Download Globalisation, interdependence and production

Toulouse IEP
March 2007
GLOBALISATION,
INTERDEPENDENCE AND
PRODUCTION
Dr. Alan Russell
Email: [email protected]
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IEP Toulouse – March 2007 – Alan Russell
Globalisation, interdependence and production
Specific Topics
1.
2.
Globalisation and interdependence Part 1
Globalisation and interdependence Part 2
Assessment questions
On completion of this short course you will be asked to write in examination
conditions on one of the following questions.
You choose one of the questions only.
1. Assess the political and economic impacts of the Uruguay Round on less
developed countries (use examples). Who gains and who loses?
2. Assess the political and economic impacts of the Uruguay Round on developed
countries (use examples). Who gains and who loses?
3. Assess the political and economic consequences of the Uruguay Round for the
activities of multinational companies engaged in transnational production (use
examples).
4. Assess the political and economic consequences of the Uruguay Round for the
globalisation of services (use examples - e.g. financial services).
5. Assess the specific political and economic impacts of the agreement on Trade
Related aspects of Intellectual Property Protection (TRIPs) (use examples - e.g. in
relation to: agriculture; pharmaceuticals; biotechnology; patents; etc).
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GLOBALISATION AND INTERDEPENDENCE: PART 1
Introduction
Historically we have seen:
1. Transition to a state -system (Westphalia)
2. Development and operation of the state system (European)
3. Expansion from European state-system to global state system
4. Operation of a global state system (total war to nuclear stalemate)
Now:
5. The contemporary process of "globalisation" and the erosion of borders (new challenges - beyond the
state system?)
Outline
1.
2.
3.
4.
5.
The re-emergence of multipolarity
The trend towards regional groups: politics and trade
Dependency: North-South Relations
Integration or globalisation?
perspectives on global political economy
1. THE RE-EMERGENCE OF MULTIPOLARITY; EUROPE, JAPAN AND CHINA:
Main point:
End of the bi-polar world is evident in the collapse of the Soviet Union and E. Bloc. But the nature
of the distribution of power was already changing. Economic issues are higher on the international
agenda requiring us to consider other aspects of the distribution of power.
Two dimensions to multipolarity:
A.
The emergence of additionally powerful states
-Polarity refers to the number of central powers dominating system
-Especially if the realist emphasis on security is relaxed
-Broader issues come on the international agenda (economic, resources, welfare, environment etc.)
-States other than the superpowers can be seen as major players - Japan, W.Europe
-But even in military terms, China (especially) and Europe (collectively) have grown in influence
-Various states have competed to sell their arms to China while China has modernised its power
projection capabilities (ballistic missiles, long-range aircraft, deep sea fleet)
-Japan restricts the nature of its military forces following WW2. But will it expand its capacity if US
security protection declines with the end of the Cold War?
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If economic influence is included as a basis for power can we simply continue to use the
realist power politics view of the world?
Can we talk of a balance of power amongst economically powerful states in the way we
have traditionally considered a balance of power in terms of military capability?
B.
The growth of pluralism
-Pluralism refers to dispersed decision-making influence and participation in issue areas
-Dispersed decision centres and influence include tremendous growth in non-state actors
-Japan and W.Europe (as regions) have grown in importance in this context - through firms and other
providers of trade and services
-Especially important is the growth in the political importance of international economic issues
This relates back to the discussion of interdependence and transnational developments
considered during my last visit.
2. THE TREND TOWARDS REGIONAL GROUPS: POLITICS AND TRADE
Main point:
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Bringing in economic issues and broader considerations of the nature of power in the international
system lead us to address the activities of states, as they interact, in a different light. New processes
are evident. Not least are new trends towards economic blocs and integration.
Taking economic issues further::
-Post-war economic order had reinforced bi-polar split
-U.S. had been military and economic hegemon in relation to both W. Europe and Japan
-U.S. dominance of Bretton Woods institutions and provider of Marshall Aid Plan
-Japan allowed free access to American markets
-Dollar as international currency
-Sometimes seen as a "two-track" system (political and economic with both aimed at containing
Soviet Bloc)
-US hegemony provides global economic stability by minimising free-riders who otherwise break the
‘rules’. Today Neo-realists (e.g. Kenneth Waltz, Robert Gilpin) stress Hegemonic Stability Theory –
a view that hegemony is necessary to achieve international economic order. Thus Britain as hegemon
in 19th century stabilised international economic order.
-BUT by end of 1950s W.Europe and Japan begin to challenge U.S. economic influence - Marshall
plan had been very succcessful
-Post-war growth in Foreign Direct Investment (MNCs)
-By end of 1960s W.Europe and Japan openly begin to challenge U.S. economic
leadership/hegemony
-Detente in early 1970s would enable economic issues to come higher on the agenda
-THEN: Collapse of Bretton Woods system as dollar and U.S. leadership are questioned and Nixon
suspends convertibility in 1971
-PLUS: OPEC fourfold oil price increase in 1973
-Thus by mid-1970s economic issues high on political agenda, with increasing evidence of a regional
response
-Regionalism most evident in W. Europe with the European Community (Union)
-The collapse of Bretton Woods would ultimately encourage a degree of protectionism between
Europe, the US and Japan, in some measure targetted on the South as well as each other
From all of this:
-Importance of the concept of economic interdependence
-N.B. Bretton Woods system promoted interdependence
-Many saw economic interdependence as fostering political cooperation
-Promotion of European integration
-Growing pluralism in economic/political terms
Again refer back to content of booklet from my last visit
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Provide a definition of globalisation.
What is meant by the term hegemony?
Can hegemony provide stability in the global political economy?
Is hegemony necessary to achieve stability in the global political economy?
Has there been a decline in the hegemony of the United States since the early 1970s?
3. DEPENDENCY: North-South Relations
Main point:
There is a story involved of the developing world attempting to climb the ladder of development. This
involved Southern demands for change in the international economy. Each time there seems to be
progress towards change new setbacks have occurred.
North-South relations after WWII
-Post-war emphasis on free-trade "ideal"
-Law of comparative advantage etc.
-Specialisation & gains through trade emphasised
-N.B. Bretton Woods agreements
BUT:
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-Developing (and newly independent) states often poor competitors
-Great diversity in the conditions faced by states of the South
-Sometimes corrupt or inefficient leaders
-Northern planners argued interests of South were the same as the North
-As mentioned before the US had a hegemonic (dominant) role and resisted changes to favour the
South
-South had little say in managing world economy
Colonial legacies:
-Imperial era had exploited colonies and with "independence" they really faced dependence
-In some regions poorly drawn borders do not match ethnic groupings
-Imperial powers had structured economies to their interests
-Former colonies locked into supplying raw materials and agricultural products
-These were exported to pay for imported manufactures (from North)
-Importance of 1960s decolonisation process
Demands for a new international economic order
The developing countries and non-alignment:
-Some success in UNCTAD in getting N- S economic issues on the international agenda
-North resisted demands in organised way
-Until late 1950s Developing states often pursued isolationist policies (import substitution)
-Failed as the cost of imports went on rising while exported raw materials declined in relative value
-Turned towards trying to produce manufactured goods for export (on low labour costs)
-But faced controlled markets through tariffs
-Later tried to achieve reform within GATT - but North resisted change
THEN:
-Emergence of LDCs as collective force (across continents)
-Growth of Southern unity and formation of Group of 77 in 1963 (now with c.125 members)
-Collective demands for redistribution of economic resources and wealth in world
-Articulated demands for a New International Economic Order (NIEO)
-Third World influence most notable in U.N. - leads to formation in 1964 of U.N. Conference on
Trade and Development (UNCTAD - now a permanent org.)
-Thus achieved some success through and establishment of UNCTAD (met 1964)
Under NIEO:
-Reform of commodity markets demanded
-More aid to the South
-Reduction of tariff barriers against goods from the South
-etc.
BUT:
-Limited impact of demands
-North acted to "divide and conquer" as some LDCs began to benefit
-North was more effectively united (behind US)
-G-77 lacked a power base
Resource power and OPEC
-Following collapse of Bretton Woods system (see earlier lecture) there was decade of oil power
-1973/4 oil price increased fourfold from c.$ 2-40 to c.$11-70 a barrel
-This came after Yom Kippur war and was combined with some supply embargoes against supporters
of Israel
-Arab nationalism helped co-operation
-Libya a vital catalyst - threatened to nationalise oil industry unless prices rose
-Oil power belatedly realised!
-West tried to respond but couldn't
-Oil is price inelastic
-No other cartel achieves same success as OPEC
OPEC power was for a time linked to demands for NIEO - with some success
-International meetings ensued, culminating in 1981 North-South economic summit - Mexico
-But in real terms progress towards change was slow
-Then events overtook the whole issue:
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a) OPEC increased oil price to $ 34-00 a barrel and world recession results
b) Debt crisis arrives
The decade of third world debt
Origins of debt crisis:
-OPEC oil profits (massive amounts of $s) are recycled to western banks
-Western banks fall over themselves to make loans!
-Large amounts lent to the South in late 1970s at low interest rates but over short periods (therefore
high repayment levels)
-Loans are used by South to assist expenditure led growth (including importing)
THEN:
-Recession in North in early 1980s results in:
-Fall in demand for Southern exports
-Collapse in commodity market prices
-Increase in cost of imports into South as $ gets too strong
-Rise in interest rates as monetarist policies used to bring Northern inflation down
-Consequently a rise in interest rates on loans to South
THUS:
-Cost of loans rises heavily as ability to repay them falls
-Mexico announces in 1982 that it can no longer service its debts
-World financial system fears a collapse if other states default
-Debt levels rise dramatically by end of 1982, to:
Mexico $85 bn
Chile $17 bn
Argentina $38 bn
Nigeria $13 bn
Brazil $89 bn
North-south relations today
Debt remains the major issue:
-Between 1982 and 1990 saw payments from debtors to creditors of $12.5 billion a month for each of
108 months! (S. George)
-On top of payments of interest etc. there was also the problem of capital flight
-MNCs also continued to repatriate profits
-"Solutions" to the problem have really focused on the survival of the banking system as priority
-The IMF and other institutions have made new loans on condition that the developing states
drastically adjusted their economies to the western style
-Forced to expand exports, cut imports and reduce government expenditure - phenomenal hardship
resulted
Other problems include:
-Great unevenness in GNP per capita
-Disproportionate consumption patterns 25% of world's population consume over 75% of goods
-20% of children in Sub-Saharan Africa die by 5
-Life expectancy varies greatly
-Diseases like tuberculosis, cholera, typhoid fever, dysentery are endemic in vast areas
-Dualism in many developing economies - a mixture of rich and extremely poor groups
-Great demand for Northern aid - but usually has strings attached
-Problems of South overshadowed by E. Europe
-Uncertain impact of 1993 GATT deal
Impacts:
-New economic issues get on the agenda
-Within UN coordinated Third World voting emerges
-LDCs become more influential in many institutions
-They become representated at GATT rounds
-Non-aligned movement became significant (a southern "bloc" and Group of 77)
-Issues centre on problems of dependency/neo-imperialism and spheres of influence
Overall a world of CORE, SEMI-PERIPHERY and PERIPHERY
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A key literature in this respect is that of World System Theorists, and especially the work of Immanuel
Wallerstein.
He conceptualises the growth of a world capitalist system since the ‘long sixteenth century’. He takes a
simple definition of capitalism to include the production of surplus and exchange. This then provides a
basis for trade and economic expansion.
A consequence is a gradual development of a world capitalist system characterised by core areas
exploiting a semi-periphery in turn both exploited and exploiting a further periphery.
The original core is Europe but gradually its semi-periphery joins the core and parts of the periphery
come into the semi-periphery.
The world today is in crisis because the current periphery cannot move up the ladder into the semiperiphery as it in turn has no other areas to exploit.
Dependency theorists such as Johan Galtung and Andre-Gender Frank share a core, semi-periphery,
periphery, conceptualisation of the contemporary world and see the smi-periphery as essential in
stabilising the global economy: both exploited and exploiters who resist the build-up of demands for
change.
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Why were states of the South unable to achieve a New International Economic Order?
How significant was the Debt Crisis in weakening the influence of the South at a time
when progress seemed possible?
How useful is a conceptualisation of core, semi-periphery and periphery in understanding
the dynamics of the global political economy?
THUS: Four way trade/economic debates -U.S. : Japan : Europe : Third World
-Eastern bloc slowly joined in
4. INTEGRATION OR GLOBALISATION?
Main point:
Two contrasting (perhaps conflicting) trends are notable. Integration suggests regional economies
become much more interdependent and open to each other. Political integration may "spillover"
from this. In contrast globalisation suggests that increasingly we see world markets (in finance,
trade, services, investment, as well as the erosion of cultural differences).
The term globalisation has become "trendy"
 It subsumes TWO developments which are very wide-ranging
 These include both the erosion of national borders (which gives great scope for many types of
non-state actor to operate across borders and
 The move towards regional developments (perhaps as stepping stones towards more openness
to global phenomenon)
 W.Europe includes EU, WEU, and links to NATO
 The Americas include NAFTA and OAS
 Pacific Rim (includes Japan, China, Taiwan, Hong Kong, S. Korea, Singapore, US and
Canada) has APEC and within the APEC grouping there is ASEAN
 Africa has the OAU
BOTH globalisation and integration challenge the sovereign independence of states
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5. PERSPECTIVES ON GLOBAL POLITICAL ECONOMY
Three perspectives have developed which throw light on the complexities of the global political
economy. In many ways they are more than perspectives and can be seen as ideologies.
Liberal perspective
 The most wide-spread perspective
 Often claimed as the guiding light in government policy circles, including international institutions
like the IMF, World Bank and WTO.
 Centres on the ideals of open markets that are seen to deliver the creation and distribution of
wealth. States should try to reduce government interference – but recognises the need for a certain
level of intervention.
 Welcomes the growth of economic interdependence and globalisation. Supports the idea of open
international markets and the cross-investment associated with FDI.
 Perspective is also associated with pluralist democratic systems.
Economic nationalist perspective
 In this perspective governments are seen to act to promote the interests of their home economy at
the expense of others.
 Subtle and sometimes very unsubtle methods are used to ‘protect’ and promote national economic
interests (e.g. tariffs, quotas, orderly market arrangements, voluntary export restraints, restrictive
regulatory requirements, political pressure, etc).
 Sometimes economic nationalism may characterise governments actions even when they claim they
are promoting the liberal perspective. In other words if one economy can persuade others to open
up but remain closed itself, it may gain more. The US in the late 1960s and early 1970s was
charged with abusing its hegemonic power to pressurise others to liberalise while being restrictive
itself.
 Japan has also been described as economic nationalist in making it hard for foreigners to buy
Japanese companies, etc.).
Marxist/socialist/dependency perspective (including World System)
 This perspective highlights class conflicts, and the spread of global dependence.
 Poorer states are seen as exploited by the North.
 The FDI activities of large firms are seen to leave developing states at a clear disadvantage and can
easily repatriate profits.
 Marxist principles for much of the Twentieth Century characterised many economies around the
world: the Eastern Bloc; China; North Korea and many developing countries themselves.
 While few countries today operate along the lines of Marxist central planning the perspective itself
offers a useful critique of the other two, especially in its dependency guise.
4. CONCLUSION
The world has transformed rapidly in the second half of the twentieth century across many dimensions.
Political interaction has embraced a much wider agenda of issues, including economic, environment,
etc..
Processes of transformation have clearly resulted in the erosion of borders, either at a regional level or
at the global level.
However, "Economic nationalism" may lead groups of states to form economic blocs in the face of
exposure to the dynamics of the global economy.
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Consider the extent to which economic nationalism is still prevalent in the global political
economy.
To what extent are politics and economics separate in the modern global political
economy?
Are the three perspectives identified really the basis for competing ideologies?
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GLOBALISATION AND INTERDEPENDENCE: PART TWO
INTRODUCTION
From Part 1:
-Growing pluralism
-Power based on many factors in addition to military strength
-two pressures: globalisation and integration (regional blocs)
-World markets
In sum: Challenge to sovereignty from both globalisation and regional integration
1. DEFINITION AND CHARACTERISTICS OF GLOBALISATION
Main point: Globalisation may be difficult to define but it is affecting all aspects of social and political
activity, both within and between societies. Increasingly the domestic social and political
environment is influenced by what happens beyond the state's borders. In international relations
governments find their independence compromised. They lose the power to achieve objectives on
their own.
Definition:
A working definition is provided by A.G. McGrew:
Globalisation can be conceived in terms of the..."multiplicity of linkages and interconnections between
the states and societies which make up the modern world system.”
Characteristics:
1. Shrinking world phenomenon
-Shift in average travel speeds.
1500 - 1840 Best average speed of horse drawn carriages or ships was 10 m.p.h.
1850 - 1930 Steam locomotives averaged 65 m.p.h.
Steam ships averaged 36 m.p.h.
1950s Propeller aircraft averaged 300-400 m.p.h.
1960s - Jet passenger aircraft average 500-700 m.p.h.
2. New technologies
-New technologies have driven the trend towards globalisation on the back of earlier industrialisation
(Some writers describe 'modernisation' as a continuum).
-Production, communication, entertainment, energy use, transportation, exploration (for resources)
have all been affected.
-New technologies diffuse rapidly, including to the South, in many instances. Enabling technologies
diffuse particularly swiftly (microchips, biotechnology, I.T.).
-Science, knowledge and technological innovation are themselves increasingly shaped by global
processes (military, communications needs, multilateral/transnational R&D).
-Knowledge as a basis of power.
Questions:
 Identify key twentieth century technological developments
conceptualisation of a shrinking world.
 To what extent is technology the driving force for globalisation?
associated
with
the
3. Globalisation of culture
-Cultural imperialism not new (evident in all periods of imperialism - all imperialists have claimed to
be 'spreading civilisation' etc).
-Vast increase in the indirect effects of spreading culture.
-Media, advertising and images spread globally.
-Global marketing and product names "Mondeo", "Vectra" (cars), often invented words that exist in
no language!
-Hollywood films as products to be marketed vs. French cinema as French culture in GATT Uruguay
Round.
-Globalisation of western culture most evident.
-Cultural imperialism may now lead "local consumers to prefer foreign brand names to local ones:
much of the Third World brushes with Colgate and drinks Coke, brands popularised by American
literature, cinema, television, and advertising" (Frieden and Lake, 1991).
-Linked to this is the effect on aspirations in the Third World for a western lifestyle.
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-Common culture of a transnational business class (MBA culture - see Robert Cox, Production,
Power and World Order, 1987).
Questions:
 Which is more significant – the dominance of ‘Western culture’ over other parts of the world
or a trend towards a genuinely global culture with new characteristics?
 Is there something new occurring or is the globalisation of culture simply an extension of
cultural imperialism?
4.
'Global shift' in economic activity (Peter Dicken)
Global finance:
-In finance there are now huge movements of money across borders. By the late 1980s the
unregulated London Eurodollar market turned over $300 billion a day, or c.$75 billion a year. In
1979 yearly transactions in this market were 6 times the value for trade. By 1986 they were 25 times
the value. Total foreign exchange dealings have reached $1.5 trillion a day, exceeding total trade by
over 50 times (BIS,1999).
-Total central bank reserves are less than the equivalent of two days turnover of foreign exchange.
-All this has been made possible by technology (a revolution in communications and information
processing technologies plus deregulation/liberalisation of markets).
Questions:
 What are the characteristics of the contemporary global financial system?
 What were the causes and impacts of the Asian Crisis which began in 1997?
 How can states maintain their influence over their own national currencies?
Global production:
“Aside from global finance, perhaps the commonist image of economic globalization is that of the
multinational corporation: huge corporate empires which straddle the globe with annual turnovers
matching the entire GNP of many nations. In 1998 there were 53,000 MNCs worldwide with 450,000
foreign subsidiaries which had global sales of $9.5 trillion; today transnational production outweighs
exports as the dominant mode of servicing foreign markets” (D. Held et al., Global Transformations,
1999, p.236).
-Growth of ‘intra-firm trade’ (now accounts for 50% of all trade into and out of the United States and
Japan). This is replacing traditional ‘arms length’ trade (i.e. produce the goods in a country and then
ship them abroad (and vice versa)). Intra-firm trade represents the movement of goods and services
within the operations of large firms. It is supported by a parallel growth in ‘intra-industry trade’.
-Core of 600 TNCs by 1985 accounted for $1 billion of sales creating more than one fifth of world's
total industrial/agricultural output (74 accounted for 50% of this).
-3/4 US transnational activity by less than 300 firms.
-Production is increasingly transnational - who can say by looking at a product the mix of
international inputs (despite what it may say in terms of "made in ...").
-Growth in trend towards global products (cars, electronic goods, entertainment).
-Yet many large firms still have a strong national base. There may be a tension between those who
control ‘national’ capital and those who control ‘transnational’ capital. (Cox, 1987). See below.
Susan Strange observes:
“A production structure can be defined as the sum of all the arrangements determining what is
produced, by whom and for whom, by what method and on what terms” (S. Strange, States and
Markets, 2nd ed., 1994, p.64).
She goes on observe: “the gradual, uneven but apparently inexorable supplanting of a production
structure geared primarily to serve national markets to one geared primarily to serve a world market”
(p.65).
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-Globalisation also entails small TNCs operating internationally to fulfil niche markets – it’s not all
about large firms! Small and medium sized firms are increasingly engaging world markets. This
extends to processes of design, production and selling.
Associated with many of these changes is a trend from ‘Fordist’ to ‘Post-Fordist’ production methods.
Fordism: represents the traditional system of mass production of standardised goods employing semiskilled workers using specialised equipment. It maximises economies of scale. It is, however,
limited by the cost of setting up (‘tooling up’) the line in the first place. It is not a very flexible
system.
It shaped relationships between the economies of the world and shaped industrial relations between
unskilled, semi-skilled and managers.
Post-Fordism: represents a shift towards small ‘batch production’ of a variety of products using
flexible machinery (in some cases flexible production lines programmed by computer where the
parameters can be adjusted quickly and easily to run different models through the line). The factory
is re-organised to reduce stocks of parts and there is a decentralisation of decision-making to workers
on the line. Design of products and production processes become more integrated. Aspects of
American and Japanese style industrial relations are combined and the skill level of workers rises.
Underpinning post-Fordism is the growth of networks of firms. Parts are delivered to factories, as they
are needed in a very flexible way, with the component suppliers also operating in very flexible and
adaptable ways. Indeed the component suppliers may take on an increasing role in the design of the
product and the overall production process. Thus a component supplier for both Renault and Ford
might have an input into the design of competing products.
The ultimate aim would be ‘just-in-time’ production – where the product is manufactured to the
customer’s specification very soon after the order is placed (eg. automobiles). This would involve
huge complexity in the network of firms and the IT links between them.
In terms of globalisation the networks of firms extend across borders.
Within firms industrial relations have had to change. Following the ‘crushing’ of trade unions there is a
shift towards greater involvement of the workforce within the firm with a greater share in its future.
Quality control, for example, is devolved to the production line and is reinforced by workers
becoming proud of their product and firm.
With post-Fordism there is a greater emphasis on product differentiation rather than price. Many
competing products at the same price but with subtly different characteristics result (e.g. in consumer
electronics). Product ranges are constantly changed (often following fashions rather than real
improvement (black to silver coloured televisions, videos, etc.)
Thus:
 High product differentiation
 Inter-industry and inter-firm co-ordination
 Emphasis on market pull in product design
 Multi-purpose production techniques / equipment
 Much use of computer controlled systems
 Redefinition of jobs and working relationships
Some writers are suggesting that these changes in worker relations, the growing networking of firms
across borders, the growth of MNCs and the links with a highly transnational financial system are
leading to a new form of hegemony in the global political economy.
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Questions:
 Given the growth of transnational production activity, to what extent can transnational
corporations avoid national regulations and national government policies?
 What are the global implications of the increase in post-Fordist production techniques?
How do these developments affect:
a) producers themselves
b) consumers
c) governments

5.
Assess the impact of globalisation and post-Fordism on:
a) the automobile industry
b) the consumer electronics industry
c) the defence industry
A transnational business hegemony?
John Stopford and Susan Strange (Rival States, Rival Firms, 1991) suggest we should look at the firm
alongside the state, examining the complex pattern of relationships between them. These include
links between: firms and other firms; states and other states; and mixed groups of firms and states
linking with other mixed groups of firms and states.
Govt – Firm links
Firm – Firm links
Govt – Govt links
The “new diplomacy” of firm – government linkages
The larger triangle illustrates possible linkages between individual firms and governments while the
inner triangle illustrates linkages between groups of individual firms and governments including groups
that contain both firms and governments together.
Robert Cox takes the idea of the links between key governments, big firms and important international
economic institutions (IMF, World Bank, OECD, WTO, BIS, etc) further.
He suggests we are witnessing the emergence of a transnational hegemony based around these groups,
with private corporations and international finance playing particularly significant roles.
The origins of his perspective is the work of Antonio Gramcsci who in examining pre-war Italy
identified the importance of common culture in binding hegemonic forces together and which
simultaneously makes the establishment of a counter-hegemony very difficult.
Thus a transnational hegemony characterised by:
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Common business culture (capitalist)
Common ideology (liberal economic/pluralist)
Ideas (including theories, framework of thought and common business practice: MBAs)
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These are all shared by heads of MNCs, big national firms and small scale capitalists
Gives rise to a ‘transnational managerial class’ (Cox)
Institutions
High levels of economic interdependence
A world economy open to the corporate movement of goods, capital and technology
New types of workers drawn in (IT workers, R&D workers, financial service sector, etc)
Dominant types of social relations of production (changing under post-Fordism)
Weakness of transnational links between ‘workers’
Thus limitations of any counter-hegemony along traditional class lines
Of course there are conflicts within the world economy and Cox notes:
Nationalist capitalist (protectionist) versus Transnational capitalist
Opposition forces (e.g. in LDCs) versus insecure governments/elites
Debtors versus creditors
Questions:
 Evaluate the significance of Robert Cox’s suggestion that there is an emerging ‘transnational
managerial class’ at the centre of a transnational hegemony.
 Assess the significance of the ‘new diplomacy’ and its emphasis on the complex linkages
between governments and firms. Give some examples of complex alliances between firms
and governments in operation.

Why is the MBA academic qualification accepted world-wide?
 Why might German firms run their Board Meetings in English?
6. Growth of transnational political processes
Partly associated with the above features of globalisation we see changes in the political process:
-Loss of ability of single governments to meet objectives, as what concerns governments and their
people become increasingly internationalised (economic stability, human rights, environment,
ideological stances, resources, etc.)
-Mass media makes events abroad have immediacy (be they disasters, news of famines, political acts,
peace processes, nuclear testing, the process of democratisation)
-Attitudes can alter through transnational awareness
-Political alliances can form across borders, as can transnational pressure group activity (Greenpeace
and French nuclear testing). Alliances can include the new diplomacy links identified above.
-Even governments fragment and forge partial links across borders (transgovernmental co-ordination
and alliances)
-More and more institutions are build internationally (international organisations or formal
agreements such as the law of the sea and the release of pollutants)
Linked to this is the growth of transnational or global issues (environment, resources, biosphere,
biodiversity, international economic stability, human rights, scarcity etc.).
Questions:
 How do non-economic oriented actors achieve political influence at the global level?
 To what extent has there been an increase in issues that have a global political context? Why
is this happening?
2. IMPLICATIONS FOR INTERNATIONAL RELATIONS
Main point: While we may still focus on the idea of an ‘international system’, the system itself cannot
be confined to being made up of states. Other actors must be included as well as other processes of
interaction. ‘World system’ or ‘global system’ may represent better terminology - although neither is
without problems.
-Our conceptualisation of structure will also have to change.
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-At a minimum we may need to embrace an international political economy view of international
relations
-Globalisation is linked to ‘modernisation’, which can be seen as a continuous process - i.e. states go
on modernising along a continuum
-Change and transformations are involved
-Reductions in the level of modernisation in any state could only occur at great social cost or
disruption
-A "paradox" of change exists - the initial lingering and then destruction of outmoded institutions
(progress also involves some disintegration)
-There is a destabilising lag between perceptions of what the world is like and external reality (hence
importance of analytical perspectives).
A new view of the structure of the global political economy:
-Susan Strange (States and Markets) observes a world comprised of four main structures. They are
reasonably distinct, but prop each other up
-They are the:
Security structure
Production structure
Finance structure
Knowledge structure
-Power in the global system is seen to be either structural (enabling the shaping of the structures) or
relative (reflecting the deployment of resources or influence within a structure.
-Power is not held or deployed just by states
Taking this further we can talk of the need to understand a 'new diplomacy' between governments
and firms, and alliances of mixed groups of firms and governments (see Stopford and Strange, Rival
States, Rival Firms)
-A last point on this type of conceptualisation of the contemporary global structure is that it is not
just the borders of states that are eroding with globalisation. The borders of firms are also eroding!
Especially in the context of the complex networks that have developed (see above).
3. STRUCTURES OR AGENTS IN INTERNATIONAL RELATIONS?
Main point: Whether we confine our view of the structure of the international system to states or
broaden it there is a common difficulty.
-Our study of history does not resolve the issue of whether global structures shape the behaviour of
individual units within the structure or whether the cumulative actions of individual agents determine
the pattern of structures (be they security, finance, production or knowledge)
-Did the 19th century balance-of-power system determine the actions of states or did the actions of
states create the balance of power system?
-Today such questions are more difficult given the above complexity.
Questions:
 Which if any of the four structures identified by Susan Strange is the most significant?
 Does the power to shape these structures lie with states or with other actors or classes
(including the transnational managerial class identified by Cox)?
 Can the agency-structure dilemma be resolved?
CONCLUSION
-Globalisation is a very significant phenomenon reflecting the increased connectedness and
interdependence of the global system
-It is a multifaceted phenomenon, which is therefore difficult to study
-It may herald a change in the international system so profound that the accumulative effect is the
erosion of the state to a level where our traditional conceptions of the role and power of governments
both at the domestic and international levels must be radically altered.
-Real power may lie with a transnational managerial class facilitated by states and other actors.
IF YOU HAVE PROBLEMS IN DEFINING ANY OF THE TERMS USED IN THIS
HANDOUT PLEASE DO NOT HESITATE TO ASK ME FOR HELP
Main Texts:
Ravenhill, J. (ed)
Global Political Economy (Oxford, Oxford UP) 2004, ISBN 0-19-926584-4
14
O'Brien, R., and M. Williams
Global Political Economy: Evolution and Dynamics (Basingstoke, Palgrave) 2003, ISBN 0333-68963-1
Goddard, C, Roe, et al
International Political Economy, 2nd edition (Basingstoke, Palgrave Macmillan) 2003, ISBN
0-333-98485-4
Schwartz, H.
States Versus Markets, 2nd edition (Basingstoke, Palgrave) 2000, ISBN 0-333-80263-2
R. Gilpin
The Political Economy of International Relations (Princeton U.P.), 1987, ISBN 0 691 02262 3
S. Gill and D. Law
The Global Political Economy: Perspectives, Problems and Policies (Harvester Wheatsheaf),
1988, ISBN 0 7450 0265 X
D.Held et al
Global Transformations, (Cmbridge Polity Press) 1999, ISBN 0-7456-1499-X
A. Walter
World Power and World Money (Harvester Wheatsheaf), 1993, ISBN 0-7450-1441-0
S. Strange
Mad Money, ( Manchester U.P.) 1998, ISBN 0 7190 5237 8
S. Strange
States and Markets: An Introduction to International Political Economy, 2nd ed (Pinter),
1994, ISBN 1 85567 236 7
P. Dicken
Global Shift, 3rd Ed. (London Paul ChapmanPublishing) 1998, ISBN 1-85396-367-4
R. Cox
Production, Power and World Order (Columbia U.P.), 1987
M. Williams
International Economic Organisations and the Third World (Harvester Wheatsheaf), 1994,
ISBN 0 7450 1432 1
J.M. Stopford &
S. Strange
Rival States, Rival Firms, (Cambridge U.P), 1991, ISBN
0 521 42386 4
Readers:
R. Stubbs &
R.D. Underhill (eds)
Political Economy and the Changing Global Order
(Macmillan), 1994, ISBN 0-333-61688-X
D. Balaam and
M. Veseth (eds)
Readings in International Political Economy, (Prentice
Hall, Simon & Schuster), 1996, ISBN0-13-149600-X
C. Murphy &
R. Tooze (eds)
The New International Political Economy (Lynne
Rienner), 1991, ISBN 1 55587 261 1
J.A. Frieden & D.A. Lake
International Political Economy: Perspectives on Global Power and Wealth, 4th Edition
(Routledge), 1999, ISBN 0-415-22279-6
K.W. Styles &
T. Akaha (eds)
International Political Economy: A Reader
(Harper Collins), 1991, ISBN 0 673 46382 6
R. Pettman (ed)
Understanding International Political Economy, with Readings for the Fatigued (Lynne
Rienner) 1996, ISBN 1-55587-677-3.
M. Talalay, C. Farrands
& R. Tooze (eds)
Technology, Culture and Competitiveness: Change and the World Political Economy
(Routledge) 1997, ISBN 0-415-14255-5.
Introductory texts:
D. Balaam
and M. Veseth
Introduction to International Political Economy,
(Prentice Hall, Simon & Schuster), 1996, ISBN 0-13-149592-5. This may be hardback ISBN.
Order paperback if possible.
T.D. Lairson &
D. Skidmore
International Political Economy: The Struggle for
Power and Wealth, Harcourt Brace, 1993, ISBN 0-03-054589-7
D.H. Blake &
R.S. Walters
The Politics of Global Economic Relations - most
recent edition.
J. Spero & J. Hart
The Politics of International Economic Relations - 5th edition ISBN 0-415-16648-9.
P. R. Viotti & M. Kauppi
(eds)
International Relations Theory: Realism, Pluralism and Globalism
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