.04 0.03 Population Growth 3.28 3.67 Econ. Standing (GDP/1000 U.S. $) 7.72 ** 1.81 Economic Growth (% Change) -0.19 0.22 Democracy (Polity III) -1.19 0.85 Military Government -9.44 6.02 Financial Openness -3.91 * 1.88 Trade Openness -0.17 * 0.09 Lagged Instability 0.77 0.03 Constant -20.57 14.42 ChiSquared (9) = 1285.59 N = 520 Pr > Chi Squared = 0.000 # of countries = 65 Log Likelihood = -2580.441 # of time periods = 8 * = coefficient is statistically significant at .05 level (one-tailed test) * * = coefficient is statistically significant at .01 level (one-tailed test)

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The model’s findings are consistent with the hypothesis that the

more a country’s economy pursues a “globalization” strategy, the more stable that country tends to be, all else being equal, a statistically significant link was found between higher levels of trade and financial openness and lower levels of instability. For trade openness, which is calculated as the sum of imports plus exports divided by total Gross Domestic Product, each one percent increase in openness leads to a decline of .17 from the mean of 42.83. Thus, for instance, a 10 percent increase in trade openness would lead to an expected decline of 1.7 from the mean, all else being equal. Possibly more dramatically, the decision by a country to remove any one of the six capital controls leads to an expected decline in the instability index of 3.91, which means a reduction in instability of over nine percent. One can clearly see that when considered together, movement toward financial and trade openness can have rather dramatic effects on the level of domestic instability, all else being equal. A second notable finding is that inertia, or the level of instability in previous time periods, explains a very large percentage of variation in a given time period. In fact, in the sample of countries and years used for this study, 77 percent of the variation in political unrest can be predicted by the level of instability in the previous year. Thus, if one knows nothing else about the causes of instability for a country during a given year, one might get a fair “ball park” estimate merely by knowing the recent history of instability in that country. The effects of the other purported demographic influences on domestic instability generally were statistically insignificant. The notable exception is the level of economic standing. A country’ s GDP is strongly positively correlated with domestic instability. In fact, a US $1000 increase in per capita GDP for a country of average economic standing leads to a remarkable 17 percent expected increase in instability, all else being equal. This finding runs counter to the hypothesis of this paper, which is that instability is likely to be higher in countries where the GDP is lower. Why the counterintuitive finding? Perhaps the finding has something to do with the way the data on unrest are collected. Reuters is more likely to pick up stories of unrest from countries where it has news bureaus. These news centres tend to be in wealthier countries. Thus, a report of unrest is more likely to be mentioned in Reuters if it occurs in

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Morocco than if it occurs in Chad. Nonetheless, this relationship between higher levels of GDP and unrest is an interesting one. It appears from this evidence that economic standing may be an important determinant of the level of stability in a developing country. The other demographic variables (change in GDP, population, and population change) did not exhibit statistically significant effects on the dependent variable. The two political variables, democratic openness (Polity III) and the presence of military government, did not have statistically significant effects on the level of instability. Higher levels of democratic institutions did appear, as hypothesized, to be negatively correlated with the level of instability, but the model did not reject the possibility that this relationship may have occurred by chance alone. The finding was the same for the effect of the presence of a military government, i.e., it was associated with lower levels of repression but the model did not find a statistically significant effect on the level of instability. The key empirical findings are as follows: I. The more “globalized” (as measured by trade dependence and

number of capital controls) an economy is, the lower the expected level of domestic instability.

II. The recent past predicts the level of instability extremely well.

77 percent of the variation in a given year can be explained by instability or stability present during the previous year.

III. The presence of democratic institutions and military regimes

does not clearly exert downward pressure on the level of instability.

IV. The higher a country’s economic standing (per capita GDP), the

higher the expected level of instability. V. Population size and growth do not appear to affect the level of

instability.

Taken together, one can say that this model demonstrates that economic globalization, as defined and operationalized in this statistical model, is associated with higher levels of instability when other factors

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are controlled for statistically. This statistical link does not necessarily mean that there is a causal link between economic openness and domestic tranquillity, but it certainly would lead one to question a statement made to the contrary. Perhaps there are modifications to the model that might reveal different results, such as including a lagged value for the globalization variables or including other unspecified variables in the model. Nonetheless, this finding presents a challenge to opponents of economic openness to explain why this model has produced results clearly in support of increased integration of LDCs into the world economy. Conclusion: I s the Picture of Globalization Really Rosy? Certainly one should not reach long-term conclusions or policy decisions based upon this or any other single piece of research. The findings of this paper suggest that countries that participate in the globalization of the world economy tend to enjoy lower levels of domestic unrest. It may be possible that the relationship between these two phenomena is not causal, but that these factors work together in a mutually reinforcing manner. One might picture a scenario in which a country chooses to become slightly more open. In turn, this country is treated with greater respect from other nations. Feeling less threatened by external sources, a country’s leaders may sense less of a need to subdue their domestic populations. In turn, these “kinder and gentler” governments will observe fewer actions of discontent on the part of their citizens. Perhaps a “virtuous circle” emerges, in which pacified citizens interact more smoothly with their governments and vice versa.

If the findings of this article are corroborated and refined by other social scientific research efforts, the message for domestic as well as international policy makers would be to encourage developing countries to open their doors to investment and trade from abroad, and to shore up their exports. Despite its vilif ication in many circles, economic openness may be good for domestic tranquillity. Once again, assuming these findings are backed by further research, several caveats are in order. First, one cannot neglect other aspects of the increased integration of the global economy. In addition to economic prosperity and political order, one must consider cultural and social factors when instituting any sort of neoliberal economic policies in

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developing countries. The social fabrics that hold many developing countries together are in many cases still traditional, and rapid change might result in undesirable social problems. Merely pacifying citizens with Pepsi-Cola and Michael Jackson cassettes may not be the total solution that policy makers have in mind. In addition, one needs to consider the fairness of policies on the citizens. For instance, one needs to consider the effect that greater economic integration will have on the income distribution in developing countries.27 Finally, if the increased investment and trade is military-related, this may lead to undesirable side effects that may negate any gains made through economic openness. In short, statistical models are capable of revealing general relationships in the social world, but they cannot take into account all of the complexities inherent in economic development and planning. This paper is not an attempt to endorse or decry any aspect of the current wave of globalization of economies in the developing world, but is instead an attempt to formulate and empirically test theoretical strains in the social science literature regarding the impact of a particular phenomenon. Globalization is still a varied concept. Hopefully, this work will add to the literature in this field and in turn be informed and refined by future research efforts. Nonetheless, it may be that a convergence between the already peaceful and economically open developed world and the developing world may be in progress. Only time will tell whether this trend continues.

27 Hamada, “Global Linkages,” 1998.

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Appendix – Countr ies Included in Study

Alger ia Guyana Paraguay Argentina Honduras Peru

Bangladesh India Philippines Benin Indonesia Rwanda Bolivia I ran Senegal Brazil Israel Sierra Leone

Burundi Jamaica South Afr ica Cameroon Kenya Sr i Lanka

Central Afr ican Republic

Lesotho Sudan

Chad Madagascar Syr ia Chile Malawi Thailand

Colombia Malaysia Togo Congo Mali Tr inidad and

Tobago Costa Rica Maur itania Tunisia

Cote d’ Ivoire Mexico Turkey Cyprus Morocco Uganda Ecuador Mozambique Uruguay Egypt Nicaragua Venezuela

El Salvador Niger ia Zambia Gabon Pakistan Zimbabwe Ghana Panama

Guatemala Papua New Guinea

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