GLOBALIZATION
But what is that, when its started, is not a simple or closed issue, and reflects the
interdisciplinary nature of IPE.
Shaping actual globalization
Globalization has been around by ages. In a narrow sense we could say that is the integration of
distinct actors (territorially and culturally) into a wider global system, an integration where they
are increasing their linkages and usually this integration influences its economy, polity, society
or culture.
We could refer globalization as “… the economic integration of national economies into a
wider global one, usually through international trade, capital flows, labor movements, and
global production networks. For some authors, this means the integration of countries into a
global capitalist system—that is, one based on private property, limited government
intervention, and the use of markets to allocate economic value.” (Encyclopedia) We could add
that has foster intercultural connections and interdependencies between societies. Some
analyst argue that has created a new form of capitalism, “benefits everyone, especially in an
economic way, and has spread democracy”. However, these statements are highly argued.
Nowadays, there is a distinctive form of globalization. Historically speaking, and for analytical,
we could stablish the first momentum of this form of globalization in 1492-1494, where
Spaniards and Portuguese divided the world and the colonial right over the territories. That’s
created a wider-international market system and settling three broad trades (arm, slaves and
species trade).
Later, an as a consequence of political and technological revolutions and conflicts, the end of
XIX century and mostly the first half of the XX century, see the formation of the nation-states,
where modern capitalism-imperialism gained strength, and subsequently political trends
embodied within (fascism, communism and modern capitalism). At the beginning of XX
century the international politics was more an independent discipline of IR, were politic was
circumscribed on diplomacy, political theory and the study of state system
After, the post WWII era, the Cold War days, where two hegemons drive geopolitics and
international (politics and economic relations were tied to the tensions that were happening
within powers) The GATT, the Warsaw Pact, The NATO, The Marshall Plan, The Green
Revolution, all are circumscribed to these tensions.
“Finally (almost),” the neoliberal era, one in which the current type of globalization gained
momentum. This momentum started in the 70s and strengthened with Reagan-Thatcher politics
inspired in neoliberalism ideas. The 70’ events started a shift in the field, moving from a
military oriented world order to a global order that needed an IPE focused on mixing political
and economy issues, as a consequence of what was happening in the global order. Some
scholars track modern economic globalization in the Thatcher Reagan Era, with politics
embeddedness in liberalism and free trade.
The born of L-F globalization
The Post WWII was an era where USA took on its role of world power (Hegemon) and
structure a world economy , fostering international institutions agreements (GATT), applying an
open economic policy tied with an internationalist foreign policy (tightly bound to the Cold war,
like the Marshall Plan) pushing for democracies (and dictatorship) in the world, supporting
them with remarkably favorable terms of trade (in Asia, Korea, Japan and Taiwan are examples
of this and in south America Venezuela is also an example) and subsequently the development
of European Coal and Steel Community1), are features of the capitalist world that was
reawakening (Globalization, Encyclopedia 973, Graeber 970).
In brief, an era of “endless” prosperity, where the standard of living in capitalist countries,
specially USA, grow enormously thanks to a social democratic consensus where working class
of North Atlantic countries enjoyed social benefits ass wells as class ascensions with “full
employment policies through aggregate demand management (…) At the same time, the
welfare state expanded rapidly, and by the early 1970s about one-fifth of the Gross Domestic
Product (GDP) in advanced capitalist countries (apart from Japan) was spent on social
expenditures 26 ” (Fotopoulos, 26) in a context of cheap energy, started to fall in the late 60’s.
(Graeber 974-975).
… Keynesian techniques of demand management were used to achieve this steady
economic growth. A mixed economy prevailed in which publicly-owned state utilities and
privately-owned capital operated alongside each other. A similar mix of public and private
provision prevailed in the social services with the state fulfilling the responsibility of
providing a universal welfare service for all its citizens but with the private provision of
health, education, and insurance also existing alongside. Rising personal living standards
enabled the demands of the citizenry to be satisfied without question of the redistribution
of wealth or power emerging as a major political issue. [Seyd. The Breakdown of Social
Democratic Consensus. In: The Rise and Fall of the Labour Left (1987; 18)]
The rise of living standard satisfy citizens demand, so this new middle class in ascendance was
satisfied and don’t question redistribution of wealth and power
1
To integrate the coal and steel industries in western Europe. The original members of the ECSC were France, West Germany, Italy,
Belgium, the Netherlands, and Luxembourg
The crisis
The crisis are complex issues, but to summarize this one, we could mention several factors that
are considered a significant cause of the 70 USA crisis.
We could talk about a
I. Long term process
Gradual manufacturing decline in the sector related to the competing sector of the world
manufacturing (fostered by US). Manufacture sector 1/3 WF was competing against cheaper labor
cost, cheaper raw material and against more productive economies. American manufacturing
companies out of business
The competition lead to manufactures to either eliminate high payment manufacturing jobs,
increase automation, shift factories to lower wage regions of the US or overseas. That reduce
taxes in cities and public services decline
1971 a export trade deficit (M greater than X). Dollar was a great currency because was tied to
gold, and they can buy more, but also the American products were more expensive for the rest of
the world. That implied a greater outflow of dollars, and there was a general conviction that they
were not in a position to maintain convertibility with gold, so they ended BW system.
Additionally, the Vietnam war was getting to expensive and had been financed by deficit
spending;
The high spending that the Vietnam War entailed and the expansion of social programs in the
country without the consequent increase in taxes favored inflation (the price of goods and
services).
II. Shock process
Two crisis shock US and world economy. Firs the 1973 oil crisis, where in response to western
support to Israel, Middle Eastern Arab states suspended to the US, resulting in line for gasolines,
dramatic oil prices, and the desire to buy more efficient cars (the automobile was one of the USA
main industries). That foster the inflationary process because it was (and still is) a fossil fuel
economy. So, with inflation and stagnation, a new economic phenomenon happens, stagnation.
(Turkish 155).
The growing internationalization of the market economy started to collapse the aggregate
demand managements, because the state used to control market size manipulating de aggregate
demand (Fotopoulos, 29)(Keynesianism). Additionally
Neoliberalist (L-F) Era
The economic crisis fosters the rejection of pots-war Keynesian consensus, because leads to a
shock in the Keynesian economic thinking, the consensus that govern could solve macroeconomic
problems.
and bring Neoliberal Ideas to the P-E boardgame. Ideas that were propitious due the
institutionalization of the internationalized market economy foster by USA and the politics that
Jimmy Carter started to promote, but major drivers were Regan-Thatcher
It’s rest on economistic worldview, that’s mean tilt to the economic analyses (production,
exchange and consumption) to understand globalization, minimizing other approaches to
comprehend global-social relations so “Cultural, ecological, geographical, political and
psychological aspects of globality are generally approached as functions of, and subordinate to,
economics (laissez-faire market economics), if they are considered at all.” (UN, 7)
Basically, its core is the classical liberal perspective that market forces plus individual
autonomy triumphs over state power, managing efficiently the economic activities. That is,
supporters state the superiority of economic freedom against public intervention, where the free
economic competition is better managing human endeavors than state planning (Neoliberalism,
Encyclopedia 1676,1677). The forces of supply and demand will better unfold the development
of production distribution and consumption, and multilateral institutions and national
authorities will provide the regulatory framework for the efficiency of global markets (UN,
8)
The market forces at the end will match society needs, maintain quality, allocate resources
efficiently and keep quality in a high standard”
Essentially, for neoliberalist its necessary to strength the power of who own capital and control
the economy, and that implies a significance reduction of social (or state control) over
markets. We can summarize the principles of interrelated policies based on neoliberalism (L-F)
idea as follow:
• Liberalization: neoliberalism states that its necessary for grow the unfettered movement
of the production factor (capital and labour).
o The labour forces need to be more flexible to market conditions (this referred
to the power that syndicates has gained in the s-d consensus). Hence, labour
force it’s a commodity and the price (wages) needed to be tied to market
conditions. Therefore, the employment (and unemployment) its going to be
something that market force will take care, and its necessary to restrict state
action.
o The capital also needs to flow freely, because the idea is more to maximize
rentability and not productivity, that mean speculative gains. Capital will go
where it has the best conditions (less regulation).
o Also, commodities need to flow free, with no restrictions to enter economies,
that is a totally free trade (a policy that many advocates but few implement).
• Privatization: the public administration of enterprises and services is considered
inefficient, so it’s necessary to handover those to private capitals. Therefore, the
welfare state of the social-democratic consensus can’t no longer exist, and services such
as health, education, pension schemes are forced to enter to the marketization
process, because market forces will provide efficiently those services.
• Deregulation (or “reregulation): The public sector must enable, not do, the efficiency of
global markets, allowing and ensuring property right as well as legal contracts.
Therefore, neoliberal deregulation has only stipulated the suppression of any rules and
practices that presumably disturb market dynamism, harm incentives and threaten
efficiency like “(…) wage and price controls, subsidies, fixed exchange rates, a
number of taxes and fees on business, and progressive taxation of personal
income” as well as greater flexibility in employments practices (UN, 10). We can add
the limitations of environmental controls or bureaucratic formalities for firms.
Those ones, foster a capitalist globalization mainly based in free markets trade, profit
maximization and economic growth where the best way of achieve and endless economic
growth, that “naturally” promote welfare, is a stateless economic growth (What is IPE, 9)
In this period, US;GB and industrialized nations dedicated to endorse this type of
globalization (Capitalist), arguing that this would increase economic growth that will establish
the basic conditions for democracy. Hence, it’s necessary a free capital world investment
movement, that’s include the research for new markets, to increase production. (What’s IPE 17).
In 1980 there was a reinforcing of the capitalist economy integration, because countries were
opening more borders and market (Globalization, Encyclopedia 973).
In the following years, with the end of the Cold War and the “winning by default” of capitalism,
industrialized nations, supported in WB and IMF policies, started to promote this type of
capitalist globalization, ensuring that capitalism will promote a kind of economic growth that
will promote peace democracy and stability. Actually, development was associated with
economic growth, and the increase in GDP started to be the ultimate goal of the political
economy.
Discussing neoliberalist globalization
The results from tis type of economic globalization (one under the umbrella of neoliberalism)
has been broadly discussed. Actually, there exist an enormous polarized debate between
proponents/supporters and opponents/detractors. Also, there are some that argues that it has
both cost and benefits. Albeit, like we said before, facts continue shaping IPE, therefore,
because globalization its an ongoing process, definitive answer can not be given, and outcomes
evaluation should consider “other conditions such as rigid social stratifications, communal
tensions, demographic challenges, epidemics, pre-existent macroeconomic conditions and
natural disasters. In these circumstances of multiple and often interrelated causes, it is
difficult to isolate the precise influences of neoliberal policies” (UN, 11; Globalization 977).
Hence, for study purposes, we could refer some issues that represent an important field in IPE.
• Economic growth
A wider global related economy including free trade, foreign investment and capital
market liberation has stimulated growth. Nevertheless, it’s still a debate between
scholars what factor foster more growth than others. Let’s remember that in a narrow sense,
growth is the rise of GDP, and that’s uses to be the ultimate objective of nations.
Within that grown, neoliberalism states that the free market force will foster a growth that
will lead to an economic convergence, where poor countries adopting the free market
policies will growth faster and one day will catch up riches ones because of the trickle-
down effects. This is not worldwide happening: For instance, the N-S gap is still present,
the gains of free market tend to reach more gradually for those who stared with more
resources and power. Some countries seen to have gained, but this not necessarily meant
that within inequalities doesn’t exist or are getting worse. Currently, even some Asians
nations experienced per-capita a national growth, some others haven’t growing out of
poverty as neoliberalist globalization promised, not to mention Latin-American or
African economic situation. Additionally, most of the trade is drove by Big corporations
with huge market power, and they usually demise small producers.
Besides there is a decease in extreme poverty, poverty it still an issue in the world, and
even trade liberalization has increased the size of economy, there is an increase in the
inequal distribution of benefits as well as the negative externalities of the free trade
(Privatizing profits, socializing losses). Additionally, wages are stagnated in developed as
well developing countries. The unemployment it also a problem that neoliberalist trade
hasn’t solve, adding the underemployment problem, where working conditions due to
flexibilization, - reductions of job guarantees, union protections and other labour
rights- are worsening. Summarizing, GDP and profit are increasing, but jus benefit a
narrow corporate elite power.
That’s why some scholars argue that inequality has either remained fairly constant or risen.
Additionally, the environmental crisis and the climate change has become more drastic due
to economic growth and free trade
• Democracy
It’s said that neoliberalist globalization will ensure democracy. There is still a debate about
the casual connection of globalization and democracy. Democracy as we know it, is a
complex concept, and many factors are related to it. For instance, could undermine democracy
effectiveness by tying government sovereignty to global actors like MNcs or economic
powers. Furthermore, internal actors could lose political action power. This new economic
globalization, with denationalization and deregulation (the urge for free market and small
government) have made it harder for states to control the flow of goods and services across
borders, which can have significant impacts on domestic industries and employment. As
states have reduced their involvement in the economy, they have lost some of their ability
to manage the trade-offs between domestic and international interests (Higgot, 159). This
can create challenges for policymakers who are trying to balance the needs of different groups
within their societies.
Some argues that international institutions could pressure global actors to adapt
democratic measures to participate in the international system. Also, economic
globalization has been couple with world (democratic) globalization
movement/organizations, with actors called social movements, that globally advocates for
a democratic trade.
Economic democracy, a heterogenus statements that’s moves between competitive
democracy - trade relations are a way of release prosperity market forces, forcing competition
between companies, territories and countries - and social and solidarity democracy -
democracy must seek to germinate an economic order where the business dynamic is
solidarity-based, cooperative, with social and environmental sustainability, in which citizens
have the power to regulate the economy.
Conflicts and security
Usually both an increase in trade between countries and foreign investment is associated
with the consecution of an international capitalist peace typified by less international
conflict. On one side maybe there are now less international wars. However, internal and
external conflicts are still happening, and case like the conflict between Russia and the
supporting Ukrainian west countries point out that even countries are economically
trading, that’s not necessary lead to a world peace. Additionally, many internal conflicts
are still happening related to the free trade and movements of capitals. Contemporary and
recently cases such as Afghanistan, Israel-Hammas war, or the Iraq invasion after 9/11 show
us, that the spread of liberal democracies does not necessary lead to peace and no
international / domestic conflicts.
The world power balance is also been transformed in economic globalization. USA its not
the hegemon any more, and several states are shifting the relative power balance relatively
and globally. The trilateral convention intended in the 80’s has failed. China is increasing
his influence trough economic-soft power regionally and globally, Russia is acting as a
regional empire triying to consolidate its tentacles in the region. Seems like USA cannot
gain its hegemony again, the current conflict of its middle west sheriff Israel, the tension in
the Asia Pacific and the rise of china is an example of this. In this scenario, tension could
increase, complicating the global governance as well as world problems (What’s IPE
25)
Wherever the impacts are, benefits and damage of globalization are a big debate among IPE
scholars and international actors, and approach the broad issues regarding globalization is a
never-ending task. Globalization it’s a fact that cant be undone.
Globalization Power
Consequently to the Thatcher-Reagan era, factors such as the end of the Cold War or the
economic reforms that happening in China, and worldwide ex-communist countries integrating
his economies to a capitalist one, is undoubtedly that globalization gained strength. The end of
the XX century saw how most of the nations are integrated in capitalist” institutions such as the
WTO, the IMF or the World Bank, and are part of regional capitalist trade agreements.
Additionally, conventions regarding labour standard, human rights, environmental issues
are widely adopted, albeit they are no perfects, and actors’ interest and goals collide in the
way that these conventions should be taken. Moreover, economic shocks spread globally, such
de Asian Financial Crisis, the 2008 crack or the Covid-economic related Crisis. (Globalyzation
Encyclopedia, 974).
Indeed, globalization is meaningful in IPE, because has set up the rules and processes involved
in trade, money, technology, production or security, and it continues to change the power
(political, economic, social, cultural) of ipe’ players. (What is IPE Ballam 16). Simultaneously,
the expansion and seek for international competitiveness influence the relationship between
state authority and markets power, in a world where Multinational corporations started to
increase its relative power and the welfare state seems to have reached its end, as we know it.
Moreover, the structural powers happening in the IPE fours level have a tremendous impact in
the international political-economic relations especially in this era of globalization (where
structural power of markets exceed states relational power). Therefore, globalization has
shifted-shaped IPE, and not the way back, and it’s important to approach it. (WHAT IS
IPE, OLD (10-12) AND NEW EDITIONS (9) Philosopher, 157,158, 167)
The dominant economic globalizations has resulted in a considerable products and service trade,
a finance circulation that’s continues to be the main way of capital accumulation, a division of
labour where sexism it`s still a thing, as well the existence of enormous gaps on labors condition
worldwide (in and out); development opportunities are in jeopardy, the ecology and
environmental changes its actually a priority one global issue (but not a top-one priority), the
ideas transmission and exchange are tremendous (and its affecting the collective learning in
complex ways), the need for build a new kind of security, political forces mobilization within
and without borders continuously shaping national and international governance. All of this are
IPE’ concerns. (Turko, 159)
Globalism criticism
Globalization is tied with technological change, and TICs innovation is having an impact in
politics. Fast communication and thee speed up of market transactions; more actors involved in
ipe’ deliberation and normative issues.
Questioning (a form of) globalization.
As more actors are now involved in political economy, accountability and legitimacy are salient
in ipe especially after the volatility of global financial markets tied to deregulation, the
migrations and refugees issues.
Crisis and/or the social implosions that resulted from economic policy inspired in neoliberalist
ideas fostered several reforms to temper the ultra-liberal mercantilism that prevailed in the
1980s and the first half of the 1990s. Reforms seems to aim to a global socio-economic
democracy, like debates about the global public goods by global taxes, the uses of a universal
basic income, the right to a decent work, the development of ways for measuring wellbeing
beyond GDP (UN, 15). In this context, the skepticism relating to free market effectiveness and
the support of government intervention to regulate economies and tic technologies2 is rising.
Additionally, in the late 90's, the “anti-globalization movements” has gained momentum, where
non-governmental actors are condemning exploitation conditions, environmental management
or income distribution. Even it has been described as anti-globalization, within the movements
there has been some disagreement in calling it so, since it is mostly an anti-neoliberal
movement, in favor of forming new forms of global democracy, and this movement has been
made possible precisely thanks to globalization (Graeber, 2005).
Problems are transnational, countries goals are related, the economic prosperity it tied to the
volatility of international trade and capital movements, national security relies more in other
states and non-state actors, the environmental “situation” its more global than ever. Hence.
Global cooperation with global/regional institutions could foster states to address wisely global
problems. However, those institutions are not perfect, each one with its internal defects like
deadlocked thanks to internal divisions or the coercion of powerful member. Nevertheless, they
have a main role in actual globalization, and are salient in the international political economy.
The nations and people integration to global markets hasn’t been in a uniform manner (Higgot
159), and we haven’t reached the “Happily ever after scenario” that liberalism ensured with
capitalist free markets. Moreover, this has led to social inequalities and exclusion producing
radical responses by the dispossessed (Chiapas, Seattle, Argentina; social-environmental
conflicts, “defense de la tierra”).
How manage global PE without increasing problems? Are the actual p-e institutions capable of
foster a development that will ensure a worthy life? Nation integration into (globalization)
markets is not happening in an uniform manner, hence “Liberalization may enhance aggregate
welfare overall but it does not solve the 'political' problem. Securing domestic political support
for the liberalization of the global economy requires more than just the assertion of its economic
virtue. It also requires legitimacy.” (Higgot, 159)
2
especially the issues related with fake-news spread, data privacy, or the ascendance of radical ideas that
endanger lifes, environment, justice, human right or even democracy.
