Globalization and American Power Kenneth N.Waltz SSOCIATING interdepen- cies,and more recently Michael Doyle dence with democracy,peace projected that this would happen some- and prosperity is nothing new. time between 2050 and 2100.1 Before World War I,the close interde- Robert Keohane and Joseph Nye,in pendence of states was thought of as their 1977 book Power and Interdependence, heralding an era of peace among nations, strengthened the notion that interdepen- and democracy and prosperity within dence promotes peace by arguing that them.In his widely read book,The Great simple interdependence had become Illusion,Norman Angell summed up the complex interdependence,binding the texts of generations of classical and neo- economic and hence the political interests classical economists and drew from them of states ever more tightly together.Now the dramatic conclusion that wars would we hear from many sides that interdepen- no longer be fought because they would dence has reached yet another height, not pay.World War I instead produced transcending states and establishing a the great disillusion,which reduced polit- Borderless World,the title and theme of ical optimism to a level that remained low Kenichi Ohmae's 1990 book.People, almost until the end of the Cold War- firms and markets matter more;states “almost'”,because beginning in the 1970s matter less.Each tightening of the eco- a new optimism,strikingly similar to the nomic screw raises the benefits of eco- old,began to resurface.Interdependence nomic exchange and makes war among was again associated with peace,and the more advanced states increasingly increasingly with democracy,which began costly.The simple and plausible proposi- to spread wonderfully to Latin America, tions are that as the benefits of peace rise, to Asia and,with the Soviet Union's col-so do the costs of war;when states per- lapse,to Eastern Europe.In 1989 Francis ceive wars to be immensely costly,they Fukuyama foresaw in these pages a time will be disinclined to fight them.Still,war when all states would be liberal democra- is not abolished,because even the strongest economic forces cannot con- Kenneth N.Waltz,former Ford Professor of quer fear or eliminate concern for nation- Political Science at the University of al honor.Generally,however,economic California,Berkeley,is a research associate of interests dominate and markets begin to the Institute of War and Peace Studies and adjunct professor at Columbia University.An Doyle,Ways of War and Peace:Realism,Liberalism, earlier version of this essay was published in the and Socialism (New York:W.W.Norton, December issue of PS:Political Science Politics. 1997),pp.480-1. 46 The National Interest-Spring 2000. Copyright @2000.All rights reserved
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supplant politics at home and abroad. made;they happen,and they happen That economics depresses politics and because many individual investors make limits its significance is taken to be a simultaneous decisions on similar happy thought. grounds to invest or to withdraw their funds.Globalization is a process shaped The State of the State by markets,not by governments. Globalization means homogenization. LOBALIZATION is the fad Prices,products,wages,wealth,rates of of the 1990s,and globaliza- interest and profit tend to converge the tion is made in America. world over.Like any powerful movement Thomas Friedman's The Lexus and tbe for change,globalization encounters Olive Tree(1999)is perhaps the most exul- resistance-in America from religious tant celebration of the American way,of fundamentalists,labor unions and their market capitalism and liberal democracy. allies;abroad from anti-Americanists; Free markets,transparency and flexibility everywhere from cultural traditionalists. are the watchwords.The "electronic The "end of the Cold War and the col- herd"moves vast amounts of capital in lapse of communism have discredited all and out of countries according to their models other than liberal democracy." political and economic merits.Capital The statement is by democratic theorist moves almost instantaneously into coun- Larry Diamond,and Friedman repeats it tries with stable governments,progressive with approval.There is but one best way, economies,open accounting and honest and America has found it.As Friedman dealing,and out of countries lacking puts it,"It's a post-industrial world,and those qualities.States can defy the“herd”, America today is good at everything that but they will pay a price,usually a steep is post-industrial."The herd does not one,as did Thailand,Malaysia,Indonesia care about forms of government as such, and South Korea in the late 1990s.Some but it values and rewards "stability,pre- countries may defy the herd inadvertently dictability,transparency,and the ability to (the countries just mentioned);others out transfer and protect its private property." of ideological conviction(Cuba and The message to all governments is clear: North Korea);some because they can conform or suffer. afford to (oil-rich countries);others There is much in what Friedman says, because history has simply passed them by and he says it very well.But how much? (many African countries). And,specifically,what is the effect of clos- Countries wishing to attract capital er interdependence on the conduct of the and to gain the benefits of today's and internal and external affairs of nations? tomorrow's technology must don the First,we should ask how far global- “golden straitjacket'”,a package of poli- ization has proceeded.In fact,much of cies including balanced budgets,econom- the world has been left out of the process: ic deregulation,openness to investment most of Africa and Latin America,Russia and trade,and a stable currency.The all of the Middle East (except Israel),and herd decides which countries to reward large parts of Asia.Moreover,for many and which to punish,and nothing can be countries the degree of participation in done about its decisions.The herd has no the global economy varies by region telephone number.When it decides to Northern Italy,for example,is in;south- withdraw capital from a country,there is ern Italy is out.Globalization is not truly no one to complain to or petition for global,but is mainly limited to northern relief.Decisions of the herd are not latitudes.Linda Weiss points out that,as Globalization and American Power. 47 Copyright 2000.All rights reserved
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of 1991,81 percent of the world stock of ners are imitated by the losers.In politi- foreign direct investment was located in cal as in economic development,late- high-wage northern countries:the comers imitate the practices and adopt United States,followed by the United the institutions of the countries that have Kingdom,Germany and Canada.She shown the way.Occasionally,someone adds that the concentration of investment finds a way to outflank,to invent a new in these countries has increased by 12 way or to ingeniously modify an old way percent since 1967.2 Obviously,the world to gain an advantage;and then the is not one. process of imitation begins anew.That Second,we should compare the inter- competitors begin to look like one dependence of nations today with inter- another if the competition is close and dependence earlier.The rapid growth of continuous is a familiar story.But the international trade and investment from apostles of globalization argue that the the mid-1850s into the 1910s preceded a process has now sped up immensely.In prolonged period of war,internal revolu- the old political era,the strong van- tion and national insularity.During the quished the weak;in the new economic years of post-World War II recovery,pro- era,says Friedman,quoting Klaus tectionist policies lingered as the United Schwab,“the fast eat the slow.”No States opened its borders to trade while longer is it"do what the strong party says taking a relaxed attitude toward countries or risk physical punishment'”,but“do that protected their markets.One might what the electronic herd requires or say that from 1914 into the 1960s an remain impoverished."In a competitive interdependence deficit developed,which system,a few do exceptionally well,some helps to explain the steady growth of get along,and many bring up the rear. interdependence thereafter.Among the If states must conform to the ways of richest twenty-four industrial economies the more successful among them or pay a (the OECD countries),exports grew at stiff price for not doing so,we then have about twice the rate of GDP after 1960.In to ask what becomes of the state itself. 1960 exports accounted for 9.5 percent of The message of globalizers is that eco- their national GDPs;in 1900 that figure nomic and technological forces impose on was 20.5 percent.3 Finding that the level states a near uniformity of political and of interdependence in 1999 approximately economic forms and functions.A glance equals that of 1910 is hardly surprising. at just the past seventy-five years,howev- What is true of trade also holds for capital er,reveals that a variety of political and flows,again as a percentage of GDP. economic systems have produced impres- Third,money markets may be the sive results and have been admired in only economic sector that has become their day for doing so. truly global.Finance capital moves freely across the frontiers of OECD countries 2Weiss,The Myth of the Powerless State:Governing and quite freely elsewhere.Still,with the the Economy in a Global Era (Cambridge,UK: movement of financial assets as with com- Polity Press,1998),p.186. modities,the present remains like the 3Robert Wade,"Globalization and its Limits: past.Despite today's ease of communica- Reports of the Death of the National tion,financial markets in 1900 were at Economy are Grossly Exaggerated",in least as integrated as they are now. National Diversity and Global Capitalism,ed. Yet many globalizers underestimate Suzanne Berger and Ronald Dore (Ithaca, the extent to which the new resembles the NY:Cornell University Press,1996),p.62 old.In any competitive system the win- Cf.Weiss,Mytb,Table 6-1. The National Interest-Spring 2000. Copyright 2000.All rights reserved
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In the 1930s and again in the 1950s, has proved wanting,and the economies the Soviet Union's economic growth of the European Union suffer from high rates were among the world's highest,so unemployment and low growth.One can impressive in the 1950s that America easily add more examples.From these it feared being overtaken and passed by.In is tempting to leap to the conclusion that the 1970s,West European welfare states America has indeed found,or stumbled with managed and directed economies onto,the one best way. were highly regarded.In the late 1970s Obviously,Thomas Friedman thinks through the 1980s,the Japanese brand of so.Tip O'Neill,when he was a congress- neomercantilism was thought to be the man from Massachusetts,declared that wave of the future,and Western Europe all politics are local.Wrong,Friedman and the United States worried about now says,all politics have become global. being able to keep up.Imitate or perish "The electronic herd",he writes,"turns was the counsel of some;pry the the whole world into a parliamentary sys- Japanese economy open and make it tem,in which every government lives compete on our grounds was the mes- under the fear of a no-confidence vote sage of others.America did not do much from the herd.” of either,yet in the 1990s its economy, too,has flourished. UT IT IS hard to believe that Yet it is odd-and intellectually reck- economic processes direct or less-to conclude from a decade's experi- determine a nation's policies, ence that the one best model has at last that spontaneous individual decisions appeared.True globalization,if it were about where to place resources reward or realized,would mean a near uniformity of punish a national economy so strongly conditions across countries.But even in that a government either does what pleas- the 1990s,one finds little evidence of this. es the“herd”or its economy fails to pros- The advanced countries of the world have per or even risks collapse.We all recall enjoyed or suffered distinct fates.Major recent cases,some of them mentioned West European countries were plagued above,that seem to support Friedman's by high and persistent unemployment; thesis.Mentioning them both makes a many Northeast and Southeast Asian point and raises doubts. countries experienced economic stagna- For one thing,even if all politics has tion or collapse,while China continued to become global,economies remain local do quite well;and we know about the to a surprising extent.Countries with United States. large economies continue to do most of Globalizers,to be sure,do not claim their business at home.Sectors of the that globalization is complete,only that American economy that are scarcely the process is irreversible.Some evi- involved in international trade-such as dence supports the conclusion,some government,construction,nonprofit does not.Looking at the big picture, organizations,utilities,and wholesale one notices that nations whose and retail trade-employ 82 percent of economies have faltered or failed have Americans.4 As Paul Krugman observes, been more fully controlled,directed and "The United States is still almost 90 per- supported by the state than has the cent an economy that produces goods American economy.Soviet-style economies failed miserably,in China 4 Robert Z.Lawrence,“Workers and EconomistsⅡ: only the free-market sector flourishes, Resist the Binge",Foreign Affairs (March/April the once much-favored Swedish model 1994). Globalization and American Power 49 Copyright 2000.All rights reserved
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and services for its own use."For the and France have grown more closely world's three largest economies-the together as each became the principal United States,Japan,and the European trading partner of the other.But a study Union taken as a unit-exports account of the two countries concludes that for 12 percent or less of GDP.5 The France has copied German policies yet world,then,is less interdependent than has been unwilling or unable to copy is usually supposed.Moreover,developed German institutions.8 countries,oil imports aside,do the bulk of their external business with one HE MOST telling refuta- another,which means that their depen- tion of the belief that state dence on imported commodities that power has sharply declined is they could not easily produce themselves to be found in the state's capacity for is further reduced. transformation.Because technological Reinforcing the parochial pattern of innovation is rapid,and because eco- productivity,the famous footloose corpo- nomic conditions at home and abroad rations also turn out to be firmly change often,states that adapt easily to anchored in their home bases.A study of such changes enjoy considerable advan- the world's one hundred largest corpora- tages.International politics remains tions concludes that not one of them inter-national.National systems display a could be called truly“global'”or“foot- great deal of resilience.Those that adapt loose."Another study found exactly one well grow and prosper;others just man- multinational corporation that seemed to age to get along.In this spirit,Ezra Taft be leaving its home base:Britain's chemi- Benson,when he was President cal company,ICI.On all the important Eisenhower's secretary of agriculture, counts-location of assets,site of research gave this kindly advice to America's small and development,ownership,manage- farmers:“Get big or get out..” ment-the importance of a corporation's Success in competitive systems home base is marked.And the technologi- requires the units of the system to adopt cal prowess of corporations corresponds ways they would often prefer to avoid. closely to that of the countries in which The United States looked to be heavy- they are located. footed in the 1980s when Japan's econo- Again,within advanced countries at my was booming.It seemed that the similar levels of development that are Ministry of International Trade and closely interrelated,one would expect Industry was manned by geniuses who uniformities of form and function to be guided Japan's economy effortlessly to its most fully displayed.Indeed,GDP per impressive accomplishments.Now it is work hour among seven of the most pros- the United States that appears light-footed. perous countries nearly came into align- ment between the 1950s and the 1980s.6 5Weiss,Mytb,p.176. Yet,while countries at a high level of 6Robert Boyer,"The Convergence Hypothesis development do tend to converge in pro- Revisited:Globalization but Still the Century ductivity,that is something of a tautology. of Nations",in National Diversity,p.37. Stephen Woolcock,looking at forms of 7Woolcock,"Competition among Forms of corporate governance within the Corporate Governance in the European European Union,finds a "spectrum of Community:The Case of Britain",in National approaches"and expects it to persist for Diei西y,卫.196. the foreseeable future.7 Since the 1950s, 8Andrea Boltho,"Has France Converged on for example,the economies of Germany Germany?",in National Diversity,chap.3. 50 The National Interest-Spring 2000. Copyright 2000.All rights reserved
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