January 17, 2005

The Meaningless Concept of Globalization

Below, guest blogger Matthew R Tubin of the University of Pennsylvania's Department of Political Science,  offers his commentary and insights on labor unions and the "globalization" debate.

Many arguments about labor strategy often start with an implicit question - How should labor deal with “Globalization”?  It is too bad for those partaking in such discourses that “Globalization" is a meaningless concept. David Held (1999, 1) and his co-authors suggest the problem as follows:

“Globalization is an idea whose time has come…Yet, it lacks precise definition. Indeed globalization is in danger of becoming, if it has not already become, the cliché of our times: the big idea which encompasses everything from global financial markets to the Internet but which delivers little substantive insight into the contemporary human condition.”


Are we talking about changes in technology, finance, the production structure, communications, transportation, cultural transmission, or the proliferation of democratic regimes?  It is important to distinguish between these economic flows themselves, the political apparatuses that manage the development of international markets, and other mechanisms that increase the prominence of these very flows – particularly technology.  Pundits and ideologues, from Thomas Friedman to the protestor on the streets in Washington, DC are understandably confused about the world with which they live.  Serious scholars have done little to demonstrate the problems with this world view, and interest groups, from business on the right, and unions on the left all may profit in a small sense from the propaganda value of this ideological debate.  The main difference between business and labor being that business executives may understand the public relations value of global baloney rhetoric, but in the boardroom do not operate as if that “new economy” determines everything they do or must struggle with.

The debates around “globalization” in political economy, labor studies, and international economics are highly controversial, ranging from claims that economic integration and international market competition are withering away the state’s autonomy; to outright skepticism regarding any substantive change in the international system whatsoever (Ohmae 1996; Gilpin 2001, 304).  It is my contention that there exists an underlying empirical basis for segments of each largely academic and rhetorical debate about processes of international market transformation, though what is “different” or “new” is grossly exaggerated.  This underlying phenomenon can and should be analyzed by scholars, policymakers, businessmen and union researchers, but it must be done without the ideological baggage of lumpy, cliché conceptualizations that do little to help one understand the world.

How can labor (or business for that matter) respond to such an amorphous concept like globalization? Forming a strategy against everything and nothing at the same time is not good strategic planning.  Grand strategic thinking is of course necessary, but even here an understanding of the specific dynamics of the theater you operate within is necessary to be successful.  Considering “globalization” the enemy is tantamount to making the same strategic errors that Bush is making in American foreign policy – fighting non existent demons, squandering resources, and reducing the possibility of achieving your own goals.  I argue that fixation on the normative creates false perceptions on the part of union leader.  The running analogy throughout this short rant is the early 20th century debate between realists and liberal idealists in the field of International Relations.[1]  Instead of calculating strategy the way the corporate executives do to maintain survival in a competitive market place, some leadership is guilty of believing rather than thinking.  While I present no empirical evidence to suggest this is the case, my intention is to convince those in the union sector to reconsider their role in the market place, and ultimately the larger society they are a part of.  By reconsider, essentially I mean focus on how they might adapt to their strategic environment.

The failures of 1990s academic predictions are startling.  Global pressures were supposed to dismantle the welfare state even though OECD states have actually increased expenditures (Swank and Steinmo 2002). Garrett (1998) finds that despite “globalization” of financial and trade-flows the welfare state in advanced industrial economies remains resilient and even offers theories from neoclassical economics to explain his findings.

Hayek and Friedman fans were happy to see to "decline of the state" arguments become popular again.  The days of Keynesian economic strategies seemed to be over.  From then on, it seemed that it was not just Thatcher and Reagan who embraced monetarist principle, but countries around the globe that had no choice but to adjust to the strait-jacket imposed on them by international capital.

Instead, capital liberalization actually requires greater state regulatory capacity (just think of the failures in Japan). Even Marxists like Chase-Dunn and Grimes (1995) argue that growth of enterprise in the world political economy is usually followed by growth in states.   The expansion of multinational production structures requires strong not weak state capacity.  Lowi (2001) claims that multinational corporations are now more dependent on the state then more historical forms of enterprise.  Lowi identifies functional prerequisites that a market economy needs that can only be provided by the state ranging from law and order through standardization of substantive legality and allocation of responsibility of injury.

The Asian Financial Crisis (1997) convinced conservative economists like Anne Krueger at the International Monetary Fund that international institutional regulatory apparatuses must be expanded to ensure global financial stability (Krueger 2003).  Union density decline has been blamed on the increasing “exit option” liberal capital markets gives companies.  Foot-loose companies were supposed to abandon high-paying unionized Northern workforces, and transfer productive facilities abroad to Mexico, Brazil, and the sweat shops in Bangladesh.  Instead FDI flows are concentrated overwhelmingly in the Triad (US, EU and Japan), and since the mid 1990s the Chinese market has become extremely important.

Is seems important to question whether capital indeed has gained leverage over labor and other actors in the economy. Has there been a qualitative shift to asymmetric market bargaining power that is historically unprecedented like the globalists are claiming?

Whether you are a Marxist or not, the idea that structural advantages for business or particular business sectors exist in capitalist society is nothing new. Whether from the perspective of collective action theory or even pluralist theory it is clear that capital privilege is a fundamental aspect of democratic advanced capitalist societies, one in which no amount of labor organizing can change. Two arguments of particular importance in this regard are that of Lindblom (1977) and Olson (1971).  Lindblom (1977, 170-188) argues that businesses in market economies maintain a privileged role in politics because of the very nature of production decision-making and the primacy of business concerns in a market oriented polity.  Lindblom suggests that this unique position of business is vital to the success of a market economy.  Olson (1971, 143) argues that the very structure of industry, in its oligopolistic form, leads to a higher degree of organization for business interests.  For these reasons, there is nothing new about the lopsided structural power of capital in contrast with other economic agents in the market system.  The difference in part between these historical arguments and those related to the globalization and open-economy theses is the idea of heightened “exit threats” on the part of capital particularly related to relatively mobile factors like finance (Frieden 1991; Keohane and Milner 1996; 243).  For Lindblom (1977, 185) the structural importance of capital in the economy was enough to motivate government actors to cater to business demands, making collective action or threats rare from the business community.  If Lindblom is correct about advanced industrial political economies, then often the latent exit threat is not even necessary.

Globalization arguments in their most basic form do have a coherent liberal logic to them, but this logic has failed miserably throughout economic history.  The simple problem being that the elegance of the arguments leaves out too many countervailing or complicating factors in the real world.  As Jones (1999, 360) points out, the very questions related to globalization center on the structure and agency debate.  Are the transformations, economic flows, and political processes that have unfolded caused by human volition or impersonal forces in the world economy?  While it is clear from a common sense perspective that structures and agents matter – the ideological interpretations of “globalization” leave one convinced that changes are somehow “exogenous” to the political and economic decisions of statesmen, corporate executives, workers and individual consumers.

Perhaps it is this trivial thinking, or the lack of cold-hearted realistic strategy that is leading to the decline in union density and not international competitive pressures. Convergence theories are a liberal tradition - they existed in the 1800s with Cobden, and in the early 20th century with President Wilson.  In the 1970s just as the Modernization version of the debate was starting to die out, Interdependence arguments resurfaced (Cooper 1968; Keohane and Nye 1977). Since the ‘90s the flavor is globalization (Ohmae 1996; Friedman 2000; Strange 1996).  Throughout history the Americans and British have always been caught up trying to understand why the rest of the world is not “just like us.”  Subsequently, Anglo-Saxon intellectuals designed theories enabling themselves to reduce the dissonance empirical reality brought upon our understanding of the world by positing convergent liberal democratic capitalist development everywhere.  It is understandable that policymakers, pundits and scholars were excited with structural changes in the world economy that became increasingly apparent at the end of the Cold War, but presentism has been a consistent problem with economic debates for the last few hundred years.  If you need an example think of the “decline of the state” argument.  In the early 20th century discussions of trade and interdependence between nations gave rise to decline like arguments.  Market forces were supposed to have becomes so powerful, that nation-states would lose the incentive to fight wars with each other since the interests of firms and investors would outweigh those of states.  Norman Angell won a Nobel Prize for a book on this topic just as the world plunged itself into total war.  In 1957 John Hertz thought that the nuclear revolution made the territorial state an anachronism.  And now, we often hear that market forces are outgrowing governments to a degree unparalleled in history.  Even though everyone grabbed their Fukuyama (1993) and Huntington (1991) the world did not suddenly reach a break in historical processes, and the intellectual hysteria was bound to diffuse over time.

In the study of international relations the battle of ideas in one way or another has always been between idealists and realists. Idealists have a fixed ideological notion of how the world works and try to manipulate the world to fit their often cloudy and confused vision, while realists except the constraints of reality and are able to design policy that may serve the interests of their society or a sub-stratum of it. Normative arguments are important, but they are utterly useless without a practical understanding of the empirical world.  Labor unions do not need a liberal ideological vision - they need a leader the likes of a labor Henry Kissinger who will fight dirty for selfish interests.

Yes I said selfish - individual unions and sectors will look out for their own workers, and national unions will look out for workers in their society to the detriment of others - the idea of international labor solidarity is nonsense. If the American worker protects himself, he may hurt the American consumer, and the Chinese worker. If workers in import-competing industry unions are successful at raising trade barriers, they hurt workers in exporting industries in addition to the American consumer who must now pay more for his consumption bundle.  Chinese workers are hurt every time we raise the barrier to the domestic market, and yet many have the gall to claim victory for the Average American, and sometimes the international community when they simply fight for themselves.  The rhetoric of egalitarianism is about as meaningful as George Bush's democracy rhetoric - if you buy it you are doomed to failure. If you are fighting to redistribute income it means you are taking something away from other people - not an abstract enemy - real people some of whom are other folks in similar jobs to your own.  Grand delusions about the moral superiority of labors position in society are not helpful to the labor cause.  A realist union strategy confronts labors need to look out for itself to the detriment of other groups in society.

Who is your real enemy, what is a realistic strategy to obtain your collective goals? What are the costs and benefits of this strategy to you and other actors in society?  And does any of this have to do with so-called Globalization?



[1] For an excellent introduction to this debate see EH Carr 1939.

January 17, 2005 in Globalization, Matthew R Tubin - Guest Blogger | Permalink | Comments (0) | TrackBack