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THE END OF THE COLD WAR, GLOBALIZATION & REGIONALIZATION OVERVIEW 1. Summer 2000 2. Course overview 3. The end of the Cold War & the end of history (?)

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Presentation on theme: "THE END OF THE COLD WAR, GLOBALIZATION & REGIONALIZATION OVERVIEW 1. Summer 2000 2. Course overview 3. The end of the Cold War & the end of history (?)"— Presentation transcript:

1 THE END OF THE COLD WAR, GLOBALIZATION & REGIONALIZATION OVERVIEW 1. Summer Course overview 3. The end of the Cold War & the end of history (?) 4. Globalization: Dimensions & ‘drivers’ 5. Globalization: How much & how secure? 6. The theory of ‘hegemonic stability’ 7. Conclusions

2 1. SUMMER 2000 The main ‘stories’: The failure of the Middle Eastern peace talks US presidential election campaign Change of power in Mexico Franco-German debate over future direction of EU Single currency referendum campaign in Denmark Russian submarine drama Hostage dramas in Philippines Continuing ethnic/religious conflict in Indonesia A POLITICALLY QUIET SUMMER - AS FUKUYAMA MIGHT HAVE EXPECTED

3 2. COURSE OVERVIEW Three main themes: International and regional trade politics & integration: How stable is the international trading system? War & peace in the post-Cold War world: Will it be less violent? Democratization & ‘marketization’ processes: Will post-authoritarian states become stable democracies? WILL THE WORLD BECOME ‘WESTERN’?

4 3. END OF THE COLD WAR, END OF HISTORY? Francis Fukuyama: “The End of History” 20th century is ending with the ‘unabashed victory of economic and political liberalism’ End of Cold War marks ‘end point of mankind’s ideological evolution & universalization of Western liberal democracy as the final form of human govt’ We’re on our way to the ‘universal homo- geneous state’ (liberal democratic politics & easy access to VCRs & stereos in economy)

5 3. END OF THE COLD WAR, END OF HISTORY? Francis Fukuyama: “The End of History?” (Contd.) First liberal democracy beat Fascism (World War II) Now it has beaten Communism (Cold War) Religious fundamentalism is not a potent opponent Liberal democracy & nationalism can co-exist World politics is going to be ‘common- marketized’

6 FUKUYAMA, MARX & ENGELS “Fukuyama speaks of the ‘universal homogeneous state’, in which ‘all prior contradictions are resolved and all human needs are satisfied’. What is this but the Marxist image of a society without class conflict or other contradictions …. The struggles of history, he says, ‘will be replaced by economic calculation, the endless solving of technical problems, environmental con- cerns, & the satisfaction of sophisticated consumer demands’. Engels said it even more succinctly: ‘The government of persons is replaced by the administration of things & the direction of the production process’”. Samuel Huntington, ‘The Errors of Endism, in: The New Shape of World Politics (1995), p. 37

7 4. GLOBALIZATION: DIMENSIONS & ‘DRIVERS’ Globalization: ‘Growing international integration of all kinds of markets’ Growth in no. of states involved in global economy Growth of international information exchange Growing international trade in goods & services Growing integration of financial markets; growing mobility of capital Growing volumes of FDI

8 4.GLOBALIZATION: DIMENSIONS & ‘DRIVERS’ Company strategies? Technological change (declining communications & transportation costs) Ideological change (Reaganomics, Thatcherism, etc.) Policy changes (Third World, China, Western states) Regime changes (collapse of Communism in Europe) A POLITICALLY FUELLED PROCESS ….

9 5. GLOBALIZATION: HOW MUCH, HOW SECURE? Geography & frontiers still have an enormous impact on trade patterns ‘Rules’ of business largely determined by national govts. The world economy today is not very much more ‘globalized’ than it was a century or more ago Much of what masquerades as ‘globalization’ is really ‘regionalization’ Is what is new in the globalized economy that we we have more exchange with our neighbours?

10 GEOGRAPHY, BORDERS & TRADE ‘A Canadian province in 1996 was 12 times more likely to trade merchandise and 40 times more likely to trade services with another Canadian province than with an American state of similar size and distance’ Study by John Helliwell, quoted in: ‘Good Fences’, The Economist, 19 December 1998, p. 21

11 5. GLOBALIZATION: HOW MUCH, HOW SECURE? Reasons for concern: Historical precedents: ‘globalization’ has collapsed before (World War I, 1930s’ Depression) Political conflicts: free trade generates losers as well as winners, may contribute to increased inequality ‘Losers’ may wield greater political influence than ‘winners’, because costs are more concentrated than gains Growth of opposition to free trade based on environmental, human rights & social policy considerations (NB ‘Battle of Seattle’!) There is not as much political as there is economic globalization …

12 TRADE LIBERALIZATION & SOCIAL PROTECTION ‘At the present … international economic integration is taking place against the background of receding govts & diminished social obligations …The question is how the tension between globalization & the pressure for socialization of risk can be eased. If the tension is not managed intelligently & creatively, the danger is that the domestic consensus in favor of open markets will ultimately erode to the point where a generalized resurgence of protectionism becomes a serious possibility’ Dani Rodrik, ‘Has Globalization Gone Too Far?’ In: California Management Review, 39:3 (Spring 1997), p. 33

13 ECONOMIC GLOBALIZATION - POLITICAL TRIBALIZATION? “Economics is going toward integration, while the politics of the time is going toward fragmentation. We cannot presume that ever growing economic ties … will inevitably & naturally produce improved political unity” Paul Kennedy, quoted in: The Wall Street Journal, 1-2 July 1994

14 5. GLOBALIZATION: HOW MUCH, HOW SECURE? International exchange requires formulation & implementation of agreed rules Devising these rules is a massive task of coordination between (a growing number of) sovereign national governments (GATT 1948: 23 members; WTO 2000: 137 members) Rules of international exchange effectively designed in & after World War II by US & UK (Bretton Woods monetary system, GATT, IMF, OECD, World Bank..) New, updated trade rules have been agreed in series of GATT negotiations, dominated by the US & the EU (European Union)

15 6. THEORY OF ‘HEGEMONIC STABILITY’ ‘The overwhelming dominance of one country is necessary for the existence of an open and stable world economy’ Hegemonic power is or must be ‘benevolent’, run the system according to interests of members ‘as a whole’ Costs of running the system are so onerous that, over time, hegemonic power tends to decline, destabilizing the world economy until new hegemon emerges UK was hegemonic power in C19, US in second half of C20 (in the ‘Western’ world, at least)

16 6. THEORY OF ‘HEGEMONIC STABILITY’ (Contd.) Reservations Is it empirically valid? (It seems so …) Is the hegemonic power sufficiently ‘benevolent’? Will system not be strained beyond endurance by growing number of participating states? Doesn’t the end of Cold War remove important motive for cooperation between Western states? Does hegemonic power have capacity to maintain the system? Does it have the will, can it muster the required level of domestic political support, to maintain the system?

17 7.CONCLUSIONS Fukuyama expects globalization to continue uninterrupted into the future. But: Historical experience warns us that - Liberal international trade requires robust political foundations These are most likely to be provided by a ‘hegemonic power’ ‘Hegemonic power’ must be able & willing to ‘run’ the system – not just in its own interest Only the US qualifies right now – is it both able & willing to ‘run’ the world economy in this way?

18 POLITICS V. ECONOMICS “Whenever in the last 200 years political passions and nation-state politics have collided with economic rationality, political passions and the nation- state have won” Peter Drucker, ‘The Global Economy & the Nation-State’, in: Foreign Affairs 76:5 (September/October 1997), p. 171.

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