Paper: Globalization – Still Centered on the Nation-State

This paper was submitted for “Global Studies 100A: Globalization – Concepts and History” with Professor Russell Burgos, Professor David Rigby, Professor Dominic Thomas and Aron Ballard in Winter 2009.

Globalization will strengthen the United States absolutely and not only at the expense of other actors. In the past and currently, the US has benefited economically and politically, however unfairly, from smaller and weaker economies. In the long run, the US – as the nation-state becomes more relevant again – will remain a leading world power, but in a different context. In analyzing the changing role of the nation-state and the economic logic of governance, I believe that the US will be expected to participate and more importantly, lead, in a plurilaterialist system, as proposed by Philip Cerny, alongside potential super powers even if it requires learning the limits of its hegemony.

The concept of nation-states and their sovereignty was borne from the Treaty of Westphalia in 1648. From then until the Cold War, international relations theory was centered on the nation-state and the “classic sovereignty” model. “The Cold War system was a state-based system” . The collapse of the Soviet Union after the Cold War left the United States situated in the center of a unipolar world as the super power. When the Cold War ended, the prevailing international system was one based on complex interdependence, an idea put forth by Robert Keohane and Joseph Nye that states and their economic connections are inextricably linked. Complex interdependence is a statist theory that holds the state and its national interest to be paramount; the national interest of the US was now linked to other countries’ national interest.

At around the same time, in terms of economics, noting the postwar devastation as well as the Great Depression of the 1930s, the Brenton Woods trio was formed to provide a framework of fixed rates to ensure a stable international monetary system that promoted national sovereignty and to prevent future crises. However, using the tenets of the “Washington Consensus,” the US imposed its rapid privatization and liberalization policies on vulnerable economies and gained considerably . It would require firms in a poor country to borrow money and lend the same amount to insure their loan on unfair interest rates – which is absolutely incredulous. “Open trade can conflict with social contracts that protect certain activities from the relentlessness of the free market” . The US took advantage of its free trade policies and benefited from other countries.

Within the WTO, the subsequent round of negotiations after the Uruguay negotiations, the Doha Development Round has essentially failed because of disagreements between the US, China and India. The Doha development round trade talks began in 2001 with the aim of lowering trade barriers to increase trade in an effort to benefit more developing countries. Pascal Lamy, WTO’s director-general, admitted, “There’s no use beating around the bush, this meeting has collapsed” . The US is unilaterally holding up the stalemate in favor of protecting its own agricultural sector. This pursuit reveals the US’s “increasingly narrow self-interested goals through aggressive unilateralism and regional arrangements” . This defiance and refusal to cooperate and compromise illustrates the power of the US even in a global forum intended to resolve discontents and strive for free and fair trade.

Initially, globalization was thought to make the nation-state less important, as Kenichi Ohmae and Susan Strange have argued, as its institutions and boundaries become increasingly irrelevant due to the rapid technological advancements and other emerging non-state actors. However, following September 11th, nation-states and their governments, specifically that of the US, were looked to as the panacea for security. While the Cold War system was based on states, this globalized system introduces multinational corporations and non-governmental actors, such as an Islamic extremist group that was able to organize transnational operations through the use of technologies. “The state matters more, not less, in globalization” . With a return to the nation-state, the US remains as one of the leading super powers.

Although the US is currently facing an economic crisis, comparatively, other smaller countries are doing far worse. The IMF brokered rescue packages to Pakistan, Hungary, Ukraine and Iceland. Iceland was also forced to nationalize three of its major banks . The economic crisis especially highlights the returning reliance on governments and the nation-state. The world is looking to the US for a recovery plan as it takes the leadership role at the G20 summit in London this April. The US’s economic might and political importance has not substantially wavered in spite of the recession. While most nations can only react to changes due to globalization, the US, as a dominant economic and political power, can affect changes more quickly and aptly.

To talk about whether the US will be strengthened or weakened in the long run, a comparative analysis with China is necessary because it is one country that could potentially surpass the US militarily and economically. China will not only succeed at the expense of the US and vice versa; this is a false Manichaean form of nationalism and mercantilism that is reminiscent of the zero sum theory prevalent during the postwar Realist period. The integration that was present postwar not only bound the US and China together economically, but also politically. During the Cold War, the US and China united over a common enemy: the Soviet Union. Now, they have again united against the “War on Terror.” China offered its public support and declared its alliance to George W. Bush at the time.
With increasing economic ties, increasing political integration was necessary to foster and further cultivate those economic ties, simply a cycle of increasing integration between the two countries – all of which is driven by economic self-interest, stemmed by the rational choice of both actors . The political agreement extended beyond to dealing with regional issues such as North Korea and Taiwan. By aligning politically, both countries further enhanced their economic ties.

Currently, US-China relations are thriving. The alarmist speculation in regards to China’s possession and possible selling of the US treasury bills is not as plausible as it seems. “Without those Chinese purchases, we would either have to raise interest rates, slowing our growth, or we would have to run comparable trade deficits with other countries so that they could buy our bonds” . The relationship between the US and China is a symbiotic one: Chinese growth brings American companies new markets overseas and the Chinese benefit from being a large market for US goods.

Unlike the old Soviet Union, China is not seeking to take over the US as the leading power. Its internal problems, such as its large income disparity between the rural and urban areas and its aging demographic would not make reacting negatively towards the US a rational choice. In addition to that, the US and China’s economies are so inextricably linked that the sharp decreases in the US stock markets were deeply felt on the Shanghai Composite Index.

One of the principle concerns in regards to the US’s power in the future is based on the scramble for energy, as it’s becoming a scarce resource. The rapid economic expansion of China and India, in particular, has created a large demand for energy and other resources. This not only raises the prices but is also generating a competition between the consuming countries. I believe that the US, as directed by its internal politics, will prevail given its advances in technology and university research and development.

Moreover, the more we are integrated in this global system and especially when the cost of war is too high, as it is now, nation-states increasingly rely on “soft power,” that is, cultural influence and attractiveness. The US is, by far, the dominant player in the spread of its cultural artifacts – such as taste preferences (i.e. Starbucks and McDonald’s) and entertainment preferences (i.e. Hollywood Blockbusters). Soft power is not exclusive to cultural attractions, but rather, it includes its political values and its foreign policies. This political capital that the US possesses ultimately attracts more multinational corporations and encourages entrepreneurship more so than other countries.

Revisiting the revival of the nation-state’s importance, we can also see the revival of similar Bretton Woods systems evolving. On September 26, 2008, French president, Nicolas Sarkozy, said, “we must rethink the financial system from scratch, as at Bretton Woods.” Globalization is drastically changing the system at hand, however, we must not forget the foundations that have already been set. The US is in a more advantageous position in regards to its internal domestic politics than in China to handle the crisis at hand.

In the future, globalization will inevitable create more competition as the playing field is “less spiky.” The US will still continue to be one of the main players in the international arena – though the rules of the game will be vastly different. Balance of power between states will still matter, but will involve more actors than just nation-states. It will involve transnational corporations, non-governmental organizations and international institutions. Cerny proposes the idea of plurilaterialism where there will be more than one dominant power. Instead, “states and state actors, multinational corporations, interest groups, and/or individuals, their activities will cut across different levels and structures” . These overlapping connections between different actors show that “global interaction networks are indeed strengthening” . This idea of a plurilaterial system will require new dialogue between America and the rest of the world; other countries will recognize that a less powerful US is still indispensable.

This idea of plurilaterialism is similar to neofunctionalism and the European where the supranational institution acts as the driving force behind integration of the separate actors. The US has definitely given up some of its sovereignty in order to participate and cooperate in international institutes such as the United Nations, but most countries have – this does not make it weaker relatively. That said, the US still has considerable leverage and is still expected to lead in the international arena due to its absolute advantages in all three areas of economics, politics and culture. Concerning the United Nations, specifically the Security Council – if the plurilaterialism is to be achieved, it must consider other nations to participate or have veto power to prevent deadlocks. Even the United Nations is not a unified entity; it is only an international community that is led by the United States.

“The US invulnerability to the global economy has evaporated – and with it the last vestiges of the American commitment to sacrifice narrow national interest in favor of global leadership” (Moon 2). I believe that the US will work to enhance its ideals of “trade liberalization, fair competition, greater integration and mutual prosperity” . Especially now, the domestic sphere is not insulated from the international sphere – leaving the US at an advantage with a leader that is open to multilateral and plurilaterial discussion. During the last election, the whole world was watching because in an era of globalization and increasing interconnectedness, everything that the US does, either domestically or internationally, has huge consequences that reverberate throughout, positive and negative. The US can begin to rebuild its brand again.

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