Discussions concerning globalisation have had a very substantive impact in the political, corporate and academic spheres.
Globilisation is a difficult concept to manage both practically and theoretically. It subjectively benefits all who can utilise it effectively, it is a transformative process. States benefit from different aspects of the process of globalisation. The term is associated with technological advancement; free trade, economy and cultural integration. In order to grasp the essence of globalisation, it is important to consider the historical process.
There has been debates about the extent to which globalisation has a positive impact on individual lives. It is widely accepted that globalisation has been tangled with trade and its early roots can be found in British Imperialism since the latter stages of the 18th century. Some retain a skewed view of the British Empire; it is glorified for being a former global power. However, no thought is spared for the conquered nations.
Rebellions surged due to the fact that China resisted the western culture and economic policies. Two states will be central for the analysis of approaches to globalisation: authoritarian China and arguably liberal America. As things stand ‘Chinese and US banks have taken Britain’s place at the top of the financial tree.’ China is invariably linked to the phrase ‘communists you can do business with’. China entered the World Trade Organisation (WTO) in 2001 with its aggressive restructuring policies; unrestricted in the conduct of their economic policy the U.S also adopted successful means of engaging with the demands of globalisation. When the Keynesian state agenda was flourishing; it was very clear that America sought to impose deregulation and express appreciation for the free-market until the post-cold war era when the move towards protectionism began to manifest.
In the case of China, subtle protectionism allowed domestic companies and manufacturers to obtain large market shares at home and beyond the China shores. However, excessive and repeated borrowing from central banks quickly caused significant flares in the rise of property and investment bubbles. Protectionism is a misleading way to perceive their world economy and globalisation. It is every nation’s interest to do what is best for them. It is in the individual self-interest of nations to follow good policy practice.
Some have insisted that there has been little protectionism since the financial crash. Furthermore, protectionism has been implicated as a key factor in American history which had a role to play in the civil war and the revolution. The World Trade Organisation and generally the Bretton Woods system have been largely successful in promoting the globalisation agenda. Globalisation has undoubtedly led to more globalised institutions. America prospered greatly from the establishment of the North America Free Trade Agreement (NAFTA) and took comfort in remaining a superpower militarily post-cold war. Tensions surfaced for economic might, between America and Japan and then the EU and now China; eventually this lead to the break down of the Bretton Woods system with the famous ‘Nixon shock’. Although Banks want to further the global governance agenda, the idea is widely discouraged.
China imports a large amount from other countries and it is also recognized for being one of the biggest trading nations; this is owing to the fact that China is more liberal with regards to their economic policies. While it could be argued that the U.S. certainly continues to gain from political and cultural globalisation, it is without doubt that China prospered more so from engaging sufficiently with the economic and technological form of globalisation. Suggestions outline that perhaps America is over-reliant on its military dominance and therefore, nothing substantial is done to manage the case of China’s growing economic might, which is accredited to the state.
State sovereignty, some believe, is under threat by the uncontrollable nature of globalisation, which has allowed a transfer of power to the global community. It is argued that the state is struggling with the challenges produced by the concept; it can no longer behave autonomously. Some maintain that the modern state is undergoing a transformative process whereby it is not in retreat neither is it considered to be unchanged. In this globalised era there arise divisive elements to the argument pertaining to state power. The Great British scholar, Susan Strange has been criticized for exaggerating the zero-sum relationship between state and market. China’s dynamic and flexible free-trade economic policy has allowed the country to increase in stature and obtain competitive advantage on the global stage.
China has managed the expansion of global trade quite capably. With globalisation comes an increasing flow of capital, financial investments and free capital flows without the restraint of borders; this is a key reason why some suggest that perhaps states are becoming powerless, as they cannot control forces unrestrained by borders.
Policy makers in America are facing challenges which are arguably caused by globalisation, some of which include; threat of terrorism, economic tensions, political pressures, growth of pressure groups as well as the strength of multinationals. Despite these many challenges outlined there are also various opportunities that come with globalisation, which many developing countries, especially China have utilized exponentially. China’s domestic industrial policy continues to prosper, it is reported that they have become so advanced that there are companies that have built fifty storey skyscrapers within a month.
One might propose that globalisation is indiscriminate; authoritarian China and the democratic U.S. both benefit from globalisation. Noam Chomsky explicitly suggests that America has adopted a new policy whereby it uses the WTO to effectively ‘export American values’. Some cite that America interfered with public budgets in a bid to support and empower private companies in order to withstand the pressure of competition from Japan. This reveals that the state still has power, the modern state has to adapt but it is not in retreat.
However, the state seems powerless to prevent domestic multinationals from relocating as a measure of avoiding paying taxes and the dilemma solidifies because these companies and industries are vital to obtain a global competitive edge. As we have witnessed in America, banks are repeatedly bailed out and this has given rise to the discussion of supposedly, banks being too big to fail. Furthermore, the U.S. government is said to subsidies domestic industries and frequently creates infrastructure projects in an attempt to boost growth and remain competitive. China also subsidies domestic transport and energy companies over foreign industries.
Until recently, many saw the state, more specifically governments, as the overarching problem. It seems now, allegations have turned to the market, and state intervention is the proposed solution. It is a suggestion that the conception of globalisation, the free market and the adoption of democracy are intertwined.
On the other hand, some oppose the relevance of democracy particularly with the rise of state capitalism, examples include China and Russia. It must me noted that the Beijing model is said to be more desirable than the American Washington consensus. In a measure to counter U.S. dominance, we can also witness the Russia-China axis becoming more apparent. Not to mention the growing tension between China and America over Taiwan, these changes have been attributed to the process of globalisation. Without doubt, America still remains a dominant power with great global influence. As China’s economic success grows, the U.S. can rest of its superior military capabilities.
It is clear that America adopts protectionism and in some cases when it is in the national interest, prefers free trade. The U.S. has used tariffs and quotas to tax and reduce imports into the country. Trade deregulation expands the market and results in economic growth, there is a case for relative comparative benefits for all concerned. Economic protectionism is costly; it can produce negative unintended results to domestic industries, employment rates as well as the level of efficiency, this is perhaps why America is struggling in the global markets.
As outlined previously, American protectionism can damage the US-China trade relationship. It is alleged that cheap imports from China has led to a decline in manufacturing jobs in the U.S. However, American consumers enjoy the fact that they can get cheap products from China. China has low tariffs and less trade barriers in an effort to embrace the free-market. We witness double standards in trade policies on the global platform. The IMF and World Bank dictate trade rules to developing countries, and of course developed western states either ignore or delay implementation of the rules. The American ‘war on terror’ campaign, best exemplifies the power of the state and the noticeable declining power of the UN strengthens the argument. The neo-liberal trade liberalisation regime is a double-edged sword, it is a danger for states to simply open up their market. Successful state like China did just that however, the Chinese only lowered trade barriers and tariffs when the country began experiencing substantial economic growth, this has not been the case for other developing nations.
Borderless economic relations have also allowed states and multinationals to adopt various methods for dealing with globalisation based on the production factors, financial opportunities, and trade environment. The criticism is that the debate on globalisation needs to shift precisely from ‘narrow preoccupations with the markets’ (United Nations). The conversation should be geared toward the population and the advantages as well as improvements it brings to individuals rather than simply focusing on ‘states’.