Liberty beyond neo_liberalism__a_republican_critique_of_liberal_governance_in_a_globalising_age

Liberty BeyondNeo-liberalism

A Republican Critique of LiberalGovernance in a Globalising Age

Steven Slaughter

Liberty Beyond Neo-liberalism

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Liberty Beyond Neo-liberalismA Republican Critique of LiberalGovernance in a Globalising Age

Steven SlaughterLecturer in International RelationsDeakin University

© Steven Slaughter 2005

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Slaughter, Steven, 1970–Liberty beyond neo-liberalism : a republican critique of liberal

governance in a globalising age / Steven Slaughter.p. cm.

Includes bibliographical references and index.ISBN 1–4039–3244–1 (cloth)

1. Globalization–Political aspects. 2. Globalization–Economic aspects.3. Liberalism. 4. State, The. 5. International economic relations.6. International organization. I. Title.

JZ1318.S592 2005320.51′3–dc22 2005043283

10 9 8 7 6 5 4 3 2 114 13 12 11 10 09 08 07 06 05

Printed and bound in Great Britain byAntony Rowe Ltd, Chippenham and Eastbourne

For Sue and Art Slaughter,with thanks

v

Contents

Acknowledgements viii

Introduction 1

Part I Economic Globalisation and Neo-liberalGovernance 13

Chapter One – A Critical Account of Globalisation 15

Chapter Two – The Neo-liberal Infrastructure of Economic Globalisation 34

Chapter Three – Liberalism and the Consequences of Economic Globalisation 58

Part II Liberal Responses to Economic Globalisation 89

Chapter Four – Extended Neo-liberalism: Governing Without the State 91

Chapter Five – Contractual Nationalism: Governing Through the Nation-state 120

Chapter Six – Cosmopolitan Governance: Building Global Democracy 150

Part III The Republican Restoration of the State 181

Chapter Seven – Global Civic Republicanism: Retrieving the State 183

Chapter Eight – Good Government in a Global Age 219

Bibliography 239

Index 250

vii

Acknowledgements

The process of writing this book has incurred many debts from itsinception as a PhD thesis. First, I would like to thank Alastair Davidson,for laying some seeds and the early advice offered by Paul James, ChrisReus-Smit, Geoff Spencely and Chris Ingham. Nonetheless, my utmostgratitude goes to Robyn Eckersley who acted as my PhD supervisor.Without Robyn’s enthusiasm, astute criticism and moral support I trulydoubt that this book would have been completed at all. I also thankAnthony McGrew, Richard Falk and Philip Pettit for their insightfuladvice, the observations of an anonymous reviewer and the editorialassistance of Palgrave Press.

Also, I wish to thank the following friends and colleagues who pro-vided valuable assistance with advice along the way: Jolyon Campbell,Gabriel Hodgson, Darshan Vigneswaran, Chris Scanlon, Paul Pretor,Zoe Knox and Yvette Slaughter. I would also like to thank the partici-pants of conferences that helped sharpen some of my ideas relating toglobalisation. In particular, I thank those who attended the workshop“The nation-state and the ecological crisis: sovereignty, economy andecology” at the European Consortium for Political Research AnnualJoint Sessions Grenoble, France in April 6–11, 2001. I would also like tothank the Australian European University Institute FellowshipsAssociation for the support that made it possible for me to study at theEuropean University Institute during the winter of 2000–1. Studying inFlorence provided a truly apposite setting to draft the republicaninspired basis of the final two chapters of the book. Of course, any mis-takes or shortcomings are mine alone.

I also benefited immensely from the moral support of my friends. Aspecial expression of gratitude goes to my wife Yvette for the assistance,love, and reassuring influence she exuded in the arduous last year of thisbook. I benefited immensely from her critical eye and her generous heart.I have also relied heavily upon my family, especially my mother andfather, for supporting me on this long and difficult endeavour. I am surethey would agree that I embraced the love of education that they incul-cated in me far further than they intended. Nevertheless, I express mygratitude for all their support over the years. I dedicate this book to them.

Lastly, sections of Chapter 7 have previously appeared in “TheRepublican State: An Alternative Foundation for Global Environmental

viii

Governance” in J. Barry and R. Eckersley (eds), The State and the GlobalEcological Crisis (Cambridge, Mass, MIT Press, 2005) and The Neo-RomanRepublican Legacy and International Political Theory Department ofInternational Relations (ANU) Working Paper 2003/5.

Acknowledgements ix

Introduction

At the turn of the twenty first century the relationship betweenglobalisation and global inequality stands as a pivotal issue in globalpolitics. The acceleration of inequality and insecurity associated withcontemporary globalisation has attracted significant public and schol-arly debate. The United Nations Millennium Declaration (2000: 1.5)stated that “while globalization offers great opportunities, at presentits benefits are very unevenly shared, while its costs are unevenlydistributed”. Furthermore, a recent United Nations report indicatedthat the

faith in the ability of unregulated markets to provide the best pos-sible environment for human development has gone too far. Toogreat a reliance on the “invisible hand” of the market is pushing theworld toward unsustainable levels of inequality and deprivation. Anew balance between public and private interests must be found(UNRISD 2000: viii).

Clearly, the social impact of globalisation is a controversial politicalquestion because while some interests benefit from the world beingorganised in a deregulated fashion, there are many others facing depri-vation and insecurity. Indeed, the very nature and existence of con-temporary globalisation is controversial. While the world has beenmoving towards becoming a “single place” for many centuries, thesignificance of economic globalisation is a subject of intense scholarlydebate. The relationship between inequality and insecurity with respectto the existence and significance of economic globalisation has pro-found practical and ethical implications for the policy-making of gov-ernments and international agencies. Contemporary globalisation also

1

poses significant challenges to contemporary forms of politicalthought, particularly that of liberalism.

Liberalism is related to contemporary globalisation in two senses. In one sense, liberalism can be seen to support economic globalisa-tion because liberalism, especially in the form of neo-liberalism, is anascendant discourse and practice in contemporary global politics. Neo-liberalism in particular encapsulates a value system that privileges non-interference in economic affairs, thereby promoting entrepre-neurialism, capitalism and economic growth. However, in anothersense economic globalisation challenges liberalism. On one level, thereare practical problems with contemporary globalisation that liberalismmust address, including the basic provision of order and stability. Onanother, there are differing accounts of liberalism as well as ethical ten-sions between the liberal promotion of individual liberty and the socialrealities of contemporary globalisation.

While these practical and ethical problems are entwined, the centralquestion that this book sets out to examine is whether liberals cangovern within the context of economic globalisation in a way thatpromotes liberty and moderates the rising social dislocation associatedwith this form of economic organisation. While solutions to the socialproblems stemming from economic globalisation will require workingat global levels of governance, can this be done without the state? Inexamining various liberal arguments, this book seeks to critically eval-uate the potential of liberalism to address the detrimental social aspectsof economic globalisation, as well as to contribute to the larger debatesof how governance should be conducted within the context of con-temporary globalisation. Central to this evaluation is an examinationof the appropriate role of the state.

Ethics and governance

This book is a contribution to the political globalisation literature thathas emerged to clarify the political – economic contours of globalisa-tion and examine the ways that policy-makers and citizens ought torespond to these developments. This literature has emerged to examinethe impact of globalisation – especially in its economic forms – on soci-ety and public life, on the authority and future role of the state, and toalso explore the possibility of new global and regional forms of gover-nance. This contribution is a normative examination of the idea of gov-ernance within the context of globalisation in that it explores the wayssocieties administer their social, political and economic affairs as well

2 Liberty Beyond Neo-Liberalism

as the ethical defensibility of the alternatives to prevailing forms ofgovernance. However, rather than examining particular institutions orparticular issue areas, this analysis considers the political and ethicalcomposition of different liberal ideas and strategies in the literaturethat have sought to advocate how we ought to govern. Essentially, I amcritically examining different liberal accounts of what constitutes“good government” in theory and practice.

Good government or governance rests on the idea that governmentought to be animated by a desired purpose. Scholars have made thisobservation in many ways. Most famously there is Aristotle’s (1986: 54)elucidation that “observation tells us that every state is an association,and that every association is formed with a view to some good pur-pose”. David Hume (1994: 20) considered that we should “look uponall the vast apparatus of our government, as having ultimately no otherobjective or purpose but the distribution of justice”. More recently,John Rawls (1972: 3) insisted that “justice is the first virtue of socialinstitutions”. Even though these scholars concur that government is instituted on moral foundations, they differ as to what purposegovernment ought to fulfil. Thus, good governance can be understoodin an ontological sense in that existing forms of governance can be con-ceived as an institutional infrastructure shaped by an assemblage ofprevailing ideas and norms. But such an assembly is always contested.There exist alternative visions of what government ought to do in a nor-mative sense. Hence, understandings of good government compriseboth ideas and norms that have been actually institutionalised andthose ideas and principles that, although held by some people as apotential form of government, have not been institutionalised in actualpractice.

In terms of the ethics and ideas that have been institutionalisedwithin the context of economic globalisation, it is neo-liberalism thathas decisively shaped the purpose of the government in many parts ofthe world. Neo-liberalism has also been influential in the constitutionof international agreements and agencies. A central concern of thisbook is the social effects wrought by this type of governance. Whilerelationships between government and the social effects it enables orproduces are often oblique, Ambrogio Lorenzetti’s murals of the“Allegory of Good Government” and the “Allegory of Bad Government”within the Palazzo Publico in Siena still serve as powerful pictorialexpressions of the relationship between ethics and government. Thesefourteenth century depictions can be interpreted as a visual demon-stration that the practice or theory of government can be understood

Introduction 3

by the values that inform government (Skinner 1986). Yet these depic-tions extend around the walls of the Palazzo Publico to include andencompass the murals of the “Effects of Good Government in the Cityand in the Countryside” and the “Effects of Bad Government in theCity and in the Countryside”. In doing so, Lorenzetti draws a direct linkbetween the virtues and vices that surround the artistic depictions ofgood and bad governments to the harmony and vigour of the people inthe former and the discord and suffering of the latter. While under-standing the practice of government requires examining the ideas and norms that inform government, forms of government can only beethically judged by the social consequences that they produce or allow.

This inquiry’s examination of politics and governance works withinthe analytical frameworks of “critical theory” and “critical politicaleconomy” as advanced by Robert Cox (1995). This theory explains the historical and social construction of governance as well as the relationship between political and economic change. In mainstream‘’problem-solving’’ theories of governance (Cox 1996b: 88), the aim isto comprehend the actions and behaviour of policy-makers. By con-trast, critical theory as it relates to the social task of governance seeksto understand why policy-makers act as they do by understanding the mate-rial, institutional and ideational conditions that shape their actions. Such acritical theory analysis takes a global view of politics that departs fromthe assumption that states are the only significant political actors andthat a divide exists between international politics and domestic poli-tics (Gill and Law 1988: xx–xxiii). Critical theory also pays attentionto the global relationship between politics and economics, to an his-torical understanding of the relationship between dominant ideas andinstitutional change, and pays particular attention to the distributionand structural manifestations of power in the political practices of“force and consent, authority and hegemony” (Gramsci 1999[1971]:170). Nonetheless, critical theory seeks not just to explain how agentsand structures interrelate but also how existing structures can be trans-formed. Cox (1996b: 90) suggests that “critical theory can be a guide tostrategic action for bringing about an alternative order, whereas prob-lem-solving theory is a guide to tactical actions which, intended orunintended, sustain the existing order”.

Liberalism is an approach to politics that sustains capitalism althoughthe prevailing liberal ideas have changed significantly in relation topolitical economic practice and governance. There has been a significantshift from the post World War II arrangement of the Bretton Woodssystem, and the consensus of “embedded liberalism” within Western


societies, towards the ideas of market driven neo-liberalism (Ruggie1994). The objectives of welfare provision, a progressive taxation systemand an active government role in markets have been replaced by neo-liberal aims of a minimal state and an untrammelled confidence in freemarkets. However, neo-liberal forms of governance, evident in policiesof deregulation and privatisation, face problems of sustaining capitalisminto the twenty first century because of the social dislocation that stems from the organisation of economic activity across state borders ina deregulated fashion. This means that neo-liberalism is increasinglybeing challenged as a viable approach to governance by people protest-ing against economic globalisation and by scholars both sympatheticand hostile to the underlying rationale of liberalism.

Liberalism and governance

While liberalism is a multifaceted approach to politics that “resistssharp definition”, its core values revolve around the importance ofindividual liberty and a minimisation of government restraints on indi-viduals (Richardson 2001: 17). The liberal conception of liberty is basedon the belief that each and every adult human is best able to determinetheir own preferred life without interference from others. This aspira-tion is understood as the liberal imperative of non-interference – the idealthat the state ought not restrain individuals except when such restraintwould prevent greater restrictions on individual choice and action(Pettit 1999a: 40–3). This principle can also be understood in the termsof “negative liberty” and paves the way for individuals to act on theirindividual interests, with law imposing minimal restraints so that theymay maximise their interests (Pettit 1999a: 17–8). On this view, “law isalways a ‘fetter’, even if it protects you from being bound in chains thatare heavier than those of the law, say arbitrary despotism or chaos”(Berlin 1958: 8). Liberal values have been instantiated in the Westernworld through representative democracy and constitutionalism, as wellas in world politics in the form of international institutions that pro-mote international cooperation and provide an institutional contextthat will create a predictable order needed for capitalism to operate(Murphy 1994). Liberalism’s relationship with capitalism is close andenduring. Liberals have confidence in the long-term benefits of capital-ism despite differences with regards to the policies needed to correctmarket imperfections and to enable expanding prosperity associatedwith “technological advance and by [the] self-maximising decisions ofprivate actors” (Hurrell and Woods 1995: 448).

Introduction 5

Given the social dislocation and inequality evident within contem-porary globalisation, the key question facing liberalism is how gover-nance can promote liberal aspirations within this unfolding context. Itseems that liberalism is caught between the social reality of economicglobalisation and a theory that aspires to develop improved global cir-cumstances. Deeply embedded in liberalism is the notion of progressand the melioration of institutions – the belief that social and politicallife can be fashioned towards the promotion of liberty (Gray 1995: xii).Thus, while liberals recognise that there may be short-term social dis-location, they are confident about the long-term effect of free marketsand the ability of human reason to develop institutions to constrainsocial outcomes that adversely affect human liberty and welfare. In themeantime, at least, Andrew Hurrell and Ngaire Woods (1995: 453) indi-cate that three tensions exist between liberalism and globalisation. Thefirst key problem for liberals is the future role of the state within eco-nomic globalisation. Liberals are divided between those who see thestate as ineffectual and those who see the state as crucial to the man-agement of economic globalisation. The second key problem is howliberals can “balance economic objectives and market liberalisationwith liberal political and social goals” that include addressing povertyand inequality (Hurrell and Woods 1995: 454). The third problem isthat of the global management of economic globalisation in relation tothe “dynamics of liberal progress” in a world divided between a “cohe-sive, prosperous, and peaceful bloc of liberal states and the instabilityand chaos of the rest of the world” (Hurrell and Woods 1995: 454).

While there are many dimensions to the contemporary debate of howliberalism ought to operate in the context of globalisation, the argumenthere considers the problems identified by Hurrell and Woods. As RichardFalk (1996a: 16) inquires: “how can the state be pulled back from its currenttilt towards market-driven globalism, and led to manifest a greater degree ofreceptivity towards people-driven globalism, thereby over time achieving a newpolitical stasis that supports the kind of institutional and legal superstructurethat could underpin humane governance for the planet”? This book exploresthis contention by examining three questions:

(1) What is economic globalisation and how does this condition relateto liberal thought and practice?

(2) How do liberal alternatives to neo-liberalism seek to govern withinthe condition of economic globalisation?

(3) How important is the state to governance that endeavours to bothpromote liberty and moderate the social problems of economicglobalisation?


The three parts of this book seek to answer these three questions insuccession.

This contribution to the globalisation literature is principally a cri-tique of liberal conceptions of governance. However, it also articulatesthe contours of an alternative conception of governance that empha-sises the potential role of the state. Yet, states around the world varyconsiderably in cultural composition, size and capacity to the extentthat talk of “the state” is inherently abstract. Nevertheless, states arecrucial sites of power and legitimacy in world politics and I agree withFrancis Fukuyama (2004) that many problems in contemporary globalpolitics emerge from states lacking integral strength and capacity.Furthermore, states are absolutely central to the way economic globali-sation continues to develop and I contend they could play a decisivepart in addressing the detrimental social impact of economic globalisa-tion. I argue that mediating the adverse social effects of contemporaryglobalisation requires an alternative conception of governance thatsharply strengthens the public qualities of the state and the capacity ofthe state to protect its citizens from concentrations of private powerand economic vulnerability. This possibility is not presently achievablebecause many states are under the sway of neo-liberalism and the ideaof a being a “competition state” that operates in the interest of open-ing up their respective societies to global capitalism (Cerny 1996b). It ismy argument that if economic globalisation is to be mediated the statemust take a “republican turn” and be redirected from its support of eco-nomic globalisation towards the provision of the security and liberty ofits citizens.

The interpretation of republicanism employed here is the neo-Romanconception of republicanism that has been elaborated in recent yearsby Quentin Skinner, Philip Pettit and Maurizio Viroli. This is not autopian strand of political thought and it is not a form of populism orcommunitarianism (Pettit 1999a: 8). Rather, the neo-Roman account ofrepublicanism offers a pragmatic approach to the development of astate that enables individual liberty by an institutional design that con-strains various forms of domination by the state and by powerful pri-vate interests within society. This political arrangement fits withinCox’s (1996b: 90) observation that “critical theory allows for normativechoice” but “it limits the range of choice to alternative orders which arefeasible transformations of the existing world”. The interpretation Idraw of republicanism is feasible. It does not argue for autocratic statesor the end of capitalism; rather it argues for a regulation of capitalismthrough the development of empowered states that protect individualsfrom powerful private interests and the worst vulnerabilities that stem

Introduction 7

from unrestrained capitalism. This account of republicanism provides acompelling argument that a secure form of liberty is only possiblethrough state directed forms of institutionalisation which entrench theability of people to contest power that would otherwise subject themand an active citizenry that develops and maintains this politicalarrangement. Ultimately, “republicanism is a kaleidoscope of institu-tions” united by the purpose of preventing the domination of peopleby public or private sources (Everdell 1983: 13). In articulating thistradition of political thought within the context of contemporaryglobalisation, I emphasise that this array of republican institutionsmust necessarily extend beyond the territory of republican states. Inthe contemporary context, this republican rationale of institutionbuilding must rest on the existing foundation of the state but cannotremain only on the state.

It is important to emphasise that this republican depiction of thestate differs from liberal conceptions of the state. Fukuyama (2004: 7)makes a useful distinction when he says that it “makes sense to distin-guish between the scope of state activities, which refers to the differentfunctions and goals taken on by governments, and the strength of statepower, or the ability of states to plan and execute policies”. While neo-liberals typically argue for a minimal state, some carefully delineatedstate capacity is required to promote deregulation, but both liberals andneo-liberals tend to believe that the state should have a narrow scopeof activities. By contrast, republicanism contends that we need both astrong state and an extensive state with a wide scope to address the var-ious forms of possible domination. However, this strength and scoperequires elaborate checks and balances as well as the constant attentionof an active citizenry to guide the state towards public purposes. Thedevelopment of a civic culture is crucial to the constitution and con-tinuation of the republican state, and I argue, addressing the social dislocation of economic globalisation.

The outline of the argument

The argument of this book is focused on the ethical and discursivenature of the practices of neo-liberalism and the arguments of liberalobservers responding to those practices of governance. This book is nota detailed criticism of particular institutions such as the World Bank.Nor is it a detailed criticism of liberalism as a political philosophy. Myefforts are focused on the ideational and ethical justification of neo-liberalism as a practice and the most decisive alternatives that are


proffered within liberal circles. My goal is to critique liberalism as an approach to governance within the context of contemporaryglobalisation and provide the core ideas of a political alternative to neo-liberalism. There are three parts to this argument.

Part I of this book contends that economic globalisation is an emerg-ing reality. While the world has been moving towards being a singleplace in many dimensions since at least the onset of modernity, theacceleration and deepening of global processes since the 1970s haslargely been conditioned by the influence of capital. Chapter 1 exam-ines the contingent nature of this acceleration. Chapter 2 outlines the practices of governance that animate economic globalisation. Imaintain that economic globalisation is underpinned by an emergingneo-liberal and free market ethos that provides a significant constitu-tive influence over government best referred to as neo-liberal governance.This ethos develops the ethico-political framework that involvesinternational arrangements and agencies as well as nation-states thatcombine a sense of national community with the instrumental liberal-isation and deregulation of markets. This framework establishes theorganisation of economic life that leads to the world operating as a sin-gle deregulated space in real time. Chapter 3 contends that neo-liberalgovernance faces a variety of problems because it sanctions forms ofsocial restructuring which have profound social effects such as increas-ing inequality and considerable vulnerability around the world. Thischapter argues that these consequences confront the liberal develop-ment of liberty and that neo-liberal governance at a national and globallevel is seemingly unable to act upon the emergent social problems orattempt to “square the circle” of prosperity, social stability and liberty(Dahrendorf 1996: 23), thereby undermining the legitimacy nestedwithin the nation-state.

Part II examines three alternative liberal prescriptions to neo-liberalgovernance. In Chapter 4 I examine what I refer to as extended neo-lib-eralism, which proposes that nation-states impede the proper andefficient functioning of capitalism and individualism. The proposal ofthe Multilateral Agreement on Investment (MAI) and the arguments ofKenichi Ohmae are examples of liberal prescriptions that extend neo-liberalism by dramatically weakening the authority of the nation-state.Chapter 5 examine what I refer to as contractual nationalism, a pro-gramme of policy-making that encourages high technology capitalismwithin a cohesive nation-state. Robert Reich and Will Hutton are con-temporary writers who have defended this line of argument, which isconsistent with the notion of the “Third Way”. Chapter 6 examines

Introduction 9

cosmopolitan governance, which argues for a global system of democracyand decision making to enhance individual autonomy. I examine thearguments of David Held and Richard Falk who have furnished well-developed liberal arguments of this alternative form of governance.

Part III argues that these liberal governing strategies fall considerablyshort of programmes that will successfully promote liberty and addressthe adverse social effects of economic globalisation. Chapter 7 arguesthat the only feasible means to moderate the adverse social impact ofeconomic globalisation is to promote the development of “civic” statesthat establish and institutionalise a republican ethos that promotespublic virtue, patriotic citizenship and civic awareness. This approachto governance is termed global civic republicanism in this book becauseit seeks a resilient form of individual liberty that can only be achievedwithin a republican conception of a civic state that in turn is only pos-sible in a global context that accords and permits such civic states to beviable. As such, this chapter outlines the scholarly resources that sup-port the idea of the civic state, namely, the neo-Roman strand of repub-licanism as delineated most notably by Philip Pettit. Furthermore, thischapter examines the legacy of republican ideas in world politics andsketches the global context of association and governance required forcivic states to be possible. Global civic republicanism is an approach togoverning that demands public responsibility for global politics boththrough the state and beyond the state without demanding a shift to a cosmopolitan democracy. The aim of global civic republicanism is the republican inspired goal of non-domination; to construct a contextwhere people “live in the presence of people but at the mercy of none”(Pettit 1999a: 80). I endeavour to develop this sense of security inrespect to the social impact of economic globalisation.

Chapter 8 concludes the book by further explaining why globalcivic republicanism is superior to the alternative approaches to liberalgovernance outlined in Part II. This chapter concludes that theinsufficiency of neo-liberal governance and the liberal alternatives toaddress the detrimental social problems within economic globalisationstems from the limited liberal understanding of the power needed tosecure liberty. The primary objective of global civic republicanism is to develop states that minimise arbitrary power or avoidable vulnerabil-ity within their societies – including the relatively unrestrained powerinherent in the actors and frameworks of global capitalism or the socialinsecurity stemming from this deregulated economic order. This suretyis achieved by states utilising a countervailing public power to pro-mote the common weal and the ideal of a collective liberty. Properly


designed and publicly supported states can be a central, yet not entirelylone, guarantor of the protection of people from the arbitrary powerthat can render them vulnerable and less free. In a global context, thisnot only requires a normative rationale that enables the public regulationof capitalism in a way that minimises the potential of vulnerability ormastery, but also the actual elaboration of interstate co-operation imbuedby this rationale.

This book is underpinned by the conviction that governance isinescapably shaped by underlying normative conceptions and that gov-ernance within the context of economic globalisation is no exception.Demystifying the norms and interests that shape the governance thatsupports economic globalisation is one important task that this bookundertakes. The other key task is to provide an alternative rationale ofgovernance. As such, critical theory’s attention to discerning patternsof dominance and the possibility of changing prevailing configurationsof global politics, as well as republicanism’s concern to constrain power,impels the argument elaborated here. Ultimately, this book seeks tocontribute an alternative discourse to the continuing debate as to howwe ought to govern within the context of globalisation. I endeavour toprovide an alternative approach to neo-liberalism that demonstratesthat the state is not only central to a realistic attempt to moderate eco-nomic globalisation, but that the state, in its current incarnation of thecompetition state, is also tied into economic globalisation in manyparts of the world. Untying the state from economic globalisation is thetask that lies before us if there is to be any hope of balancing the pur-suit of prosperity, social cohesion and liberty within a world where theethical foundation of governance is the minimisation of vulnerability.While this approach falls short of a defence of complete equality or thecessation of capitalism, it is an alternative that takes the distributionand exercise of power as the key concern that affects the constitutionof liberty. This critique of liberal governance paves the way for a repub-lican-inspired alternative to achieve the liberty that liberalism is unableto secure in an era of economic globalisation.

Introduction 11

Part I

Economic Globalisation andNeo-liberal Governance

1A Critical Account of Globalisation

Do we find ourselves at the threshold of a new world? Which one? And through what processes will it be shaped?(Castells 1980: 255)

In order to examine liberal arguments regarding governance within aglobalising context, the meaning of globalisation must be explored.Globalisation is a contested concept that seeks to capture the under-lying logic of significant social changes across the face of the globe.The central argument of the first part of this book is that there is adifference between globalisation understood as a long-term process of “growing global interconnectedness” (McGrew 1997b: 7) and eco-nomic globalisation as a relatively recent configuration of neo-liberalideology and economic organisation. This distinction is crucial toexamining the way liberal approaches to governance intersect with thesocial, economic and political realities of contemporary globalisation.I will argue that economic globalisation is a contingent reality definedby the reorganisation of capitalist accumulation that involves shifts in geography and power. As such, this emerging structure entailschanges in social and economic practices as well as shifts in the domi-nant norms and in the function of political institutions. It will beargued that the nation-state, far from declining, is a central actor inthe reorganisation of economic activity that is occurring across soci-eties around the world. This reorganisation of economic life is alsocentral to the rising levels of inequality and insecurity across theworld.

This chapter will provide an explanation of what economic globali-sation is and why it has emerged. I will argue that economic globalisa-tion, understood as the movement to a world economy that operates

15

as a single deregulated place in real time, is not inevitable. It is an his-torical development driven by economic and political forces whichstem from a fundamental reorganisation of capitalism. This chapterwill first examine the conventional accounts of globalisation and thendepart from them utilising critical political economy to illuminate thechanging social, economic and political practices.

Globalisation theory and neo-liberalism

In an effort to systematise the examination of globalisation, the bookGlobal Transformations (Held et al 1999) presents three explanations ofglobalisation. These accounts stem from the literature that has soughtto explain contemporary global integration. The first approach encom-passes conventional liberal formulations that reveal a rapidly changingworld and its effect on business and government. This type of thoughtis referred to as “hyperglobalisation” in that it proclaims that globalisa-tion is not an incomplete process but a “result” clearly evident withglobal capitalism as the centrepiece (Held et al 1999: 3–5, 11). There isalso a broad thesis of progress built into these arguments that rests onthe notion that technology allows companies and individuals to actupon a spontaneously formed “self”-regulating global market. As such,economic globalisation is seen as an inevitable and monolithic develop-ment (see Reich 1991b; Ohmae 1990). In this context the ability of thestate to act is restricted to the extent that the state becomes an obsoleteorganisation in a world defined by global capitalism (Ohmae 1995a),not to mention, global forms of governance and civil interaction.

The second set of observations posits a contrary perspective inresponse to the hyperglobalist position. The “skeptical” account ofglobal transformation suggests that globalisation is not occurring andis thereby a “myth” in at least one of two ways. Some scepticists arguethat the persistence of an international economy and the continuedimportance of states within the world economy precludes the emer-gence of a truly global economy (Hirst and Thompson 1996: 10). Thisposition argues that, in some senses, the level of global integrationduring the last decade of the twentieth century is less than the periodof 1870–1914 (Hirst and Thompson 1996: 2). Far from a world wheremarkets have trumped states, the world economy is still shaped bystate to state interaction. Scholars sceptical of globalisation note thereremain significant differences between the strategic choices made bystates in response to the world economy (Weiss 1998). In addition,some sceptical scholars also note that states have continued to adapt

16 Liberty Beyond Neo-liberalism

to increasing interdependence in world politics and that strong statesare still “able to work the system to their advantage” (Waltz 1999: 7).

Other sceptics argue that capitalism has always been global. Thisapproach stems from Marxist arguments that emphasise the conti-nuity of the capitalist mode of production and thereby perceiveglobalisation to represent an exaggerated view of change. After all, Karl Marx (1986[1872]: 37) indicated that

the need of a constantly expanding market for its products chasesthe bourgeoisie over the whole surface of the globe. It must nestleeverywhere, settle everywhere, establish connexions everywhere.

David Harvey (1997: 421), in particular, believes that globalisation is a“long standing process always implicit in capital accumulation, ratherthan a political-economic condition that has recently come into being”.Implicit within much Marxist thought is the idea that globalisation isan ideological term used to invest neo-liberal policies with the aura of“inevitability” that effectively “destroys” state capacity to manage eco-nomic activity (Bienefeld 1994: 120). In both strands of the scepticalargument, the state persists as an important form of governance.

The observations of the hyperglobalists and sceptics miss someimportant elements of the social change that have occurred since the1970s. Both sets of observation set capitalism in stone. They do notexamine the history of various types of capitalism or the changingideas that dominate and shape decisions within capitalist social devel-opment. In many ways, the ideas underlying these observations repre-sent “two stopped clocks [that] gaze upon the movement of history”(Lipietz 1986: 17). This is particularly evident in the failure to examinethe ways in which governance interacts with changing social and eco-nomic practices. In the case of liberal observations, there is muchdescription of what is happening to governments and firms, but littlequestioning of why or how globalisation was formed. Liberal perspec-tives take global economic structures for granted, leading them tooverlook the role that political structures, both within and beyond thestate, play in economic globalisation. Both liberal and orthodoxMarxist derived arguments run into trouble because they fail toexamine the history of decisions within and between nation-states aswell as the ideas that shape economic life.

The “transformationalist” perspective is the third account of globali-sation (Held et al 1999: 7). According to Anthony McGrew (1997b: 8),these authors seek to locate globalisation as a “fundamental historical

A Critical Account of Globalisation 17

shift in the scale of contemporary social and economic organization”.Anthony Giddens (1990: 64) exemplifies this account when he definesglobalisation as “the intensification of worldwide social relationswhich link distant localities in such a way that local happenings areshaped by events occurring many miles away and vice versa”. Theprocesses of globalisation have been interconnecting individuals andpolities since at least the onset of modernity (Robertson 1990: 26–7;Held et al 1999: 10). Giddens points to the ability of modern socialforms to exist across time and space via abstract systems of rule, beliefand exchange that are especially evident in empires, religion andtrade. These processes of increasing interdependence and “time-spacedistanciation” have operated on a global scale and cut across bordersin various forms of economic, cultural and political activity (Giddens1990: 14).

The authors of Global Transformation develop the transformationalistargument further by examining various forms of global integration inan historical sense. In comparing the globalisation of various forms ofactivity, such as governance, organised violence, trade, finance andculture, across time, the account emphasises globalisation as a multi-faceted process. As such they define globalisation as

a process (or a set of processes) which embodies a transformation in the spatial organization of social relations and transactions–assessed in terms of their extensity, intensity, velocity and impact–generating transcontinental or interregional flows and networks ofactivity, interaction, and the exercise of power (Held et al 1999: 16).

This spatial shift is evident in a “stretching and deepening of socialrelations and institutions across space and time” such that people areincreasingly influenced by events occurring on the other side of theglobe and the “practices and decisions of local groups or communitiescan have significant global reverberations” (Held 1998: 13). Whilethese processes have been evident throughout human history, the inci-dence of globalisation has varied among the history of differing facetsof human activity, but has been subject to “great shifts and reversals”and does not have an “emergent telos” (Held et al 1999: 414).

While globalisation is not new according to the transformationalistargument, contemporary global integration is characterised by a con-dition where “the extensive reach of global networks is matched bytheir high intensity, high velocity and high impact propensity acrossall the domains or facets of social life” (Held et al 1999: 21 and


429–31). This leads to the observation that politics is globalising in thesense that

political communities and civilisations can no longer be character-ized simply as “discrete worlds”: they are enmeshed and entrenchedin complex structures of overlapping forces, relations and move-ments…. But even the most powerful among them – including themost powerful nation-states – do not remain unaffected by thechanging conditions and processes of regional and global entrench-ment (Held et al 1999: 77–80).

Within this context the functions of governance are being increas-ingly placed in a multi-level structure where the lines between foreignand domestic policy blur (Held et al 1999: 80–1). This creates thesituation whereby nation-states cannot be assumed to be the onlysignificant political actors within world politics, with internationalorganisations and non-state actors increasingly important to policy-making and political life (Held et al 1999: 52–62).

While the hyperglobalist position overstates global transformationand the sceptical position takes a stance that misses the significance ofchanging ideas and institutions, the transformationalist account ofglobalisation argues that the global integration of social relations isoccurring as a long-term and indeterminate process. However, whilethe transformationalist account is an observation that is important tounderstanding contemporary globalisation, it is silent on some of thepolitical forces that influence and maintain the prevailing form ofglobalisation. In order to explain the nature of contemporary globali-sation, it is important to outline both the forms of global integrationand the political substance of these forms of integration and inter-dependence. While, it is important to explain how the world has beenorganised spatially over time, it is also important to examine whichactors and groups dominate the political context that is being stretchedto a global level. In the case of contemporary globalisation, the trans-formationalist account overlooks the importance of neo-liberalism andunderstates the changing role that capitalist actors have played in theconstruction of the prevailing type of globalisation.

Understanding economic globalisation as a relatively recent and dis-tinct phase of global integration relies on an alternative approach tothe transformationalist account of globalisation. An alternative isevident in what Robert Cox (1995) refers to as “critical politicaleconomy”. The broad understanding of a critical approach to political


economy is outlined by neo-Gramscian scholars such as Robert Coxand Stephen Gill, and by scholars who employ a loosely regulationistschematic, such as Manuel Castells and Saskia Sassen. These scholarsanalyse the movement towards a global economy as centring on themotivations of social groups and dominant ideas, as well as changes in the technical and political infrastructure of global politics. Whileglobalisation, as the slow and uneven expansion of modernity overthe last five hundred years, is an opened-ended process, the form andcontext of contemporary globalisation is not preordained. The ratchet-ing up of global integration since the 1970s is significantly linked tochanges in the form of economic and technological organisation onthe part of firms, whole industries and societies around the world(Castells 1989: 23–5). This change has led to increasing interactionsbetween and across states, such that economic and social relations are no longer only national or international in that such processesroutinely transcend state borders and are “less tied to territorial frame-works” (Scholte 1997: 430–1; see also Castells 1996: 92–3). This quali-tative increase in global integration is also connected to the increasingprominence of neo-liberalism both as a discourse and as politicalrationale that shapes governance in many states around the world, as well as international economic agreements. These developmentsexplain the social restructuring and the forms of global interdepend-ence, hierarchy and fragmentation evident since the late twentiethcentury.

Because this phase of integration is characterised by the neo-liberalextension of capitalist relationships it is referred to as economic orneo-liberal globalisation. Economic globalisation is the structuredprocess where economic organisation is global rather than national orinternational (Cox 1997: 55). While capitalism has long operated on aworldwide scale, and the interwar period was characterised by lowlevels of trade and rising state autarky, the post war period was definedby an expansion of international trade and co-operation. But, eco-nomic globalisation represents a development from an internationaleconomy, in that economic activity is globally organised by actors andframeworks that conceive of the globe as a whole as being the locationof economic activity. This economic context has been accompanied byshifts in ideas and institutions that have facilitated the developmentof a global economy. To further examine this shift, it is necessary tofirst explore the way in which critical political economy examinesglobal politics.


Critical political economy

Critical political economy has two edges to its analytical framework.First, it is critical in the normative sense of forwarding alternatives to prevailing patterns of power. Second, critical political economy iscritical in the ontological sense – it does not take the world as given.Rather, it is focused on the nature and potential of transformations ofsocial structures. Hence, it

is concerned with the historically constituted frameworks and struc-tures within which political and economic activity takes place. Itstands back from the apparent fixity of the present to ask how exist-ing structures came into being and how they may be changing, orhow they may be induced to change (Cox 1995: 32).

In theorising the multiple and overlapping transitions in worldpolitics, critical political economy examines the relationship betweenthe structures of governance and prevailing economic frameworks byintegrating the domestic and international fields in order to “theorisethe complementary and contradictory relations between the power of states and the power of capital” (Gill and Law 1993: 93). Yet, theimplications of these political economic arrangements are only intelli-gible within the context of the historical development of ideas, cultureand knowledge because the prevailing beliefs and ideas that areembodied in the institutions of political and economic practice shapethe ways in which political agents act. The question this poses is cui bono: who benefits from the rules and norms of the system? Inorder to probe the construction of social life and determine how worldpolitics is shaped, five concepts become crucial. The first two stemfrom Gramscian thinking, the latter three from regulationist analysis.

Proponents of critical political economy use the interlockingnotions developed by Antonio Gramsci of an historic bloc andhegemony to explain the development of political life. An historicbloc is “a wider social and political constellation of forces” whichrepresents an

“organic” link between “political” and “civil society”, a fusion ofmaterial, institutional, inter-subjective, theoretical and ideologicalcapacities…Any new historic bloc must have not only power withincivil society and economy, it also needs persuasive ideas and argu-ments (involving what Gramsci called the “ethico-political” level)


which build on and catalyse its political networks and organization(Gill and Law 1993: 93–4).

Within a given historic bloc, hegemony prevails. Hegemony repre-sents a system of domination that exists, not just in terms of physicalpower and coercion, but also in terms of the ideas, culture and consentthat give cohesion to a particular social order (Gill and Law 1993: 93).Such ideas shape the building of institutions within states, as well asthe ideas that dominate negotiations between states and the buildingof international institutions. Consequently, an historical bloc depicts a normalised pattern of social life while the notion of hegemonyilluminates the norms and ideas, and hence the organisations andindividuals, that prevail over the shaping of that historic bloc.

Contemporary Gramsician scholars, particularly Robert Cox andStephen Gill, have asserted that an historic bloc exists at a worldwidelevel, that world politics is more than just the interaction of states butalso “a globally-conceived civil society” (Cox 1993: 61). A worldwidehistoric bloc is a social structure best referred to as a world order whichencompasses an assembly of material practices and dominant ideas, aswell as forms of state and international organisations, framed bydominant groups of people that invest the contingent social formationwith a sense of coherence and normalcy. The composition of worldorder is shaped by what Cox refers to as “social forces”, which arethose groups of people including classes, class fractions, mass move-ments and intellectuals whose power is continually being reshaped bythe consensual and conflictual nature of “civil” interaction (Cox1996b: 100). Social forces exert their influence over the shape of worldorder, either through control of the state, or through the transnationaltransmission of ideas or influence (Cox 1996b: 100–1). Consequently,a world order is a “framework” consisting of a “particular configura-tion of social forces” that acts as a background condition which

does not determine actions in any direct or mechanical way butimposes pressures and constraints. Individuals and groups maymove with the pressures or resist and oppose them, but they cannotignore them. To the extent that they do successfully resist a pre-vailing historical structure, they buttress their actions with an alter-native, emerging configuration of forces, a rival structure (Cox1996b: 97–8).

Thus, world politics is political in the sense that a specific configu-ration that determines the character of world order is historically


and politically configured by processes of control and consensus.Ultimately, this order is animated by hegemony – where there is a“widespread acceptance of the key principles and political ideas” ofthe leading social forces (Gill 1993: 266–67). Moreover, the socialforces that dominate do not only decisively shape the constitution of aworld order; they also actively defend this framework from otherpotential orders that do not suit their interests (Cox 1996b: 97).

A world order can be examined in two different senses. In one sense,a world order or historic bloc can be seen as a coalition or “an alliance– a ‘bloc’ of those whose interests are served and whose aspirations arefulfilled by this economic and social system” (Murphy 1994: 27). Thisentails the hegemonic building of a coalition of social forces thatconsent to the order, as well as the formation of norms and ideas thatlegitimate this order. In another sense, a world order is a pattern of life“that must be looked at in different ways in order to be understoodcompletely”:

Only when we have looked at all of the faces of a historical bloc –its biological-material face, its economic face, its political face, andits cultural and ideological face – can we begin to understand theways they are internally connected one to another, and thereforebegin to understand what makes the characteristic form of itsoverall social development possible (Murphy 1994: 28).

By examining the faces or elements that comprise a given worldorder, the interests that are dominant and benefit the most from theorder become clear. A world order is a social formation shaped by acoalition of social forces, where the faces or elements of a world ordercan be understood as the material face, which includes the economic,social and technological aspects of organisation, the ideological-cultural face and the institutional or political face (Cox 1996b: 98).

In a similar vein, regulationist writers seek to explain how capitalismperpetuates itself as a social process within the state. The interaction ofthe state and the market, in the context of the capitalist mode of pro-duction, is not automatic. There is no “global maestro” that directscapitalism (Lipietz 1986: 17). Rather, there are a number of institu-tional arrangements that emanate from society that constrain, developand shape the capacity of capitalism to operate in a profitable manner.Regulationist thought examines these influences in light of threeframing concepts. First, there is the examination of the “regime of accu-mulation”, which consists of the manner in which production, innova-tion and consumption are arranged and stabilised over time to enable


capitalistic accumulation (Lipietz 1986: 19). Second, there is the “modeof regulation”, which consists of the “norms, habits, laws, regulationnetworks and so on that ensure the unity of the process” of capitalistaccumulation and the governance of social life (Lipietz 1986: 19–20).These concepts illustrate the changing ways in which capitalism isorganised in light of the social struggles which are resolved within thecontext of the state and the mode of regulation, that constructs aninstitutional setting that allows for relatively efficient and profitablemarkets (Boyer and Drache 1996: 5–6). Third, regulationists refer towhat can be called a “global regime” which represents the nature of theeconomic relationships of production, exchange and consumptionthat bracket and stabilise the various state regimes at the core and theperiphery of the world economy (Lipietz 1986: 20). However, regula-tionists do not point to a “global” mode of regulation because thereare no global compromises in the sense of a global state, even thoughthere are international forms of governance. Instead, we can point tothe Gramscian notion of hegemony to indicate the field of domi-nance, or world order, that enables a given global regime (Lipietz1986: 26–7).

The account of critical political economy that I have presented herecombines Gramscian and regulationist perspectives to examine theunderlying framework of global politics. In contrast to the transfor-mationalist account, that perceives globalisation to be transformationand process, the critical account of economic globalisation suggeststhat economic globalisation is a contingent social formation: a worldorder that represents a constellation of social forces and groups thatsupport a particular political framework within states and at a globallevel. While globalisation is occurring in the long-term sense thattransformationalist’s outline, the political logic of a world order isalso present. However, world orders are not immutable structures.They develop within particular historical junctures by social forcesthat, in time, are challenged and transformed by contending socialforces and ideas. I contend that economic globalisation is a socialstructure that was formed by a crisis in the social reproduction of cap-italism. For this to transpire, the post Second World War world orderthat supported international bargaining had to collapse and be sup-planted by a new set of social forces and agreements that forged newglobal forms of economic and social organisation. Before outliningthe world order of economic globalisation and neo-liberalism, it iscrucial to note what preceded it.


Changes in world order: crisis and resolution

During the twentieth century, there were a series of world orders thatfollowed the demise of the gold standard and the clear reign of PaxBritannia in the years leading up to the First World War. The inter warworld order was typified by the absence of clear hegemonic power andby imperialism between western powers and most of the non-westernworld (Cox 1993: 60). Nation-states across the western world weredefined by economic nationalism as the mode of regulation, despitedifferent histories and cultures. The practice of sharing a common fatewas fostered by the developing Fordist regime of accumulation thatushered in mass production and consumption. A tangible commoneconomic fate within the nation-state was central to economic nation-alism. The autarchic nationalism of the inter war period entailed thesupport of the state for productive capital (Overbeek and Van der Pijl1993: 9–10), and involved a rejection of the laissez-faire liberalism ofthe late nineteenth century (Cerny 1990: 212–3). Autarchic national-ism was evident in “beggar thy neighbour” policies in trade and cur-rency depreciation during the Great Depression and conflict duringthe Second World War.

The post Second World War order was underpinned by the hege-mony of the United States. This world order was also defined by the breakdown of imperialism through the beginnings of decolonisa-tion. Despite this shift, there was the persistence of neo-imperialism,evident within a global regime of unequal exchange between thewestern core and the non-western periphery (Gill and Law 1988: 78).The United States presided over a monetary system that fixed worldcurrencies to the US dollar (which in turn was fixed to gold) and estab-lished the set of institutions arranged at Bretton Woods (Ruggie 1991:203–4). These institutions included the General Agreement on Tariffsand Trade (GATT), the International Monetary Fund (IMF) and theWorld Bank. The GATT was a framework aimed at expanding tradebetween member states by multilaterally negotiating a degree of com-parative advantage and avoiding unfair trading policies. In order todevelop a stable international monetary system that avoided competi-tive currency devaluation, the IMF was established as a lender of lastresort for balance of payment difficulties. The World Bank was devel-oped as a lender to states that were rebuilding or developing. Theseinstruments were aimed at promoting a global regime that promotedeconomic growth, economic stability and an “active domestic role for


the state in order to ensure that equity and growth went hand inhand” (Kapstein 1996: 20–1; see also Cox 1993: 297).

The post war world order was underpinned by ideas that can best bereferred to as “embedded liberalism”, because efforts of economic lib-eralisation were balanced with social stability and welfare within thenation-state (Ruggie 1991: 203; see also Ruggie 1982). The observationthat the ideas of embedded liberalism influenced western states andthe Bretton Woods agencies at this time, was evidence that policy-makers had learnt from the “mutually destructive consequences of theexternal economic polices states pursued in the 1930s” (Ruggie 1991:203). It was also evidence of a “synthesis” of an “Americanised versionof liberal internationalism” and the interests of American productivecapital (Overbeek and Van der Pijl 1993: 11). Essentially, if the nation-state was to be prosperous, the international economy had to bemanaged by international co-operation. Contrary to “the economicnationalism of the 1930s, the international economic order would bemultilateral in character; but unlike the liberalism of the gold standardand free trade, its multilateralism would be predicated upon domesticinterventionism” (Ruggie 1991: 203). The character of the prevailingglobal regime was international.

The domestic aspect of embedded liberalism was made manifest bysocial bargains between various national social forces; the government,business, unions and farmers. This “social pact” involved the deploy-ment of welfare mechanisms and social entitlements backed by theKeynesian-interventionist state in many countries (Castells 1989:21–2). Keynesian economics provided a justification for being scepticalthat the market and laissez-faire methods, both domestically and inter-nationally, could be smooth or self-balancing. Keynesian economiststhereby asserted that governments should use taxation and expen-diture to manipulate aggregate demand in order to promote fullemployment and economic growth. These domestic arrangementswere ultimately underpinned by welfare-Keynesian modes of regula-tion evident by an active government presence in macroeconomicactivity and the promotion of policies that enabled a range of Fordistregimes of mass production and mass consumption to exist across thewestern world. This intervention was aimed at economic growth andproductivity, as well as social stability, the maximisation of welfareand the development the nation-state in terms of public infrastruc-ture. In contrast to the interwar years, this national bargain was an“historic compromise” that promoted employment, the welfare state,increased trade and an expanding international economy (Kapstein


1996: 16–7). It was a particular relationship between the government,business and organised labour that linked the nation-state to theinternational capitalist economy that ultimately balanced capitalismand social stability in what became known as a “golden age” (Castells1989: 22).

The world order defined by the hegemony of the US and the normsof embedded liberalism came to an end “sometime from the late 1960sthrough the early 1970s [when] it became evident that this US-basedworld order was no longer working well” (Cox 1993: 60; see also Cerny1997: 259). During this period, the economic growth of the post warperiod declined and inflation increased. The US also withdrew fromthe dollar-gold standard and paved the way for major currencies to“float” instead of remaining at a fixed rate. The norms underpinningthe Bretton Woods system and state policy-making began to be ques-tioned. In addition, some of the social forces supporting the Fordistarrangement, most notably the interests of business, were disaffected.As a result, the social practices and the ideas associated with Fordismwere challenged. This crisis of the late 1960s and 1970s

cannot be traced to any one single incident, or to any one isolateddip in the normal business cycle. It was a fundamental crisis of“normality” affecting all aspects of the post-war order: social rela-tions of production, the composition of the historic bloc … the roleof the state, and the international order (Overbeek and Van der Pijl1993: 14).

This multifaceted crisis was a series of cracks in both the support forthe embedded liberal/Keynesian ideal and the various “faces” of thisworld order.

By the late 1960s, the material face of the embedded liberal worldorder, the Fordist regime of accumulation, was in a “situation ofstructural crisis” across advanced capitalist societies (Castells 1980: 80).The contours of this crisis involved both declining profitability that stemmed from the successful social and labour demands in the western world, as well as inflexibility associated with the Fordistregime of accumulation (Castells 1989: 22). The oil shocks of the early1970s had the dramatic effect of prompting stagflation across thewestern world and accelerating the crisis of Fordist regimes of accu-mulation and the ability of the welfare-Keynesian state to maintainprofitable capitalism in the western world (Castells 1989: 22; Gill1993: 250–4). Such a crisis is defined by the impossibility “to expand


or reproduce the system without a transformation or reorganisation ofthe basic characteristics of production, distribution and management,and their expression in terms of social organisation” (Castells 1980: 8).The successes of the welfare state and the relatively strong position oflabour in advanced capitalist societies were restricting firms, both in terms of realising profits on current investments and pursuingfurther profitable options (Castells 1989: 22). Firms responded by developing profitable opportunities through the replacement of labour by the utilisation of information technology and by extendingproduction processes to cheaper parts of the world (Castells 1989:23–26). In effect, firms were encouraged by this economic crisis to takethe “global option” in order to develop a benign environment for profit(Castells and Henderson 1987: 1). It was also the successes in the postwar international economy of embedded liberalism that ultimately ledto a disembedded global economy. These successes included: theexpansion of trade after the Second World War and the economicrebuilding of Europe and Japan; the rise of the transnational corpora-tion; and the expanded production of new technological items, includ-ing information technology (Overbeek and Van der Pijl 1993: 13).

The changes in social and corporate organisation were paralleled byan ideological and institutional shift during this period of crisis. Theideas of a national bargain were also weakening because of the devel-opment of transnational linkages of “informal networks of ruling classconsultation” between business people and government officials in private forums such as the World Economic Forum (WEF), theBilderburg conferences and the Trilateral Commission (Overbeek and Van der Pijl 1993: 13; Gill 1993: 266). In particular, the TrilateralCommission was at the forefront of questioning the mode of regula-tion that supported a Fordist national bargain and the “ungovernabil-ity” that this type of circumstance produced (Crozier, et al 1975: 11).The ideology that emerged from the transnational linkages of businessduring the 1980s and 1990s invoked the importance of free marketsand a minimal state. The ideology became referred to as “neo-liberal-ism” and expressed the view that government should implement a“variety of measures intended to insulate economic policy-makingfrom popular pressures” (Cox 1996b: 305). While the influence of neo-liberalism varied significantly from country to country, it hadtransnational forms of connection at its inception and was central to the challenge made to the idea of the welfare state and to “biggovernment”, evident within the new right expressions of Reaganismand Thatcherism. Transnational neo-liberalism was also shaped by theperceived threat to capitalism due to calls during the 1970s for a New


International Economic Order. This ultimately unsuccessful order wasan appeal by developing countries and western social democrats todemocratically regulate the international economy and increase therepresentation of the developing world (Van der Pijl 1993).

The role that the US performed in this waning world order alsoshifted within this political and organisational shift towards neo-liberalism and a global economy. The system of supremacy with theUS as the hegemon ran into problems by the 1970s. While the USremained the world’s superior military force by a large margin, it nolonger arranged rules and institutions in the way in had in the 1940sor 1950s. Stephen Gill points out that there was a shift from “total” US hegemony towards a “US-centred transnational hegemony” wherethe US shared its hegemonic and rule setting capacity with other like minded governments of powerful states (Gill 1993). The develop-ment of the Group of Seven (G-7) was evidence of this cooperationbetween powerful capitalist states. This shift closely paralleled thetransnational linkage of business consultation as evident in the WEFand the Trilateral Commission. This convergence amongst capitalistelites and powerful states created a “common cause between the USand its allies” founded on the formation of arrangements that openedup opportunities for profit across the world in a way that differedsignificantly from embedded liberalism (Gowan 2001: 88).

The argument advanced here is that a globalised economy essen-tially developed from a breakdown of the international economy ofembedded liberalism. This decay of the post war world order stemmedfrom declining profitability and economic stagnation in the westernworld (Castells and Henderson 1987: 3). This crisis was central to themovement of economic activity and technological innovation towardsa resolution that involved the development of world order with adifferent framework of normality than an international economy.Governments and capitalistic actors within advanced capitalist soci-eties forged this resolution in three respects. First, new forms of social organisation were evident within a new regime of accumulationthat was more flexible and increased the power of firms in relation to workers. This regime of accumulation, often referred to as “post-Fordism”, endeavoured to extract a higher proportion of the surplus ofthe production process for capital through restructuring work andreducing benefits and wages (Castells 1989: 23; Cox 1996b: 300–1).Second, a change in the mode of regulation involved a shift in theaims and mechanisms of public policy towards neo-liberalism andderegulation. This entailed a shift within national policy-making from“political legitimation and social redistribution to political domination


and capital accumulation” (Castells 1989: 25). This shift involves newforms of state activity that include deregulation, privatisation, regres-sive tax reform and the delegitimisation of the welfare state. The thirdelement of the restructuring of capitalism involved an expansion ofprofit-making opportunities to a worldwide scale with “the systemworking as a unit, worldwide in real time” (Castells 1989: 26).

While capitalism has been a world economy from the sixteenthcentury, it is only since the 1970s that there has been the motivationand the technical infrastructure for capitalism to operate as a singleplace in real time. During this period, economic activity ceased to beconducted at arms length between distinct national economies thatbalance capitalism with social objectives. Rather, capitalist marketsand actors increasingly operated within global networks that wereincreasingly deregulated and underpinned by neo-liberalism and thebusiness interests supportive of this context.

A neo-liberal world order

Economic globalisation is more than a continuation of “time-spacedistanciation”. By the account drawn from critical political economy,economic or neo-liberal globalisation is a contingent alteration in theworld’s social structure which weaves material, normative and institu-tional elements to fashion a world order that operates as a singlederegulated place in real time. This neo-liberal world order has beenactively developed by capitalistic social forces that have expanded andentrenched capitalist relationships, as well as supported new forms ofsocial organisation and new forms of public policy and governance.Contemporary globalisation is occurring on the terms of capitalistrestructuring. It represents a new normative and institutional frame-work and a “new model of socio-economic organisation” which isdeveloping in an uneven way with national variations in order toachieve the basic aims of capitalism, a higher rate of profit for theowners of capital (Castells 1989: 23). As such, economic globalisationis not a natural development of generic capitalism, nor technology,but a social construct formed from changing social forces. The funda-mental feature of economic globalisation that the critical approachseeks to demonstrate is that the world order of economic globalisationwas unleashed by transnational social forces and by social forceswithin key states that desired a political economic context thatdiffered from the world order of embedded liberalism. Moreover, thesocial forces of capitalism acted politically and economically in a waythat ultimately undermined embedded liberalism. While it would be


an extreme exaggeration to suggest that the social forces supportive ofneo-liberalism had complete control over the development of thealternative to embedded liberalism, economic globalisation was notautomatic. It is a political economic process that has structural proper-ties that, while far reaching, are not inevitable or irreversible.

This emerging world order consists of three interlocking dimensions.The material dimension of the neo-liberal world order involves chang-ing social and technological practices across societies, work places andthe world. At the heart of this change is the rise of what ManuelCastells refers to as an “informational economy” where informationtechnology has qualitatively changed the nature of global economicorganisation (Castells 1989, 1996). As such, there is now a globalregime where a new international division of labour has expandedindustrial enterprise beyond North America, Europe and Japan so thatincreasing numbers of products are produced in different locations, inlight of locational and cost advantages, then compiled in a locationand then sold in various markets (Frobel et al 1978; Reich 1991b: Chp10). In addition to these global webs of production, there is the devel-opment of a flexible/just in time regime of accumulation becauseFordism began to break down “virtually everywhere” by the early1970s (Scott 1998: 20; See Castells 1996: 152–6). The emergent regimeof accumulation, often termed post-Fordism, involves “product flexi-bility”, which entails the rise of differentiated products seeking nichemarkets and “process flexibility”, which is typified by an increasinglyflexible production process (Castells 1996: 155).

Associated with these developments is the rise in significance of theTransnational Corporation (TNC) – due in part because of their mobilityand sheer size within the global economy. Not only has the TNC beentransformed from a vertical bureaucracy into a horizontal, “networkenterprise” that connects “autonomous systems of goals” because ofglobal competition (Castells 1996: 171), but the TNC has become animportant political actor able to negotiate with states (Strange 1992:6–7). As such, TNCs have been key agents in the development ofeconomic globalisation. Also, the global economy has been heavilyinfluenced by the increased scale and importance of global financewhich “has achieved a virtually unregulated and electronically con-nected 24-hour-a-day network” (Cox 1996b: 301). The development ofglobal financial markets in the late twentieth century was also shapedby information technologies that enabled “instantaneous transmission,interconnectivity and speed” of financial flows (Sassen 1995: 43). As aresult, global capital markets expanded from 10–20 billion dollars perday in the 1970s to 1.5 trillion in 1998 (UNDP 1999: 25).


As result of these material factors, there is a “new geography of inter-national transactions” evident through the increase in global competi-tion as a fundamental component of the global economy (Sassen 1994:10–1). The “enduring architecture” of economic history is being over-laid with the “variable geometry” of networks and flows of capitalismwhich are ever changing, mobile and searching out locales of advan-tage and innovation (Castells 1996: 145). As Castells contends, whileprivate economic actors are shaped primarily by profitability, politicalactors, such as governments in many nation-states, are primarily con-cerned about the competitiveness of their jurisdiction in relation toother jurisdictions (Castells 1996: 81, 86–7). This “variable geometry”and the promotion of competitiveness on the part of many nation-states diverges significantly from the relative inflexibility of Fordismand an embedded liberal international economy.

According to the perspective of critical political economy, thesematerial developments do not occur within a vacuum. They developedwithin parallel ideological and institutional frameworks. The ideologi-cal and normative dimension of this world order is associated with thebroadening of hegemony beyond the US to incorporate transnationalcapital interests in other capitalist states (Gill 1986) and the relatedproliferation of neo-liberal thought. As such, the world order ofeconomic globalisation also entails a changing institutional basisinvolving a new complex of international institutions, adjustments in the exercise of US power and influence, and new patterns of stateregulation (Sassen 1994: 14–18; Gill 1997: 6–14). In the next chapter, I will elaborate the ideological and institutional dimensions of thisworld order in more detail. Ultimately, the emerging framework that stems from these three dimensions constitute a context thatinfluences and disciplines actors within this structure. The social forcesof transnational capital sustain this structure by decisively shaping thepreceding dimensions of world order. Nevertheless, actors such ascorporations and states also perpetuate the structures of economicglobalisation by simply adapting to what they see as “global ‘realities’”of economic competition (Cerny 1997: 251; Carnoy and Castells 2001:5–6).

Economic globalisation as social change

While the transformationalist account of globalisation argues thatcontemporary globalisation is a long-term process that is multi-faceted


and non-teleological, the position of critical political economy regardsthis depiction as an insufficient explanation of contemporary globali-sation. While concurring that long-term processes of globalisation areunderway, this chapter contends that contemporary globalisation isbeing decisively shaped by the restructuring of capitalism. This socialrestructuring involves the emergence of a neo-liberal world order thatinvolves deregulated capitalism, thereby rejecting the internationaleconomy established at Bretton Woods that was animated by the aspi-ration of embedded liberalism. It is no longer the case that “economictransactions are conducted at arm’s length between distinct and dis-joint national economies”, now “although physically separated, thesemarkets are global in that they function as if they were all in the sameplace, in real time and around the clock” (Ruggie 1994: 517). Theworld economy is now a complicated global system of transnationalnetworks that operate across nation-states.

The material processes examined in this chapter operate within acontext of ideas and political institutions that abet deregulated capital-ism. Economic globalisation is encoded with rules and ideas thatpermit transnational economic connections and networks. The argu-ment here is that economic globalisation is not an automatic orinevitable development of capitalism, technology or modernity. Rather,it is a highly political process. The development of a global economyand the increasing influence of business and global markets is no“accident” (Strange 1996: 44–5). Economic globalisation is an emerg-ing world order that has been guided by the decisions of investors,corporations, business councils and governments within a context ofneo-liberal aspirations and ideals. It has, in the words of Richard Falk,been “globalisation from above” (Falk 1997a).

The object of this “ethico-political” assemblage is to “enhance the rateof profit for private capital, the engine of investment, and thus growth”(Castells 1989: 23). This neo-liberal assemblage, with its emphasis onprofitability and deregulated capitalism, is distanced from the balancebetween capitalism and social stability that defined embedded lib-eralism. Consequently, global politics is shaped by an ongoing, indeter-minate and tension ridden practice of social restructuring where “thelibertarian spirit of capitalism” has “finally found itself at home at thelast frontier where organisational networks and information flows dis-solve locales and supersede society” (Castells 1989: 32). The followingchapter appraises the ideological framework and the neo-liberal infra-structure that supports the “libertarian spirit of capitalism”.


2The Neo-liberal Infrastructure of Economic Globalisation

The state becomes a transmission belt from the global to thenational economy, where heretofore it had acted as the bul-wark defending domestic welfare from external disturbances(Cox 1996b: 302).

The changing social practices of economic globalisation have notemerged from thin air. For economic activity to be organised on a globalbasis, an appropriate political infrastructure is required to facilitate andlegitimate transnational forms of economic activity. At Bretton Woodsin 1944, the international economy of the post war period was stabilisedby the arrangement that linked expanded world trade to welfare pro-motion at home. By contrast, during the 1970s, the emergence of a moredisembedded global economy was paralleled by the development of newinstitutions, most notably the Group of Seven (G-7), and new roles forthe Bretton Woods institutions aimed at promoting the global expan-sion of market forces. Economic globalisation also entails changes in thefunction and character of nation-states. Despite claims of hyperglobal-isers, nation-states not only continue to exist, but are also crucial to thepromotion of economic globalisation. Nonetheless, within economicglobalisation the overriding purpose of the nation-state differs marked-ly from earlier conceptions of the state, such as the welfare state, thatsought to protect the interests of domestic constituencies.

Underpinning this emerging political infrastructure is a significantnormative and political shift in world politics. According to the criticalaccount of globalisation that I developed in the previous chapter, this normative shift was towards neo-liberalism and liberalised capital-ism. The ideology of neo-liberalism is central to the operation of thisemerging institutional context. As such, the infrastructure of the world

34

order of economic globalisation represents a complex formation thatinvolves new norms and ideas that animate the state and internationalinstitutions. Building the consensus needed to give weight to theseprocesses of deregulation is a difficult task in that it has to operate at aglobal level in addition to reshaping the role of the nation-state(Mittelman 2000: 26).

The purpose of this chapter is to continue a critical political economyunderstanding of economic globalisation by examining the ways neo-liberalism and deregulated capitalism influence governance. As such,this chapter has two parts. The first explores the unfolding discursiveand ideational aspect of neo-liberalism and global capitalism. This partmaintains that neo-liberalism is a powerful constitutive influence overgovernment in the contemporary period. The second part outlines theinstitutional basis of global and national governance evident in neo-liberal practice. This leads us to foreshadow the difficult balance thatnation-states face between advocating a more open economy and at the same time securing and maintaining public support for neo-liberalpolicy-making.

The neo-liberal idea

Neo-liberalism, is a philosophy and ideology that supports individual-ism, free markets and a minimal state (Richardson 2001: 85). This market-orientated ideology is a revival of classical liberalism that nowposits the centrality of economic relationships in global politics. Forneo-liberals, the ongoing practice of economic globalisation is evidenceof the progress of capitalist society and the triumph of the idea of a“self”-regulating market. Neo-liberalism is an ideology that promotesprofit, economic growth and material progress as the ultimate aims of social life. It asserts that minimal political involvement in “free markets” is the road to efficiency, economic growth and personalliberty. This ideology has become “encoded” in economic globalisation(Mittelman 1996a). As James Richardson (2001: 94–5) observes:

In endorsing globalization the neoliberal elites seek to shape devel-opments in a particular direction. They focus on the economicdimension: the transnational organization of production, the globalmobility of capital, and the removal of all barriers to the construc-tion of a world market…. Neoliberal doctrine thus drastically narrowsthe potentially vast array of opportunities that multidimensionalglobalization appears to open up.

The Neo-liberal Infrastructure of Economic Globalisation 35

Neo-liberal ideology is clearly manifest at a global level in institu-tional forums such as the G-7 and IMF, and during the 1980s, wastermed the “Washington Consensus”: the idea that there is no reason-able alternative to the global promotion of free markets and that “min-imum government and free markets are achievable and desirable”across the developing world (Gray 1998: 22). In the western world, theefforts of Ronald Reagan in America and Margaret Thatcher in Britainmade neo-liberalism an unfolding social reality.

Neo-liberalism has permeated global politics and shaped the behav-iour of various agents through a series of different avenues. Somescholars, suggest that there has been a general shift in sensibility and“common sense” in the many parts of the world where capitalism has significantly permeated into social life. Under the sway of neo-liberalism, capitalist norms and practices pervade everyday life in amore systematic way than in the past. This cultural spread and deep-ening of capitalist relationships of neo-liberalism is evident in Gill’snotion of a “market civilisation”, which entails

cultural, ideological and mythic forms understood broadly as anideology or myth of capitalist progress. These representations areassociated with the cumulative aspects of market integration and theincreasingly expansive structures of accumulation, legitimation,consumption and work (Gill 1995a: 399).

Thus, not only does capitalism increasingly shape society, butcapitalist processes are increasingly, but not completely, unalloyed bysocial and cultural constraints inherent in the balance of embeddedliberalism.

Before concentrating on the ways that neo-liberalism influences gov-ernance, it is essential to examine the social forces that promote, andbenefit from, neo-liberalism. According to Richardson, there are threemain sources of active support for neo-liberalism. The first source is the“corporate and financial elites and their associates” (Richardson 2001:169). Leslie Sklair couches this elite in the stronger terms of being the“transnational capitalist class” operating through “social movementsfor global capitalism” (Sklair 1997: 514–5). As Sklair, Cox and Gill indi-cate, social movements are not only counter hegemonic social forces(Cox 1996b; Gill 1986). While for Gramcian inspired scholars “civilsociety” is a field where hegemonic forces and ideology are contestedby counter hegemonic positions, hegemonic social forces do not standstill. Hegemonic social forces are active in the perpetuation of their


hegemony. Social movements that are organised by hegemonic inter-ests, such as business councils and bodies like the WEF, ultimatelyenable certain classes and groups to rule by disseminating economic,political and cultural influences across the globe. The social forces thatsupport economic globalisation include an array of “local, national,international and global organisations” (Sklair 1997: 514–5). Becausethere are many organisations and social movements that resist neo-liberal globalisation, the organisations that do support a world order of global capitalism have to continually endeavour to produce andactively maintain a hegemonic arrangement consistent with neo-liberal aspirations.

People within social movements for global capitalism include corpo-rate executives, “globalising bureaucrats” and “professionals”, as well asmembers of media elites (Sklair 1997: 524–32). These elites influencegovernments around the world, participate within organisations suchas the Trilateral Commission and WEF, as well as various businessgroups and neo-liberal think tanks. Gill and Sklair cite the TrilateralCommission, a private forum incorporating wealthy and powerfulindividuals from Europe, North America and Japan, as a particularlyinfluential forum for reaching common frameworks of values, ideasand goals (Gill 1986: 215). These groups are central to the developmentof neo-liberal capitalism because they forge links between nationalelites and develop forms of transnational consciousness (Sklair 1997:514–5). Some members of this “corporate class” forward neo-liberalismbecause they are driven “by self-interest, others by moral convictionand many simply because they are employed to do so” (Korten 1995:73). Neo-liberalism is also perpetuated by policy experts and tech-nocrats in international agencies (such as the World Bank), as well as bygovernments in many parts of the globe (UNDP 1999: 29). Aside fromthese influential groups, there are also globally connected owners,investors, managers and highly paid professionals that benefit from,and are involved with, the expansion of transnational corporations andglobal finance.

Richardson (1995: 142) is also mindful of the people, particularly inthe western world, who benefit from the existence of this elite and theeconomic system that stems from neo-liberalism, even if such supportis “passive” and indirect. This extension of those who benefit from eco-nomic globalisation in material terms points to the way the prevailingorder of capitalism is legitimised by this elite via a “supportive cultureand ideology” of consumerism (Richardson 1995: 142–4). As such, aneo-liberal world order extends into the cultural milieu of society as


well as its economic practices. A market civilisation penetrates deeplyinto society via “cultural mechanisms connected with consumerism,education, leisure activity and the construction of individual identities”that, ultimately, normalise market forces and private interests (Gill1998b: 31). The processes of exchange that proclaim consumption asthe highpoint of social life give flesh to the ideology of neo-liberalismand extend the ideas of the market deep into societies across the world.

The second source of neo-liberalism is the United States (US). Notonly is the US a major source of the transnational capitalist elite andthe culture of consumerism, but also “it can be reasonably said that theneoliberal ascendancy reproduces the characteristic American versionof liberalism” (Richardson 1995: 145). However, it must be added thatBritain too has a similar legacy in respect to liberalism. Not only werethe efforts to make neo-liberalism an unfolding social reality ofMargaret Thatcher in Britain contemporaneous to Ronald Reagan inAmerica, but the influence of finance within Britain was a key socialforce supportive of neo-liberalism (Hutton 1997: Chp 3). Yet, the roleof the US remains paramount to the development and maintenance ofneo-liberalism:

So long as it has no geopolitical rival, it can exercise its power by itspreferred means, economic and cultural. Reflecting the society’sdeeply embedded pragmatic but essentially classical-liberal politicalculture, U.S. governments played the key role in the global shift toneoliberalism and remain committed to keeping the global econo-mic order within its parameters (Richardson 2001: 169).

The US is a significant source of support for neo-liberalism and eco-nomic globalisation. However, while the neo-liberal ascendancy wasfostered by the hegemony of the US, the way neo-liberalism has beenenacted is very much in concert with elites and states in the westernworld and beyond.

The third source of neo-liberalism is the academic and intellectualderivations of neo-liberal and neo-classical economic thought(Richardson 2001: 153–5). During the 1980s, neo-classical thoughtreplaced Keynesian economic thought as the dominant economic par-adigm in most universities and many think tanks and research centres.More than this, neo-liberal economics became a new orthodoxy, astructure of knowledge that provided moral justification for a newrange of policies and institutions. Neo-liberal economists have actedglobally as “epistemic communities” that have “effectively structured


negotiations” and policy by shaping the overarching moral and rhetor-ical context, often through reference to “technical issues” (Habermas2001: 109). These economists in many cases began to function as“priesthood” over the public discourse and policy (Richardson 2001:167). The language of neo-liberal economics emphasises the impor-tance of economic growth achieved by the development of free marketsboth domestically and globally. According to this logic, governmentsought to liberalise barriers to economic activity, engage in processes ofprivatisation that shift decisions and assets from the public sector tothe private sector and concentrate on the promotion the rule of law inrespect to contract law and property rights. Richardson notes that oneof the significant aspects of neo-liberal economics is its purporteduniversal applicability. Whatever the particular traditions of a countryor problems facing it, the neo-classical remedy is always the same: acomplete reliance on deregulated markets (Richardson 2001: 160).

However, neo-liberalism is not an abstract economic philosophybecause this ideology is intertwined with the interests of the trans-national elites and wealthy states. While the world order of economicglobalisation is not the consequence of any single actor, it is clear thatit is a result of “the actions of many people, corporate bodies, andstates, that cumulatively produce new relationships and patterns of behaviour” (Cox 1996b: 296). As Richardson (2001: 90) indicates:neo-liberalism is “an ideology of the powerful”. While there haveclearly been dissenting voices, neo-liberal discourse has provided theprimary justification of polices of deregulation as well as patterns of privilege and distributions of wealth. Neo-liberalism has elevatedeconomics to an intellectual justification for policies that promoteeconomic growth and profitability while shielding critiques of thesocial consequences of these policies. Indeed, neo-liberalism is anideology that possesses precious little of the breadth or compassion ofthe broader liberal legacy. David Korten (1995: 74) savours the irony ofneo-liberalism in his phrase “corporate libertarianism” because

its consequence is to place the rights and freedoms of corporationsahead of the rights and freedoms of individuals. Presented as an eco-nomic agenda, it is in truth a governance agenda. Who will have thepower to rule, and to what end?

Hence, the rise of neo-liberalism represents more than a shift in the ideas shaping economic knowledge or public policy. While neo-liberalism is by no means the only idea or discourse permeating global


politics, it has had a decisive impact on the ways in which power andsociety are being structured.

Neo-liberal governance

The transmission of neo-liberalism does not rest merely upon the dis-cursive proliferation of neo-liberal forms of knowledge and sensibility.Economic globalisation is made possible by institutions that are conso-nant with neo-liberal ideas and norms. As Gill (1998b: 24) maintains,“ideology is not enough”. At a fundamental level, economic globali-sation requires “political globalisation” (Cerny 1997). Not only hasthere been “an intensification and extension of capitalist relationships”within and between nation-states, but these values and a revived trustin the market have been strengthened by government action in linewith efficiency and an open world economy (Palan et al 1996: 19). Acomplicated and particular structure of governance is necessary tomake the world order of economic globalisation possible. Not only doesgovernance encompass both global and more local levels of politicalorganisation which include the state, but it also includes public andprivate forms of regulation. These political processes encompass theexistence of institutionalised neo-liberalism at the national and globallevel, on one hand, and the structural effect of states shaped by globalfinance and mobile capital, on the other.

It is necessary to emphasise that governance is the practice of socie-tal organization that refers to the establishment and operation ofbroader social institutions and decision-making processes than purelythe government or the state. In many ways, this explanation of gover-nance is consistent with Gramsci’s notion of the “extended” state, inthat it includes both the state apparatus and the actors and ideas of civilsociety (Gramsci 1999[1971]: 263). While this realm has long beeninfluenced by structures and ideas that transcend states or societies, itis clear during the twentieth century that governance is being increas-ingly enacted in a worldwide context. While the field of governance isbroad and influenced by a vast array of institutional and political prac-tices, the state plays a significant role within these practices. In theGramscian sense of the “narrow” state, the state is a distinct institutionwithin fields of broader governance (Gramsci 1999[1971]: 261). Thestate is a territorial institution that weds legitimate authority to law andthe dispensation of force with the government acting as the principalpolicy-maker within the framework of the state. Lastly, market actorsand frameworks also constitute an aspect of governance. GeoffreyUnderhill (2000: 815–7) is at pains to note that “power is clearly not the


preserve of the formal institutions which pretend to monopolise it, par-ticularly states – private market power is very much part of the patternof governance we experience”.

Consequently, we can see that governance is a loosely integrated butcomplicated practice that includes consensus and coercion, persuasionand law. The actual configuration or pattern of these influences hasvaried over time. Changes in ideas and norms have been central tochanges in patterns of governance. As illustrated in the previous chap-ter, at any given time there is a contingent set of values and discoursethat are coupled with the hegemonic social forces that sustain a worldorder. Such a prevailing discourse shapes the social task of governanceand public policy and represents in many ways Michel Foucault’s ideaof a “discursive formation” in that it represents a “regularity (an order,correlations, positions and functionings, transformations)” in respectto authority (Foucault 1972: 38). Such a discourse transcends the enact-ment of a strategy chosen by the actors within governance to the extentthat it becomes an institutionalised rationale and takes on inter-subjec-tive qualities. This pervasiveness does not mean that the discourse orthe practices it engenders are inviolate, or the power that is exercisedby this discourse is uncontested. Rather, it is a regularity that intersectswith other institutions, ideas and practices. Such a regularity represents“a set of ideas and practices with particular conditions of existence,which are more or less institutionalised, but which may be only par-tially understood by those that they encompass” (Gill 1995a: 402).Consequently, the rise of neo-liberalism has decisively shifted the waysgovernance is conceived by the actors involved and the policies thathave been fashioned by governments.

It is not the case that this pattern of governance, or agents operatingwithin this framework, are shaped solely by neo-liberal political thoughtor neo-classical economic theory. But, while there are a few states thatdetach themselves from economic globalisation, the majority of statesare active participants in the neo-liberal and deregulated approach ofgovernance. It is this sense, I use the term neo-liberal governance.There is more to neo-liberal governance than neo-liberal philosophy –it “is not the pure, doctrinaire version of libertarian theorists”(Richardson 2001: 145). Rather, neo-liberal governance is a policy-mak-ing sensibility inextricably tied up with the political-economic interestsshaping governance that enables and in fact, constitutes, economicglobalisation.

There are two prime political influences tied up with the way neo-liberalism has penetrated into the structures of governance around the world. First, there are the structural features of the world economy,


in particular global finance and mobile capital, which while enabled by neo-liberal deregulation, have influenced how all states operate.Whether or not states seek to uphold neo-liberalism or the interests of transnational capital, they are nonetheless shaped by a context ofderegulation that, once let loose, is difficult to control. As Phillip Cerny(1997: 269; 1994: 238) explains: “the genie is out of the bottle” – thecompetition between states for capital moves states inexorably towardspolices of deregulation regardless of their ideological commitment toneo-liberalism per se. Once open global markets are set in motion, theyprovide an influence over the ways governance is enacted. Second, it isimportant to emphasise the ways in which neo-liberalism dovetailswith the national interests of the US and the G-7 countries. While the hegemony of US was tied up with embedded liberalism, after the1970s there was the shift towards neo-liberalism in US policy-makingdiscourse. Yet, policy-makers in other wealthy countries held thisdiscourse as well and were also concerned with the ways increasingeconomic integration could be managed. So what was occurring duringthe 1970s, through the formation of the G-7 in particular, was the“broadening of the management of world capitalism” beyond just theUS, even though the US benefited greatly from broadening andentrenching of a global economy (Gill 1986: 217). After the early 1970sthe US and the G-7 states sought to uphold an open global economyfree from impediments to their economic prosperity and sought to pre-serve a world order supportive of capital in the face of developing worldconsternation regarding the international economic order (Richardson2001: 150–1). This is the case even if powerful states seek to “buck thesystem” and protect key economic sectors such as agriculture.

Consequently, neo-liberalism is a discourse and rationale that isshaped by the aspiration of those social forces seeking an open worldeconomy. This rationale equates this form of governance “withprogress and civilisation” as well as “necessity” (Gill 1997: 5), and anydeviation from this orthodoxy “is viewed as a sign of either madness orheresy” (Gill 1995b: 66). Indeed, a certain conception of globalisationhas “become normalised” by this rationale (Mittelman 2000: 4). Assuch neo-liberal governance can be considered as a form of “goodgovernment” – it is a rationale imbued with moral purpose andinfluence. Because of this discursive influence, as well as the consensusand coercive attributes supporting this ideology, neo-liberal governanceshapes the exercise of power and the nature of economic activity and integration. Neo-liberalism is essentially a rationale of governancethat entrusts the direction of social life to the “libertarian spirit of


capitalism” (Castells 1989: 32). Thus, I contend that neo-liberal gover-nance is a framework of thought and action, of political intervention-ism at a local and global level, that is required to make the realisationof this spirit possible by the construction of free markets and deregula-tion at a global level. As a rationale of governance, neo-liberal politicalthought has been decisively coloured by the development of globalmarkets and the power of the US government. This rationale infuses aninstitutional order that is at once national and international, as well aspublic and private, that possesses a gravitas that Saskia Sassen (2000: 2)refers to as a “new normativity”.

This new normative order engenders economic globalisation and isdefined by processes of deregulation, privatisation and liberalisation.Deregulation is defined by the removal of “political” interferences fromthe operation of markets. Politics is defined, in this sense, as democra-tic and social influences that will distort market outcomes. In a deepersense, deregulation is a political process that not only removes socialimpediments, but also guarantees contracts and property rights (Sassen1998: 199). Associated closely with this policy has been the practice ofprivatisation. This policy either involves the sale of state assets to theprivate sector or the “contracting out” of public services to the privatesector. These policies are clearly designed to promote efficiency, entre-preneurialism and maximise economic activity. Liberalisation is anotheredge of neo-liberal governance. Liberalisation entails the restriction ofthe ability of states to protect domestic interests or capital in respect totrade and capital movements. While processes of liberalisation are farfrom complete with states still possessing various means to protect par-ticular domestic constituencies (Scott 1998: 13), Sassen (1998: 199–200)describes the implication of these processes as “denationalisation”:where processes of neo-liberalism delimit and transform state’s policy-making such that international financial institutions or networks ofprivate market authorities shape policies that were hitherto domesticmatters.

Economic globalisation is defined by an expansion of economic activ-ity across territorial borders that is made possible by the “negative inte-gration” of the processes of deregulation and liberalisation (Habermas2001: 97). The consequences of this development are far reaching. Notonly does it disembed key aspects of authority away from the state andshift them towards prioritising economic concerns (Ruggie 1994: 525),but we can also see that these new forms of governance and “good gov-ernment” are entrenched by ongoing political-economic practice. AsSassen notes, through “the multiple negotiations between national


states and global economic actors we can see a new normativity thatattaches to the logic of the capital market and that is succeeding inimposing itself on important aspects of national economic policy mak-ing” (Sassen 2000: 10). Capital is in the process of being “liberated” fromboth social control and from territorial restriction.

The realisation of this “libertarian spirit” and the acts of deregulationand liberalisation, are not automatic or spontaneous. It is enforced bypolitical action: “whereas capital tends towards universality, it cannotoperate outside of or beyond the political context, and involves plan-ning, legitimation, and use of the coercive capacities of the state” (Gill1995a: 422). As Karl Polanyi (1957: 140) distinctively opined, a freemarket is “opened and kept open by an enormous increase in conti-nuous, centrally organised and controlled interventionism”. Yet, this“political context” is not limited to just a rearticulation of the role ofthe state; neo-liberal governance also provides a rationale that alsoreshapes the global economic architecture.

Neo-liberal economic architecture

The global economic architecture is the collection of actors and frame-works, both public and private, associated with the organisation andcoordination of economic relationships across the world. These actorsand frameworks engage in the ongoing development of shared under-standings and rules that relate to global trade, finance and investment.While the global economic architecture has become more complicatedsince the 1970s, the most significant change has been the way in whichthe formal agencies of the global economic architecture now activelyintervene and “discipline” individual governments. The original intentof the Bretton Woods system was to enable states to cooperate on eco-nomic matters in order to promote prosperity and social stability andavoid the calamity of the great depression (Ruggie 1994: 516). However,neo-liberal efforts to restructure economic activity and enable globalmarket exchanges have required the “enormous” political interventionthat Polanyi referred to in the context of the nineteenth century to bestretched to a global level. Gill (1995a: 411–2) indicates that the neo-liberal form of governance involves the exercise of disciplinary powerin that “disciplinary neo-liberalism is a concrete form of structural andbehavioural power” that while “not necessarily universal or consis-tent…[is] bureaucratised and institutionalised” in the form not just ofmarkets but also by a range of public actors, such as the World Bankand the IMF, and private actors such as credit rating agencies. The


discipline of neo-liberal governance also intervenes in the operation ofstate policy and narrows policy alternatives. As Peter Gowan’s provoca-tive notion of “neoliberal cosmopolitanism” indicates; the intent ofthis governance is not a world government but rather “disciplinaryregimes – characteristically dubbed, in the oleaginous jargon of theperiod, ‘global governance’ – reaching deep into the economic, socialand political life of the states subject to it, while safeguarding interna-tional flows of finance and trade” (Gowan 2001: 79–80).

The broad approach of critical political economy suggests that thisarchitecture, including the state, has shifted decisively since the 1970s. This architecture is designed to constitute a transnational businessfriendly environment – to ensure investor credibility, to allow govern-ments to maximise economic growth in their territories and to allow “theowners of capital [to] determine how production takes place” (Gill 1998b:25). As Sassen (1998: xxvii–xxviii) maintains, what has changed is

the particular content of this new regime, which strengthens theadvantages of certain types of economic actors and weakens those ofothers. The hegemony of neoliberal concepts of economic relationswith its strong emphasis on markets, deregulation, and free interna-tional trade has influenced policy in the 1980s in the United Statesand Great Britain and now increasingly also in continental Europe.This has contributed to the formation of transnational legal regimesthat are centred in Western economic concepts of contract andproperty rights… [that] has spread to the developing world.

This new framework can be understood as occurring through a pro-cess of “coercive socialisation” which involves “a range of external pres-sures (both state-based and market-based) and a variety of transmissionmechanisms between the external and the domestic” (Hurrell andWoods 1995: 457). There are four mutually reinforcing mechanismswhereby neo-liberal governance is invested in the global economicarchitecture.

First, there is the field of influence and discipline of the formal inter-national financial institutions. An important development in the post1975 global economic architecture was a shift in role and function ofthe Bretton Woods institutions. During the 1990s, trade negotiationscreated the World Trade Organisation (WTO) and enacted tighter traderules aimed at extending free trade to more products and services,including the complicated areas of agriculture and intellectual proper-ty rights. The purpose of the World Bank and IMF shifted with the debt


crisis of the 1980s so that these institutions revolved around thesurveillance of the economic performance of target economies andensured that indebted countries undertook “structural adjustment” intheir economies as a form of “conditionality” required for receivingfunds. Structural adjustment entailed measures aimed at the reductionof both inflation and government expenditure in addition to promot-ing neo-liberal policies that transformed the role of the government in the economy towards policies that included trade liberalization,privatisation and deregulation (Richardson 2001: 118). The highly inter-ventionist influence of these institutions and the discipline of condi-tionality have served to entrench neo-liberal governance. Amendmentsto the neo-liberal orthodoxy of these bodies during the late 1990s,dubbed the “Post Washington Consensus”, keep the core aspects ofneo-liberalism intact despite being more attentive to strengthening therule of law and public institutions in target societies.

There has also been the creation and subsequent development of theG-8 institution. Although it is often decried as little more than aglorified photo opportunity, the G-8 represents a significant hub ofpolicy deliberation and “informal” consensus formation by leaders ofthe world’s powerful states, as well as being site of considerable institu-tion building (Bayne 1995). During the 1990s, the then G-7 engaged in a process of international institutional reform which included theformation of the G-8 and G-20. These processes of policy coordinationand consensus formation are especially important from the perspectiveof critical political economy because the international financial institu-tions perpetuate the ideas and discourse of neo-liberal governance. Inparticular, while the G-8 system attempts to coordinate policies amongmember states – often with mixed results and various disagreementsand tensions (Gill 1997: 10–1; see also Bayne 1995) – in doing so itbinds states and institutions into a mutually interlocking set of prac-tices and ideologies. In addition, these institutions are largely unac-countable in that they are not subject to regular, transparent oversightby democratic procedures or by non-capitalist social movements (Cox1996b: 301) – despite increases in openness during the course of 1990s(Scholte 2000b: 154). Cox maintains that the international institutionsthat support global capitalism are undertaking a “transnational processof consensus formation among the official caretakers of the globaleconomy” which is aimed at maintaining the stability and legitimacyof global capitalism (Cox 1996b: 301). Within the broader context ofglobal governance, it appears that the operation of the WashingtonConsensus through the formal international financial institutions is


focused on economic issues and isolates them from any social goals.According to many observers they do so to such an extent that theydominate and are more powerful than other regimes and organisations,including the UN (Bayne 1995: 506–7; Cox 1996b: 309).

Second, Gill’s conception of “new constitutionalism” indicates thatthe reconfiguration of law is an important practice that entrenches neo-liberal governance. While liberalism and capitalism have alwaysentailed some form of separation between “politics” and “economics”,this separation has become legally entrenched. As Gill (1998b: 23)explains, “in neo-liberal discourse…private forms of power and author-ity in capitalist society are only fully stabilised when questions of eco-nomic rule (e.g. workplace organisation, the rights of investors) areremoved from politics (that is from democracy)”. These politico-legaldimensions constitute international and domestic forms of legality thatimmerse states within an emerging context that filters out influences togovernment except market ones. This observation is mirrored by Sassen(1998: xxvii) who claims that governments have responded to “newclaims on national states to guarantee the domestic and global rights of capital” with “new forms of legality”. This legal shift separates“economic policies from broad political accountability in order to makegovernments more responsive to the discipline of market forces andcorrespondingly less responsive to popular-democratic forces andprocesses” (Gill 1998a: 5). Examples of this include “frameworks suchas NAFTA, GATT, the European Union’s Maastricht accords, as well asother initiatives such as the introduction of constitutional amend-ments requiring balanced budgets and autonomous central banks (withzero inflation targets) and other means whereby important areas of eco-nomic policy are taken out of the control of (elected) governments”(Gill 1997: 11). New constitutionalism bestows special rights on capitalwith the aim of maintaining and “locking in” government credibilityin terms of satisfying financial market actors (Gill 1998a: 5). Thesetypes of legal arrangements are most prevalent within the westernworld but are extending across the world. The aim of this legal practiceis twofold. On one hand, it is to protect investors’ rights and therebyensure markets are able to promote profitability and the freedom ofmovement for capital. On the other, it is to safeguard the processes ofderegulation from potential social manipulation or reversals. This con-text ultimately attempts to establish a “secure” and predictable basis forfirms operating across the world.

Third, neo-liberal governance is evident in the operation of many ofthe private forms of governance operating within the global economy.


While there has been a significant shift in the formal and public side of governance, there has also been an increase in the influence thatprivate or non-official actors and frameworks have come to play ongovernments. Sassen (2000: 11) claims that a “privatised institutionalframework” is “evident in the rising importance of international com-mercial arbitration and the variety of institutions which fulfil ratingand advisory functions that have become essential for the operation ofthe global economy”. While a myriad of different actors within“transnational civil society” have been increasingly prominent in theformation of global politics and the formulation of policy, the empha-sis here is on private bodies that have direct influence or authority inregards to the processes of governance (see Strange 1996: Chp 6).Examples of the importance of private frameworks of governanceinclude the expan-sion in “international commercial arbitration” as away of resolving commercial disputes that are transnational in jurisdic-tion, and the “emergence of self-regulation in economic sectors” thatare either “dominated by a limited number of firms” or dependent onspecialised or technical knowledge (Sassen 2000: 14–15). However, themost prominent private actors are credit rating agencies; organisationsthat are involved in credit research to determine the risk and credit-worthiness of firms and governments. Not only are states shaped by pri-vate influences that are external to the state (Scholte 2000b: 138–40),but they are also increasingly influenced by market influences andmarket thinking (Sinclair 1994: 455). As such, private forms of gover-nance reinforce and expand the “discipline of the market”.

Fourth, neo-liberal governance is perpetuated by the policy directionevident in most nation-states. For economic globalisation to endure,states have to operate in a manner that both enforces neo-liberalismand adapts to a world shaped by deregulation and competition.Ultimately, economic globalisation is held together by an intersectionof ideas, power and economic practice at a global level. This new formof state has become referred to as the “competition state” by PhilipCerny and other scholars (Cerny 1996b; see also Gill 1997: 13–4; Palanet al 1996). According to Cerny, the policy orientation of the competi-tion state represents a shift away from the welfare state or the develop-mental state to the maxim that “the main task or function of the con-temporary state is the promotion of economic activities, whether athome or abroad, which make firms and sectors located within the ter-ritory of the state competitive in international markets” (Cerny 1996b:124). The competition state represents a strategy that seeks to pushderegulating markets with the aim of attracting mobile capital and


maintaining market creditability in the hope of obtaining economicgrowth (Cox 1996b: 302). As such, the competitiveness of the nationaleconomy within global markets becomes the critical focus for govern-ment. It is important to recall that economic globalisation was essen-tially developed by western states as a way out of the crisis in profitablecapitalism during the 1970s. Subsequent processes of deregulation andcompetitiveness are essential for pushing economic globalisation for-ward. According to Cerny (1997: 253), economic globalisation involvesa process of “structuration” whereby agents and structure continuallyreshape the other: as states adapt to the structures of the global eco-nomy by competing and deregulating they entrench economic global-isation. The strategy of the competition state is necessarily tied intoeconomic globalisation.

Neo-liberalism and the competition state

As we have seen, the state is enmeshed within the public networks ofinfluence and discipline of global markets, formal international finan-cial institutions, the principles of new constitutionalism, as well as theprivate networks of credit rating agencies. These mutually interlockingmaterial, institutional and ideational frameworks transmit the “liber-tarian spirit of capitalism” to states around the world. However, statesaround the world clearly interact differently with economic globalisa-tion because they vary enormously in their capacity to interact withglobal capitalism and differ in regards to their stance towards address-ing neo-liberal ideas and norms. Powerful states that are represented inthe G-7 and OECD forums, particularly the US, play a significant rolein promoting economic globalisation via their supremacy in interna-tional financial institutions and through various regimes and alliances(Gowan 2001: 82–6; see also Strange 1996: xiv). Yet, many states aremerely attempting to adapt to economic globalisation and the forms ofknowledge that are often imposed on them (Biersteker 1992: 106;UNDP 1999: 29). As such, there are wide ranges of strategies wherebydifferent states attempt to be competitive and few states have totallyexcluded themselves from integration into the global economy (seePalan et al 1996). As Fernando Cardoso (1993: 156) soberly notes, somestates “will end up in the ‘worst of all possible worlds’. They will noteven be considered worth the trouble of exploitation; they will becomeinconsequential, of no interest to the developing global economy”.

Hence, from the perspective of critical political economy the impor-tance of the term competition state stems from the observation that


there is shift in the purpose of the state and that states have neitherbeen bystanders nor powerless within economic globalisation. Ratherthan bringing about the end of the state, economic globalisationrequires “the actual expansion of de facto state intervention and regu-lation in the name of competitiveness and marketization” (Cerny 1997:251). What is occurring is a shift in function and moral purpose under-pinning most states. The “new normativity” that Sassen (2000: 2)emphasises has come “from the world of private power yet installs itselfin the public realm and in so doing contributes to de-nationalise whathad historically been constructed as national state agendas, notably theKeynesian agenda”. Consequently, the competition state fulfils a “newform of intervention” that opens the way for a resolution of the crisisin the world order of embedded liberalism at the behest of a new coali-tion of social forces and interests (Castells 1989: 25). The competitionstate entails more than a shift of power within the state towards “thoseagencies in closest touch with the global economy” (Cox 1996b: 302).It entails a restructured function and rationale across the entire appa-ratus of many states.

Under the aegis of the competition state, the nation-state becomes acrucial part of economic globalisation because in order to forge a sin-gle, increasingly deregulated world economy the power of the state isessential. In the constellation of institutions that constitute governancein the contemporary world, no other organisation has the authoritythat is linked to public legitimacy and the ability to enact law (Sassen2000: 4; See also World Bank 1997: 4). However, public support forcompetitive processes is not easy to achieve, largely because the statecan be caught between its public constituencies and the transnationalcapitalist constituencies such as financial markets. In prioritising theinterests of capital, the state is at risk of undermining the legitimacyand public support that is essential to underpin economic globalisation(Cerny 1996b: 131). Nevertheless, in a competitive global context,deregulation has been conducted in order to uphold the “nationalinterest” in regards to economic policy and goals. Competition obligesexpanding the national interest to include market constituencies andpushing forward with deregulation in order to be able to maximise eco-nomic growth (Cerny 1994: 224). In a sense, economic growth becomesthe polestar of the national interest. As such, with the exception of afew states that have excluded or distanced themselves from the globaleconomy, the vast majority of states have been heeding the advice ofneo-liberal economists and business interests, thereby moving towardsopening their markets and loosening their regulation of economic


activity. Since the 1980s, there has been “nearly a complete turnaroundin economic policy” within developing countries demonstrated by ageneral discrediting of socialist models and an embracing of deregula-tion and liberalisation (Biersteker 1992: 106).

Beyond this, Cerny (1996b: 124) believes that states are also being“marketised”, in the sense that they are taking on an entrepreneurialand competitive function within a global economy. This consequencelies in the mutual constitution of competition state and economic glob-alisation: processes of deregulation are shaped by the ongoing develop-ment of economic competition between states. Cerny (1994: 226) refersto the shaping of state function and government policy by market net-works as “embedded financial orthodoxy”. This is where governmentpolicy and discretion in taxation and expenditure “is shaped first andforemost by financial and monetary imperatives” (Cerny 1994: 226).Global finance and the networks of financial markets and credit ratingagencies are not only a growing influence on government policy, butthe practices of the competition state are an important source of theextension of these markets through a “widening circle of deregulation”(Cerny 1994: 239). These frameworks are having an increasingly inte-gral role shaping state policy, largely because states are competing withother states for deregulated conditions on a “unilateral basis” (Cerny1994: 239).

Consequently, economic policy and deregulation are shaped by thetransmission of neo-liberal ideology and by the actual competitionbetween states, not only for particular capital investments (by offeringtax breaks, for example), but for the regulatory standards to attract cap-ital evident in wage levels, skill bases, environmental regulations andgeneral levels of taxation (Cerny 1994: 225). This leads not only to a“subsidy auction” between nation-states and even regions withinnation-states (Martin and Schumann 1997: 205) but also leads to “com-petition in laxity”, that is a downward movement in the form of “com-petitive deregulation and creeping liberalisation”– a potential “race tothe bottom” (Cerny 1996b: 134–5). Nevertheless, despite this down-ward tendency, there is the persistence of subtle and not so subtle formsof protectionism. Powerful states are still able to depart from trade rulesand many governments still politically accommodate key dissentingvoices of deregulation by protecting their interests (Scott 1998: 13). Inaddition, there are firms that maintain “worlds best practice” in respectto environmental and social standards as well as locales where high reg-ulatory standards are a source of competitive advantage (see Wheeler2001).


The manifestation of embedded financial orthodoxy and the compe-tition state not only shapes governmental discretion, but also changesthe very structure of the state. While states have previously encouragedmarket forces, state structures are now

being transformed into more and more market-oriented and evenmarket based organisations themselves, fundamentally altering theway that public and private goods are provided. Indeed, states aretransforming – marketizing – themselves in the search for competi-tiveness in an increasingly economically interpenetrated world(Cerny 1996b: 124).

Across many states, particularly within western states, there are threetendencies that demonstrate the ways in which the state is shaped bythe market forces of global finance and neo-liberal rationality. First, thestate is increasingly involved with deregulated “meta governance”(Jessop 1997: 575), that is, providing the basic rules, co-ordination andthe networking for public decision-making rather than acting as a mono-lithic state. This has become known as “reinventing government”, astrategy that swept Western public administration during the 1990s(Osbourne and Gaebler 1992: 25). The role of government increasinglybecame one of “steering rather than rowing”. This provided the cue for widespread increases in privatisation and corporatisation of publicutilities around the world (Scholte 2000b: 122). Ultimately, the rein-vention of government involves the infusion of business logic into theheart of government.

Second, there has been a shift in the modus operandi of economicpolicy. Under the rubric of neo-liberal governance, states have per-sistently enacted deregulation and the liberalisation of trade andfinance. The emphasis of economic policy-making has been on limit-ing inflation through orthodox monetarism rather than Keynesianbudgetary controls. Keynesian macroeconomic management has beenreplaced with the microeconomic management of economic activity(Cerny 1997: 260). Policy regimes of microeconomic reform are aimedat increasing efficiency in various economic sectors of society andincreasing the role of market forces in labour markets and formerlypublic sectors. Aside from competing via decreasing taxation and regu-latory levels, export processing zones and other locales have been estab-lished in order to attract global economic linkages (Scholte 2000b:77–8). Ultimately, economic policy-making is no longer attempting tomaximise general welfare, or self-sufficiency. Rather, it is an attempt to


forge “a flexible response to competitive conditions in a range of diver-sified and rapidly evolving international marketplaces, i.e. the pursuitof ‘competitive advantage’ as distinct from ‘comparative advantage’”(Cerny 1997: 260). The goal of this response is to attract capital andeconomic opportunity to the jurisdiction of a given state.

The third characteristic tendency of the competition state is the “de-socialisation of economic government” (Rose 1996: 337). Again, thistendency is most evident in western states that have witnessed a shiftin the way welfare programmes have been enacted, from welfare provi-sion to a displacement of welfarism evident in government demandsfor welfare recipient “enterprise” and responsibility (evident in thestrategy of “workfare”) (Cerny 1997: 260; Jessop 1997: 572–5). The de-socialised nature of contemporary governance points to the heart of theshift in rationale from welfare state to the competition state, with theimportance of national welfare giving way to maximising those regionsand individuals that can compete (Rose 1996: 340). While the provisionof social welfare has continued across western states (Mishra 1999:97–100), there has been a shift in the purpose of these outlays from“social provision to social control”, largely because the rationale of thestate has changed in a way that still, despite the new de-socialisedapproach, has to manage the unemployed and the poor and enforce thenew restructured social order (R. White 1996: 109). Such a shift requiresthat social policy be subordinated to “labour market flexibility and thedemands of structural competitiveness” (Jessop 1997: 572).

Consequently, the competition state represents a transformation of,and in many ways an increase in, the way in which the state attempts todefend and sustain capitalism, not the elimination of its ability to coor-dinate economic life. This does not mean that capitalism entirely definesthe state. Even laissez-faire capitalism of the nineteenth century was“shot through with political accommodations that provided the condi-tions of survival of the entire system” (Scott 1998: 13). Likewise, prag-matic accommodations, in the form of protection for sensitive culturalvalues as well as industries or sectors, are an essential part of the con-temporary enactment of neo-liberal governance – especially in relation tothe ways many wealthy countries subsidise and protect their agriculturaland textile industries (see Oxfam 2002). Nevertheless, there is a substan-tial difference between the welfare state’s institutionalised concern forthe maximisation of welfare within society (such as concerns for publicservice delivery, full employment and redistribution) and the competi-tion state’s emphasis on the “promotion of enterprise, innovation andprofitability in both private and public sectors” (Cerny 1991: 179).


Thus, far from protecting society, many states are now activelyorchestrating open and economically flexible societies. However, as wewill see in the following chapter, the competition state’s attempt tobalance national goals of belonging and social inclusion, on one hand,and competitiveness and efficiency, on the other, is a difficult task. Thisawkward balance represents how neo-liberal governance is an ethosthat decisively shifts the function of hitherto-public institutions, and atthe same time depending heavily on the public quality of the nation-state. As Cerny (1995: 598) claims, within the context of economicglobalisation and neo-liberal governance the nation-state “faces crisesof both organisational efficiency and institutional legitimacy”. Whilethese contradictions of neo-liberal governance will be explored in thenext chapter, in Chapter 4 I will critically explore an even more far-reaching alternative vision of liberal governance that departs fromthe “political accommodations” of the prevailing balance between thenation-state and neo-liberalism, in order to free deregulation from the constraints of the nation-state. This is a perilous endeavour for neo-liberalism exactly because of the importance to the neo-liberal agendaof the legitimacy of the nation-state’s claim to represent the public andmaintain a historical sense of community. While neo-liberal gover-nance has been extremely successful in providing the context for economic globalisation, how the tension between the promotion of national belonging and the prioritisation of transnational privateinterests will be resolved remains unclear.

The outcome of neo-liberal governance is an environment that issupportive of an open and flexible regime of capitalist accumulation.Within the context of economic globalisation the only viable road toeconomic growth is to attract transnational capital by ensuring themaintenance of market credibility. The aim of this environment is apredictable and secure circumstance for investment that protectsprofitability and property rights. This generally entails low levels ofinflation, moderate business taxation and the maintenance of law andorder. As such, the institutions of neo-liberal governance are aimed atembedding and expanding the realm of the market by ensuring thatthese arrangements are “politically locked in so that economic agentswill be able to realise their investment plans with a longer politicalshadow of the future” (Gill 1997: 11). Due to the fact that the staterequires considerable legal capacity to achieve this transnational “busi-ness friendly” environment, as well as to deal with the levels of unem-ployment and social dislocation that have stemmed from this regime,most states have not became “minimal states” in terms of expendituresor power (Scholte 2000b: 134–5; See also The Economist 1995).


Conclusion

This and the previous chapter combine to present an understanding of the political economic framework of contemporary globalisation.The approach of critical political economy that I have delineated hererests on the distinction between globalisation and economic globali-sation. While the transformationalist account of globalisation convinc-ingly demonstrates that contemporary globalisation is a long-term spa-tial process, the critical account of economic globalisation rests on amore recent shift in the ideas that shape business decision-making,public policy and public expectations. The critical understanding ofeconomic globalisation is important because it endeavours to under-stand the actions, interests and deliberations of private and publicdecision-makers. In doing so, this approach conceives of contemporaryglobalisation as a contingent political process. While critical politicaleconomy emphasises that economic globalisation is a discursive andideational formation just as much as a material one, this approachemphasises the forms of agency and power required to create and main-tain economic globalisation. While there is clearly no central organiseror cast-in-iron global capitalist class, there are organisations and pow-erful social forces that have complex forms of association and sharedassumptions that have been effective in shaping the prevailing forms ofeconomic and political practice. Contemporary globalisation is not the“runaway world” that it is sometimes characterised as being (Giddens2000b). Economic globalisation involves, not only changes in socialand technological practice but also changes in cultural patterns, domi-nant ideas and the institutional framework of capitalism such that theworld increasingly operates as a single deregulated place in real time.This chapter has sought to draw out these connections and reveal theforms of power and knowledge that prevail and construct economicglobalisation.

Furthermore, the argument that I have drawn here asserts that notonly is economic globalisation actively constructed but it is alsounderpinned by norms that have a powerful constitutive influence overgovernment that alters existing state institutions and creates new insti-tutions consistent with the normative and material dimensions of anew world order. As Sassen underlines, “in this new normative order,certain claims emerge as legitimate, others are delegitimated” (Sassen2000: 10; see also Gill 1995b: 66). What is legitimated is the disciplineof market forces on individuals and states. Hence, the private entrepre-neurial interests of capitalistic agents and states that deregulate in orderto attract capital, and thereby pursue economic growth, are clearly


legitimate within this rationale. Consequently, I conclude that neo-liberal governance is a prevailing articulation of good government that most states do not typically disregard. However much this moralfoundation is contested, debated and even violated, I contend that thisethos still shapes political processes in much of the world. Ultimately,while there are strong disciplinary aspects of neo-liberal governance,the motivation of economic growth and of economic returns that statesseek to achieve are enmeshed in the moral purpose of neo-liberalgovernance. The ethos of neo-liberal governance can be understood infive principle dimensions.

First, neo-liberal governance represents the growing concern on thepart of public decision-makers with maximising economic growth and thesecurity and profitability of investors. While neo-liberal governance isformed by principles founded in neo-liberal political theory and neo-classical economic theory, this approach to governing is profoundlyconditioned by the constellation of capitalist social forces, particularlyinvestors and business interests.

Second, the principle means to the goal of economic growth andprofitability is via an extensive global regime of deregulation. The principlegoal of such measures is to provide a “business friendly” environmentthat allows market forces to determine economic life and promoteprofit. Such an environment is secured by legal procedures that min-imise the intrusions of democracy or non-economic concerns.

Third, associated with the processes of deregulation are practices ofliberalisation that restrict the capacity of states to protect domestic capital.While protectionism is not eliminated, the focus of neo-liberal gover-nance is on minimising the effect of borders on the competitiveness ofglobal market forces. Liberalisation limits the potential of domesticgroups from being protected economically by the state, thereby com-pelling economic agents to compete in a global context.

Fourth, despite the fact that neo-liberal governance is being promul-gated at a global level, the nation-state, under the aegis of the competitionstate, plays a crucial role in creating, enforcing and legitimising the processesof deregulation and liberalisation in many countries. In many parts of theworld, the public legitimacy and authority of the nation-state acts as acrucial – but tension ridden – foundation for normalising the extensionand entrenchment of a transnational “business friendly” environment.

Fifth, economic globalisation is not a natural or inevitable process butrather one enabled by the coercive power and consensual influence ofdominant social forces, powerful states and the international financialinstitutions. Neo-liberal governance represents the moral purpose


underpinning the exercise of this power. Thus, neo-liberal governancerepresents more than an ideology and discourse that shapes policy-making; it represents the way in which market forces and private inter-ests are normalised and sanctioned to shape the character of globalpolitics.

The argument of this chapter is that behind this emerging global eco-nomic structure is a “new normativity” aimed squarely at removingimpediments to the operation of a capitalist world economy, intensify-ing the influence of market forces in the hope of obtaining economicgrowth and protecting the interests of investors around the world,transnational corporations and the governments of wealthy states. Inmany parts of the world, the purpose of the state has confirmed RobertCox’s aphorism: the state has become a bulwark for protecting an openand deregulated form of global capitalism. As a result, states around theworld are increasingly shaped by the discipline of the market. However,in doing so, populations of these states are increasingly open to thefluctuations and risks of the market. As a result, economic globalisationproduces significant levels of social vulnerability and dislocation. It isto these concerns that we turn in the following chapter.


3Liberalism and the Consequencesof Economic Globalisation

One response to globalization is to pose the question: Is itethically sustainable? Morally and politically, is it possible tomaintain a global system in which the world’s 225 richestpeople have a combined wealth equal to the annual income of 2.5 billion people, the poorest 47 per cent of the world’spopulation? …Is it ethically defensible to claim that this is theprice paid for the gains that accompany expanding marketforces? (Mittelman 2000: 246)

In the preceding chapter the prevailing world order was examined byfocusing on the ideas, interests and institutions that predominate. Thischapter completes a critical political economy consideration of eco-nomic globalisation by investigating the patterns of disadvantage thatopen up problems for the continuance of this world order. After all, theprevious chapters have defined economic globalisation as a developingformation of material, ideational and institutional elements under-pinned by the dominance of capitalist elites around the world andwealthy states. This order is a contingent reality; it is not an inescapableextension of globalisation. Maintaining economic globalisation is aninherently political task that faces a stark series of moral and politicalchallenges given the significant array of social consequences that flowfrom the deregulated nature of the world economy.

Governing within the context of economic globalisation is difficultbecause global politics is shaped by the structure and power of marketforces to such an extent that social stability and public legitimacy can-not be assumed. The role that the state performs within economic glob-alisation is an awkward one where the state is drawn away from itsdomestic constituency and is subject to the discipline of market forces

58

and international organisations tied to neo-liberal conceptions of good government. Policy-makers operate within a context where neo-liberal governance prevails thereby strengthening claims relating to the promotion of economic growth, profitability, market creditabilityand competitiveness, while de-prioritising claims concerning welfare,democracy and the strategic development of a state’s economy towardssocial ends. Since market forces have been significantly freed frompublic constraint, and market and private forces have increasinglyshaped public institutions, there has been a significant rise in inequal-ity and vulnerability around the world. These social consequences posesignificant problems for policy-makers wishing to sustain global capi-talism. While the observation that free market capitalism causes socialdislocation comes as no surprise to those critical of capitalism, it doespose a difficulty for those who embrace capitalism and liberalism.

This difficulty is underscored by the public protests against economicglobalisation that have increased after the protests in Seattle against theWTO meeting in 1999. These protests emphasise the importance oflegitimising the institutional infrastructure of economic globalisationand addressing (and being seen to address) the adverse social impact ofthe neo-liberal project across the world. While the tensions betweenthese tasks are obvious, these concerns affect liberals at both an ethicallevel, in the sense of promoting the values of liberty and a sense ofjustice across the globe, and a practical level, in the sense of sustainingeconomic globalisation. Central to the latter issue is what role can andshould the state play in order to govern societies in an effective waythat both solves public problems and allows the values of liberalism toprevail. As such, this chapter has two tasks. The first is to outline theways economic globalisation generates inequality, polarisation andinsecurity, as well as threatens to undermine the legitimacy of thosestates that are infused by neo-liberalism and the policies that promoteeconomic growth at the expense of social goals. The second task is toexamine the ways in which economic globalisation and neo-liberalgovernance pose dilemmas to both liberal values and effective liberalgovernance. While liberalism is a “broad church” that contains manydifferent positions in relation to the desirability of deregulated capital-ism, most liberals assume that in the long run free markets will pro-mote material wellbeing, “progress” and liberty (Hurrell and Woods1995, 448). Nevertheless, the unfolding reality of economic globalisa-tion is far less reassuring for liberals.

The relationship between economic globalisation and contempo-rary patterns of social dislocation is a complex and contested one.

Liberalism and the Consequences of Economic Globalisation 59

Despite the absence of a statistically or politically objective stand-point on the actual relationship between economic globalisation andpoverty (see Wade 2004), and even though economic globalisationhas produced significant levels of wealth overall, including wealth inpoorer regions of the world (UNDP 1999: 25), there is considerableevidence that this wealth has not been spread evenly and has pro-duced social dislocation that has affected a wide range of societies.Even though there have been significant social gains within the con-text of economic globalisation the question is whether neo-liberalismand the “Washington Consensus” can promote secure, equitable soci-eties around the world. Moreover, while there is nothing new aboutinequality and vulnerability in the world system:

What is distinctive about the contemporary period is that a growingsense of unease about the inherent inequality of the internationalsystem is occurring at a moment when there is a – frequentlyunfulfilled – expectation that such inequalities could, indeed shouldbe addressed. The fundamental disconnect between the rhetoric ofliberalism, democracy, human rights and security, on the one hand,and the reality of marginalisation and disadvantage on the other,fuels a growing chorus of opposition to an array of processessubsumed under the rubric of “globalisation” (Beeson and Bellamy2003; 339–40)

This chapter seeks to examine this “disconnect” and the problematicimplications of the social consequences of economic globalisation forthe liberal tradition of political thought. The sense that more could bedone to alleviate poverty and promote social cohesion casts a longshadow over policy-making within contemporary globalisation.

Inequality and polarisation

The restructuring of the world economy through the processes of eco-nomic globalisation dramatically reorganises social life. The increasingdensity and scale of global webs of innovation, finance, production,circulation and consumption, are producing widely diverging fortunesfor people across the globe. The world as a whole is more intercon-nected and more prosperous but the distribution of economic growthand wealth has been fundamentally uneven. In the period of 1980–97,for instance, 33 countries managed to have economic growth in excessof 3 per cent while 59 countries managed economic growth at or below0 per cent (UNDP 1999: 27). Consequently, UNDP reports (1996: 2–3,


See UNDP 1999: 44) maintain that the extreme unevenness in socialopportunities is due in part to the reliance on the “quantity of eco-nomic growth” (rather than its “structure or quality”) and is leading toincreasing levels of inequality and polarisation as well as the entrench-ment of clusters of poverty.

Inequality has risen at an overall global level as well as between coun-tries and within countries. Despite a “dramatic surge in economicgrowth”, the levels of overall global inequality have risen in the lasttwenty to thirty years (UNDP 2001: 16–7). The UNDP (1997: 9) notedthat the ratio of income of the world’s poorest fifth compared to therichest fifth has increased from 30 to 1 in 1960 to 78 to 1 in 1994 withsignificant groupings of poverty within Asia, Africa and Latin America.Inequality between countries, particularly between wealthy OECDstates and other states has also risen significantly (UNDP 2001: 16–7),which according to Robert Wade (2004: 583) is a “structural divide, notjust a matter of a lag in the South’s catch-up”. In addition, there havealso been new patterns of inequality within nation-states around theworld. The UNDP (2002: 20) maintains that “among the 73 countrieswith data (and 80% of the world’s people), 48 have seen inequalityincrease since the 1950s, 16 have experienced no change and only 9 – with just 4% of the world’s people – have seen inequality fall”.Inequality within most OECD countries was rising during the 1980sand 1990s (UNDP 1999: 37). A glaring example of inequality is that ofthe USA, where the “top 1% of families enjoyed a growth of after-taxincome of almost 160% over 1979–97, while families in the middle ofthe distribution had a 10% increase” (Wade 2004: 578). Inequality hasalso worsened for those countries making a transition from communistrule (UNDP 2002: 63). Consequently, these various forms of inequalityand polarisation are significant social trends.

One important feature of contemporary patterns of inequality hasbeen the development of new clusters of social stratification in bothwealthy and poor countries. While the legacy of a wealthy North and apoorer South persists, in an era of economic globalisation there has been

an accentuation of uneven development, this time not only betweenNorth and South, but between the dynamic segments and territoriesof societies everywhere, and those others that risk becoming irrele-vant from the perspective of the system’s logic. Indeed, we observethe parallel unleashing of formidable productive forces of the infor-mational revolution, and the consolidation of black holes of humanmisery in the global economy, be it in Burkina Faso, South Bronx,Kamagasaki, Chiapas, or La Courneuve (Castells 1996: 2).


Even where there have been significant advances in economic growthand reductions in extreme poverty, in places such as China for instance,social stratification and inequality have increased (UNDP 1999: 36).Also, while local conditions of disease, war and social dislocationinfluence patterns of inequality within the developing world, withinthe advanced industrial world a significant gap exists between the citiesand rural regions (Sassen 1994: 5–6). Even within urban regions therehas been an extension of social exclusion because of a “disarticulation”of some parts of cities from the global economy (Sassen 1994: 39; SeeCastells 1998: 137–45). These uneven patterns of wealth and povertyare further fragmenting societies in accordance to the flexible circuits ofproduction and exchange of the global economy.

While increasing inequality has been strongly associated with eco-nomic globalisation, contemporary patterns of poverty are more varied.While there has been a reduction in extreme poverty, there has notbeen a general rise in wealth across the world (Wade 2004: 581). TheUNDP (2002: 18) has claimed “the declining share of people in extremepoverty is hopeful, but the level remains disturbingly high”. While thesecond half of the twentieth century saw one of the greatest advancesin reducing poverty in human history, since the 1980s there has beena series of setbacks across much of the world – including the wealthynations of the OECD (UNDP 1997: 2–4). As such, while poverty is evi-dent through processes of social exclusion across the developed world:

Of the 4.6 billion people in developing countries, more than 850 million are illiterate, nearly a billion lack access to improvedwater sources, and 2.4 billion lack access to basic sanitation. Nearly325 million boys and girls are out of school. And 11 million childrenunder age five die each year from preventable causes – equivalent tomore than 30,000 a day. Around 1.2 billion people live on less than $1 a day (1993 PPP US$), and 2.8 billion on less than $2 a day(UNDP 2001: 9).

While these stark forms of poverty are widespread across the devel-oping world, the poor wages and working conditions of the “informaleconomy” are not just present in rural settings in the south but withinlarge western cities as well (Sassen 1994: 106). Also, the global restruc-turing of economic life has decreased the magnitude of the middle classin the developed world, particularly in the US (Castells 1998: 130–2).Likewise, clusters of unemployment and “superfluous labour” arefound around the world (Cox 1996a: 26). These clusters of human


misery are found in the slums of the world – a recent UN report sug-gests that approximately 921 million people around the world live inslums (UN-Habitat, 2003). On the other side of this emerging socialorder is an elite that is increasingly wealthy and detached from societyin some respects. This detachment of the wealthy is apparent in citiesaround the world, most notably through the proliferation of “gated”suburbs and neighbourhoods (Castells 1996: 415–6). James GustaveSpeth of the UNDP has declared that “an emerging global elite, mostlyurban-based and inter-connected in a variety of ways, is amassing greatwealth and power, while more than half of humanity is left out” (citedin C. Thomas 2001: 165). While this detachment is by no means acomplete withdrawal from society, it is evidence of diverging fortunesand social fragmentation in many parts of the world.

These patterns of inequality, polarisation and poverty are linked toeconomic globalisation in four key ways. The first source of accelerat-ing inequality and poverty is government policy within the frameworkof neo-liberal governance. In the developing world, the capacity ofstates to avoid poverty has been limited by a neo-liberal reluctance touse “public-sector interventions to counter this inequality” (Scholte2000b: 245; See UNRISD 2000). The impact of the policies of the IMFand the World Bank, most notably through the austere processes ofstructural adjustment, have also been central to the “unprecedented”advance of poverty across many states (Chossudovsky 1997: 26, SeeUN-Habitat 2003: 6). These developments have been accompanied bydeclining levels of development assistance from the developed worldand a reluctance of these wealthy states to liberalise the trade in agri-cultural and textile products at the same pace as manufactured prod-ucts and intellectual property (Scholte 2000b: 245–6, See Oxfam 2005:6–7). Across the developed world, there have been neo-liberal efforts towind back the welfare state, which have lead to the “politics of auster-ity and a cut back in state provision of social, welfare, health, and pub-lic expenditures” (Gill 1997: 13; See Mishra 1999: 97–100). These cut-backs and the unmediated reliance on opportune market outcomesfeed directly into the development of inequality and poverty.

The second cause for inequality stems from the way the “old” divi-sion between wage earning and profit earning took a new turn with theexpanded horizons of a global rather than a national limit for invest-ment. The mobility and flexibility of the participation of the investorcontrasts with the immobility of wage earning labour. The owners andmanagers of capital have benefited substantially from the globalisationof production and the restructuring of the American and European


economies in particular, while workers have borne the costs of restruc-turing (see Krugman 1994: Chp 13; Martin and Schumann 1997: Chp4). The massive increase in the sheer scale of lucrative financial andstock trading can be attributed to the policies of financial deregulationand the rising needs of globally integrated corporate finance (Scholte2000b: 240). Ethan Kapstein (1996: 29) has suggested that the generaleffect of embedded financial orthodoxy demonstrated by “reduceddeficits, reduced spending, reduced taxes, and the most exalted deity,low inflation – have favoured financial interests at the expense of work-ers and have created an international rentier class”. Moreover, manyparts of the world, especially the poorest developing countries “remainlargely excluded from private financial markets” and have not beenintegrated into the flows of Foreign Direct Investment (Held et al 1999:210). Many people of the same countries have borne the economic andsocial impact of the debt crises and hence are bearing the risk – but fewbenefits – of the global financial system (Scholte 2000b: 274).

Third, inequality stems from the flexibility of the global division oflabour and the earning difference between workers on the basis of whatthey individually add to the global economy (Castells 1998: 72). Theglobal division of labour will benefit workers depending on where theindividual worker fits into this division of labour and occupationalstructure – if at all (Castells 1996: 278–9). Some worker’s skills are val-ued by the global economy and some are not, but this valuationchanges over time. The low capacity to ‘value add’ coupled with declin-ing agricultural prices have contributed to the poverty of many farmersin the developing world (Oxfam, 2002: 74). Also, belonging to largefirms or living in wealthy nation-states no longer offers security because“stepped-up global competition [has] kept redesigning the variablegeometry of work and markets” (Castells 1996: 278). Instead of a singlemovement or arrangement that benefits all, there is now a multiplicityof movements that effect various professions in differing ways – usher-ing dramatic inequality and insecurity for many. However, this “deteri-oration of living and working conditions” (ILO 1994: 1), which takeson different forms in different nations and different regions withinnations, affects already vulnerable people with increased exploitation.This flexibility and the rise of part time and casual employment and therise of information technology are all tightly caught up in the diverg-ing fortunes of workers (UNDP 1999: 37). Part of this flexibility hascome from the weakened position of organised labour in a contextwhere firms “play workplaces and production sites off against eachother” (Martin and Schumann 1997: 131; see also Lee 1996: 492–3) and


where governments actively oppose trade union activity (Castells 1996:278). Indeed, this divergence of fates is central to increasing nationalinequality in most western countries, despite differing institutionalarrangements across the western world.

Lastly, many societies around the world have been unable to controltheir engagement with economic globalisation. At one level, manydeveloping states have not possessed the institutional capacity toattract investment and neo-liberal policies have not only failed toattract investment, but have also further weakened the basic capacity ofmany of these fragile states (Fukuyama 2004: 16–7). In particular, devel-opment has actually regressed in Sub-Saharan Africa (UNDP 2002: 18)because “liberalization policies were not able to attract investment orimprove competitiveness” and the “abstract” logic of neo-liberal struc-tural adjustment measures were not attentive to the social conditionsin particular countries (Castells 1996: 134–135). At another level, devel-oping countries have been excluded from advantaging from economicglobalisation. Continued efforts to protect and subsidise agriculturalproduction in the EU and the US, has the effect of limiting the accessof developing countries to global markets. Oxfam (2002: 5) claims thatif developing countries were able to increase their market share by oneper cent, it would lift 128 million of the world’s poorest people out ofpoverty.

The consequences of these patterns of inequality and poverty aresignificant. Despite the economic gains associated with economic glob-alisation, this changing network of economic relations appear to beproducing a global hierarchy of social relations in addition to patternsof fragmentation and polarisation. Not only do these trends producesignificant levels of suffering and vulnerability but they also posesignificant challenges for policy-makers and scholars. These challengesinclude various forms of insecurity and social exclusion, as well as prob-lems with social cohesion and political representation that ultimatelyculminate in the public questioning of the legitimacy of prevailingforms of governance.

Insecurity and social fragmentation

While vulnerability is obviously borne by those around the world wholive in conditions of poverty, economic globalisation develops forms ofinsecurity and risk that diffuse in wider and wider circles. Scholars whoexamine contemporary globalisation from a critical political economyperspective highlight that insecurity and risk are intrinsic in the market


driven nature of neo-liberal governance and economic globalisation. Inmany ways, Stephen Gill’s notion of a “market civilisation” is manifestby people being increasingly affected by the fluctuations and vicissi-tudes of deregulated transnational capitalism. The shift in governance,new information technologies and organisational shifts towards “post-Fordist” work practices all contribute towards “minimizing the distancebetween economy and society” (Castells 1989: 17). Consequently, forinstance, insecurity is extending across the world because working con-ditions are uncreasingly shaped by the fluctuations of markets in waysthat affect even wealthy people. As the UNDP (1999: 37) claims:

In both poor countries and rich, dislocations from economic andcorporate restructuring and dismantled social protection havemeant heavy job losses and worsening employment conditions. Jobsand incomes have become more precarious. The pressures of globalcompetition have led countries and employers to adopt more flexi-ble labour policies, and work arrangements with no long-term com-mitment between employer and employee are on the rise.

This flexibility is not exercised evenly; indeed processes of “re-engineering” or restructuring within companies have become a sourceof “jobless growth” and insecurity for a range of workers. Even inhighly paid or high technological work there is increasing insecurity ascompanies utilise technology at the expense of labour, use part timeworkers in order to cut costs, and move certain jobs to other cheaperlocales (Scholte 2000b: 220–1).

Nevertheless, there can be no doubt that the greatest insecurity andvulnerability rests with the poor in the developing parts of the world.Not only are huge numbers of people in Less Developed Countries eco-nomically deprived and suffer from high rates of infirmity, but theirsocieties are fundamentally fragile and insecure. Caroline Thomas(2001: 161, 166–167) indicates that “global deprivation continues”and human security, understood as “satisfaction of basic materialneeds” including political participation as well as access to “food, shel-ter, education and health care”, is impeded primarily by the dom-inance of neo-liberal principles fashioned by western states. Moreover,Francis Fukuyama (2004: 18–9) has claimed that the neo-liberal agenda has dramatically understated the importance of strong states tosuccessful development. Consequently neo-liberal strategies of devel-opment have generally not produced impressive results or social sta-bility in much of the developing world (Scholte 2000b: 216). In recent


times, particularly after the terrorist attacks of ‘9/11’, more links havebeen drawn between the socio-economic insecurity of people in poorsocieties and the creation of civil war, terrorism and ultimately, threatsto international security (see Beeson and Bellamy 2003).Consequently, measures to promote human security and humandevelopment have been further strengthened by the development ofthe Millennium Development Goals (UNDP 2003). The real catastro-phe underlying this widespread human insecurity is that such perilousconditions dramatically restrict the capacity of many people aroundthe world to be free or to live full dignified lives.

Another source of considerable insecurity stems from the volatility offinancial markets. The widespread deregulation of financial markets has meant that capital moves across borders more readily and affectssocieties more sharply. Within the context of economic globalisation,these crises have occurred with greater frequency and the “harms haveextended far beyond the investors who knowingly take risks. Indeed,the greatest pains of global financial instability have often hit highlyvulnerable social circles” (Scholte 2000b: 218). Financial crises in LatinAmerica in 1994–5, Asia in 1997–8, Russia in 1998, Brazil in 1999 and Argentina in 2001 are all examples of the national economy inter-acting with the global financial system to produce significant levels of inflation, unemployment, bankruptcies and other forms of humansuffering. The subsequent interventions of international agencies likethe IMF that are designed to alleviate economic instability often havethe effect of magnifying the social distress (Chossudovsky 1997: 15–6).In addition, the human impact of these crises persist long after theeconomic problems are addressed (UNDP 1999: 40). In this way, the global economic system can capriciously reduce and condition thesocial opportunities of people around the globe.

Insecurity also extends across the world via forms of ecological inse-curity. While many of these forms of insecurity and risk ultimatelythreaten everyone, actual processes of ecological degradation and pol-lution affect the lives of people presently. Such degradation is a “chron-ic and ‘silent emergency’ that threatens the livelihoods of some of thepoorest people of the world” (UNDP 1999: 43). While free market cap-italism certainly accelerates the degradation of ecological systems, neo-liberal governance has not only licensed this acceleration but haslimited measures aimed at curbing ecological degradation (Paterson2000: 254–5; See Conca 2000). While there have been significantdevelopments with global environmental governance through the pro-liferation of environmental treaties, such measures have operated in


the ideological shadow of neo-liberal governance and the practicalpolitics of governments prioritising embedded financial orthodoxy orstructural adjustment programmes by abandoning environmentalprojects (Scholte 2000b: 212).

These forms of insecurity are compounded by the absence of politi-cal avenues whereby people can obtain some sense of surety or control.Because most states have become open to global capitalism, people arenot only vulnerable to the vacillations of the market but many are alsovulnerable to the operation of private concentrations of power.Powerful market actors such as TNCs are often able to exercise consid-erable influence because they possess the resources and mobility toopen up economic opportunities in particular states. But the power thatthese companies possess and the potential they have to leave a givenlocale can create a lack of local control (UNRISD 2000: 77; See Oxfam2002: 176–7). The operation and influence of the global financialmarkets, high levels of debt and the advice and influence of the inter-national financial institutions also generate a sense of powerlessness(Scholte 2000b: 215–6). The judgements of global capital can severelycurtail and discipline a given nation’s domestic choices. In addition,social arrangements can be rearranged by economic crises and thepolicies advocated by international financial institutions (such as the IMF) to strengthen economic fundamentals and restore investorconfidence (UNDP 1999: 40).

Furthermore, the prevailing form of global governance is also char-acterised by the relative lack of capacity of the developing world tohave a significant impact on the nature and polices of these over-arching structures. The lack of the developing world’s voice in globalgovernance is evident in the fact that the G 7 represents 64.0 per centof the worlds GDP but only 11.8 per cent of the world’s population(UNDP 1999: 109). The weighted voting mechanisms of the IMF and World Bank also give them little input into these crucial bodies,although since 1999 measures such as Poverty Reduction Strategy Papersgive developing states a greater “ownership” in actual World Bank andIMF programs (World Bank 2004). Nevertheless, there are significantgaps in the actual capacity of states to participate in the developmentof the global economic architecture. A telling example of this was thatduring the establishment of the WTO only some developing countrieshad the expertise or the means to represent themselves or “defend theirnational interests” (UNDP 1999: 34). Unfair rules relating to agricul-tural trade are a consequential sign of the lack of influence of develop-ing countries (Oxfam 2002: Chp 9). Thus, it is of little surprise that


many developing countries have a low capacity to shape their owneconomic policies and global policy-makers have generally “accordedtop priority to liberalization rather than equity” or other social goals(Scholte 2000b: 247).

Ultimately, even in wealthy countries, there is the concern that eco-nomic globalisation reduces the capacity of democracy and citizenshipto offer forms of protection or opposition to these global processes. Interms of democratic participation in public policy and political out-comes, there are a series of “disjunctures” in a globalising age betweenthe public and outcomes because so many global influences cut acrossthe territory of the state (Held 1995: Chps 5–6). These disjunctures aremagnified by the rationale of neo-liberal governance. The influence ofglobal market forces and the need of states to maintain credibility inthe face of these forces places even more significant restrictions overthe ideal of a vibrant democratic sphere. Not only is there an ideolo-gical convergence of political parties in many nation-states around neo-liberal policies (Mishra 1999: 102–3), but the promotion of marketforces and economic growth removes many political alternatives andcontrol over aspects of economic policy from democratic consideration(Gill 1997: 13). The practices of the competition state and new consti-tutionalism restrict the rights that citizens can expect to enjoy. Theyopen up society to the pressures of increased competition and decreasethe autonomy of society from global pressures as a matter of institu-tional necessity. This dismantles the rights and processes of citizenshipand democratisation that have “involved centuries of struggle for rep-resentation” (Gill 1998b: 38).

There is also evidence to suggest that the fragmentary effect of eco-nomic globalisation is weakening the social cohesion of societiesaround the world. The fragmentary consequence of globalised capital-ism on social life was a chief concern of the World Summit for SocialDevelopment in 1995 (UNRISD 1995). While the weakening of civil lifedepends heavily upon the historical circumstance of a given society, itis clear that the impact of inequality and polarisation has an unravel-ling effect on social cohesion (Dahrendorf 1996: 28–31; Kothari 1998:187). Inequality, for instance, can disrupt already precarious relationsbetween ethnic groups (UNDP 1999: 36). Within the developed world,problems of social cohesion are rarely as violent as direct ethnic con-flict. Nevertheless, there are still signs of a break down of social cohe-sion. In particular, there are signs that inequality and polarization, aswell as the decreasing role of welfare functions under the aegis of thecompetition state are responsible for the gradual fraying of the “social


compact” that was so prominent when embedded liberalism held swayacross the western world (Ruggie 1994: 523). Indeed, the “need to avoidsocially disintegrative activities has not been joined by a clear policyunderstanding of how to minimize dislocation in the face of the ten-sions inherent in the structural imperatives of economic liberalization”(Devetak and Higgott 1999: 488). This is precisely because of the neo-liberal trust in economic growth and markets. Consequently, there willcontinue to be a divide between those who benefit and those who donot. The underlying tendency of neo-liberal governance is to acceptthat the “economic fates of citizens within a national territory areuncoupled from one another, and are now understood and governed asa function of their own particular levels of enterprise, skill, inventive-ness and flexibility” (Rose 1996: 339). This fragmentation is acceptedby the competition inspired state, despite the fact that it weakens socialcohesion.

Rather than societies coalescing around a national bargain and shar-ing a common fate, it is increasingly the case in some countries thatwealthy groups within societies are progressively more unwilling tobear the burdens of financially contributing to a common good. RobertReich (1991b: 253) asserts that this detachment is a form of secessionand that it is “occurring gradually, without fanfare” and that whileelites still pledge national allegiance, the “new global sources of theireconomic well-being have subtly altered how they understand theireconomic roles and responsibilities in society”. While the fragmentaryeffect of economic globalisation is not a violent secession, it does posesignificant consequences for societies around the world, especiallythrough shifting patterns of taxation. The secession of the wealthy isevident with a decreasing tax burden on the rich and on corporationsand an increasing tax burden on middle and low-income groups (TheEconomist 1997: 19; see also Reich 1991b: 253). This shift is due to thephysical mobility of TNCs and the ability of TNCs to shift profits via“transfer pricing” (Martin and Schumann 1997: 198–201). This leads tothe competitive stance of states via “market friendly” reductions in tax-ation of the wealthy and “company-specific tax concessions” (other-wise know as “sweeteners”) as governments feel the pressure to remaincompetitive and attractive to global markets (K. Thomas 1997: 117).The result of these forms of “corporate welfare” is such that the corpo-rate share of taxes has fallen in America from 21.51 per cent in 1955 to7.87 per cent in 1993; a “trend [that] holds for the OECD as a whole”(K. Thomas 1997: 117). Thus while there are signs of polarisation, thereis also a fragmentary effect associated with economic globalisation thatchallenges egalitarian aspirations associated with a social compact in


which everybody shares from the economic successes of the nationaleconomy.

Consequently, we can see that social polarisation and insecuritystems from both the presence of market forces and the absence ofprotective political mechanisms. Ultimately, there has been a doubledisplacement of state power towards private market influences such ascorporations and financial markets, on one hand, and towards external“supraterritorial” influences of global and regional institutions on theother (Scholte 2000b: 138–9). This places limits on democracy andoften frustrates the ability of people to determine their own future.These forms of social dislocation are also evidence of an increasing tri-umph of the private over the public. Beyond the social problemsalready noted, this has significant implications for the legitimacy of thestate that presides over these developments and allows those flourish-ing within economic globalisation to decrease their responsibility tothose who are not.

The antinomies of neo-liberal governance

While economic globalisation entails political-economic processes thattranscend and circumvent the nation-state, economic globalisation andneo-liberalism are nevertheless reliant upon the nation-state. Althoughcapital and economic decision-making have become increasinglyglobal and disembedded from the nation-state, these processes are still“partially embedded” in the territory of the state and thus dependenton the state “in producing and legitimating new legal regimes” (Sassen2000: 21). The nation-state is a form of polity that has legitimacy, stem-ming from the fusion of administrative apparatus and community, andcontrol over territory that has been central to modern developments inthe spread and consolidation of liberal democracy and the develop-ment of international and (now) global capitalism. By linking a visionof community to the administrative apparatus of the state, the “powerover life and death” is legitimised by “appealing to and mobilisingdeeper and more demanding feelings” (Poggi 1978: 101). The nation-state is critical to neo-liberal governance because the nation-stateallows for the overlapping notions of competition and consensus tocoexist, that is, with nation-states competing against each other forcapital upon a backdrop of a consensus regarding neo-liberal gover-nance. Undoubtedly, the nation-state also provides a belief system thatcontinues to motivate forms of loyalty, sacrifice and acquiescence –even if nationalist claims are often disputed (see Castells 1997: 29). Theidea of national community provides a crucial resource for effective and


consensual governance. Thus, far from being the end of the nation-state, neo-liberal governance requires the nation-state.

Yet, the combination of neo-liberal governance and the nation-stateis problematic in much of the western world. The nation-state can beseen to be in danger of losing its “legitimacy, institutionalised powerand social embeddedness” (Cerny 1997: 251), thereby leading to publicdissatisfaction within many western states (see Alesina and Wamiarg2000: 170). The practice of the competition state can be seen to under-mine this historical sense of legitimacy in a number of ways despite thepersistence of nationalism across the world (James 1996: 224–5; see alsoMann 1993). First, the competition state is limited in the social policiesit can readily enact. Because states are shaped by embedded financialorthodoxy and the actual operation of financial markets, states have toconsider the reactions of these markets and weather financial bubblesand panics (Cerny 1994: 226). As a result of the limits and requirementsof deregulation, states become shaped and beholden to transnationalmarket actors, which can undermine the public sense that the state isresponsible to society (Scholte 2000b: 138–9). Also, under the aegis ofthe competition state, government policy is ultimately enmeshed inthe same manner of thinking as that of market actors, such as corpora-tions. This is because government policy is not just locked into consid-ering market reaction to economic and social policy but the state isactively marketised – promoting itself within global markets (Cerny1996a: 634). This short-term, market orientated context problematisesthe ability of governments to pursue long-term democratic or socialobjectives. The enactment of long-term programmes and public goods,such as those pursued by welfare states that cultivated public supportwithin a context of embedded liberalism (Cerny 1995: 604–7), becomeincreasingly difficult within the context of economic globalisation.

Second, while the discipline of competition and embedded financialorthodoxy place severe limits on the ability of government to reachfavourable social outcomes, the state also actively enforces and extendsthe market discipline into social and economic life. This promotion ofefficiency and competition requires confronting organised labour, regu-lated work conditions, restrictive trade practices as well as breaking upmonopoly situations including state enterprises (Castells 1989: 23–4).Many historically derived political or ethical principles are challenged bythe free market logic. While there are some gains via increased efficiency,the way these gains are enforced is not smooth or always accepted bysociety – the implementation of neo-liberalism often requires elements ofsecrecy and force. This ushers in a context of conflict between the gov-ernment and unions and local populations as seen across the advanced


capitalist world during the 1980s, especially under Thatcher in the UK andReagan in the US (Castells 1989: 24–5). Across the non-Western World,the enforcement is more authoritarian (Gill 1995a: 420). Organised labourin developing states has been suppressed by military force, for instance(see Enloe 1995: 12). Ultimately, neo-liberalism ushers in policies that mayprompt conflict between the state and society and thereby can be seen tochallenge any notion that the state is on the side of society.

These processes threaten to undermine the historical legitimacy thatmakes the nation-state so important to enacting neo-liberalism. Themajor implication of embedded financial orthodoxy is that governmentscannot uphold the protective or strategic functions crucial to this legiti-macy (Cerny 1996b: 131). In one sense, the state is becoming an instru-ment, or a ‘transmission belt’ as Cox avers, built around the task ofpursuing economic growth by liberalising and deregulating. Thus, notonly does this discipline potentially clash with responsibilities to theelectorate and to long-term social objectives, but by also increasinglybeing instrumental, the nation-state risks losing the associative and pub-lic character that gives the state its legitimacy (Cerny 1996b: 124–5). Inaddition, because governments are sensitive to the discipline of globalmarkets and locked into pursuing economic growth, they tend to over-look the social requirements of large sections of their societies. The com-petition state is increasingly tightly wound into global financial marketsand international financial institutions and less responsive to the elec-torate or to notions of national community or social justice. In addition,economic results (in particular, the improvement of living standards) areincreasingly crucial to state legitimacy (Carnoy and Castells 2001: 16).The national interest is a major argument made by governments tosupport deregulation and other efforts to open a state to the global econ-omy. But this source of legitimacy is clearly a two edged sword: after all,while economic growth and economic success may bestow some tran-sient form of legitimacy upon governments enmeshed by neo-liberalgovernance, such gains are not guaranteed, and are certainly not spreadevenly. Ultimately, the integrity of the nation-state cannot be assumedwhen “the policy orientation of the state has been pulled away from itsterritorial constituencies and shifted outwards” (Falk 1997b: 129).

Thus, there are signs that there are now severe restrictions on the“things people can expect from even the best-run government” (Cerny1997: 258). This undermines the “symbolic social function” of thenation-state leading

to a growing disjunction between democratic, constitutional and social aspirations of people – which are still shaped by and


understood through the frame of the territorial state – on one hand,and the dissipating possibilities of genuine and effective collectiveaction through constitutional political processes on the other (Cerny1996b: 130-1).

Clearly, this not only leads to “an erosion of the idea of a public inter-est” (Cerny 1999: 2), but is also problematic for the stable reproductionof forms of governance suitable for any form of complex social organ-ization, not to mention maintaining the legitimacy required for theinterventionism of neo-liberal governance. The ability of the nation-state with this symbolic sentiment to pursue political objectives is asource of considerable social power. The potential consequences of thecompetition state threaten to undermine this power.

Hence, we can observe the contradictions of the states shaped by thelogic of the competition state. The emphasis of the state on the mobileowners of capital seems to be at the expense of those who are rooted tothe society. This privileges competitiveness of firms over the citizenshipof people. This also provides the central contradiction regarding therole of the state within neo-liberal governance; economic globalisationrequires the support of the rule of law, the institutional support that isrendered by states and the international institutions set up by them(Strange 1996: xii). Nation-states require the idea of national belongingand sharing a common fate, but this belief is difficult to sustain withinan economic system and a pattern of governance where social life isbeing reduced to efficiency and competitiveness (Cerny 1996b: 130).Thus, while the competition state, in the Western World at least,ensures that the state adapts to economic globalisation and promotesderegulated capitalism, the competition state does not guarantee pub-lic legitimacy in the long term. The weakened capacity of the competi-tion state to promote welfare potentially endangers a stable society and,ultimately, capitalism. The competition state is clearly a course ofaction that will enable states to adapt to economic globalisation. But,this adaptation is problematic and tension ridden. While the state willsurvive, will stable liberal societies thrive? Will capitalism survive?

Protesting economic globalisation

There are two primary indications that the legitimacy of the state isbeing questioned in parts of the world due to economic globalisation.The first is through reactions against economic globalisation withinstates. Some groups within societies around the world, most notably


the Zapatistas in Mexico, explicitly resist neo-liberalism (Castells 1997:68, 72–83). Other groups feel that the nation-state has lost its tradi-tional legitimacy and increasingly identify with sub-national forms ofidentity, because the state does not provide the desired sense of belong-ing, often because the state prioritises narrow economic goals and islocked into various external concerns. Despite the benefits of economicglobalisation, the reliance on economic growth is not enough to securewidespread public support in many parts of the world because this“progress” involves a “lessening, or in some cases a negating, of thequantum of political control exercised by the encompassed, especiallyin the least powerful and poorest zones of the global political eco-nomy” (Mittelman 2000: 5). This discontent is fanned by the inequal-ity that stems from economic globalisation. Across the world, there aresections of societies that seek some solace in forms of autarchic nation-alism or despotism (Martin and Schumann 1997: 10). While there are significant signs of a progressive reaction against “globalisation-from-above” through the operation of social movements with globalconnections (what Falk refers to as “globalisation-from-below”), anextreme nationalist backlash is evidence of insecurity and exclusion feltby some people (Falk 1997a: 19; see also Mittelman 2000: 234–5).Benjamin Barber (1998: 34–5) warns that ultimately “if we cannotsecure democratic communities to express our need for belonging, un-democratic communities will quickly offer themselves to us”.

This danger is evident with social reactions against the fragmentationand immiseration of a globalised – laissez-faire social order similar tothe circumstances of the 1930s as documented in Karl Polanyi’s notionof a “double movement” (Polanyi 1957: 130; see also Cox 1996b: 31–2).Polanyi sought to explain the rise of extreme nationalism, economicprotectionism and war in the early twentieth century. His explanationindicated that these phenomena were a movement against the mid-nineteenth century attempts to create a self-regulating market (Polanyi1957: 68–9). The double movement thesis consists of the first move-ment, which is the institutionalised liberalisation and the dominanceof the abstract market over society. The second movement is the sharpsocial reaction against the liberalised society, a reassertion of some sortof popular solidarity and control over social life so that people becomemore than an “accessory” of the capitalist economy (Polanyi 1957: 75;see also Mittelman 2000: 234–42). Such reaction is evident in contem-porary concerns regarding the inequality and insecurity stemmingfrom economic globalisation. Mark Rupert indicates that within theAmerican context there are “at least two distinct positions – one which


might be described as the cosmopolitan, democratically-oriented left (a position I will call “progressive”), and another – the nationalistic/individualistic far-right” (Rupert 1997: 142). The latter position incor-porates a wide range of fears and suspicions of the power of global eco-nomic forces (Rupert 1997: 150; see also Castells 1997: 84–97).

The second way in which the legitimacy of the state is being chal-lenged is through the protests against the formal institutions of theglobal economic architecture, most notably the WTO and the G-7. Thestreet protests in Seattle, Genoa and other places where the organisa-tions of the global economy have convened is clear evidence of thecontested nature of economic globalisation. However, the way thesereactions against economic globalisation relate to the legitimacy of the state is somewhat convoluted. The tension between democraticgovernance and financial openness, or what Susan Strange (1994: 216),refers to as the “clash between the legitimacy of the liberal economyand the legitimacy of the liberal polity” is apparently being played out“above” the state. In many ways, the protestors against economic glob-alisation do not see the state as having a capacity to resist or moderatethis condition. The state, it seems, is not even worthy of being protest-ed against. While I consider that this dismissal of the state is misguid-ed in light of the crucial role that states play in supporting economicglobalisation, it points to the ways in which those seeking to resisteconomic globalisation doubt the legitimacy and capacity of stateswithin contemporary globalisation.

Naturally, these protests are also evidence of disillusionment with theformal institutions of the global economic architecture. The appear-ance of protest movements and NGO criticising these institutions notonly opens up and complicates processes of policy formation but alsochallenges the ideas that underpin these institutions (O’Brien et al2000: 22; see also Kobrin 1998: 106). The Economist (2000: 17) under-scores the impact of the protest movements on neo-liberal governance:

They are right on two matters, and the importance of these pointswould be difficult to exaggerate. The protestors are right that themost pressing moral, political and economic issue of our time isthird world poverty. And they are right that the tide of “globalisa-tion”, powerful as the engines driving it may be, can be turned back.The fact that both these things are true is what makes the protestors– and, crucially, the strand of popular opinion that sympathises withthem – so terribly dangerous.


While there are many different motivations for the various protests, acentral feature of these protests movements is the apparent belief thatthe way economic affairs is currently organised is unjust, unsustainableand ultimately illegitimate. There are particular concerns amongst thosein the protest movement in regards to the impact of structural adjust-ment on developing countries, the way trade regimes are insulated fromecological or social concerns and the generally secretive nature ofprocesses within the international financial organizations (Scholte2000a). There is also the debated legitimacy of the WTO within the WTOmembership at the meetings in 1999 and 2003, especially among thepoorer states, despite a broad commitment to a rule based trading system(Raghaven 2000: 496). Hence, the international financial institutions,and economic globalisation more broadly, face a crisis of legitimacy.

These protests also feed into an even broader and more profoundquestion: how is this world to be governed? Processes of economicglobalisation have accelerated the long-term development of global-isation and have emphasised the importance of global forms of co-operation and governance. The development of global governance is arelatively new endeavour stemming from the intensification of global-isation and interdependence during the twentieth century, massivecrises in the form of world war, genocide and decolonisation, and theextension of multilateralism as an organising principle of the relationsbetween states. The types of problems that are manifest in this contextare those that no single nation-state can manage on its own. Theseproblems include managing economic interdependence, environmen-tal management, ensuring security and moderating disputes betweenand within states, as well as the maintenance of an often-disputedcommitment to human rights. As I argued in the previous chapter, neo-liberal governance has been very influential in the development of con-temporary global governance. Nevertheless, neo-liberal governance andeconomic globalisation does place limits on the promotion of effectiveglobal governance through the UN system.

It is not only the case that economic globalisation has appeared todeepen some key environmental and social problems, but it has alsoushered in a world order that sidelines institutions that are not centralto the neo-liberal project – including the UN system. Because neo-liberal governance extends deeply into the institutions of governanceat a global and local level, other moral discourses, such as liberal inter-nationalism or social democracy, have been sidelined or rearticulatedby this dominant conception of governance (see Falk 1995a). This


means that the UN can only be “the architectural facade of an under-lying structure of power” – it cannot readily enact its role as a repre-sentative fulcrum for progressive global governance (Cox 1996b: 309;see also Scholte 2000b: 244–5). This is evident in the way the G-7attempts to restructure the UN (Bayne 1995), and the way in whichissues of competitiveness and principles of new constitutionalism andneo-liberal ideas penetrate into environmental and social policyregimes (UNDP 1999: 34–5). This particularly concerns those countriesin the developing world that are subject to the discipline of interna-tional financial institutions which they have little input into, whilebeing linked into a UN which is representative but performs a relativelysmall role in global economic architecture (Scholte 2000b: 249; see alsoKothari 1998). This dominance ensures that the UN, as well as otherinternational organisations and regimes, are on a second rung ofimportance beneath the dominant international financial institutions.

Of special concern to the UN is the future of “developing countriesand countries with economies in transition” within the context of eco-nomic globalisation (UN Millennium Declaration 2000: 1.5). The taskof global governance supporting these countries is an increasinglydifficult one because the rising levels of inequality, poverty and insecu-rity complicate UN efforts to promote development and human rights– practices that reduce the conditions that ferment interstate conflictand achieve the UN promotion of “social progress and better standardsof life in larger freedom” (Charter of the UN: Preamble). Ultimately,economic globalisation produces a hierarchy of power, a fragmentationof social outcomes and a political sensibility of neo-liberal governanceamong the various authorities that obstructs efforts to manage co-operation towards social ends. This provokes and propagates the publicattitude, evident at protests against agencies associated with economicglobalisation, that the only way to effectively address issues of inequal-ity and poverty is to challenge the core principles of neo-liberalgovernance and to question the fundamental practices of economicglobalisation in order to respond to the serious problems that threatenhumanity. In the words of the UNDP Development Report of 1999:“reinventing global governance is not an option – it is an imperative forthe 21st century” (UNDP 1999: 97).

Those protesting against the various agencies of the global economicarchitecture appear to be arguing that the current system of global eco-nomic governance is allowing unfettered capitalism to dominate to the detriment of many across the world. The legitimacy of prevailinginstitutions is in question precisely because the global economic order


deepens social problems such as inequality, insecurity and societal frag-mentation. With these protests, it is clear that it is not just the UNDPor scholars arguing that global governance needs to be rethought in aworld that is interconnected and increasingly deregulated. At present,many people around the world are also arguing that the way the worldis governed needs to be rethought as well.

Liberalism and economic globalisation

The rethinking of governance is important exactly because of the scaleof the social problems illustrated earlier. Even so, the rethinking of gov-ernance within a globalising context is especially difficult for scholarsand policy-makers who subscribe to liberalism. Liberalism’s close rela-tionship with capitalism contrasts with socialist and many communi-tarian arguments that are chiefly opposed to globalised capitalism.Nevertheless, while some liberals can be seen to support economicglobalisation, other liberals are troubled about the effect of economicglobalisation on liberty and welfare. Ultimately, the social conse-quences stemming from economic globalisation provoke questions ofboth a practical and ethical nature for those inspired by liberalism.Questions relate not only to the practical issue of how the legitimacy of neo-liberal governance may be bolstered but also to ethical issues ofhow the inequality and injustice of economic globalisation can bemoderated.

It was indicated in the introduction to this book that liberalism isdefined by its emphasis on the importance of individual liberty. Thebroad tradition of liberalism can be understood in many differentsenses ranging from a type of society, to a political philosophy or to aparty political platform. While difficult to pin down, liberalism is ahistorically developed way of thinking that has

emphasized reason instead of tradition, contract rather than status,the present and the future instead of the past, the value and rights of the individual instead of that of existing power-holders,whose claims based on the superiority of cast or creed it challenged.Basically liberalism has been an attitude in defence of the individualman and citizen in defiance of the arbitrary acts of government(Bramstead and Melhuish 1978: xvii).

Although this body of thought aspires to promote individual libertythrough a democratic and constitutionally defined order that promotes


non-interference in peoples’ lives by the state, economic prosperity andentrepreneurialism have also been especially prominent parts of theliberal legacy (Gray 1995: 61–3). Liberalism is both a philosophicalapproach to political life and an ideology that has actually shapedmodern political practice both within the state and beyond.

In a philosophical sense, liberalism is “a body of ideas about social andpolitical values, the principles that should govern political life, thegrounds for political legitimacy” (Richardson 2001: 18). These valuesdefend individual liberty – the belief that each and every adult humanis best able to determine their own preferred life without interferencefrom others. In addition to the importance of liberty, John Gray (1995:xii) claims that liberalism also entails the ideas of individualism, egali-tarianism, universalism and meliorism. The latter is important becauseentrenched within liberalism is a belief in progress and the idea thatsocial and political life can perfect the promotion of liberty (Gray 1995:xii). Nonetheless, there are various divisions within liberalism as tohow these values can be understood and pursued. Most notably, thereis the division between neo-liberalism or “laissez-faire” liberalism thatemphasises non-interference in the market and “social” and “welfare”liberalisms that support government interference to enable the marketto produce more equitable social outcomes (Richardson 2001: 32–8).While liberalism can be understood in this philosophical sense, liberal-ism can also be understood as the ideology that underpins modernityand the constitutional arrangements supporting capitalism (Gill 1998b:24–6). Despite historical variations within liberalism, liberal norms,particularly the principle of non-interference and the promotion ofproperty rights have profoundly shaped political institutions across thewestern world, as well as at an international level, and have legitimat-ed the existence and spread of capitalism across the world (Richardson2001: 55–6). While liberal aspirations of liberty have always been essen-tially and inextricably contested, liberal conceptions have prevailedand shaped the content of international political economic practices.

Consequently, liberalism has been a crucial ideational influence overthe notion of acceptable government as it has actually existed in themodern period (Reus-Smit 1999: 123). While conceptions of liberal gov-ernment have been contested in actual terms by socialism and fascismduring the twentieth century, and in a theoretical sense by variousstrands of philosophy, liberalism has nonetheless survived its competi-tors and spread across the world during this time. Also, while liberalismhas been sharply resisted in various ways by some societies in Asia andthe Middle East, liberalism has still been partially encoded in the spread


of capitalism and national self-determination, as well as the develop-ment of international institutions and regimes (Richardson 1994:59–65). However, the spread of liberalism has reached a new intensitywith the global development and diffusion of neo-liberal norms andpractices (Richardson 1994: 85–90). While this neo-liberal rationale ofgood government is by no means purely neo-liberal philosophy orindeed the only variety of liberalism currently articulated, it has ush-ered in a new expansion in the influence of liberal conceptions of lib-erty and legitimacy. Nevertheless, even from the broader perspective ofliberalism, neo-liberal governance faces significant problems.

It is my contention that liberals are faced with a series of dilemmasby the social and political impact of economic globalisation. Whilethese dilemmas are framed by already existing normative positionswithin liberalism in respect to the debates between neo-liberalismand social liberalism regarding capitalism, these positions do noteliminate the practical or ethical dilemmas that economic globalisa-tion poses. It is not only the emerging world order that is challengingfor liberals. The manner by which economic globalisation can bemoderated is also deeply problematic. For, while liberals believe in thecentrality of capitalism for individualism and prosperity, it is this system in its global form that is the source of problems to other lib-eral aims of stability, liberty and democracy. I contend that there arethree main difficulties stemming from the social impact of economic globalisation for liberalism.

The first difficulty for liberals is the financial and social turbulencethat results from the unregulated nature of economic globalisation. Theemphasis on economic growth and profit has meant that the vacilla-tions of the markets have become accepted even though “they havefailed too many people [for] too long” (Kapstein 1996: 37). Even in theextreme case of the turbulence generated by global finance, efforts sofar to moderate the system have been partial and aimed at securing theinterests of investors more so than regulating global finance, evendespite the financial crises around the world (Scholte 2000b: 218–9).Likewise, redistributive programmes within and beyond the state havebeen de-legitimised by the growing neo-liberal faith in market out-comes. Development and prosperity are following the networks of cap-ital that bisect the nation-state, leaving dislocation and despair in the“black holes” in the global economy. The reliance on economic growthis also posing problems of ecological and social sustainability. As JamesWolfenson, the President of the World Bank, maintains “if we do not have greater equity and social justice, there will be no political


stability and without political stability no amount of money puttogether in financial packages will give us financial stability” (cited inDevetak and Higgott 1999: 483). However, as obvious as the weaknessesand contradictions in this global social order are, it is entirely possiblethat the entropic social order and restricted prosperity of a wealthy elitecould endure. The global economy can operate without widespreadprosperity or earning power amongst nations or people. The extensionof a global economy with a patchwork of order and insecurity, pros-perity and poverty seems “to suggest that like a human body whoselimbs have had to be amputated, the world economy can still continueto find ways to function in a less than complete or ideal fashion”(Strange 1996: 192). There is nothing to suggest that this is pleasant oroverwhelmingly stable, let alone consistent with liberal values.

Second, the problem of these social effects for liberals is that theyaffect the capacity of individual liberty to be realised. Increasingly,people’s ability to plan and live their lives is hampered by the political,economic and civil conditions imparted by economic globalisation.Indeed, while economic globalisation “has improved economicefficiency and it has provided enhanced individual liberty for many …in its failure to secure social justice on a global scale, it also inhibits theliberty for many others” (Devetak and Higgott 1999: 483). This chal-lenges liberal visions for a sustainable and workable liberal society.Social opportunities are polarising along with incomes and locationwithin the global webs of economic activity. In sum, economic global-isation and neo-liberalism are aimed at increasing the liberty of capitalnot people and thus “is not working to advance human freedom” (Gray1998: 208), let alone promote human security (C. Thomas, 2001: 161).Where liberty exists within the networks of the informational-globaleconomy, it exists at the expense of the liberty and personal sense ofsecurity of people elsewhere within the networks of the global eco-nomy, or more probably beyond them, in the bypassed parts of theglobal economy.

Third, even those liberals not overly concerned about the ethical con-sequences of economic globalisation still have to be concerned aboutthe legitimacy of neo-liberal governance (see Devetak and Higgott1999: 488). Neo-liberal policy-making strikes a difficult balance in pro-moting economic globalisation. On one hand, neo-liberal governancerelies upon the nation-state as a basis for legitimacy and efficacy in pro-moting an interventionist and deregulatory programme that opens upsociety in order to promote economic growth and profitability. On theother hand, neo-liberal policies divest governments of wide ranges


of discretionary power over directing economic goals by surrenderingpower to markets and international institutions. As examined earlier,this calls into question the legitimacy of the state and internationalfinancial institutions and thereby threatens to undermine the gradualand incremental nature of the enactment of neo-liberal governance.While the nation-state has supported the reproduction of global capi-talism so far, despite significant levels of entropy and polarisation, canthis balance last for long? While some claim that economic globalisa-tion needs to be “explained better” (The Economist 2000: 17), eventhose enthusiastic supporters still need to demonstrate how capitalismwill hold together in the short term and how governance will unfold in the long term. It is difficult to emphasise enough the concern thatliberals have with at least appearing to travel in the direction of justand legitimate social order – this is a practical “political problem” as wellas an ethical one (Devetak and Higgott 1999: 488).

Liberal governance and economic globalisation

These problems indicate the ways the social impact of economic glob-alisation concerns liberals. This creates the central question of this bookof whether liberalism can adequately address the social problems that stem from economic globalisation. My response to this question is one ofdoubt. While the next part of this book explores this doubt, there aretwo underlying reasons for my scepticism that liberalism can moderateeconomic globalisation. The first is that there is an underlying reluc-tance on the part of liberals to regulate or interfere in the activity ofindividuals (Pettit 1999a: 40–3), especially when they are operating aseconomic agents (Gill 1998b: 25–7). This reluctance to regulate is bestcaptured by Karl Polanyi’s (1957: 257) criticism that the underlyingrationale of liberalism provoked the fascism of the inter war years:

The victory of fascism was made practically unavoidable by the lib-erals’ obstruction of any reform involving planning, regulation, orcontrol … Freedom’s utter frustration in fascism is, indeed, theinevitable result of the liberal philosophy, which claims that powerand compulsion are evil, that freedom demands their absence froma human community.

The reluctance to regulate in the interests of society is currently man-ifest in the many ways states leave the fate of their society to the fluctu-ation of markets. While this is a distinctly neo-liberal unwillingness to


interfere in the lives of individuals, what about those social liberals who are more willing to interfere? With the notable exceptions of socialliberals such as T. H. Green and L. T. Hobhouse, and welfare liberalssuch as John Rawls and Ronald Dworkin, social strands of liberalismhave been more about improving the operation of markets by regula-tion rather than democratising or socialising markets by regulation(Richardson 2001: 36–9). In many respects, despite philosophicalstrands of liberalism at the fringes expressing doubt and apprehension,liberalism as an ideology has denied the social problems that capitalismproduces and has thereby become an apology for established powerrelations.

The second avenue of doubt stems from whether and how politicalpower could be mobilised to moderate economic globalisation, even ifliberalism could overcome its inveterate aversion to significant regula-tion. It is one thing to desire to regulate economic activity but it isanother thing to have the political institutions and public support toenact such regulation. In a globalising age, this becomes a complicatedissue because while many liberals have long dreamt of institutionalis-ing universalist principles across the entirety of the globe, the state hasbeen the main instrument of governance for enacting liberal principlesof justice in practice despite the liberal aspiration to legally restrain itsauthority (Held 1995: 233). This leaves liberals having to decide firsteither to construct a global polity or begin by defending the veracity of the state. This boils down to a quandary facing liberals rethinkinggovernance, a liberal dilemma of public power within an era of eco-nomic globalisation: where should public power be situated? In order toaddress economic globalisation, do we begin by attempting solutions atthe level of the state or do we develop global strategies first? While thestate has been the context where citizenship as a legal and normativeframework has been constructed that enabled the possibility of stable,prosperous social relations, these relationships have been significantlyundermined by economic globalisation. This dilemma is sharpened bythe potential of ethnic and national resurgence within the nation-statethat raises the imagery of stratifying community, which may endangerliberal values. As such, the overarching goal is to avoid the twin dan-gers of resurgent nationalism and a powerful state on the one hand andan unjust and unstable social order on the other. However, while therole of the state in addressing the social consequences is an importantquestion for liberals and one where there is genuine disagreementbetween liberals, it is crucial to reiterate the important role the state hasactually played in the development of economic globalisation.


While these underlying doubts frame the potential of future liberalgovernance to moderate economic globalisation, these doubts are par-ticularly sharp for the rationale of neo-liberal governance. Proponentsof neo-liberal governance have two rejoinders to those who doubt thevalidity of economic globalisation. The first is that while there will beshort-term problems and costs associated with deregulation and liber-alisation, in the long term they will produce expanding prosperity(Hurrell and Woods 1995: 448). The second is that there is simply noalternative that is superior to liberal representative democracy and freemarkets (The Economist 2000: 17). The counter-response to these rejoin-ders is clear. To the first: the long-term gains are doubtful and the prob-lems of legitimacy are problems now. The long-term gains of the marketare unlikely to be either evenly or quickly allotted without politicalredistribution (Wade 2004: 583). The second rejoinder is that there is aclear need on the part of neo-liberals and liberals who more reluctant-ly support economic globalisation to forge adjustments to economicglobalisation or to rethink the underlying rationale of governance. Notonly are there actual liberal alternatives to neo-liberal governance, aswe will see in the second part of this book, but liberal policy-makersand scholars have faced the ways in which capitalism produces socialproblems in the past (Richardson 2001: 36–9). Economic globalisationis yet another case where the meliorist nature of liberalism and theneed to perpetuate capitalism gives rise to alternative formulations ofgovernance to those that actually prevail.

Nevertheless, at present there are symptoms of denial among the pol-icy-making elites. The moral weight of neo-liberal thought hasentrenched a confidence in markets despite the deep social problemsnoted earlier. Branko Milanovic (2003: 679) suggests that

Something is clearly wrong. Maintaining that globalization as weknow it is the way to go and that, if the Washington consensus poli-cies have not borne fruit so far, they will surely do so in the future,is to replace empiricism with ideology.

Not only is neo-liberal ideology denying the significance of the socialeffects associated with economic globalisation, but this ideology alsoactually legitimises inequality and “a situation where inequalities aregreater than at any period in history” (C. Thomas 2001: 168). As aconsequence, the orthodoxy of neo-liberalism has been questionedfrom within by policy-makers in the international financial institutionsand from people outside in the global protest movements against


economic globalisation. While there has been a significant level of re-thinking the theoretical and practical aspects of neo-liberalism, theideological commitment to free markets places significant limits on themeliorist underpinnings of liberal thought. This leads to the questionof whether addressing prevailing inequality and deprivation is “beyondthe boundaries of neo-liberalism” (Wade 2004: 583)?

The limits to neo-liberalism are telling in the development duringthe late 1990s of the “Post Washington Consensus”, This involved ashift towards amending neo-liberalism by “complementing” the nor-mal agenda of neo-liberal policies with a new emphasis on develop-ing civil society, promoting institution building, stronger domesticgovernance and social protection (Jayasuriya 2001: 1). This includedincreased concern for the institutional underpinnings of capitalism indeveloping countries by addressing corruption more firmly, as well asstrengthening financial codes and regulatory standards. Also, WorldBank policy-making began to promote measures that pursued socialstability and poverty reduction with more flexibility and vigour thanin the past by reducing high debt burdens, moderating the speed ofcountries capital liberalisation and promoting social safety nets(Jayasuriya 2001). At the heart of the Post Washington Consensus is amore explicit understanding of the importance of a strong state in“safeguarding and creating market order” (Jayasuriya 2001: 8, SeeFukuyama 2004: 21). While, these important measures are at an earlystage of development and are a product, partly of a response to civilsociety activism and partly of a response to learning from the failureof development outcomes in the 1990s, the actual measures departonly slightly from neo-liberalism. They do little to bring developmenttowards participatory governance or public regulation. They do littleto rethink the fundamental assumptions of neo-liberalism or moveaway from an ideology that operates in the interests of transnationalcapitalists. Ultimately, the Post Washington Consensus is an attemptto support the status quo and protect economic globalisation morethan a new political ethos expressing a deeper commitment to equal-ity or human welfare.

As such, I contend that any emergence of the Post WashingtonConsensus does not remove the need for liberals to reflect on the natureand governance of global capitalism. While there are liberals and neo-liberals who see the extension of economic globalisation as good,despite some short-term pain, for the whole of humanity, there areother liberals who are far less confident. Many liberals and some capi-talists have reservations about the ethical consequences, viability and


sustainability of global capitalism. In short, there are liberals who arguethat something must be done, that alternative strategies are required

to square the circle of wealth creation, social cohesion and politicalfreedom. While completely squaring the circle is impossible, one canget close to it – which is probably all a realistic project for social well-being can hope to achieve (Dahrendorf 1996: 22–3).

This task is a challenging one for liberals. A movement towardssquaring the circle requires a new account of good government thataddresses the social problems stemming from economic globalisationand attempts to do more than merely tinker with the prevailing polit-ical-economic order or the ideas that underpin this order. Graftinginstitutions at odds with the fundamental organisational principles andmaterial reality of a world order are unlikely to work. Ultimately, “whilewe wonder about risks, we must not forget to think about solutions”(Dahrendorf 1996: 35). In forwarding an alternative account of goodgovernment, we need to recontextualise and rethink the fundamentalnorms of governance and political association if a foil for global capi-talism or indeed a different kind of capitalism is to be possible.

Investigating liberal alternatives

If the global economy operated so that it did not produce graphicinequality, polarisation and the contested legitimacy of institutionsthat underpin this economy, liberals would have few qualms about eco-nomic globalisation. The fact that it does indicates how liberals are con-fronted by the reality of global capitalism in an ethical and practicalsense. In the face of these problems, different authors emphasise differ-ent effects as the crucial issue that liberals should be concerned aboutwhen rethinking liberal governance. Some are interested with thefuture of capitalism (Ohmae 1995a), some are more concerned with thewelfare of people (e.g. Falk 1995a; Reich 1991b), while others are moreconcerned about the future and the possibilities of effective democracy(e.g. Held 1995). The three most distinctive practical approaches to gov-ernance within a globalising context that are influenced by liberalthought will be examined in the next three chapters. Each prescribes adifferent strategy of governance based upon an argument of how gov-ernance ought to be arranged to respond effectively to economic glob-alisation. The first position is what I term extended neo-liberalism, a formof governance argued by proposers of the Multilateral Agreement on


Investment (MAI) and Kenichi Ohmae. This approach argues for thelimitation and ultimately the disaggregation of the nation-state inorder to secure prosperous global capitalism. The second position is con-tractual nationalism, according to which Robert Reich and Will Hutton,as well as the broad political approach of the Third Way, argue that the effects of global capitalism can only be moderated and the gainsmaximised at the level of a cohesive nation-state. The last approach ofpotential governance is cosmopolitan governance in which Richard Falkand David Held argue for a globally integrated system of democracy.

These three liberal positions all concur that economic globalisationhas a profound influence over both people’s lives and political institu-tions. However, the manner of dealing with the nature and socialeffects of economic globalisation differs significantly. These authorshave been selected not only because of their focus on economic glob-alisation and contemporary changes in the nation-state. They are alsoprominent because they each posit a definite programme of action thatsuggests a distinctively liberal assemblage of values, institutions andpolicies. As such, they represent discernible but divergent views of thefuture of the nation-state and different responses that point toward aliberal future which departs from some or all of the elements of neo-liberal governance. Each of these authors has a differing vision of liber-alism and their own distinct view of what economic globalisation isand the problem it represents. These authors, and this book, address theimportant question of what ideas could shape how contemporary glob-alisation should be governed.

The first part of this book set out to examine the nature andsignificance of economic globalisation for liberal aspirations of gover-nance. It has found that economic globalisation is a world order oftransnational capitalism consisting of interlocking material, normativeand institutional elements that occur within longer-term processes of globalisation. The ethical rationale of neo-liberal governance andrelated processes of deregulation and liberalisation underpin this worldorder. These structures and processes engender a wide range of socialproblems that undermine the legitimacy of neo-liberal governance. The writers in the next part of this book grapple with these conse-quences. These responses go beyond merely being concerned with thepractical and ethical consequences of economic globalisation and con-sequently pose definite plans of action that seek to rearrange prevailingforms of governance. As this chapter has maintained, given the scale ofthe social and political challenges facing liberal scholars and policy-makers, this is not an easy task.


Part II

Liberal Responses to EconomicGlobalisation

4Extended Neo-liberalism:Governing Without the State

We are writing the constitution of a single global economy(Ruggerio 1996).

No more than Canute’s soldiers can we oppose the tides of theborderless world’s ebb and flow of economic activity. The onlyreal question, then for political leaders – the only responsiblequestion – is whether those tides can be harnessed to providea better life for their people (Ohmae 1995a: 125).

Clearly, there is significant social dislocation associated with a deregu-lated global economy. Yet, there are also significant gains in wealth tobe made. There are some liberals who argue that these long-term gainsare worthwhile but will require stronger forms of liberalisation andderegulation than the prevailing form of neo-liberalism. This approachof liberal governance is depicted in this chapter as extended neo-liberalism. While there are different ways in which an unfetteredglobal market can be enabled, the approach of extended neo-liberalismsees the nation-state as an impediment to the economic gain of aneven more deregulated economic order. While neo-liberal governancerelies upon the nation-state to enact deregulation, the approach expli-cated in this chapter perceives the nation-state to be a threat to therealisation of high levels of deregulation as well as possessing thepotential to reverse this deregulation in the future and threaten the interests of capitalists. This is because the nation-state ultimatelyembeds more than just capitalism or competitiveness; it also embodiesvarious interests in society.

The ideas presented in this chapter represent differing ways thenation-state can be sidelined in order to restrict “special” interest

91

groups, democracy and cultural values that could impede the neo-liberal project. As such, these ideas represent both a continuation ofthe neo-liberal project and a break with the neo-liberal practicesoutlined in Chapter 2. While neo-liberal governance seeks to advancecapitalist practices into the nation-state, the ideas of extended neo-lib-eralism seek to dramatically entrench and protect neo-liberalism byreducing the presence of the nation-state. While neo-liberal gover-nance advances capitalist interests mostly by incremental de factointerventionism, I contend that the approach of extended neo-liberal-ism seeks to separate economics and politics in a more obviously dejure sense by ensuring that market forces overtly dominate politics.This goal echoes the “minimal” state as characterised by the “publicchoice” and libertarian schools of thinking that seek to propel reformsin public institutions that narrow the discretion of state activity tomarket supporting goals (Self 1993: Chp 3). However, the de jureapproach of extended neo-liberalism entails reforming the operationof the nation-state within a global context.

Two ways in which the nation-state could be curtailed are presentedhere to outline the possibility of an approach to governance thatextends beyond the balancing of neo-liberalism and the nation-state.The first approach is demonstrated in the form of the MultilateralAgreement on Investment (MAI) negotiated within the Organisationfor Economic Cooperation and Development (OECD); an unsuccessfulbut portentous attempt to create a regime that dramatically constrainswhat the nation-state can protect and regulate. This attempt sought toentrench corporate power by way of a legal structure across nation-states. The second stems from the ideas of Kenichi Ohmae who arguesthat the nation-state is an anomalous form of governance in a global-ising world and that there needs to be a radical devolution of author-ity to the local level to make the most of economic globalisation. Tothis end, Ohmae argues for the transformation of the internal structureof the nation-state in order to advance global capitalism. After out-lining these two approaches, the chapter will then examine the signi-ficant problems that the underlying rationale of these approaches hasin being able to moderate the social exclusion evident in economicglobalisation.

The multilateral agreement on investment

The MAI was developed to enhance the global mobility of investmentby taking the investment provisions of the North American Free Trade


Agreement (NAFTA) and amplifying these provisions among OECDnations and then eventually extending the agreement across the world(Kobrin 1998: 100). Confidential negotiations began in May 1995 andwere originally scheduled to be completed by May 26 1997, but by theApril 1998 Ministerial meeting of the OECD, negotiators agreed topostpone further negotiations until October 1998, although bilateralmeetings occurred throughout the summer of 1998. In October 1998,negotiators met in Paris and decided to consult again in December butFrance withdrew from the last round of discussions, leading to thefailure to assemble the MAI at the OECD (The Preamble Center 1998a:1). So while the OECD round of negotiations was a failure, the ideas ofthe MAI are still being contemplated and have been discussed in otherinternational forums, such as the WTO. At its core, the MAI representsan approach to governance that continues to be compelling for thosein the corporate sector.

The key draft provisions of the MAI (OECD 1998) indicate why neo-liberals and those involved with corporate capitalism are so in favourof this type of an international regime that adapts free trade principlesto transnational investment flows. The provisions include

National Treatment, which requires countries to treat foreign investorsat least, as well as domestic firms. While governments would be pro-hibited from discriminating against foreign investors, there would benothing to stop governments from treating foreign corporations morefavourably than domestic ones.

Most Favored Nation (MFN), which requires governments to treat allforeign countries and all foreign investors the same with respect toregulatory laws.

A limitation on Performance Requirements, which are any laws thatrequire investors to invest in the local economy or to meet social orenvironmental goals in exchange for market access.

Banning restrictions on the Repatriation of Profits and the Movement ofCapital, thus ensuring that corporations and individuals can movetheir assets more easily.

A ban on Uncompensated Expropriation of assets. The MAI would requiregovernments, when they deprive foreign investors of any portion oftheir property, to compensate the investors immediately and in full.Expropriation would be defined not just as the outright seizure of aproperty but would also include governmental actions “tantamount to

Extended Neo-liberalism: Governing Without the State 93

expropriation.” Thus, certain forms of regulation could be argued to beexpropriation, potentially requiring governments to compensateinvestors for lost revenue.

The MAI includes “Roll-back” and “Standstill” Provisions that requirenations to eliminate laws that violate MAI rules (either immediately orover a set period of time) and to refrain from passing any such laws inthe future. State and local, as well as federal laws, would likely beaffected. Some existing laws will be exempted.

In its current form, the MAI does not contain language on theResponsibilities of Corporations regarding treatment of employees, envi-ronmental protection, fair competition or other issues. There is discus-sion of including an existing OECD code of corporate responsibility inthe MAI, but these provisions would be non-binding.

Investor-to-State Dispute Resolution. The MAI would enable privateinvestors and corporations to sue national governments, and seekmonetary compensation, when they believe a law, practice or policy ina country violates investors’ rights as established in the agreement(Sforza et al 1998: 4).

These provisions clearly extend beyond the need to rationalise the 1,600 bilateral investment treaties that already exist into a singlemultilateral framework (Kobrin 1998: 100). Particularly, there is anincrease in the power and protection that investors have withregards to governments and citizens, as well as a decrease in thetypes of action that governments can undertake to influence investoractivity. At the heart of the proposed MAI is a globalisation ofinvestor rights, including the right to legally challenge governmentsthat disadvantage foreign investment, in all nation-states that ratifythe MAI.

Given that the series of MAI drafts negotiated between 1995 and1998 were not enacted, it is impossible to determine how these provi-sions would have been implemented in reality. However, for our pur-poses it is possible and important to draw out the intent and some ofthe implications of this approach of governance. The intent is clear inthe preamble of The MAI Negotiating Text (as of 24 April 1998):

Considering that international investment has assumed great impor-tance in the world economy and has considerably contributed to thedevelopment of their countries;


Recognising that agreement upon the treatment to be accorded toinvestors and their investments will contribute to the efficient utilisa-tion of economic resources, the creation of employment opportunitiesand the improvement of living standards;

Emphasising that fair, transparent and predictable investment regimescomplement and benefit the world trading system;

Wishing that this Agreement enhances international co-operationwith respect to investment and the development of world-wide ruleson foreign direct investment in the framework of the world tradingsystem as embodied in the World Trade Organisation;

Wishing to establish a broad multilateral framework for internationalinvestment with high standards for the liberalisation of investmentregimes and investment protection and with effective dispute settle-ment procedures (OECD 1998: 7).

In short, the overriding objective of the MAI is to further entrenchneo-liberalism in a way that legally compels participating states toprotect current levels of global economic integration and to pave theway for further global integration. This necessarily means protectingcorporate business interests from political and legal interference. Thusthe OECD draft of the MAI represents an extension of Stephen Gill’sconcept of “new constitutionalism” (Gill 1998a). While new constitu-tionalism represents an attempt to insulate economic policies frompolitical scrutiny in order to make governments more responsive tothe discipline of market forces and therefore less responsive to demo-cratic processes, this type of attempt has hitherto mostly been con-ducted within nation-states or within regional blocs of states. JamesGoodman (2000: 35) maintains that the MAI was a “remarkably bold(and reckless) bid for power”. It represents an attempt to take new con-stitutionalism to a comprehensive and global level that dramaticallystrengthens the power of corporations. This clearly represents anintensification of prevailing patterns of neo-liberal governance andconfirms Renato Ruggerio’s claim that the MAI is the constitution of a“single global economy”.

What would the draft MAI have changed or done if it were success-ful? Clearly nation-state’s that ratify the MAI will be required to ensurethat state and lower levels of government comply with the MAI. Thismeans opening all economic sectors to foreign ownership and treatingforeign investors no less favourably than domestic firms by removing


performance requirements or other laws that require investors tobehave in prescribed ways in exchange for market access (Mittelman2000: 229). This potentially includes local economic development and local content laws, laws that ban the production or sale of danger-ous products and laws designed to conserve natural resources, sincesuch laws may put foreign investors at a competitive disadvantage.Thus, governments would have to dismantle most restrictions on themovement of capital. Governments would also have to compensateinvestors if their assets are expropriated, either through seizure or“unreasonable” regulation and accept a dispute-resolution processallowing investors to sue governments for damages before interna-tional panels when they believe a nation-state’s laws are in violation ofMAI rules. Corporations would play a direct role in enforcing the MAIsince they would have had the right to challenge governments andseek damages when they believe a law is in violation of the agreement(Sforza et al 1998: 6).

Supporters of the MAI argue that a comprehensive set of rules gov-erning investment is needed to lock in the deregulation that hasalready taken place during the 1980s and 90s. The primary purpose ofsuch an agreement would be to reduce the “market distorting” effectsof policies that require investors to respond to influences other thanthat of market forces or discriminate against foreign capital (Mittelman2000: 229). Thus, the MAI protects the rights of investors to free andpredictable access to markets as well as to conflict resolution mecha-nisms for disputes between governments and TNCs. Supporters of theMAI argue that these changes will ultimately lead to overall increases inefficiency and competition and thus levels of investment and economicgrowth which lead to the creation of new economic opportunities andexpanding prosperity (Sforza et al 1998: 2).

Behind the multilateral agreement on investment

The confidence in the MAI’s ability to generate substantial economicbenefits was central to the OECD’s efforts. However, entrenching thebusiness interests of the twenty-nine member states was also imperative,so while governments negotiated the MAI, business interests wereinvolved from the start (Barlow and Clarke 1998: 7). Like the NAFTAagreement, the idea of locking in neo-liberal reforms and liberalisationstemmed from both governments and business. This is manifest ingiving TNCs a legal standing that protects both their interests and theirability to pursue redress for government actions that adversely affect the


businesses under the MAI provisions. Thus, despite losing areas of policydiscretion, most governments welcomed the idea of not only entrench-ing neo-liberal policies but also magnifying corporate power and puttingit in law (Barlow and Clarke 1998: 11–12). Nonetheless, this was tobecome problematic as negotiations progressed. While the organisers ofthe MAI within the OECD agreed upon the principle of a codified invest-ment regime, disagreements existed as to what areas of economic activityshould be covered by such a regime. In particular, France and Canadaargued for cultural exemptions to media and entertainment investmentthat the US (particularly because of its significant film making industry)did not want (Barlow and Clarke 1998: 89). The US also disagreed withthe EU negotiators who argued that preferential treatment to membernations of the EU might be an “unavoidable by-product of integration”(The Preamble Center 1998a: 1). The US government strongly opposedany exemption that would enable the EU to have policies that may placeUS firms at a competitive disadvantage to EU firms.

Corporate interests clearly dominated the negotiation of the MAI.The US was represented at MAI negotiations by the State Departmentand the office of the United States Trade Representative (USTR) whichwas working “hand-in-glove” with the US Council for InternationalBusiness (USCIB) – a business council whose membership includessenior executives of large US TNCs (Barlow and Clarke 1998: 12; seealso Goodman 2000: 38).

While the US government wanted a “‘high standard’ investmentagreement” there were 36 Advisory Committees that advised the USTR(Barlow and Clarke 1998: 10), yet

of these 36 committees, only one is formally charged with assessingthe impacts of multilateral agreements on the environment. By thesame token, there are only a handful of labor representatives on theadvisory committees while there are more than 500 business repre-sentatives (The Preamble Center 1998b: 2).

The aim was clearly to ease the flow of capital by ensuring predica-bility before and after investment, not to promote labour or environ-mental standards. Indeed the MAI draft claimed that these tasks, whileimportant, were a task for other international regimes and organisa-tions (OECD 1998: 9). As such, the implicit goal on the part of busi-ness interests was to give unparalleled power to investors and thussafeguard these interests from social standards, government interfer-ence and public scrutiny.


Thus, it is no surprise that despite the MAI draft’s profound implica-tions, few outside of the involved technocratic and business elites wereinitially aware of the MAI’s objectives and level of development. Littleattempt was made by OECD governments to inform their respectivepublics of the purpose of the MAI even when the negotiations were atan advanced stage. In fact, a policy of secrecy was followed in mostOECD nation-states (Barlow and Clarke 1998: 13; Goodman 2000:38–43). Just before the MAI was to be debated in 1997 in the US con-gress, two congressmen remarked, “if you have never heard of thisagreement, you are in good company. Most members of Congresshaven’t either” (The Preamble Center 1998c: 1). Knowledge of the MAIbegan to spread in January 1997 when a draft of the MAI was leakedand put on the internet, thereby prompting a massive level of publicdisquiet in virtually all participating states (Barlow and Clarke 1998: x).

Because a climate of concern regarding economic globalisationalready existed, many environmental, labour, human rights and com-munity groups feared that the MAI could have serious consequences(Kobrin 1998: 104–5). They maintained that aside from bypassingdemocracy, the MAI could deepen economic globalisation’s “race tothe bottom” by making it easier for investors to move finance and pro-duction facilities from one country to another and thereby increasethe pressure on nations across the world to compete for investment bylowering wages and labour, environmental and consumer-safety stan-dards (Barlow and Clarke 1998: 2). These public concerns played animportant part in the failure of the MAI in the OECD because theyprompted a substantial international campaign by interested socialmovements and parts of some governments against the MAI. Anti MAIforces gathered in significant strength precisely because the MAI wouldseemingly affect a wide range of NGO concerns, from the environ-ment to indigenous rights (Goodman 2000: 34). Importantly, thispublic dissatisfaction points to the ways that developments withineconomic globalisation provoke a civic reaction that was coupled withan increasing global awareness of the machinations of internationalinstitutions such as the OECD. This campaign was organised andenacted mostly over the internet and placed the OECD organisersunder “unprecedented scrutiny”, as well as placing informationregarding the proposed agreement in the public arena (Kobrin 1998:98). This had the effect of not only politicising the MAI in manynation-states but also of turning the MAI into a visible “lightning rod” for public dissatisfaction regarding economic globalisation acrossthe western world and NAFTA in North America (Kobrin 1998: 105).


This scrutiny had a substantial impact on the disagreements betweenOECD delegates because the “growing pressure from civil societyfurther exacerbated the differences of opinions within the OECD”(Kobrin 1998: 99; see also Goodman 2000: 43). Thus, the national dif-ferences and the international campaign combined to slow and ulti-mately derail the OECD attempt to implement the MAI.

Clearly, while the MAI was a dramatic failure in the OECD, the ideaof MAI-like provisions still persists in some quarters. In an ideologicalsense, it continues to hold weight in business and government circlesand in a legal sense, it is still being discussed to see what form theideas of the MAI could take. The WTO has emerged as the forumwhere the MAI is being negotiated after ideas to forge a scaled backMAI as a set of “hortatory principles” within the OECD were not fol-lowed (The Preamble Center 1998a: 2). Canada, France, the UK andHolland supported this approach, while the U.S. originally opposedmoving negotiations to the WTO, on the grounds that a WTO agree-ment would probably be more controversial and hence much weakerbecause of developing nation desires to protect national sovereignty(Barlow and Clarke 1998: 10). Subsequent events at the Seattle andCancun WTO meetings have demonstrated the controversial nature ofany proposed deregulation of investment rules within the WTO frame-work. Yet, the WTO is still an organisation shaped primarily by neo-liberal ideas that could potentially forge a strong investment regimethat, while lacking the boldness of the original MAI, could still upholdcorporate interests.

At its core, the MAI is a very simple idea: the removal of anyrestraints on capital markets by enacting a legal regime that takes thediscretionary power away from governments. This is a significant stepwithin the development of new constitutionalism where

what is being attempted is the creation of a political economy andsocial order where public policy is premised upon the dominance ofthe investor, and reinforcing the protection of his or her propertyrights. The mobile investor becomes the sovereign political subject(Gill 1998b: 23).

However, the entrenchment of this order on a global scale not onlyseeks to make the neo-liberal supremacy of public policy more securelydominant, but it also provokes the type of reaction seen against theMAI precisely because the proposers of the MAI overstepped thebounds of neo-liberal governance. The incremental adjustments


wrought by neo-liberal governance operate through the nation-state ina way that steadily widens economic globalisation without obviouslyand blatantly dismissing the democratic nature of the nation-state.The MAI is a form of extended neo-liberal thought because it advocatesa shift away from the practice of neo-liberal governance and seeks notonly to protect investors but also to make them “sovereign”. In doingso, this development utterly reshapes governance in a way that under-mines people’s belief in the nation-state and eliminates the variousforms of social protectionism, such as “cultural exemptions”, that tendto satisfy the public and suborn discontents to the prevailing directionof liberalisation and deregulation embedded within the nation-state.However, there is another way to deepen neo-liberal capitalism thatdoes not involve a “global constitution” that enmeshes the state, butrather seeks to alter the state from within.

Kenichi Ohmae and a borderless world

Kenichi Ohmae’s writings about the future of politics are an extensionof his work as a management consultant, where he emphasised theneed for corporations to adapt to the emerging economic forces andtrends. In The End of Nation State Ohmae claims that it is not only cor-porations that need to adapt to a global economy but the nation-stateas well. Ohmae (1995b: 27) believes that since the 1970s there has beena fundamental change in the world economy and the way corporationsoperate. The driving force of these changes has been the impact ofinformation technology, which he claims has allowed transnationalcapital movement to be easier and therefore more significant, as well asincreasing the flexibility and responsiveness of corporations and eco-nomic processes to the preferences of consumers.

This change has three main implications. The first is the changingpatterns of where economic activity is occurring. While economicactivity is concentrated on the “Triad” of Japan, the United States andEurope, the dynamism of this new pattern of economic activity isevident through wider economic linkages that radiate from these threehubs, such as Japan’s linkages with Asia. For Ohmae (1990: xi), this“Interlinked Economy” represents a new engine of dynamic growththat has developed networks of capitalism that flow to opportunitieswithin a state or across multiple states. As such, Ohmae emphasisesthe rise of regional clusters of capitalist development or what MericGertler (1997: 21) refers to as “glocalisation”. Ohmae (1995b: 80–1)refers to these clusters as “region states”, actual existing “natural


economic zones” that may fall within the borders of a nation-state(such as Baden-Wuttemberg in Germany) or span nation-states (suchas the Growth Triangle of Singapore, Johore in Malaysia and the RiauIslands of Indonesia). The second element of Ohmae’s analysis of achanging world economy is the rise of a new logic by decision-makersin business and government. He believes that there is a new globaleconomic structure that rewards flexibility and defines the landscapeby which all institutions operate. In fact, a new “global logic” is inplace that rewards those decision-makers who make decisions bythinking globally and opening up to what Ohmae (1995b: 4) refers toas “global solutions” which “will flow to where they are neededwithout the intervention of nation-state”.

Consequently, he claims that these factors combined lead to a thirdimplication, the end of the nation-state. At one level, Ohmae seesrising individualism and increasing consumer knowledge as weaken-ing the claims of economic nationalism. He argues that this new dis-cretion and awareness of individual consumers is diminishing people’sexpectations of their nation-state. At another level, Ohmae (1995a:120) believes that the nation-state is fundamentally at odds with aglobal economy since although

nation-states were created to meet the needs of a much earlier histor-ical period, they do not have the will, the incentive, the credibility, orthe political base to play an effective role in the borderless economyof today…The bottom line is that they have become unnatural –even dysfunctional – as actors in a global economy because they areincapable of putting global logic first in their decisions.

Thus, the only viable route to prosperity is to be completely open tothe global economy. Ohmae (1995b: 4) believes that states are inwardparochial institutions that are unable to fully open up to the globaleconomy and rather than attempting to be a “middleman” in connect-ing these markets to individuals, the state should simply stand aside.He claims that governments are unable to embrace the opportunitiesthat a global economy presents. Instead, decisions are made to keepthe global economy under some form of control in order to protectthe vested interests of powerful interest groups, to uphold a govern-ment’s advantage in an election or to build up a region of a nation-state that is not economically fending for itself. The problem forOhmae is that while these forms of activity were once possible, theyare now inefficient and unsustainable. Hence, the nation-state


has become a powerful “engine of wealth destruction” that utilisesresources in an unproductive manner, a practice that is in Ohmae’smind both senseless and unsustainable because the global mobility ofresources ensures that inefficiency provides an incentive for economicactivity to move elsewhere (Ohmae 1995a: 120).

According to Ohmae, the problem is that even federal nation-stateswith extensive local government autonomy are hindered by the sameset of limitations of more centralised nation-states in that they mustpay attention to powerful interests groups and public expectations of the state. Ohmae (1995b: 47) refers to these expectations as the“civil minimum” – the various public services undertaken by thegovernment at a more or less universal level which thereby requirescross-subsidisation. While this is a clear echo of the public choice con-ception of “rent seeking” (see Buchanan 1991), Ohmae claims that,despite being well meaning, the nation-state’s provision of the civilminimum cannot succeed in raising living standards. The problem inproviding the civil minimum is that the various forms of cross subsidi-sation are unsustainable in an economic sense. He argues that notonly does the number of claimants rise, and the expectations of thosewho have access to various services increase, but that it becomes moreand more difficult to exclude groups from accessing civil minimumservices, especially during election time in democracies (Ohmae1995b: 47). In short, the inefficient use of resources for both subsidiesand broad-based social services “ratchets up” (Ohmae 1995b: 55).According to Ohmae, this is unsustainable in a global economybecause of the strain it places on the economy of those states whosupport these programmes and, importantly for Ohmae (1995b: 55),consumer aware people are increasingly cognisant of this inefficiency.He is also concerned that, in addition to the burgeoning cost, theallure of the civil minimum focuses governments’ energies away fromthe global economy. Ultimately, Ohmae is arguing that the nation-state is unsustainable because it is inward looking when it ought to beupholding the welfare of its people by looking to the global economyfor the solutions to economic problems rather than focusing on howwealth should be distributed.

Ohmae’s analysis of the transformation of the world economypoints to a significant change in the relevance of the nation-state. Heclaims, “precisely at a time when the economic wellbeing of peoplearound the world increasingly depends on their ability to participatein the global economy, the nation-states in which they live find it both structurally and philosophically difficult to offer systemic


continuous support for such participation” (Ohmae 1995b: 77–8). Assuch, it appears to Ohmae that we must turn to alternatives other thanthe nation-state. The argument here is not just that this change isdesirable or possible, but that it is occurring in the shape of emergingregion states.

The region state

The crux of Ohmae’s alternative conception of governance is theregion state. These natural economic zones, which he uses to describethe actual contours of the global economy, are also the alternative tothe nation-state. Thus, he uses the term region state in a double sense:to describe what is occurring and what should be the political organ-isation of the world. Ohmae’s prescription to promote economicwelfare within economic globalisation is to encourage the develop-ment of region states. Indeed, he is arguing for regional autonomy to aconsiderable degree – that regions within and between states should beleft to their own devices to compete for capital and to raise infrastruc-ture needed for capital to operate (Ohmae 1995b: 119 and 127).Ohmae (1995b: 88–9) claims that region states are not local in focus inthat they would be aimed at connecting into global capital flows andnot tied to the preferences of civil minimum claims or national protec-tion. The focus of region states is also economic and not political:“regional autonomy is a great – essential – lever for taking advantageof the global economy to the benefit of all citizens and residents”(Ohmae 1995b: 119). The main focus is on maximising the economicadvantage of linking to the global economy by “being reliable ports ofentry” (Ohmae 1995b: 89). Ohmae’s region state develops around thedevolution of economic decision-making responsibility within afederal nation-state. Yet, it is global capitalism that really dictates thepolicies of region states. Hence, as the region state gains increasedautonomy from the nation-state it falls more under the sway of theglobal economy. Ultimately, Ohmae sees the centralised nation-stateas the problem and the global economy as the solution.

Region states are systems of rule that Ohmae believes will be able toconnect with the global economy in a more substantial and sustain-able way than the nation-state. He claims that they are alreadyforming from the practices of a global economy:

The boundaries of the region state are not imposed by political fiat.They are drawn by the deft but invisible hand of the global market


for goods and services. They follow, rather than precede, real flowsof human activity, creating nothing new but ratifying existing pat-terns manifest in countless individual decisions (Ohmae 1993: 78).

The scale of these region states varies according to economic link-ages and certain infrastructure needs (such as at least one internationalairport and a freight handling harbour) with a population in the fiveto twenty million range (Ohmae 1993: 80). Also of importance inplacing the borders of a region state is the extent of communicationsand marketing considerations. This last factor is the most revealing,with Ohmae (1995b: 89) arguing that the size of the region state oughtto be an attractive market by being small enough for consumers toshare tastes and interests as but large enough for certain economies ofscale. This underlines the way in which the region state is shaped notby local forces but by global markets.

The role and aim of the region state is clear. Nation-states shouldpermit their regions to autonomously act as powerful “engines ofdevelopment” by being global in focus, emphasising efficient eco-nomic linkages, welcoming foreign investment and by sideliningclaims to any civil minimum (Ohmae 1995b: 88–9). He makes thepoint that nation-states encourage regional economic developmentbut stop when it “threatens current jobs, industries and interests”(Ohmae 1993: 87). The effect of this is costly. Ohmae (1993: 87) notesthat “in Japan, a nation with plenty of farmers, food is far moreexpensive than in Hong Kong or Singapore, where there are nofarmers” because the latter two nations are open to the benefits of theglobal economy. In short, by consistently forwarding the “globallogic” and encouraging the development of region states, people willbenefit from such openness. This necessitates region states that arefocused on the attraction of capital and the provision of communica-tions and transport infrastructure needed to support networks ofglobal capitalism.

Ohmae deploys three main arguments to support the idea of theregion state. The first relates to the “effective engines of prosperity”that the region state would be (Ohmae 1995b: 149). He clearlybelieves that economic quality of life issues should be central topolicy-making of the region-state and the nation-state. This is enabledby the efficient use of all resources, not the inefficient production ofgoods that are then subsidised by the government to placate powerfulinterests or to maintain jobs. By acting as a port of entry, the regionstate is not only opened up to the global economy in a way the


nation-state cannot be, but is also embracing a market discipline thatwill ensure this efficiency. The goal is

not to solve all problems locally, but rather to make it possible tosolve them by harnessing global resources. The effectiveness ofregion states depends on their ability to tap global solutions… Theimplicit goal of their policies and their actions is not to defer someoutdated insistence on self sufficiency, to buy off some well-wiredconstituency, to satisfy some emotional craving for the trappings ofsovereignty, to tie up some bloc of votes, to feed some vocaldemand for protection, or to keep some current government inpower. It is to improve the quality of their people’s lives by attract-ing and harnessing the talents and resources of the global economy,not by warding that economy off so that special interests flourish(Ohmae 1995b: 96).

Thus, instead of inefficient industrial policies or other forms of pro-tection the prescription of the region state is founded on a “proactivepolicy” which encourages local businesses to network together andengage with the global economy rather than sheltering them (Ohmae1995b: 96).

The second argument relates to the way prosperity would spreadfrom one region state to another. Ohmae (1995b: 100) argues thatwhen region states are left to their own devices they will be efficientand prosperous and that this prosperity necessarily “spills over” intoneighbouring region states. Also, there is the motivational danger ofbeing recalcitrant and inwards looking – thereby missing out on theopportunities of global capital. The rise of some flourishing regionstates encourages linkage and discourages autarky. Because regionstates are freed from centralised support, a competitive–Darwinian“survival of the fittest” scenario threatens those regions that do notengage with the global economy and other region states with eco-nomic obscurity. This motivation and the rationale that there is nogain for a region state to hoard its prosperity in a global economyprovide a case for the expansion of successful region states.

The third line of argument that Ohmae advances is that the auto-nomy of the region state is a strength. According to him, one of thegreat virtues of the region state is that it unleashes the “true” self-interest of a region to provide for itself (Ohmae 1995b: 96). The factthat it is not tied to a centralised nation-state with the civil minimumtrickling in from the centre both allows and forces the region state to


open up to the only source of prosperity that a global economy pro-vides: the flows of resources that only go to those places that are openand flexible. Because the region state is freed from the encumbrance ofspecial interests and the civil minimum, he fundamentally believesthat those decision-makers and the public of region states are “flexiblecommunities of interest” that are in the best position to know what isneeded to forge a prosperous life (Ohmae 1995b: 96). For Ohmae, thecontrast with the nation-state is stark, with the centralisation, supportof special interests and provision of the civil minimum providing astrong reason for the nation-state to be replaced by the region state asthe main complex of governance.

The state in a world of region states

What happens to the nation-state in a world where important areas ofpolicy discretion rest with the region state? This is where Ohmae’sargument becomes increasingly circular. He believes the devolution ofpower is both the “end” of the centralised nation-state and the onlyway the idea of nation-state can survive a globalising era (Ohmae1995b: 129). This is because he sees a continuing but residual role forthe centralised nation-state. But it is a role that is a far cry from thetraditional role of the nation-state that provides a more or less com-prehensive frame of authority and justice for its citizens. Not onlywould the nation-state open up society to transnational capital, but itwould also willingly relinquish control to region-based decision-makers and cease to provide civil minimum goods and services(Ohmae 1995b: 130–6). Some of the political machinery of the nation-state would remain but any notion of political community or societalconcern that could influence the policy-making process would not.Region states would have sole responsibility for policy-making thatattracts capital. What is not fully explained in this shift to the regionstate is how the region state is less susceptible to special interests andhow the nation-state could give up virtually all control of its regions.

The residual role of the nation-state means in effect a break up ofthe centralised nature of the state. This break up occurs on two axes.Firstly, by a devolution of power into a federal system of governmentthat would allow the region states to undertake their roles in embrac-ing economic activity as their first and overriding goal. This form offederation would be loose because it is dependent on a central gov-ernment that does not interfere in the working of any of the regionstates it encompasses (Ohmae 1995b: 100). In short, the region state


has more authority to develop economic policy than the centralnation-state. Secondly, the nation-state must cease any provision ofthe civil minimum or any other centralised protection or redistribu-tion (Ohmae 1995b: 126). This fundamentally curtails the policy lati-tude of the nation-state. Any provision of a centrally administeredcivil minimum would undermine the whole notion of a federatedsystem of region states. Consequently, region states most look toglobal capitalism for opportunities while being limited to their ownwherewithal and capacity to develop the infrastructure to harnessglobal capitalism (Ohmae 1995b: 126–7).

Through the shift towards the primacy of region-states, there aresome functions that remain with the nation-state (Ohmae 1993: 82).The “traditional issues” of foreign policy and defence, macroeconomicand monetary policy, as well as education and training all remainunder the direction of the nation-state. Yet, of these, the provision ofmacroeconomic conditions is somewhat illusionary when region statesare dependent on the movements of global finance and equity capital.The government of the nation-state will not fund infrastructure but itshould lay down regulations to facilitate common standards and com-patibility (Ohmae 1995b: 129). To lay any more responsibility thanthis in the hands of the nation-state would invite the possibility ofinterest groups lobbying for the central government to set up infra-structure rather than a region to organise and provide it itself. Indeed,according to Ohmae (1995b: 136), the new role of the nation-state isto be a “catalyst” that develops the economic latitude needed tounleash the competitiveness of region-states. The nature of being acatalyst will differ for states with economies at different levels of devel-opment. For developing countries, the emphasis is on getting “theright policies, institutions and infrastructure in place at the right time”(Ohmae 1995a: 123). This means states ensuring that the infrastruc-ture needed to open up to the global economy is present whileopening up opportunities for regions to be economically autonomousand thereby loosen the “heavy hand of government regulation”(Ohmae 1995a: 123–4). For states of the western world, the centralchallenge is how to avoid stifling region states such as Silicon Valley orBaden-Wuttemberg and at the same time facilitate new region stateswithout holding on to discretionary economic control and the desireto be the “prime movers” too long (Ohmae 1995b: 136).

The region state represents another tangent of extended neo-liberalism: governance that is apparently local in authority and organ-isation but totally tied into global capitalism. It is a type of governance


that looks past the “special” interests of its citizens to provide themwith a programme that delivers efficient networks within the globaleconomy. Ohmae (1995b: 79) claims that nation-states are intrinsicallydomestic in focus and have “begun to dissolve” in economic termsbecause of this underlying rationale. Nation-states may try to engagewith the global economy but are always limited by the ways they arebeholden to their population’s appeals to the provision of commonstandards of public services and the protection of certain interests. Theregion state is a form of polity that embraces the “global logic” bylooking towards global capitalism and thereby providing no such serv-ices or guarantees to its citizens. Ultimately, locating authority withthe region state places the nation-state at a less than a residual footing– with the nation-state being little more than a loose term thrownover the political structure of a given national grouping of regionstates. It is unclear how this system would work in practice, withouttotally collapsing into a world of region states. One is left with the dis-tinct impression that this is what Ohmae would not mind seeing, withthe minimal nation-state having a brief transitionary phase beforedrifting into history.

The elements of extended neo-liberalism

Both the proposers of the MAI and Ohmae take different journeys tothe same destination: a dramatically reshaped nation-state that isunable to interfere with the discipline of global market forces. As such,extended neo-liberalism goes beyond neo-liberal governance in tworespects. First, extended neo-liberalism eschews the incremental dereg-ulation and liberalisation of neo-liberal governance in favour of a dra-matic and obvious delimitation of the nation-state and democracythat legally entrenches a “credible” context for investors. Second,extended neo-liberalism does not engage nation-state in a substantiveway whereas neo-liberal governance relies heavily upon the nation-state for the legitimacy of “market friendly” polices and practices. Thesocial forces supportive of neo-liberal governance have largely co-opted nation-states around the world and locked them into maintain-ing and expanding economic globalisation both in terms of ideologyand the practical competition for economic activity. By comparingextended neo-liberalism with neo-liberal governance we can see howneo-liberal governance enacts deregulation, liberalisation and privati-sation in a gradual and pragmatic manner by transforming existingforms of political association rather than developing them anew as


extended neo-liberalism contends. Nevertheless, the arguments pre-sented in this chapter culminate in an approach to governance thatclaims that the best way to govern in a globalising environment is tounleash market forces by limiting the actions of national govern-ments. This convergence is made clear in three interdependent points.

First, extended neo-liberalism contends that in order for the potentialof neo-liberal reforms of economic efficiency and investor security to befulfilled they must be locked in and protected from political or democraticmanipulation. The separation of “economics” from “politics” is essen-tial to the neo-liberal project, but in order to secure the material gainsof globally deregulated markets this means further restricting govern-ments by legally delimiting the authority of the nation-state.

Second, extended neo-liberalism attempts to dramatically increase the significance of economic relations across the world. Whether achievedby a global regime or by radical federalism, the only extensive andsystematic discipline that should be exercised over governments is the desires of people as capitalists and consumers, not as citizens.Ultimately, overriding power rests with global capitalism and theeconomic actors that act within the networks of capitalism and themarket discipline they impart.

Third, democracy is restricted and limited by extended neo-liberalism.Economic policy-making is quarantined from public opinion and pro-tected against future popular movements or reactions against deregu-lated capitalism. Thus, democracy cannot trump global market forcesbecause authority is either lifted from the state by a global legal regimeor authority has be devolved to competitive locales too small andlocked into competition to effect large scale change. The goal of thispotential form of governance is nothing less than establishing a pre-dictable political-economic context for the investor.

Extended neo-liberalism is testament to a deep suspicion of democ-racy, where democracy is comprehended as an instrumental form ofprotection of individual liberty from the state that can potentiallyenlarge into a more invasive and centralising threat to capitalism andindividual liberty (Gill, 1998b: 23). Extended neo-liberalism also repre-sents a supreme confidence in unfettered capitalism in not only pro-ducing substantial gains in levels of wealth across the world but also inproviding a self regulating society capable of basic levels of financialand social stability with only minimal state interference.

The question is whether global capitalism can deliver? Can unfet-tered global capitalism promote prosperity that extends across theworld? I contend that there are substantial doubts that extended


neo-liberalism can spread prosperity widely across the world let aloneameliorate the social effects of economic globalisation. After all, theproblems indicative of global capitalism: inequality, polarisation and insecurity all stem from the unregulated and uncontrolledmanner of this configuration of capitalism. The rationale of extendedneo-liberalism is a radical extension of the prevailing pattern of gover-nance that is holding sway across the world. Hence, we have the situa-tion of both the proposers of the MAI and Ohmae simultaneouslyunderstating the actual role that the nation-state plays in enablingeconomic globalisation and suggesting that the nation-state frustratesthe further development of economic globalisation.

On one hand, Ohmae is arguing that the nation-state is a hindranceto citizens enjoying the full benefits of a global economy. On theother, we have many governments actively using neo-liberal policiesto shape the nation-state and enable global capitalism. In claimingthat the region state is the desirable form of governance and thenation-state an outdated and unsustainable form of governance,Ohmae ignores the active role the nation-state plays in supporting theform of global economic activity that he believes is the solution. Atthe heart of Ohmae’s prescription is a fundamental misunderstandingof the type, nature and scale of government activity required tosupport global capitalism. For the proposers of the MAI, the dilemmaof the role of the nation-state is reversed. In legally restricting theability to conduct economic policy-making, decision-making powerand hence legitimacy is drawn away from the state. While the MAIapproach accepts the interventionism of the state in keeping marketsopen, the global legal restraint of the MAI visibly weakens people’sconfidence in the sovereignty of the nation-state. The virtue neo-liberal governance’s combination of deregulation and the nation-state,as compared with extended neo-liberalism, is that while there is rela-tively quiet de facto liberalisation on a significant scale, there is not thesame level of overt de jure liberalisation that visibly emasculates thenation-state and provokes public disquiet.

As a result of the blatant approach of extended neo-liberalism, thereare problems with the viability of this alternative articulation of goodgovernment. The remainder of this chapter addresses three primaryproblems. First, there are problems with the idea that the region stateor legally enmeshed state can actually create prosperity that moderatesinequality and fashions a significant level of social cohesion. Second,there are also problems with the notion that the region state or legallyenmeshed state can support global capitalism with the same effective-ness as the neo-liberal inspired nation-state. This leads to the third


problem of whether the idea of extended neo-liberalism is the wayforward for liberal and especially neo-liberal thought. Even if extendedneo-liberalism can moderate the adverse consequences of economicglobalisation across the world or is able to sustain global capitalism,this does not mean that liberal outcomes can be guaranteed byextended neo-liberalism. As we will see, local representation can leadin so many different directions; many of them are not even vaguelyliberal.

The minimal state and inequality

The proposers of the MAI and Ohmae believe that an unfettered globaleconomy will produce prosperity that addresses poverty and inequal-ity. If social life is determined by the market, then the production ofcheap goods and services will ensure that inequality will become anon-issue with the market creating “no absolute losers nor winners, asmarket mechanisms adjust participating nation’s competitivenessrather fairly through currency exchange rates and employment”(Ohmae 1990: 216). Ohmae makes the classical liberal/neo-liberalassumption that wealth will circulate to provide everybody engagingin economic activity with an ample living standard (see Hurrell andWoods 1995: 448–9; Habermas 2001: 93). Yet, on a global scale, this isnot occurring through the processes of deregulated capitalism that arein existence. The global economy is producing clusters of wealth (orwhat Ohmae calls region states in the descriptive sense) that do notspread out for reasons associated with the strategic compatibilities of local linkages and resources. Ohmae believes that by liberating localdecision making, more places around the world will embrace theglobal economy and usher in prosperity that will not only bringwealth to that locale, but will radiate to other locales. But can everylocale be a successful region state?

Even if we, like Ohmae, close our eyes to the active role thatnational governments have played in politically sustaining the forma-tions of local clusters in the name of competitiveness, it is clear thateven if all locales were to be weaned from the benefits and publicservices provided by the state, not everywhere can be a prosperousregion state. There are vast differences between nation-states in thegrowth in trade and investment flows across the world (UNDP 1999:27), as well as access to telecommunications infrastructure and tech-nology (Castells 1998: 92–5; 1999: 4). There are places that are geo-graphically isolated that have been devastated by long-term hostilitiesor simply do not have the social cohesion required to provide a stable


environment for capitalism (Castells 1998: 161–4). Obviously, placesin the developing world, especially in Africa, are a long way frombeing able to provide basic infrastructure and social cohesion, let alonethe opportunity of being a prosperous linkage in the global economy(World Bank 1997: 14). While the uneven nature of capitalism is onereason for this, the lack of strong coherent states around the develop-ing world is another key reason underlying this developmental failure– rather than the presence of states as Ohmae suggests (see Fukuyama2004).

Moreover, the type of economic growth is more important than thelevel of economic growth in determining levels of development andinequality. In particular, economic growth does not automaticallyimprove poverty and promote human development unless the growthis both “pro poor” and sustained within poor communities (UNDP1997: 71, see also Sen 1999). Unfortunately, Ohmae does seem to beresponsive to the ways capitalist working conditions can produceharmful forms of economic growth, including paid child labour, andaccelerated forms of social exclusion (Castells 1998: 72–3). In addition,contemporary global capitalism has not created widespread long-terminvestment and has instead worsened the fragility of some regionsthrough financial volatility and crises (Strange 1996: 197–8; see alsoCastells 1999: 4). Ohmae’s assumption that embracing the globaleconomy will provide prosperity may not be shared by the people ofLiverpool or Sierra Leone, leading to the possibility of inward lookingregions. This may mean that the virtuous processes of the market thatOhmae and the OECD technocrats lay faith in may in fact degenerateinto regional ghettos that have markedly lower living standards andstability than nearby regions.

This extension of the neo-liberal panacea also overlooks the differ-ences and inequality within a locale or region-state. In a globaleconomy, the real divisions in what people earn is not only due totheir location in the global economy but also what they add to theglobal economy. As Robert Reich (1991b: Chp 14) argues, people whowork in knowledge based professions tend to be connected to theglobal economy in a more favourable way than the service and manu-facturing sectors–with significant inequality resulting (see also Sassen1994: Chp 6). The global economy does not just divide people on thebasis of whether this or that location is connected to the webs of pros-perity but what individuals do within the webs of the increasinglyglobal division of labour. This problem is likely to be exacerbated ifnation-states follow Ohmae’s advice and relinquish control of welfare


and redistributive programmes. Given that the declining levels of gov-ernment support are partially responsible for the severity of currentlevels of inequality, this is even more disquieting. As Castells (1999: 5)soberly observes, when society is “left to market forces, there is anundeniable tendency toward a polarized social structure, betweencountries and within countries”.

Ultimately, there are limited places that can be host to lucrativeleading edge technological production, with many places that are“black holes of informational capitalism” that Manuel Castells explainsare a “social landscape” defined by systematic social exclusion (Castells1998: 162; see also Scott 1998: 136). Castells (1998: 162) makes thepoint that these black holes can be changed, that “purposive humanaction can change the rules of social structure”. My contention is thatthe ideas of Ohmae and the MAI do not embody this change becausethe ideas are aimed at the economic goal of increasing deregulation toassist businesses, not the removal of social divisions. Extended neo-liberalism seeks to direct the rules in the same direction as neo-liberalgovernance but to push them even further by extending deregulationand restricting redistribution.

The state versus the region state

Contrary to Ohmae’s argument, the declining level of governmentintervention in regards to social issues has not entailed the end of thestate. As Allen Scott (1998: 46) notes “those, like Ohmae, who foreseeits virtual dissolution fail, in particular, to take into account the socialand above all perhaps the cultural pressures – as opposed to the eco-nomic relations – that continue to make the state and the nationpotent political realities in the contemporary world”. Ohmae perpetu-ates the neo-liberal perception that people are merely shaped by eco-nomics and not by political and social interests, as well as not beingconscious of the ways cultural and political forces actually constituteand legitimate any form of capitalism (Scott 1998: 152). As examinedin Chapter 2, a particular type of government action is required tounderpin economic globalisation. The active nature of the state, in theform of the competition state and deregulation, is something thatOhmae does not seem to reconcile with his account of the regionstate. While Ohmae points towards a radical path of complete disman-tling of social policy and the devolution of authority to the smallestform of governance as possible, he doesn’t recognise the role that thestate in its deregulated and interventionist form actually plays in


supporting and legitimating economic globalisation. He hopes thatgovernments will accept that it is their role to provide “a steady andsmall hand, not to interfere” (Ohmae 1990: 212). However, to enactderegulation, a strong disciplinary hand is required, and this necessi-tates the controlled use of power via the state.

A state constituted by the practices of the competition state may notbe compatible with the localised authority of the region state orindeed within a nation-state embedded within a MAI like arrange-ment. The region state may undermine this role by drawing authorityto a localised level. This authority runs the distinct risk of beingunable to maintain the discipline associated with a nation-state that isintimately connected to the deregulated political economic linkages of a global economy yet still maintains a semblance of popular legiti-macy. Contrary to Ohmae’s intent, the authorities of the region statemay be captured by “special interests” of their constituents. In addi-tion, while the practice of the competition state is bound to the globaleconomy in a way that challenges public belief in the state, most suchstates still possess an important level of legitimacy. However, it is notclear that the region state can work simultaneously at a global anddomestic level as effectively as the national competition state can inmost cases, because the competition state imbues a complex networkof technocratic control with a historical sense of legitimacy and com-munity. The region state will probably be too small and caught upwith external evaluations of the global economy to be able to governin a way that both manages to uphold the “symbolic function” neces-sary to hold public legitimacy at the same time as enacting the gradualprogramme of neo-liberal governance (Cerny 1996b: 131). In a similarway, states enmeshed within a MAI like agreement would find it hardto maintain this public sense of legitimacy. The lesson for neo-liberalreform is evident in the way the MAI’s attempt to “lock in” the neo-liberal project from public interference provoked a vociferous publicreaction in so many OECD nations.

Problems associated with the coexistence of the region state and thenation-state raises doubts that the region state could operate so as tomanage the political conditions needed to support a global economywith a winnowed nation-state. A world that has free markets thatenable the economy to act as a single place in real time needs a politi-cal and legal infrastructure that has the ability to support such an eco-nomic system both within and between nation-states. However, theregion state is too fixated on trying to make the most for individualsin such a system that it lacks the public sentiment as well as the


institutional organisation and breadth to sustainably underpin thecomplexity of a global economy. In particular, the region state, bybeing built so single-mindedly around principles of commerce, wouldbe unlikely to provide the funds needed to solve problems of globalgovernance. While Ohmae (1990: 212–6) claims he would like to pay athird of his taxes to a global body for global problems like the environ-ment and development, a third to his local community and the lastthird to his nation-state, this tax requires structures that wouldenvelop the region state. Not only would such global funds interferewith the operation of the market but they would also cut across theregion state with specific political programmes that would clash withthe economic goals of the region state. The resolution of these clasheswould be in favour of the region state by Ohmae’s account, meaningthat global governance would be a feeble affair. Thus, ultimately, evenif extended neo-liberalism can dismiss the ethical problems associatedwith prevailing forms of inequality and insecurity, as a practicalproblem, this approach does not offer the means of strengthening theprovision of political mechanisms that address global problems orindeed actually support economic globalisation. This leads us to con-clude that the region state is far from being what is needed for thelong-term support of a global economy or a world where complexthreads of interdependence forge the need for concerted global gover-nance. Ultimately, extended neo-liberalism rests on the premise thatthe only factor needed for global social stability is economic prosperity.

In sum, extended neo-liberalism, in sacrificing public legitimacy forthe gains of a completely deregulated world economy, endangers themechanisms and political association essential for the state inter-vention needed to open markets and keep them open. Both the MAIproposers and Ohmae are seeking to minimise the discretion of thenation-state in order to both entrench and deepen the neo-liberalproject. This is perilous, not only because it endangers the neo-liberalproject by inviting public resistance, but also because it also endangerseffective global governance and the social and political stabilityneeded at a global level for global capitalism to operate.

Extended neo-liberalism and local representation

Even if extended neo-liberalism could resolve the tensions originatingfrom dealing with inequality and the long-term governing of a globaleconomy without an empowered state, regions are undoubtedlyshaped by more than economic concerns (Scott 1998: 153). In trying


to forward an alternative to neo-liberal governance, the ideas ofextended neo-liberalism place great faith in trying to further liberatecapitalistic frameworks and agents in order to facilitate an increase inthe opportunities and material conditions for individuals across theworld. But, can the practice of a legally enmeshed state or the regionstate open the possibility for stable and prosperous liberalism within aglobal economy? Clearly Ohmae sees political communities as beingshaped primarily by economics when he discusses shared consump-tion patterns as being central to the composition of a region state. Thefact that the region state is defined by the flows of the global economyultimately means that the public sentiment that underpins the regionstate is very weak – the term “flexible communities of interest” sug-gests an ultimately instrumental and economistic polity. Would thistype of elastic community hold together or ward off undemocraticforms of community such as chauvinism or fascism (Barber 1998:34–5)? It is highly doubtful. In terms of political rights, the discre-tionary power of the citizen to elect regional government to do any-thing other than build infrastructure and attract capital is also limitedwithin the region state. Likewise, economic and social rights such asminimum standards of pay, health and safety and enforcing the obli-gations of corporations, would seemingly be in a similar limited andcurtailed shape. Citizenship in a region state would be a weak andpurely procedural affair. The proposers of the MAI also thought,wrongly as it turned out, that people were primarily the homo economi-cus’ of economics textbooks.

Given the minimal bonds of association and a thin and proceduralmodel of citizenship, can such local representation usher in prosperitywithout being taken over by other concerns such as local politicalagendas, ethnic desires and nationalist aspirations? Ohmae (1995b:119) is quite candid about the dangers of devolution because “it canalso be used as a plausible rationale, under the cover of which reli-gious, racial, ethnic or tribal groups privately aspire to advance onlytheir own, self interested ends”. This “danger” is highlighted by thedesire for local autonomy in areas such as Scotland and Quebec wheredevolution is sought after but for reasons associated with communityautonomy. Even cases where regional autonomy is sought after forsome economic reasons such as the League Nord in Northern Italy,community self determination has risen as the popular motivation fordecentralisation. It is clear that while the scale of the polity may bedetermined by the exigencies of the global economy, the intent of thepolity cannot. The possibility of the region state being taken over by


other agendas or interests is real and ubiquitous. Many of these pos-sibilities are devoid of the ethical values and the political structuresneeded to underpin not only the visions of those who wish to embraceextended neo-liberalism but of a liberal society as well. Clearly, devolu-tion can be a good thing but only if it operates within a structure thatbalances commercial goals with cultural and ethical values. The EUprinciple of “subsidiarity” is a good example of devolution that occurswith peoples’ complex and manifold lives in mind because it embeds“the principle that decisions should be taken as close to the citizens aspossible” and does not embed only economic concerns (EuropeanCommission 1996: 14). Federalism can be crucial part of governancebecause it is capable of managing complexity and accountability notjust because of a mechanistic logic connected to the global market.

This raises the possibility that the globally competitive devolution ofauthority is really the wrong way for liberalism to go in order to enacta conception of political or civic rights. Even though Ohmae (1990:216) wants some form of global legal guarantee that he would havepolitical rights that would be supported by a political structure, whereand how it should be enforced is far from clear in his account. Thenation-state within his approach lacks the real authority to ensurepolitical rights. The region state lacks the motivation to ensure rightsin a context of competitiveness that extends into social life. A globalorder may be the logical location of a charter that allows states to col-lectively establish human rights. Yet, such a political and legal orderwill always be subservient to the logic of the global economy inexactly the same way that the MAI proposers seek to combine a stronginvestment regime with weak social provisions. Any attempt toprovide a substantial set of human rights and social or environmentalstandards would interfere both with the market mechanism and therights of the investor.

Since there is no guarantee, let alone justification, of the ethicalunderpinning needed for a liberal society, the ideas of extended neo-liberalism do not inspire confidence that these ideas will culminate inan acceptable form of liberal governance. Whether one is a neo-liberalor a social/welfare liberal, it is clear that the ideas of extended neo-liber-alism make the liberal vision that combines liberty and social stabilityincreasingly precarious. Even if we ignore the narrow views of democ-racy that the technocratic approach of extended neo-liberalism holds,it is clear that even the potential of impressive economic results of aderegulated economy are not enough to satisfy people. Ultimately,there are basic rights, guarantees and a sense of security that the ideas


of extended neo-liberalism do not provide in their single-minded pre-occupation with providing the right conditions for the “invisiblehand”.

Conclusion

Many people searching for an approach to governance within a global-ising world would dismiss the arguments of the MAI proposers andOhmae out of hand. However, this chapter has also demonstrated thatthis alternative rationale of governance is distinct from neo-liberalgovernance. Yet, it is clear that extending neo-liberal policies is auda-cious and naïve. The protests against economic globalisation havegraphically highlighted how controversial neo-liberal ideas are and theemergence of a Post Washington Consensus shows how importantstates are to stable capitalism. By turning away from the nation-stateas the locus for governance, the ideas of extended neo-liberalism arenot only radicalising the current direction of public policy across theworld but also embarking on a potentially dangerous direction. WhileOhmae espouses the importance of people having increased economicopenness and choice, and while he criticises interest groups for frus-trating governance that forwards such choice, in the end Ohmae is alobbyist himself. It is just that Ohmae’s constituency of the interestgroups includes transnational corporations and not domestic interestgroups. Like the proposers of the MAI, Ohmae is willing to merelyhave a change of the relevant interest groups that dominate policy-making – ones that usher in the interests associated with the globaleconomy and depose those interests connected to societal or civicinterests. Ultimately, while extended neo-liberalism seeks to ensurethat global markets and TNCs have increased power and mobility,there are no guarantees that people will find themselves in a stablesociety that provides even a modicum of protection against theseglobal flows of capital.

While the tensions between the national competition state and aglobal economy are fairly clear it is not clear how stable a world ofcapitalism sans the nation-state would be. Nevertheless, it is unlikelyto assist the most vulnerable people around the world or promote a greater sense of political and economic stability. In addition, when it comes to sustaining global capitalism, the state is a necessary, albeitimperfect, friend. Extended neo-liberalism and Ohmae, in particular,are reluctant to accept the importance of the nation-state as an insti-tution that enforces and supports the processes of economic globalisa-tion – instead relying on a context where capital reigns without such


broadly legitimate institutionalisation. Ultimately, neglecting the stateboth as a means to a stable society and as the support for the continu-ing reproduction global capitalism is a risky proposition. In harness-ing, in fact surrendering to the global economy, the proposers of theMAI and Ohmae are endangering both the possibility of societies beingable to address inequality and insecurity, as well as the form of eco-nomic organisation that they place so much faith in.


5Contractual Nationalism:Governing Through the Nation-state

The challenges of this age are also extraordinary and the cost of failing to meet them is high. The actions we take todaywill determine what kinds of jobs Americans will have tomor-row, how competitive our businesses will be in the global econ-omy, how well prepared our children – especially the poorestamong them – will be to succeed…and how secure we will be as a nation in an increasingly complicated world (Clinton1996: 11–2).

While neo-liberal governance and extended neo-liberalism addresssocial dislocation indirectly, relying on deregulated markets to achievedesirable outcomes, other liberals have emphasised the importance ofdeveloping social cohesion in order to sustain both liberal values andglobal capitalism. Rather than break the state into region states orattempt to govern at a global level, the arguments analysed within thischapter attempt to recover the nation-state as a viable location for gov-ernance. This position, which I term here as contractual nationalism,asserts that the reason that the nation-state ought to be the locus ofgovernance stems from the need for a legitimate site of stability withinthe turbulence of economic globalisation. Contractual nationalistsargue that in order for social stability and belonging to be renewed, anational community needs to be remade so that mutual responsibilitycan be the foundation for prosperity and the perpetuation of economicglobalisation.

The approach of contractual nationalism draws from the ideas of eco-nomic nationalism and social liberalism, in that it seeks to maximise

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the wealth of the nation-state by way of governmental activity. Econo-mic nationalism asserts that “a nation’s citizenry largely shares (orshould share) a common economic fate, the state has a crucial positiverole in guiding the national economy to better performance, and theimperatives of nationalism should guide the state’s economic policies”(Levi-Faur 1997: 360). Economic globalisation clearly challenges theidea of a common economic fate within the nation-state. As such, the position of contractual nationalism attempts to found a newnational social contract that fosters social cohesion and the pursuit ofthe “knowledge economy” within economic globalisation. In contrast to the confidence of full-blooded neo-liberalism, the proponents ofcontractual nationalism acknowledge that the social dislocation andinequality inherent in economic globalisation is a threat to stable gov-ernment, liberal values of justice and potentially to the smooth func-tioning of capitalism itself. The aim of this project is social stability thatenables dynamic capitalist enterprise.

Contractual nationalism, as I will outline in this chapter, consists ofthree overlapping arguments. The first stems from Robert Reich and hisidea of positive economic nationalism. The second is Will Hutton’s cri-tique of Thatcherite neo-liberalism and his argument for a stakeholdingsociety. The third operates under the title of the Third Way as expressedby Anthony Giddens and by the ideas articulated by Bill Clinton asPresident of the USA and Tony Blair as the Prime Minister of the UK. All these writers and leaders are often placed under the banner of theThird Way. However, this is misleading essentially because of substan-tial differences between Reich and Hutton, who represent the first gen-eration of contractual nationalist thinking and the Third Way whichhas enacted only some of the earlier arguments of Reich and Hutton.The chapter will then furnish the argument that these perspectives pos-sess an underlying rationale that has substantial problems of realisti-cally being able to moderate the social exclusion evident in economicglobalisation.

Robert Reich: the shift to a global economy

Robert Reich is a scholar of political economy who was also theSecretary of Labour during the first Clinton Administration where heattempted to raise the minimum wage, increase training programmes,instigate good corporate “citizenship” and improve labour-businessrelations. Although political forces at play in the U.S. political arenahindered these efforts, he argued that a new social compact was needed

Contractual Nationalism: Governing Through the Nation-state 121

between workers and business for them to stay productive and com-petitive in an increasingly competitive global economy. This argumentwas developed in his book The Work of Nations where he examined thepolitical and social ramifications of the changing world economy. Reichis concerned about the effects of economic globalisation on the popu-lace of the Western world and believes that this process is responsiblefor the generation of inequality and polarisation.

It is Reich’s contention that the global economy is bisecting thenation-state in such a fundamental way that it makes it difficult to talk about a nation-state as a single coherent body with a shared fate.Despite the fact we talk and organise our thoughts in line with ournation, he claims “there is no longer a ‘we’” (Reich 1990: 67). Thenational bargain that linked workers and the owners of capital hascome undone. In the 1950s, the national corporation was the “nationalchampion”, with firms such as General Motors and U.S. Steel being the cornerstone of the American economy (Reich 1991b: 43–4). Whileother nations had their own “champions”, by the 1990s, Reich (1995a:161) contends that corporations from all over the world were no longerclearly acting within the national interest of their home nation sincecorporate decisions were increasingly “driven by the dictates of globalcompetition, not by national allegiance”. Not only is it increasinglydifficult to determine the nationality of an actual product that is madefrom components from different nation-states, but corporations arealso owned by people from different nations-states. In addition, cor-porations have been forced to operate according to new principles of international competition that emphasise “speed and agility” on aglobal scale (Reich 1991b: 89). The competitiveness and flexibility of cor-porations and the owners of capital has created a context that cannot bereadily reconciled with the long-term interest of a nation’s workers.

Reich (1991b: 153) sees a distinct clash between the interests of work-ers who are rooted to a particular place where they live, work and raisetheir families, and those corporations and nationals who are globallymobile and in control of the circuits of investment. While an increas-ing array of actors in the global economy are operating according to a globally competitive mentality, there remains a deep divide in theimpact of policies on various people’s interests. Reich (1991b: 135)claims that the idea that “the strength of the American economy is syn-onymous with the profitability and productivity of American corpora-tions is thus an axiom on the brink of anachronism”. Reich is keen todistinguish between the nation’s economic interest and the interests ofnational companies. A conception of the national interest that joins


the two is increasingly difficult to sustain because of the different tra-jectories of the investors and workers. Policies that assist investors maynot be the in the interests of workers. Reich claims that the future ofthe American economy no longer rests in the hands of motivatedAmerican capitalists. Rather a nation’s future are the skills and insightsof the work force, and how well those skills and insights are linked tothe global economy. Moreover wealth, instead of trickling down,increasingly “trickles out” in the form of foreign investments (Reich1991a: 36). While the benefits for wealthy capitalists from foreigninvestments are clear, the benefits for others within the nation arelimited; “with the connections between American capitalists and theAmerican economy thus unravelling, all that remains rooted withinour borders is the American people” and as such, in this global context,the government must go beyond attempting to spread wealth andshould seek to “build our human capital and infrastructure, and bar-gain with global capital on our behalf” (Reich 1991a: 36). In such nego-tiations it is the type of work associated with that capital that matters– the nationality of the owners of the capital should not make a mate-rial difference (Reich 1991b: 166–8).

Compounding the divide between corporations and workers is thedivide between the different types of work that citizens undertake andthe significant cleavages opening up within society as a result. Theinequality and polarisation that stems from the diverging fortunes ofvarious forms of work – the differing value added by people even with-in the same nation-state means that the majority of workers in mostnations are “losing ground” in relation to “symbolic analysts” (knowl-edge workers) and the owners of capital (Reich 1991b: 244). Yet, thecrux of the dilemma for Reich is that the wealthy are loosing their con-nectedness with the poor within their nation-state. He claims that this“secession” stems from the fact that economic fortunes have divergedso significantly that the wealthy no longer depend upon the poorersections of society (Reich 1991b: 252; see also Lasch 1995: 45). Thissecession is evident in declining public investment and services becauseof decreasing taxation regimes on the wealthy. Ultimately, if “left to unfold on its own, the world wide division of labour not only willcreate vast disparities of wealth within nations but may also reduce the willingness of global winners to do anything to reverse this trendtowards inequality – either within the nation or without” (Reich 1991b:315). The inequality that stems from the changing global division oflabour and the detachment of the wealthy from the fortunes of the restis precisely the problem that Reich seeks to moderate. Consequently,


Reich (1991b: 311) outlines a policy prescription that aims to maximisethe welfare of people within this emerging global economy. This is called“positive economic nationalism”, and while he presents this suggestionin the American context, it is clearly applicable to other nation-states.

Renewing the national interest within a global economy

Reich (1991b: 309) claims that “positive economic nationalism” issuperior to the protectionism and isolationism of “zero sum” national-ism or the detachment of cosmopolitanism. While Reich is sympathet-ic towards the common social bond of nationalism, efforts to insulatesociety from economic globalisation are unlikely to succeed and willonly distance the citizens from opportunities that global capital orinternational co-operation may provide (Reich 1991b: 307). Reich’s fear of cosmopolitanism rests on the detached and impassive stance itprojects. His fear is that cosmopolitanism is particularly prevalentamong the wealthy and that these people are successful in relation tothe rest of society but “may feel no particular bond with any society”and hence any form of sacrifice for others becomes unlikely (Reich1991b: 310). This fragmentation of national solidarity emasculates anymeaningful notion of civic responsibility and a public inclination thatcan provide the financial means to deal with the consequences of aglobal economy.

Neither the ideas of established nationalism or cosmopolitanism candevelop public policy that effectively addresses the inequality and frag-mentation of economic globalisation. Consequently, Reich (1991b:311–2) advances the idea of positive economic nationalism, where

each nation’s citizens take primary responsibility for enhancing thecapacities of their countrymen for full and productive lives, but whoalso work with other nations to ensure that these improvements donot come at others expense. This position is not that of the laissez-faire cosmopolitan, because it rests on a sense of national purpose –of principled historic and cultural connection to a common politicalendeavour.

Neither is this scenario zero-sum in the sense that the overarchinggoal is to increase global wealth and welfare. Positive economic nation-alism does not seek to increase the welfare of one nation-state at theexpense of another. This position also rejects any idea that the nationalbargain of the post-war period, between “national” corporations and


the people of a nation-state, can be resurrected. But Reich (1995b: 148)does not believe that the idea of the national interest is dead becausewhile nearly everything is “fungible: capital, technology, raw materials,information” – a nation’s workforce is not. He acknowledges thatcorporations operate on a global field, but claims that the workforce is becoming more essential to prosperity in the global economy.Supporting and improving the workforce and the social environmentthat develops it is the core of any “new” national interest.

Given the observation that there has been a divergence of the inter-ests of the corporation and workers, Reich argues that governmentsneed to concentrate on attracting capital that provides lucrative workfor the nation’s workforce. How governments are to pursue this centralobjective of improving the living standards of its citizens has less to dowith the success of native companies operating within the nation thanwith the competitiveness of people and firms of whatever origin oper-ating within the nation. This means it does not matter if high wageopportunities in America arise from capital that originates from Japan,Germany or indeed from America. The corporation as a “nationalchampion” is no more. Rather, it is a separate mobile entity that mustbe courted for the jobs and opportunities that it can provide a nation-state. In respect to the economic prospects of American citizens, Reich(1991b: 168) claims that

efforts to increase the profitability of American-owned corporationsare the wrong vehicle for achieving this end. Habituated to an oldereconomy in which corporate nationality mattered, policy makershave been more concerned about who owns what than about whichnation’s work force learns to do what.

Two important points stem from this observation. First, governmentsshould attract corporations of any nationality if they can provide highquality jobs. Merely supporting native corporations because they arenative is dubious in the emerging global economy. Second, somegroups of workers, most notably blue collar-routine producers, have notbeen adding sufficient value to the global economy to maintain orincrease their standard of living (Reich 1991b: 245). This contrasts withthe workforce that is closer to the global webs and flows, such as sym-bolic analysts, who are succeeding and considerably enhancing theirstandard of living. These points mean that there is only one thing gov-ernments can do to improve living standards and reduce polarisationwithin a global economy: invest in people.


Reich’s vision is of a global economy in which the source of wealthfor a nation’s citizens is their accumulated skills and education, as wellas the quality of the social and material infrastructure, which is essen-tial to attract mobile capital, especially from the high technologysectors. By actively courting capital of any “nationality”, the competi-tiveness of a nation-state becomes crucial. Positive economic national-ism is formulated around an understanding of the mobility and powerof transnational capital. It seeks to harness this capital by providing anattractive environment and a “competitive advantage” to those firmswho undertake economic activity within that nation-state’s territory.According to Reich, there are two paths that the nation can take inrelation to global capital. The first is the creation of a “virtuous cycle”,where education attracts global capital that enables workers to performcomplex tasks, which “permits them to invest in better schools, trans-portation, research and communications systems” (Reich 1991a: 43).The second path is a “vicious cycle” in which global capital is luredonly by low wages and low taxes that make it difficult to finance edu-cation and training, hence making it hard to escape to a virtuous cycle(Reich 1991a: 43). Clearly in both cycles not everyone can work in high technology sectors or even a highly skilled manual work, but aneducation system can improve the skills of workers and also providemobility to other fields of work.

Ultimately in Reich’s picture of positive economic nationalism, thenation-state is the key to social and economic stability. He presents thecase for the state being responsible for its members by making the mostof the opportunities of the global economy. While “money is unpatri-otic”, Reich (1991c: 53) claims that

People…are relatively immobile, and they belong to societies withparticular cultures and histories and hopes. It is up to governmentsto represent people, to respond to their needs and fulfil their hopes– not to represent global money.

The core value of positive economic nationalism is that governmentpolicy can and should influence the way the nation-state interacts withthe global economy, rather than letting global economic forces washover a nation-state, as neo-liberals contend.

The policies of positive economic nationalism

Positive economic nationalism has five main policy themes thatattempt to make global integration mesh with national welfare. First,


positive economic nationalism is aimed at promoting a high qualityworkforce to attract world-class firms in order to promote a high stan-dard of living. The policies to achieve this are ongoing training andeducation programmes. In order to tap into the global economy andunleash the virtuous cycle of the knowledge economy an extensive uni-versal education system will be required with an ongoing commitmentto life long education and training for the populace. It will not beenough to rely on firms to do all of the training because of the mobil-ity of workers and the short-term profitability mentality of many firms.Reich (1991b: 249) believes that government will have to lead the waywith human investment. This investment must be coupled with a highlevel of public investment in physical infrastructure such as roads, com-munications and airports as well the public infrastructure relating tochildcare and health care provision (Reich 1991b: 313). This is in orderto attract capital to smoothly run cities with efficient transport andcommunications systems.

Second, the pursuit of high quality jobs may require more than justan attractive environment for globally mobile investors. Positive eco-nomic nationalism demonstrates an admiration for European stylesocial democracy by arguing that governments should also consider anindustry policy, in the form of public subsidies, public research anddevelopment funding and joint ventures with private industry to attracthigh value added production, as well as research and development(Reich 1991b: 313). Such subsidies would neither be across the boardprotection or limited to domestic firms. The aim of selective state inter-vention in the production process would be to aid “sunrise” industriesand to help fade out “sunset” industries and would be aimed at max-imising the interests and potential of workers (Reich 1991b: 313–4).

Third and more ambitiously, Reich suggests that there should beforms of collective bargaining by nation-states for investment flows. Heis intent on minimising the disruptive impact he believes stems frominvestor mobility both within the nation-state and internationally.Within the nation-state Reich advocates the idea of collective bargain-ing between various provincial levels of government by centralising theinvestment negotiations conducted by regional governments. Reich(1995a: 176–7) believes that “by avoiding internal bidding contests,they [governments] end up paying far less to attract investment andhave an easier time getting the jobs they want”. Internationally, heclaims that the provision of subsidies and the bargaining with capitalwould have to be internationally negotiated with the result being “akind of GATT for direct investment” that would set out “the rules bywhich nations could bid for high-value-added investments by global


corporations” (Reich 1991b: 313; see also 1995a: 180–1). Nevertheless,the international edge of positive economic nationalism is not particu-larly well developed. Reich (1991b: 314) refers to policies aimed atassisting developing economies but they are confined to a generalisedsupport for debt reduction measures and for free trade in the shape ofmaintaining the openness of wealthy markets. As we shall see, thevagueness of the external context of contractual nationalism is a recur-ring theme.

Fourth, Reich emphasises the idea of “new” corporate citizenship. ForReich (1996: 1), co-operation between society, corporations and govern-ment is an essential component of economic success in a global age since“if the government is to do less, then the private sector will have to domore”. This means government should reward firms, possibly throughtax exemptions, that invest in the training and health of their workers(Reich 1994; 1996). Corporate citizenship could potentially moderate“bidding wars” engendered by corporations between localities for taxbreaks. Such behaviour does much to undermine local governmentfinances and, ultimately, society. Corporate citizenship should encouragebusinesses to balance their shareholder and community obligations andreverse declines in corporate philanthropy (Reich 1991b: 279–81).

Fifth, and underpinning the previous policies, Reich defends the ideaof a new social compact and a renewed moral bond within the nation-state. In order to implement these policies that enhance the competi-tiveness of a nation-state and the skills within society, somebody has topay. Reich (1991b: 249–250) emphasises that “good education, train-ing, health care, and public infrastructure…will be costly” and thatonly the symbolic analysts and the wealthy that can afford to increasetheir tax burden but

herein lies the paradox: As the economic fates of Americans diverge,the top may be losing the long-held sense of connectedness with thebottom fifth, or even the bottom four-fifths, that would motivatesuch generosity. Ironically, as the rest of the nation more economi-cally dependent than ever on the fortunate fifth, the fortunate fifthis becoming less and less dependent on them.

Reich (1991b: 315 and 303) addresses this issue by pointing to both theclaim that “our mutual obligations as citizens extend beyond our eco-nomic usefulness to one another”, as well as Tocqueville’s notion of “self-interest rightly understood”. While Reich suggests these republicannotions are admittedly less compelling with the fragmentation of the


economic fates of rich and poor, he claims that positive economicnationalism is superior to the options. Both visions of autarkic zero sumnationalism and laissez faire cosmopolitanism endanger cohesive nation-states and the future of a stable global economy. Thus, there is the long-term interest of the wealthy embedded within the idea of positiveeconomic nationalism. A society dislocated from the global economyand set upon a vicious cycle is not inevitable nor in the interests of thesuccessful. The preferred alternative is a nation-state where the successfulinvest in other people within the nation-state in order for more people toadd value to the global economy and thus attract capital and prosperityfrom the global economy. Furthermore, this loyalty to a nation and its people will have to reverse the secession of the wealthy and polarisa-tion in order not just for that nation-state to make the most of a globaleconomy but to facilitate and legitimate the global economy itself.

Will Hutton: turning to a stakeholder society

Another account of contractual nationalism originates from WillHutton, an economic analyst who examined the social impact of freemarket policies and global capitalism within the British context. LikeReich, Hutton advocates the development of a capitalist society thatcarries forward a joint concern for social justice and expanded oppor-tunities for involvement by people excluded from neo-liberal economicenterprise. Hutton does not believe that capitalism is self-forming or self-regulating (1996: 17). As such, his ideas represent a critique of the neo-liberal project of the Margaret Thatcher government and theEnglish capitalist elite more generally which is interwoven with thedevelopment of global capitalism and the idea that “there is no alter-native” other than deregulation and privatisation (Hutton 1996: 66).He emphasises the interventionist role that the Thatcher governmentplayed in redefining the role of the state and pushing the neo-liberalpolicies of deregulation, privatisation and the demobilisation ofunions. Hutton critiques the alleged economic success and the socialsustainability of these policies. He claims that this new direction hasfailed to benefit large sections of society; spawning inequality, socialdislocation and sacrificing the “civilising values of an inclusive society”(1996: 15). In critiquing this new social order of economic globalisationand Thatcherism, Hutton (1997: 90) emphasises principles of inclusionand public involvement in his formulation of a “stakeholder society”.

According to Hutton, the social impact of neo-liberalism rests mainly upon the development of substantial inequality that stems


from changes to taxation rates and changing employment patterns andconditions. The changes to taxation in the Thatcher reforms includedcutting top tax rates and a shifting of the burden of tax from direct toindirect taxation (Hutton 1996: 170). The changing working conditionsduring the 1980s in Britain included the weakening of unions, thegrowth of flexible part-time and casual work, and the substitution oflabour with technology or the relocation of productive enterprise over-seas. Hutton (1996: 172) claims that the combined effect of thesechanges was that the real income of the bottom sixth of Britain’spopulation’s fell between 1979 and 1991, “while the income of the top10 per cent rose by more than half”. This weakens social cohesion and leads to what Hutton (1996: 105–8) terms a “thirty, thirty, fortysociety”, a society fragmenting between “the disadvantaged”, “the mar-ginalised and insecure”, and “the privileged”. He points to the geographicconcentrations of poverty and social exclusion and suggests that evenin economic terms, the neo-liberal project was a failure in Britain.According to Hutton (1996: 175), the transformation of British societyto a free market society has not borne

impressive fruit. Britain has certainly become a more unequal societythan it was in 1979 but the pie, rather than expanding more quickly,is if anything expanding more slowly. The collapse of social cohe-sion that comes when the market is allowed to rip through societyhas produced a fall in the growth rate.

Even in narrow economic terms, neo-liberalism in Britain during theThatcher period was a dramatic disappointment. The neo-liberalreforms instituted by the Thatcher government’s policies have “erodedthe fabric of social life” that in turn “has weakened the economy(Hutton 1996: 192). Hutton claims this has set Britain down a low tax,low wage path within the global economy which parallels the viciouscycle outlined by Reich.

Hutton’s (1997: 65) task of restoring a fair and productive “stake-holder society” involves developing social inclusion in two ways. First,his alternative to the neo-liberal model of governance advocatesenhancing the importance of citizenship and avenues that include allpeople within the political processes of the state. Secondly, Huttonargues that the consequences of economic reforms on people must becalculated in a broader sense than just economic cost and built into the political processes of government. Hutton (1997: 21) argues thatthis means the development of a “wise society” which “with proper


democratic mechanisms would take a more rounded view of what con-stitutes efficiency and make a more pragmatic judgement about thebalance between private and public interests”. Taking a broader con-ception of efficiency means that poverty or loose government regula-tion, in food inspection for instance, would be seen as uneconomicaland harmful for society as a whole (Hutton 1997: 21–4).

Hutton (1996: 312–3) contends that the state is central to the processof moving away from neo-liberalism and points out that while thestate’s capacity for discretion has been reduced by economic globalisa-tion, it has not become completely powerless. Hutton (1997: 63–6)emphasises that this is not to say that a top down monolithic state isthe answer. Rather, at the heart of a “stakeholder society” is a state thatis an essential site of orchestration that operates “to design institutions,systems and a wider architecture which creates a better economic andsocial balance” and promote “common purposes” (1997: 64–5). Theaim is a more inclusive and fairer society that engages in policies thatavoid short-term investment and individualistic capitalism which cre-ate an unfair distribution of risk, income and opportunities for people.The task is an intricate one where

the object of the exercise is to keep the merits of private ownershipwhile reshaping the way it works. Thus the great challenge of thetwentieth century, after the experience of both state socialism and of unfettered free markets, is to create a new financial architecture in which private decisions produce a less degenerate capitalism(Hutton 1996: 298).

In a very real sense, this “new financial architecture” translates to anew social architecture. According to Hutton, if the actual institutionaldesign of the state and society can be infused by the logic of stake-holding then capitalism will operate to produce the type of society thatis more hospitable to a stable and just form of capitalistic enterprise.

The idea of a stakeholder society involves significant changes to theinstitutional basis of society, the configuration of the state and thebroader international context. These changes are all enmeshed withinthe notion of an inclusive model of citizenship that promotes a repub-lican notion of civic responsibility and participation as well as rights inrespect to a wider public good extending beyond individual privateinterests. This republican context is the grounding Hutton (1996:295–6) sees as being necessary for a “stakeholding economy”, where cit-izenship extends beyond the political sphere into the economic and


social spheres, and delimits the operation of businesses throughlaw–not just “voluntary codes”. Businesses, on Hutton’s account, oughtto legally take into account the interests of key stakeholders – tradeunions and banks for instance – but also include broader and con-tinuing societal concerns by emphasising long-term investment, aresponsibility for the negative externalities of capitalism and a com-mitment to co-operation with other actors with differing private inter-ests (Hutton 1996: 295–98). Yet, he maintains that regulation is not the only route to a stakeholding society. There should be governmentmechanisms that provide incentives for actors to moderate the risksand costs that they indirectly inflict upon society (Hutton 1997: 65).This requires an active state that has both the policies and the con-stitutional structure able to include people in its decision-makingprocesses through a vibrant civil society.

The type of state involved in stakeholding requires changes at twolevels. The first is at the level of policy, especially in relation to thedirection of the welfare state. Not only does the welfare state play animportant role in insuring against risk, underwriting social cohesion,and investing in society, it

is a badge of a healthy society; it is a symbol of our capacity to act morally, to share and to recognise the mutuality of rights andobligations that underpins all human association. It is an expressionof social citizenship (Hutton 1996: 306).

The investment function of the welfare state is especially importantin a society that desires people to have the opportunity and the skillsto improve their own positions as well as the position of the whole soci-ety. The “social returns” of welfare investment represents both long-term economic sense and moral sense according to Hutton (1996:307–11). This investment is not inexpensive. It requires a progressivetax system and the commitment from the wealthy. The second changeis to the constitutional structure of the state, where Hutton (1996: 286)argues for a “republican attitude” to construct an inclusive and trans-parent constitutional structure in Britain. The development of a repub-lican constitutional structure is clearly pertinent to other Western stateswhere the unfettered interests of capitalists have overwhelmed publicinterests. Hutton (1996: 286) rails against what he sees as the central-ised and “careless” nature of Britain’s de facto constitutional foundationwhich “conforms to no agreed rules nor clearly articulated principles”


which set out the functions of government and the rights and obliga-tions of citizens. This development would create a state that is less dis-tant from people, more interested in building civil society and makingauthority more responsive and transparent to public oversight. Asidefrom renewing an inclusive and publicly directed political system, ashift towards a republican constitution would assist in enablingcountries such as Britain to “play its part in the construction of aninternational financial and trading system in which renewal is notundermined by rentiers moving offshore” (Hutton 1996: 286).

According to Hutton (1996: 313), the international context necessaryto a stakeholder society requires a re-invention of the “bargain” thatenabled Bretton Woods to balance international capitalism with stabil-ity. Such a “supranational authority” would enable predictableexchange rates; permit states to choose the “right trade-offs betweeninflation, growth and employment”; facilitate social and environmen-tal values to be included in investment and trade regimes; and lastlyenable developing countries to access the markets of the industrialworld (Hutton 1996: 314). This is needed so that the world’s financialmarkets can facilitate stability and predicability for investors and citi-zens alike. Hutton also emphasises the development of regional ties,such as the case of Britain in the European Union, because it is easier tobuild the stakeholder society with like-minded states. Hutton (1996:316) is keen to cement Britain into a framework that would enablesocial and economic programmes that no one state could promote onits own, ultimately “if Europe wants to defend its idea of a welfare stateand stakeholder, social capitalism – it will have to do so in a unitedway”. If the idea of a stakeholder society is to operate, it must involvean international context that contrasts markedly from the neo-liberalconsensus that operates within economic globalisation.

While I find the ideas of a stakeholding society and a stakeholdinginternational economic architecture a persuasive alternative to neo-liberalism, the societies that Hutton (and Reich) draw inspiration from– in particular social democratic Europe – have been buffeted by therealities of economic globalisation and the ideological ascendancy of neo-liberalism (The Economist 1996; Gill 1998a: 13; Mishra 1999:97–100). As such, there is always the danger that the ideas of Reich andHutton would become compromised by the prevailing currents of neo-liberalism and the need to promote a “softer” alternative to neo-liberalism within the context of economic globalisation. I contend thatthe Third Way is an example of precisely this process.


The Third Way

The ideas of Reich and Hutton assisted the development in the late1990s of a broader movement towards an alternative to neo-liberalismreferred to as the Third Way. The key political proponents of the ThirdWay, notably Clinton and Blair, were joined by European leaders inchampioning the Third Way as a practical alternative to harsh neo-liberalism without embracing conventional social democracy (Giddens2000a: 4–5). But was it? Critics of the Third Way have dismissed theThird Way as being “Thatcherism pursued by other means” (Callinicos2001: 3). Furthermore, the proponents of the Third Way were veryselective in the way they echoed the ideas of Reich and Hutton. Unlikethe proposals of Reich and Hutton, the ideas of the Third Way came tobe entirely tied to imaginative employment and social policies, but notto some of the bolder ideas that linked investment and institutionalreform to an alternative to neo-liberalism. The Third Way is a muchmore narrow and pragmatic programme that takes globalisation to bean inescapable aspect of contemporary political and economic life.

Anthony Giddens is a high profile supporter of New Labour in Britainand an influential proponent of the Third Way. In his terms, the ThirdWay is

a framework of thinking and policy-making that seeks to adaptsocial democracy to a world which has changed fundamentally overthe past two or three decades. It is a third way in the sense that it isan attempt to transcend both old style social democracy and neo-liberalism (Giddens 1998: 26).

Most problematically, he describes the Third Way as being an exten-sion of social democracy, whereas Reich and Hutton have largelydefended their ideas in liberal terms. This also runs contrary to themovement across the world incorporating liberal political parties (inthe US) and radically shifting the nature of social democratic parties(Callinicos 2001: 8–11). In particular, the British Third Way, asexpressed by New Labour, ended up in “assimilating some of the mostadvanced ideas of liberalism” within the Labour movement (Freeden1999: 151; see also Callinicos 2001: 8–12). Consequently, the dominantphilosophical underpinnings of the Third Way are liberal-capitalist notsocial democratic. Indeed, the ideology of the Third Way is actuallyintended to sustain liberalism and capitalism. As David Marquand(1999: 46) elaborates


the social liberal and social democratic traditions were not identicalbut they both held that the capitalist free market should be tamedin the interests of social citizenship and human flourishing. NewLabour has turned that proposition inside out. Its aim is to re-engineer the society and culture so that the economy can competemore effectively in the global market place.

Certainly, the seeds of this reversal are also discernable in the writingsof Reich where the instrumental value of social cohesion and commu-nity is defended in an era where such traits are also attractive to hightechnology investment. Similarly, investment in education and healthare seen to be desirable because they provide enhanced opportunitiesfor the individual and for the economic prosperity of society, notbecause of “social citizenship” or “human flourishing”.

The main elements of the Third Way programme echo the ideas laiddown by Reich and Hutton and aim towards similar ideas of publicinvestment, institutional reform and social cohesion. Giddens (1998:111–28) points to the “social investment state” as being an alternativeto the welfare state that advances a programme of “positive welfare”where efforts to develop human capital through education, trainingand childcare are not exercised solely by the state but by an increasingarray of societal frameworks and individual initiatives. A collaborationof public and private bodies can now conduct the public tasks that usedto get done either by the market or the state. Indeed, the dividebetween civil society and the state becomes blurred in the Third Wayprogramme because, while civil society is seen as the locus of crucialhuman networks, it is also seen as the framework for the implementa-tion of crucial public tasks for the state and the economy. Third Waysocial investment places wealth generation at the forefront of efforts topromote measures that lift people from disadvantage. Giddens (1998:99) claims that the social investment state has “an essential role to play in investing in the human resources and infrastructure needed todevelop an entrepreneurial culture”. Essentially, governments ought tofoster the skills needed for breaking cycles of poverty in an increasing-ly capitalistic and technological context, rather than by supportingpeople with traditional welfare state entitlements.

The welfare policies of the Third Way overlap considerably with anemphasis on the development of community. The building of commu-nity is not a new task for government, but the Third Way placesextraordinary emphasis on both local and national forms of commun-ity. Local partnerships between government, civil society and the


private sector are crucial to the Third Way’s positive welfare programmeand to the facilitation of community. Nevertheless, the Third Way facesa difficult task, not only in seeking to promote local forms of commu-nity involvement, but also in attempting to foster an inclusive nationalcommunity in circumstances of individualism, pluralism and socialfragmentation. This “communitarian” agenda, as discussed within theUS and Britain, is also evident in Giddens’ (1998: 66) assertion of “norights without responsibilities” and Clinton’s (1996: 8) ideas of “oppor-tunity, responsibility and community”. The Third Way emphasisescommunity values and social cohesion but ultimately weds such socialcohesion to the notion of progress. It does so because proponents of theThird Way assert that the only way a community can survive is to“embrace the future” (Clinton 1996: 17). However, this national com-munity is not an inward looking one based on homogeneity, but ratherpremised upon the nation bestowing forms of belonging and acting asa “stabilizing force, a counter to endless fragmentation” that is kept incheck by cosmopolitan sensibilities (Giddens 1998: 129). This mixturebetween cosmopolitanism and a communitarian conception of thenation is best captured in Giddens’ neologism, the “cosmopolitannation” (Giddens 1998: 130–2).

The Third Way’s emphasis on national community is backed up byinstitutional reforms that strive to avoid emphasising either a largestate or free markets. Instead, Giddens (2000a: 165) holds that “thegood society is one that strikes a balance between government, marketand the civil order”. This vision emphasises the decentralisation of thestate without weakening its authority; constitutional reform along thelines of codifying basic rights and responsibilities; improving adminis-trative efficiency through the introduction of market principles alongthe lines of “reinventing government”; and general improvements intransparency and accountability. Giddens (1998: 75) also points to theimportance of experimenting with local direct democracy and othermeasures that include citizens in the enactment of law and policybecause of what he obliquely refers to as the “downward pressure ofglobalisation”. More concretely, Blair (1999: 7) asserted that in the UK

we are modernising our constitution. We have devolved power to anew Parliament in Scotland and a new Assembly in Wales. We arehanding power back to local government, because we believe thatpower should be exercised as close as possible to the people it affects.

Such reforms are aimed at increasing the legitimacy and inclusive-ness of the state making space for civil society to thrive – but stops short


of emphasising the state’s republican responsibility to its public thatHutton thought so important.

The balance between the market and state that characterises the ThirdWay is also manifest in its international dimensions. As Giddens (1998:129) contends, “the emerging global order cannot sustain itself as a‘pure marketplace’”; it requires the rule of law and effective global gov-ernance. This support of liberal internationalism, which was mirrored insome respects by the practices of the Blair and Clinton governments, isaugmented in Giddens’ (1998: 129, 152–3) work by references to theimportance of forms of global governance able to act on economic sta-bility, ecological risk and peace. While the efforts of Blair and Clinton tosecure peace in places like Somalia and Balkans have come undersignificant criticism for their selectivity and ulterior motives, they dopoint to the ways the Third Way does have an external dimension thatincorporates a vision of “international community” (Blair 1999: 7). Bythis Blair (1999: 3) means that we are bearing witness to

the explicit recognition that today more than ever before, we aremutually dependent, that the national interest is to a significantextent governed by international collaboration… Just as withindomestic politics, the notion of community – the belief that part-nership and co-operation are essential to advance self-interest – iscoming into its own; so it needs to find its international echo.Global financial markets, the global environment, global securityand disarmament issues: none of these can be solved withoutintense international co-operation.

Nevertheless, despite rhetoric about a “far-reaching overhaul andreform of the system of international financial regulation” (Blair 1999:3), there seems to be significant limits to the resolve of this conceptionof international community and the Third Way governments in partic-ular (see Callinicos 2001: 109; Richardson 2001: 199–200). Giddens(1998: 144–7; see also 2000a Chp 5) notes that global forms of gover-nance and taxation, such as the Tobin tax, may be desirable but havenot been enacted due to a “lack of political will”. However, he does nottease out how the Third Way would generate the political will to regu-late global finance or indeed be able create a global consensus capableof moderating the social problems stemming from global capitalism. Assuch, the Third Way accepts the “core neo-liberal tenets” of the pre-vailing form of globalisation (Callinicos 2001: 106).

Indeed, the aim of Third Way policies in reference to welfare, socialcohesion as well as domestic and international political institutions is


to adapt to the reality of economic globalisation, not to significantlychange its course. The overarching aspiration of Reich, Hutton and theThird Way is to hold society together by sustaining global capitalismand employing a cohesive nation-state to attract the prosperity that theglobal economy has to offer. This cohesion is based on a mix of self-interest on the part of the members of a nation-state with an attemptby government to foster communal values. Hence, the Third Way restson an implicit national contract between the various people within thenation-state. The primary aim of this instrumental community andnational contract is to sustain global capitalism, not to simply advancenationalism or patriotism. As such, the underlying rationale of Reich,Hutton and the Third Way can best be understood as contractualnationalism.

The question central to this book is whether the broad position ofcontractual nationalism can sustain capitalism in a way that addressesthe social problems stipulated in Chapter 3. While there is a commonpolitical and moral purpose evident in the writers and proponents ofthis alternative form of governance, there are notable differencesbetween Reich and Hutton over various issues. While both agree on theneed for a national contract, they disagree over who should be includ-ed. Reich extends the contract to those companies present within thenation-state, while Hutton appears to make national membership a cri-terion for involvement. Likewise, they differ over the primary means bywhich the national contract will operate; Reich emphasises redistribu-tion of resources, Hutton emphasises a broader programme of regula-tion. Nevertheless, the differences over policy direction become moreapparent when Reich and Hutton are compared with the writers andproponents of the Third Way.

The shifting sands of contractual nationalism are evident in the waythat the primary aim of the first generation of writers, manifest in theideas of Reich and Hutton, was to hold society together; prosperitywould follow. By comparison, the primary goal of later manifestationsof contractual nationalism is evident in the Third Way’s efforts toenable nation-states to make the most of the global economy; socialinvestment is more important than social cohesion. While there is acommon moral standpoint across these positions, in many respectsthere has been a reversal of political priorities. The instrumental natureof a social bargain has been therefore extended under the Third Wayand the more significant efforts to rework government regulation ofcorporations or investment in line with the new national interest wereunceremoniously abandoned. The “republican reform” ideas of a


self-governing state that regulates capitalism, as is found most notablyin Hutton (and to lesser degree in Reich), go considerably beyond thecore concerns of the way contractual nationalism has been interpretedand articulated by policy-makers associated with Third Way govern-ments. Yet, I contend that this shift from the interventionism of Reichand Hutton to the weaker stand of the Third Way is inherent to con-tractual nationalism because of the instrumental and pragmatic basis ofeven the first generation of contractual nationalism. The shift withincontractual nationalism reveals the values that comprise this alterna-tive approach to government and the instrumental foundations onwhich the various initiatives are based.

The elements of contractual nationalism

The idea of social investment, competitive advantage and social cohe-sion become a self-reinforcing circle within the strategy of contractualnationalism, especially in the rhetoric of Third Way leaning govern-ments. Contractual nationalism seeks to combine prosperity that stemsfrom global capitalism with stable national communities. As such,there are three defining elements that comprise contractual national-ism as an alternative to neo-liberal governance.

First, social investment in human capital suitable for high technologyinvestment ought to be the central focus of government policy accord-ing to contractual nationalism. This is imperative because the leadingtechnological sectors of the global economy require a growing numberof educated workers to fulfil these tasks. In line with developing sectorsof competitive advantage, governments ought to develop these skills ina broader and more predictable manner than the market.

Second, social cohesion is important to the reproduction of stable globalcapitalism. As such the nation-state is central to the aspirations of con-tractual nationalism. Without a reinvigorated community of this type,the aim of social cohesion would be difficult to reach and it would bedifficult to motivate the wealthy to pay the taxes required to invest inhuman capital.

Third, contractual nationalism explicitly accepts and promotes economicglobalisation. The task of contractual nationalism is to balance the needfor a stable national community with the programme of inserting thatcommunity into the high technology webs of the global economy.Contractual nationalism seeks to balance competitiveness within theglobal economy with social cohesion, not the creation of a new eco-nomic system that regulates or impedes capitalistic agents or frameworks.


Neo-liberalism is regarded by contractual nationalists as harsh,unnecessary and ultimately unproductive. Governing through anation-state that promotes inclusion and stability is more likely to pro-mote stable capitalism and liberal values of liberty and equality thanthe harsh social divisions that result from stark forms of neo-liberalism.However, the balancing of social cohesion with global capitalism is noeasy task. It is easier to sing the praises of an inclusive and outwardlooking community than it is to construct it in practice. In fact thereare significant problems in enabling contractual nationalism to be aviable replacement for neo-liberal governance. The remainder of thischapter addresses three primary problems. First, there is the fact thatcontractual nationalism takes the global economy largely as given. Thissignificantly restricts the political horizons of contractual nationalism.The second problem facing contractual nationalism is that the devel-opment of national community is significantly more difficult than sup-porters of contractual nationalism allow for. The third problem is thatthe renewed national bargain is flimsy – it does not ultimately providea strong motivation for the wealthy to invest in their community.These problems limit the ability of contractual nationalism to be aviable approach to governance because while it attempts to make eco-nomic globalisation more stable and legitimate, there are real doubts asto whether it does enough to moderate the adverse social effects inher-ent in economic globalisation.

Accepting economic globalisation

In conceiving economic globalisation as being inevitable and unavoid-able, the approach of contractual nationalism advances the practice ofthe competition state and therefore continues to advance economicglobalisation. As Philip Cerny (1995: 611) indicates, the idea of invest-ment in human capital represents the “outer limits” of governmentaction within the competition state. However, even the outer limits ofthe competition state are significantly conditioned by economic glob-alisation. After all, as I argued in Chapter 2, governments framed byneo-liberal governance typically place concern for market “sentiment”and competitiveness above other concerns. In doing so, governmentsnot only promote the competitiveness of their nation-state, but theyalso push economic globalisation onwards. The question remains as towhether accepting economic globalisation can ever be made compati-ble with the goals of social cohesion and developing human potential.

Manfeld Bienefeld’s criticism of Reich is illuminating in this respect,especially in that Bienefeld believes that nation-states can and should


promote concerns other than promoting a softer form of economic glob-alisation. Bienefeld (1996: 419–20) claims that Reich’s “soothing com-prehensibility” belies a fundamentally fallacious vision of the world;

it is wrong in presenting the globalisation process as inevitable andirreversible; it is wrong in implying that the successful minority canenjoy real success in a polarising and unstable world; it is wrong inassuming that a world of five billion disconnected individuals couldremain a stable source of markets, profits and royalties; it is wrong insuggesting the “better training” could rescue the majority fromdecline; and it is wrong in accepting the mainstream’s claim that allattempts to tamper with liberalisation of trade or capital flows wouldnecessarily “substantially diminish our standard of living!”

Economic globalisation is not inevitable and irreversible, for the sim-ple reason that its legitimacy is fragile and its political infrastructure iscontested by the resistance of various social movements around theworld. Reich’s acceptance of economic globalisation is based on hisbelief that it is inevitable not because of the widespread prosperity,which by Reich’s own reckoning flows only to a minority, but ratherbecause Reich emphasises the technologically driven nature of eco-nomic globalisation rather than its political elements.

Indeed, the reputed inevitability of global capitalism does not evenguarantee the future position of the fortunate few. Bienefeld (1994:104–5) casts doubt on Reich’s “‘Malibu forever’ future”, that in

an ever more fragmented, volatile and competitive world this minor-ity’s gains will be shallow and precarious. Material gains will be off-set by other losses, like increased personal and economic insecurity,more fragmented and transitory family and community relation-ships and an increasing incapacity to protect spiritual, ethical orenvironmental standards from erosion by the forces of competition.

The choice between gated communities and the “secession of the suc-cessful”, on the one hand, or inclusive societies on the other, is beingdetermined by the elites choosing the former, mostly because of theabsence of an alternative that is palatable to groups that wish to main-tain a privileged position in society. The uncertainty and growinginsecurity for the wealthy is a significant by-product of economic glob-alisation that affects rich and poor. Hence, there is the very likelypossibility that the secession of the successful-cum-“Malibu forever”future of the wealthy will be a Pyrrhic victory for the elites.


Even beyond the fortunes of the wealthy, the future stability of theglobal economy is not so rosy that social instability will not affect ratesof profit and economic growth. Instability and inefficiency are theproducts of an unregulated global economy: the poor rates of economicgrowth, the high rates of bankruptcies and inequality in the 1980s and1990s, and the crises of the global financial system all point to the haz-ardous implications of an unregulated economic order for a range ofpeople around the world (Bienefeld 1996: 429; see also Callinicos 2001:42–3). The reluctance to rearrange the basic conditions of economicglobalisation is evident in an aversion to pursue any fundamentalreform of the global financial architecture or to promote debt cancel-lation that is not “conditional on the implementation of the usualIMF/World Bank package of neo-liberal measures” (Callinicos 2001:107). As such, there is a profound lack of a global perspective in theresponse of contractual nationalism to the flaws of this economic orderand to the needs of developing countries (Richardson 2001: 199;Callinicos 2001: 3). While earlier articulations of contractual national-ism pointed to the need for a new economic order, subsequent arti-culations have backed steadily away from radical shifts in the globaleconomic architecture and have re-affirmed the importance of liberali-sation and deregulation. There is no serious effort by Third Way gov-ernments to develop a bold new global arrangement such as that whichwas forged at Bretton Woods so that trade, investment and financialtransfers can be arranged and regulated with reference to social stabili-ty, let alone the needs of the poor and vulnerable around the world.While advancing high technology capitalism may address some of thesocial effects of economic globalisation in advanced capitalist states, itleaves many people within and beyond this privileged part of the worldto their own devices.

There is the implicit belief in contractual nationalist thought that vir-tually the whole world can be involved in technologically based work;this is clearly implausible and hardly a policy framework that is able toassist the vulnerable in advanced capitalist states, let alone in poorerparts of the globe. The blithe confidence that increased human invest-ment will facilitate prosperity suggests a degree of over-confidence ineducation and training. Bienefeld claims that the belief that training isthe best way to bind the disadvantaged to a deregulated global econo-my (in the long run) is also an illusion. He critiques the training “cargocult” not only because it “blames the victim”, but also because it“obscures the fact that competitiveness and efficiency are primarilysocially, not individually, based” (Bienefeld 1996: 429). Critics of


contractual nationalism note that influencing the skills within theworkforce is one of the few aspects of economic life left to governmentdiscretion that involves a commitment that “often does not lead to significant action or expenditure” (Bienefeld 1994: 113; see alsoCallinicos 2001: 51–5). Bienefeld (1994: 115) indicates that training isnot the solution to mass unemployment and underemployment. Aslong as the pursuit of profit is unmediated by political constraint, mostforms of unemployment will remain beyond the means of even themost substantial of training programmes.

In this sense, the ideas of contractual nationalism offer a meagre pre-scription in response to the basic structure of economic globalisation.While the confidence of contractual nationalism in economic global-isation is contextualised by the argument for a state that is able to fostersocial cohesion and human capital, the confidence in markets isabsolutely central to this potential form of governance. However, it isclear that there is significant incompatibility, or at least extreme ten-sion, between the promotion of social cohesion and human capital andthe idea of neo-liberalism and the competition state. States enmeshedwithin the outward looking logic of the competition state are lockedinto the flows of global capitalism. Promotion of social cohesionrequires inward reflection on the forms of civil society and democraticprocesses that enable people to feel and be part of a political commu-nity. Nevertheless, it is generally necessary for the competition state toplace paramount importance on its connection with the global econo-my, even if it means overriding domestic opinion. Thus, the rationaleof the competition state cannot place anything other than a minimalcommitment to the notion of social cohesion. Not only are nationalsocieties fragmented by global economic flows but these societies arealso sidelined by governments disciplined by global capitalism. Co-tractual nationalism acts as a one-way door; society can be arranged forthe market but the market cannot be arranged for the interests of soci-ety. Therefore, it cannot move beyond the “outer limits” of the compe-tition state and this is simply not far enough to ensure long-term socialcohesion.

The problems of governing through community

The contradiction between social cohesion and the competition statealso manifests itself in the manner in which this cohesion is supposedto be fostered. While there is little doubt that the various people whoadvance arguments in the vein of contractual nationalism hold to ideas


of community and solidarity with sincerity, this is no guarantee thatthe community is going to work towards the desired economic goals.Indeed, the very fact that the motivation and vision for a certain kindof community does not emerge from various existing communities, but rather the desires of policy-makers, points to a problematic form of association. The type of community that contractual nationalismrequires for the competition state to be sustained is likely to be differ-ent from what people in society want, or in fact need. Of course, asser-tions regarding community evident within contractual nationalismassumes that this form of community is possible. This is not a fait accompli. In essence, there are two questions associated with theretrieval of community. The first is whether community can be rebuiltwithin an age of individualism, pluralism and neo-liberal globalisation.The second is whether community is a good thing in such an age offragmentation, pluralism and globalisation. The problem with contrac-tual nationalism is that its proponents address the second questionfirst. They ask whether their vision of community is desirable beforethey answer whether it is possible at all.

There are two problems that complicate the possibility of buildingthe type of community suitable for contractual nationalism. The first isa “goldilocks” problem. The community has to be just right. If the com-munity that emerges from government policy is too strong and snow-balls into a community with tight affiliations and belief in proportionalsacrifices – there might be political demands that the wealthy might beunwilling to bear and indeed may hinder the competitiveness of par-ticular states. If the community is too weak, it will be unable to mustereven the faintest commitment to the goal of cohesion and a commit-ment of wealthy to invest in the less fortunate. The second problem isone that gives weight to the idea that a weak community is likely to bethe result because the form of community envisioned by contractualnationalism requires a strong conception of the common good to pullpeople together. However, the complex and heterogeneous make-up ofmodern capitalist–industrial societies makes the idea of a strong com-mon good extremely difficult to reach, as indicated in the work ofSchumpeter in the 1940s (see Bellamy 2000: 94–5). The developmentsof political, economic and cultural globalisation expand these differ-ences within society and escalate the difficulty in forging a commongood based upon the notion of community.

To complicate the likelihood of the realisation of this communityeven further, the idea of an outward looking community or a “cosmo-politan nation” inherent in contractual nationalism asks emotional


gymnastics of people within a national community. This is not to saythat this form of open community is not possible or desirable, just thatit is unlikely to command the same sacrifice or create the same bondsas people struggling against a common adversary. Indeed, it is impor-tant to point out that this critique of contractual nationalism’s concep-tion of community does not mean that all forms of community areimpossible. Clearly, strong communities continue to exist in variousplaces, including the nation-state (Castells 1997: Chps 1 and 2). How-ever, nationalism in many Western societies is taking a backgroundform with the continued propagation of national symbolism and“banal nationalism” (Billig 1995: Chp 1). Yet, these national commu-nities do not imply a Fordist national bargain of the type seen in thepost war world that explicitly places responsibilities – in the name ofthe national community – on the wealthy. In this sense, and in thissense only, can the nation be regarded as a community that has beendramatically undermined by the onset of economic globalisation(Cerny 1997: 99). Nevertheless, the ways in which the legitimacy of thenation-state is undermined in an era of economic globalisation doesprompt the practical need for liberals to resurrect new responsibilitiesand bonds so as to buttress the legitimacy of the nation-state withinthis context. Indeed, contractual nationalism revives a line of liberalthought that sought to counter-balance harsh capitalism with a viewthat emphasises “harmony” and the social nature of justice and equalliberty (Hobhouse 1964[1911]: 72; see also Richardson 2001: 192; Ryan1999). The “new liberals” of the late nineteenth century believed thatthe nation could be relied upon for social solidarity. These liberals tookthe nation-state as a basis for a “moral community” that was necessar-ily and “naturally implied by individual self-development” (Bellamy1992: 50). However, the vision of nationalism embedded in social lib-eralism or contractual nationalism has to contend with the forms ofnationalism and community that are reactions against economic glob-alisation. Contractual nationalism cannot assume the continuing reso-nance of the nation within a globalising period with the same ease ofliberals of the late nineteenth century Britain.

For these reasons, retrieving or indeed reinventing a community thatis suitable for the policies of contractual nationalism is a difficult act.The nation-state under the idea of contractual nationalism is not acommunity of discourse and deliberation. It is an instrumental form ofcommunity – if this idea is not an oxymoron – with the only commonpurpose being an economic one from which people obtain widelydiverging shares. Not only does the desired community have to walk a


fine line between a strong community and a weak one, but also thevery nature of community itself is thrust upon an increasingly atom-ised society that perceives community in ways that do not neatlymatch the visions of policy-makers.

The lament of the symbolic analyst

The attempt to jointly pursue economic globalisation and a nationalcommunity is a tension-riddled project that not only does not seemreconcilable with late modern pluralism, but also seems caught up inan outright contradiction. The contradiction stems from trying to tapinto the flows of global prosperity by using a national community thatis being fragmented in the process. It seems the project of contractualnationalism is using community to achieve something that is quitesimple. Ultimately, contractual nationalism, particularly the Third Way,is afraid to say what is really needed: to bind the capitalists and sym-bolic analysts to a robust conception of a shared public good thatmakes them pay for the system from which their fortunes flow. Thisgoal is simpler and more to the point than the meandering articula-tions of community evident within contractual nationalist thought. Yetclaims to such community, while quite possibly liberal, are not onlydifficult to achieve in practice but also a complicated and precariousway to make global capitalism sustainable.

Despite the divided economic fortunes of citizens in the nation-state,there are still bonds between people of a nation-state, even if they donot provide the basis for strong economic nationalism or a nationalbargain that provides a foundation for redistribution. Contractualnationalism attempts to wield the existing national filaments togetherso as to make the most of global capitalism by promoting human cap-ital and the attractiveness of a stable society to global capital. For thisto work, the wealthy must take responsibility and pay for it. However,

one needs a large amount of good faith to believe that the class ofsymbolic analysts will voluntarily acknowledge and undertake suchresponsibilities. Other than the ethical appeal of such responsibili-ties, Reich does not provide any grounds on which such a politicalscenario may be established (Levi-Faur 1997: 369).

While Hutton is far more willing to intervene in the issue of propertyrights than the proponents of the Third Way, the contradiction ofdesiring community and desiring not to encumber the wealthy is the


precarious bottom line of contractual nationalism. Giddens (1997: 39)makes a telling point when he says “of course, the fundamental prob-lem to be faced up to is: can anything be done for the have-nots with-out exerting more control over the prerogatives of the haves”?Contractual nationalism not only operates with the aim of benefitingthe haves but also relies on community instead of citizenship to bindthe wealthy and poor into a common and mutual framework of securi-ty. The unwillingness to ascribe rights and responsibilities to all (includ-ing the wealthy) consigns those who need public wherewithal to liveand prosper, to declining fortunes, regardless of the type of communityin place. The somewhat ironic result is that contractual nationalismalso does not give the symbolic analyst or the capitalist what they mostneed: the two-way flow of security and certainty. This security is notestablished within a nation-state let alone via mechanisms that makesecurity a possibility at an international level between wealthy andpoor states.

Consequently, contractual nationalism does not possess a moralpurpose that is capable of addressing inequality or insecurity within an advanced capitalist state, let alone at a broader global level. AlexCallinicos (2001: 63–7) and G. A. Cohen (2000: 120–1) point to theways in which community is important to the development of publicsentiments that address inequality. As Cohen (2000: 120) contends,“for inequality to be overcome, there needs to be a revolution in feeling ormotivation, as opposed to (just) in economic structure”. Cohen (2000:128) makes the point that “what is required is indeed an ethos, astructure of response lodged in the motivations that informs everydaylife”. While contractual nationalism utilises policies that seek toinvolve more people within capitalistic enterprise, it simply does notpossess a public sentiment that seeks to moderate inequality.Ultimately, contractual nationalism is embedded within the samelogic of economic growth and competitiveness as neo-liberal gover-nance. To moderate the social dislocation stemming from economicglobalisation, an ethos is needed both within and between nation-states that provides a robust rationale for some form of redistributionand regulation of global capitalism.

Ultimately, while technology, the norms of a “market civilisation”and the institutional mentality of the competition state make eco-nomic globalisation possible, they cannot sustain it indefinitely.Contractual nationalism represents an effort that promotes communi-ty as a softer more productive version of neo-liberalism, but it is onethat does not provide an ethos or political structure capable of eliciting


the resources to sustain a softer version of global capitalism or generatesignificant public support. As such, the ideas of contractual nationalismhave inevitably collapsed into the Third Way and become the “emptyslogan” that Reich (1998: 1) feared. The Third Way shows little sign ofbecoming the “broad based political movement” that Reich (1998: 1)believes it must in order to be a viable alternative to the neo-liberalproject.

Conclusion

Contractual nationalism is an imaginative approach to governing thatseeks to rebuild a nation-state whose populace are skilled and amenablein regards to the developing global economy. Reich, Hutton and theproponents of the Third Way agree that neo-liberalism has ushered in processes that undermine both capitalism and a stable society.Significant social dislocation is not compatible with the type of societyand people required for the information technology hubs of the globaleconomy to flourish. Even though the ideas of the first generation ofcontractual nationalists – that is, Reich and Hutton – were bold in thatthey sought to establish social cohesion by elaborate governmentactivism, there was always the inherent danger that the ideas weregoing to be undermined by the ideological and institutional forces ofeconomic globalisation. The Third Way represents the manifestation ofthat possibility: the minimum social stability and human investmentneeded for competitive advantage within a shorter set of economic andsocial horizons. Contractual nationalism contains no strong reasonthat social cohesion and social investment should be maximised, otherthan when it can provide a competitive advantage within a globaleconomy, because it is deeply embedded in the same cultural and nor-mative sensibility as neo-liberalism. This is evident in its awkward bal-ance of community and individualism, its immense faith in economicgrowth and its fixation on high-technology capitalism well tailored toadvanced capitalist states. Consequently, its neglect for the needs ofdeveloping states, coupled with the dearth of an extensive account ofglobal governance, severely limits its viability in global sense.

Contractual nationalism faces problems both in terms of fulfilling itsprimary goal – promoting economic competitiveness – and its second-ary goal, which is holding society together. A nation-state imbued bycontractual nationalist ideas needs an ethos that is going to hold ademocratic community together. However, an instrumental and thinform of association is unlikely to be sufficient even if it is put in place.


Contractual nationalism struggles to be an alternative to neo-liberalismbecause it understates the reason that many liberals have sought analternative to neo-liberal governance in the first place: that the nation-state and social stability cannot be taken for granted. Contractualnationalism takes social cohesion seriously but does not have themechanisms or an ethos to make social cohesion an enduring possibil-ity. We now turn to a liberal alternative that possesses an ethos thatseeks to reshape global capitalism at a global level.


6Cosmopolitan Governance:Building Global Democracy

The idea of a political community of fate – of a self-determiningcollectivity which forms its own agenda and life conditions –can no longer meaningfully be located within the boundariesof a single nation-state alone (Held 1998: 21).

So far the second part of this book has examined liberal alternatives toneo-liberal governance that have largely accepted the primacy of capi-talism. However, within the tradition of liberalism there are alternativeapproaches that do not prioritise capitalism and involve institutional-ising liberal political principles into world politics. One version of thisideal is liberal internationalism, which emphasises the practice of coop-eration amongst liberal nation-states through diplomacy, internationallaw and the development of international organisations. Liberal inter-nationalism has shaped world politics and is a background assumptionof neo-liberal governance as well as the authors and policy-makers ofcontractual nationalism. A stronger version of the institutionalisationof liberal political principles is liberal cosmopolitanism which advancesan unwavering commitment to all humanity and a sense of detach-ment from solely local or national affiliations. While cosmopolitanismis “not monolithic” or exclusively liberal (Rengger 2000: 763), theuniversal value of individual humans is an important part of the liber-al tradition and leads to differing variations of cosmopolitan thought.An important distinction should be made between “political” cos-mopolitanism, which advocates the creation of universal politicalinstitutions at a global level on one hand, and “moral” cosmopoli-tanism on the other, which advances universal principles that do notjustify global institutions but “the basis on which institutions shouldbe justified or criticised” (Beitz 1999b: 287).

150

The idea of cosmopolitan governance forwarded in this chapter iscosmopolitan in the first, more robust sense that seeks to provide the political infrastructure of a universal political community thatradically delimits the state. Cosmopolitan governance seeks to devel-op a world where all people have an input into a single global democ-racy. The idea of a worldwide structure of governance has a long his-tory in Western thought, but it was Immanuel Kant (1983: 118–9) who maintained that there ought to be a global system of law thatcombined peace among states with the acceptance of universal “hos-pitality” of each and every individual from other states. The revivaland rethinking of this strand of thought is connected to the develop-ments associated with the events of the late twentieth century, mostnotably, accelerating globalisation; the rising importance of globalgovernance; the increase in the number of states that practice democ-racy around the world; and the development of an extensive system ofuniversal human rights law under the aegis of the UN (Archibugi andHeld 1995: 3). However, these developments do not achieve the objec-tive at the heart of cosmopolitan governance; the global extension ofdemocracy across states, so that individuals and not states are the pri-mary moral agents (Archibugi and Held 1995: 4). This prescription ofgovernance suggests that democracy ought to be extended to a globallevel so that democracy can address both local and global problems inan effective and just manner.

In this chapter, I seek to examine whether the approach of cosmo-politan governance can adequately address the social consequencesstemming from economic globalisation. While many scholars havedeveloped cosmopolitan arguments (see also Linklater 1998; McGrew1997a), two influential authors that advocate liberal cosmopolitanpositions in relation to economic globalisation are Richard Falk and David Held. These arguments are undeniably robust visions of cosmopolitanism that differ significantly from liberal interna-tionalism evident, for example, in The Commission of GlobalGovernance’s (1995) efforts to protect states from the turbulence ofglobalisation. Cosmopolitan governance has no intention of protect-ing or prolonging the existence of the state. It is the purpose of thischapter to first outline the two author’s views on the nature of con-temporary globalisation and the model of governance that they pro-pose. I, then, examine the practical challenges facing cosmopolitangovernance and argue that there is little likelihood that this form ofgovernance will be able to immediately address the social effects ofeconomic globalisation.

Cosmopolitan Governance: Building Global Democracy 151

Richard Falk and inhumane governance

The international law scholar Richard Falk has written numerous booksand articles about an alternative liberal order on a global scale. Sincethe late 1960s Falk has been involved with the World Order ModelsProject (WOMP), a group of progressive scholars from around the worldunified by a desire to advance humane responses to the problems ofwar, environmental degradation and poverty. The WOMP and Falk arecritical of the ability of the state or the state system to effectively dealwith these problems, largely because of the global scope of these prob-lems and the inward looking nature of the sovereign state. Falk (1994a:153) is mindful that the WOMP needs to be given a “fresh interpreta-tion in light of changing contexts and perceptions, including the co-opting impact of market driven modes of globalisation”.

Falk considers the onset of economic globalisation to be the emer-gence of a political order that mixes the worst elements of the statessystem with a new capitalist logic. Globalisation entails a world where

territorial states are being bypassed, their authority diminished, andtheir competence and legitimacy eroded … Globalisation indicatesthe planetary scale of emerging technologies and their implicationsfor the world economy, for market and capital efficiency and oppor-tunity, with an overall homogenising impact on human experienceand aspiration (Falk 1995b: 11).

Falk (1995b: 88) regards this process as being “globalisation fromabove” which stems from the global political structures that supportthe global market. He considers this type of activity and the institutionsthat support economic globalisation as regressive because “it furthermarginalises the more vulnerable elements in society, as already wit-nessed by high unemployment as a permanent feature of most affluentsocieties even when their economy is in a robust phase” (Falk 1995b:94). According to Falk, the reason for the globalisation of economicactivity is to do with organisational changes in capital investment andchanging international institutions such as NAFTA and the EU. Thisconnects with his claim that capitalism has been in an especially “cruelphase” since 1975 manifest by the amplified promotion of “efficiency,growth and ‘competitiveness’” within firms, states and between states(Falk 1995b: 48). This has meant that welfare mechanisms within mostcountries and global poverty reduction efforts in other countries havebeen weakened. He claims that the results of this rapid and dramatic


process of restructuring within societies across the world creates “hard-ship and anguish” as well as “repression and exclusion” for many peo-ple in the world (Falk 1995b: 55).

Yet, Falk (1995b: 55) emphasises that this is not a natural or acciden-tal condition but rather a deliberate political order characterised by“avoidable harm”; where “those in authority…are causing harm tohumanity”. He claims that this is a condition of “inhumane gover-nance”; a global process which perpetuates and deepens social disad-vantage (Falk 1995b: 1–2). Within this condition Falk (1995b: 177)believes that states in general have a diminishing capacity to act pro-gressively and in fact are turning increasingly into agencies “for servingglobal economic priorities”. The consequence of this change is that“the state is being subtly deformed as an instrument of human well-being by the dynamics of globalisation, which are pushing the state by degrees and the varying extents into a subordinate relationship with global market forces” (Falk 1996a: 14–5). This understanding ofcontemporary governance largely corresponds with the argument fur-nished in Chapter 2 and points to the ways the very possibility ofsocially progressive policy-making is diminished by the ideas of theneo-liberal consensus. In addition, the power of the “structural pres-sures” of global markets and organisations are

particularly damaging and discrediting for those who favour thetype of compassionate forms of governance associated withAmerican liberalism or European social democracy. What this meansis that, temporarily at least, in such a world order, Sweden can nolonger be Sweden! The humane or compassionate state is beingphased out (Falk 1997a: 130).

According to Falk (1996b: 56), pragmatism rules because of thepotential consequences of displeasing globalised markets – ultimately“structural factors overwhelm value preferences”.

Despite this development, Falk sees the broader processes of contem-porary globalisation as also opening opportunities to fashion solutionsto the problems that economic globalisation and inhumane gover-nance create. In Falk’s opinion, the diminishing of the state and thestates system as the primary form of governance because of economicglobalisation makes it almost inevitable that a new structure of globalgovernance will take shape because this type of globalisation provokes“globalisation from below” – a civil reaction that stems from the grow-ing global consciousness extending from the knowledge of a “wider


we” that shares a joint future on the planet (Falk 1995b: 89). Falk seesthe antagonism between globalisation from “above” and “below” as the context on which contemporary political dangers and hopes arecentred.

Humane governance

Falk (1995b: 243) contends that a desirable form of political organisa-tion will be “humane governance” – a normative project that buildsupon humanity’s shared aspirations, hopes and fears in order to fash-ion an “imagined community for the whole of humanity”. It is beingshaped by those transnational social movements that seek to amelio-rate human suffering involved in inhumane governance by addressingthe prevalence of war, human rights abuse, economic insecurity andenvironmental degradation. Humane governance

is a preferred form of geogovernance. It is both process and a goal.Humane governance emphasises the achievement of comprehensiverights for all peoples on earth. It accords priority to those most vul-nerable and abused … Thus humane governance is less a negation ofgeopolitics than an insistence on its essential irrelevance to theproper ordering of political life at all levels of social interaction (Falk 1995b: 9).

As an alternative to the market driven geopolitics of neo-liberal glob-alisation, humane governance seeks to build a liberal political commu-nity at a global level. This form of governance focuses on establishing“a regulatory framework for global market forces that is people-centredrather than capital-driven” (Falk 1996a: 13). As such, it constitutes anambitious cosmopolitan project aimed at developing a complex arrayof political institutions that operate across states.

This project is predicated upon developing a structure of “global con-stitutionalism” via the principled extension and entrenchment of exist-ing international institutions that would enable institutions like the UNto be wrested away from their statist operation and directed to humanepurposes. This entails a dramatic strengthening of the rule of interna-tional law by entrenching the judicial resolution of interstate disputesand embedding transnational social movements into global governance.Falk (1991: 10–1) claims that global constitutionalism would be a

complex institutional presence on an international scale that pos-sesses a potential quasi-governmental character and that exists and


operates within a loose constitutional framework that could be givena more specific content by reference to an existing basic law (i.e., theUN Charter); it could also be a normative presence in the form ofincontestable positive international law that is embodied in a seriesof commitments to a world capable of meeting basic human needs(including individual and group dignity) and of sustaining the eco-nomic, geopolitical, and ecological basis of life on the planet forfuture generations.

This scheme represents the “intensified continuation” of the emergentnormative and institutional framework already under way during thetwentieth century under the aegis of the UN – not just a milder form ofmoral cosmopolitanism or liberal internationalism (Falk 1991: 7).While the aspirations of humane governance are sometimes embodiedin law as it presently stands, Falk (1995c: 164) claims that such com-passion can only be “exhumed, and made operative, by the militancyof civil society”.

The cosmopolitan nature of this emphasis on legality and institu-tionalisation, as well as the activity of a global civil society, is furtherdemonstrated through the importance of “world citizenship” thatapplies to all individuals across the world, thereby enabling them to bea legitimising source for global political authority (Falk 1995b: 253).The emphasis on the role and rights of the individual and the restric-tion of the role of the state would enable the global protection ofhuman rights and extend the “commitment to achieve a more equi-table international economic order, as well” (Falk 1991: 9). A concernfor individuals everywhere would include a concern for redistributiveinstitutions and policies that assist the most vulnerable. This is mani-fest in the suggestion by Falk (1997a: 18) for the expanded provision of“global public goods”, such as development assistance and environ-mental protection, that have been neglected within the context of neo-liberal stringency.

While global constitutionalism and world citizenship are crucial ele-ments of humane governance, they are underpinned by the idea of a“cosmopolitan democracy”, which seeks to build a global system ofpolitical representation and participation that connects individuals tothe system of rule that focuses on their welfare and future (Falk 1995b:249, 253–4). The development of cosmopolitan democracy must stemfrom and build on the movement in the latter part of the twentiethcentury towards the spread of democracy across the world. None-theless, there must be the recognition that democracy at the level of thestate can no longer be a “sufficient focus for those seeking to embody


the values and practices of democratisation” (Falk 1995b: 131). Ifdemocracy is to be achieved in an era where all forms of activity includ-ing economic activity extend across state boundaries, then democracyhas to be extended to a global level as well. In the short term this meansthat the UN must be overseen by a public “UN monitor” as a steptowards the global democratisation of the UN – so as to insulate the UNfrom the grip of statist politics (Falk 1995b: 133).

Global democratisation is only conceivable with the agency of global civil society. While many scholars have referred to the growth oftransnational organisations and associations that interact over variousissues, Falk relies heavily upon the ideal of global civil society as an eth-ical assembly to rest the constitutional structure of humane governanceon. This is largely because of the institutional elements that he pointsto; this is the one that not only inspires the others but also exists in anascent form. While globalisation from above, in the form of globalcapitalism, represents a continued threat to progressive social ideas, italso provokes the resistance of globalisation from below (Falk 1997a:19). Global civil society, as globalisation from below, develops transna-tional social movements and NGOs which can act as networks that arenot only separate from states but seek to temper state and marketactors. Falk’s vision of global civil society also builds new forms ofglobal consciousness that expounds values connected to the long-termfuture of humanity that resist inhumane governance and economicglobalisation. This emerging global awareness plays a central role inshaping the shared aspirations and hopes that Falk bases his concep-tion of humane governance upon.

A global consciousness is necessary for the formation of a global con-stitution and democracy. Human participation in this formation is cen-tral to the development of humane governance and as such Falk(1995b: 253) invokes the principle of world or global citizenship. In thissense, world citizenship is not just a status that follows a structure ofglobal constitutionalism, as noted before, but as the principle that is ameans to the development of a global structure of governance. A worldcitizen is a “‘citizen pilgrim’” in that these citizens primarily function“temporally”; in contrast to state citizens who operate principally in a“spatial” sense (Falk 1994b: 139). In addition, Falk (1995b: 253) claimsthat state citizenship is circumscribed and ceremonial – a form of “post-modern serfdom” – thereby laying down the “challenge” to reconfigurecitizenship at a global level in a way that forwards human rights anduniversal participation in the future of humanity. Consequently, Falk’ssupport of world citizenship as a means to humane governance is more


tied to a normative or aspirational stance that forwards a human wideassociation than an actual account of legal rights and obligations. Yet,Falk (1994b: 139) is aware that if the idea of world citizenship isimposed on the current world order it looks like a “purely sentimental,and slightly absurd, notion”. Therefore, Falk (1994b: 140) emphasisesthat world citizenship is a “political project” that rests

upon a sense of solidarity, a feeling for equity and for nature, astrong impulse to achieve both local rootedness and planetaryawareness, and an underlying conviction that the security andsanctity of the human community rests, in the end, on an ethos ofnon-violence.

World citizenship is tied to global civil society and the “attitudes ofnecessity” embedded in transnational activism which seeks to avoidinjustice and the unsustainablity of inhumane governance on a globalscale (Falk 1994b: 131–2).

The state within humane governance

These elements create a global structure that embeds the state in a globalconstitutional structure that is predicated upon “as much decentralismas possible, with as much centralism as necessary” (Falk 1995b: 36). Ineffect, this would mean that the global constitutional elements ofhumane governance come to decisively shape global decision-making and delimit the role of the state. Ultimately, humane gover-nance entails a shift away from governance designed to support theinterests of sovereign states and the “regulatory vacuum” maintained byneo-liberal interests (Falk 1995c: 176). As such, the role of the state with-in the constitutional structure of humane governance is at best a provin-cial level of government within the gradual development of a global federal system. Falk downplays the positive role that states could play indeveloping humane governance. Aside from a brief passage where Falk(1995b: 34–5) realises that containing market driven globalisation “mayrequire strengthening the sovereign state… and even accepting a rise in economic nationalism” he notes that the “effort might be self-destructive and short lived unless coordinated on a regional or transna-tional basis”. Nevertheless, Falk (1994b: 253) realises that the “greatestchallenge, at present, is to reconcile the territorial dimensions ofcitizenship with the temporal dimensions: acting in the present for thesake of the future, establishing zones of humane governance”. In


Humane Governance, Falk steers away from advocating a state that fostersan inward looking community or patriotism in the process of develop-ing a “zone of humane governance”.

However, in subsequent work he appears to consider that citizenshipwithin the state may be required to promote humane governance pre-cisely because economic globalisation has weakened the role of citizenswithin many states (Falk 1996c: 3; see also 1996b; 1997b). Therefore,the challenge is to

reconfigure the outmoded dichotomy between undifferentiatedpatriotism and cosmopolitanism. If this challenge is met, then thevitality of traditional patriotism can be restored, but only on thebasis of extending ideas and practices of participation and account-ability to transnational sites of struggle…then patriotism and cos-mopolitanism will be able to share a common commitment torefashioning conditions for the humane state, the humane region,and, depending on the success of transnational social forces, adecent, inclusive globalism (Falk 1996b: 60).

It also appears that the need to rethink patriotism and state citizen-ship stems from a realisation that the force of global civil society is per-haps not as strong or committed to cosmopolitanism as humane gov-ernance requires. The globalism of the market is trumping, for the timebeing, the ethical globalism of cosmopolitanism. Consequently, whileFalk continues to see the state as being compromised by economicglobalisation and arguing that if humane politics is to be created itmust be developed at a global level, he sees patriotism to the state ashaving some virtue. Indeed, the possibility of their being a “commoncommitment” between patriotism and cosmopolitanism is a potentprospect. Even so, ultimately as we will see in next chapter, this requiresa restoration of the public virtues within the state just as much as thedevelopment of a worldwide cosmopolitan consciousness.

This deliberation does not diminish Falk’s advocacy of humanegovernance as a project that reflects the aspiration of humanity and aglobal imagined community that directly shapes the institutions need-ed to promote the welfare of human beings everywhere in the face ofthe divisive and harmful effects of economic globalisation. While cos-mopolitan governance can stem from a global imagined humanity andthe resistance of those opposed to market driven globalisation as Falksuggests, cosmopolitan governance can also stem from a rethinking ofthe foundations of democracy and the rule of law. The pre-eminent


example of this type of cosmopolitanism is found in David Held’smodel of cosmopolitan democracy.

David Held

Held’s argument for the genesis of cosmopolitan democracy springsfrom an understanding of democracy that is informed by HabermasianCritical Theory in light of the increasing impact of globalisation. Thehistorical congruence between people, territory and polity assumed inthe practice of the modern state stemmed from the accountability thatcitizens have of the lawmakers as well as the lawmakers having policiesthat only affect those citizens – “the people” – in a “demarcated terri-torial area” (Held 1995: 50). However, increasing transborder connec-tions that stem from globalisation directly challenge the assumptionthat democracy can operate effectively within the state.

Globalisation is defined by processes that Held believes present theneed to rethink democratic theory and practice. Globalisation refers to

a shift in the spatial form of human organisation and activity totranscontinental or interregional patterns of activity, interaction andthe exercise of power. It involves a stretching and deepening ofsocial relations and institutions across space and time, such that, onone hand, day-to-day activities are increasingly influenced by eventshappening on the other side of the globe and, on the other, the prac-tices and decisions of local groups or communities can havesignificant global reverberations (Held 1998: 13).

This “stretching and deepening” of connections includes, but is notlimited to, globalised capitalism, which points to the spatial emphasisof the transformationalist conception of globalisation (Held 1995:20–1; see also Held et al 1999). Thus, globalisation creates a series of“disjunctures” that cut across the democratic state and “indicate thedifferent ways in which globalisation can be said to constitute con-straints or limits on political agency in a number of key domains; andto what extent the possibility of a democratic polity has been trans-formed and altered” (Held 1995: 99). These disjunctures include inter-national law, the internationalisation of political decision making,international security structures, the globalisation of culture and theworld economy.

The world economy is a major source of disjuncture for democracybecause “there is a clear disjuncture between the formal authority of


the state and the spatial reach of contemporary systems of production,distribution and exchange which often function to limit the compe-tence and effectiveness of national political authorities” (Held 1995:127). The increasing economic integration between states has becomea central feature of world politics and has become a part of everyday lifein most parts of the world. While Held (1995: 131) does not emphasisethe ways in which political authorities have consciously authored and advocated these policies, it is certainly true that contemporaryglobalisation has changed the “costs and benefits” of economic policy,and indeed has made “‘bucking’ international trends” more difficult.Likewise, the “vast array of international regimes and organisations”has led to the globalisation of policy-making (Held 1995: 107), suchthat the state becomes only one actor amongst networks of private and public organisations. While the EU represents an advanced form of multi-level governance because it is a situation where sovereignty is “clearly divided”, states enmeshed in organisations such as the IMFor World Bank also have their sovereignty conditioned (Held 1995:109–112). Whether due to economic flows or to the influence andauthority of international organisations, the policy autonomy of thestate has been restricted. A crucial consequence of a globalised econo-my is the weakened capacity of the state to regulate economic affairs,given that the state is less able to affect economic activity that routinelycrosses its jurisdiction.

According to Held, these disjunctures clearly limit the freedom ofgovernments to act in the manner they desire and ultimately severs thecongruence between democratic governors and their respective public.Not only do these disjunctures decrease the control that states are ableto exercise over their territory, but also increase the probability of statesaffecting people beyond its territory. Importantly, Held (1995: 136)maintains that democracy must come to terms with

these developments and their implications for national and interna-tional power centres. If it fails to do so, it is likely to become ever lesseffective in determining the shape and limits of political activity.Accordingly, the international form and structure of politics andcivil society has to be built into the foundations of democraticthought and practice.

Consequently, Held (1995: 140) maintains that the future of democ-racy is with a “cosmopolitan model of democracy” that provides a globalresolution of the disjunctures to democracy. Although he places emphasis


on the rise of unrepresentative forms of authority as a challenge to statesovereignty and authority, his concerns do not end there. Held is alsoconcerned with the effect of social inequality and other social problemson the nature of political participation. His model of cosmopolitandemocracy does more than just extend democracy beyond borders. Healso rethinks the essential elements needed for individuals to participatein democratic activity. Before detailing cosmopolitan democracy, a briefoutline of Held’s democratic theory is needed to fully flesh out hisresponse to the contemporary effects of economic globalisation.

The pivotal aspect of Held’s (1995: 145) democratic theory is the“principle of autonomy” that connects the idea of liberty to a politicalcommunity where people are able to choose and legitimate the condi-tion of their political association. The principle of autonomy states that

persons should enjoy equal rights and accordingly, equal obligationsin the specification of the political framework which generates andlimits the opportunities available to them; that is, they should befree and equal in the determination of the conditions of their ownlives, so long as they do not deploy this framework to negate therights of others (Held 1995: 147).

Held’s democratic theory clearly promotes a liberal – but non-liber-tarian – aspiration of the liberty of the individual, although this aspira-tion is contextualised by the deliberative social democratic reasoning ofHabermasian Critical Theory. Autonomy is achieved by processes andpolicies that promote the protection of the individual from coercionand involve public deliberation regarding the laws of the polity, as wellas the development of individual capacities and the expansion of eco-nomic opportunity (Held 1995: 150). When these outcomes are notproduced a condition of “nautonomy” exists. Held’s (1995: 171) idea of

nautonomy refers to the asymmetrical production and distribution of lifechances which limit and erode the possibilities of political participation.By life chances I mean the chances a person has of sharing in thesocially generated economic, cultural or political goods, rewards andopportunities typically found in his or her community.

Disadvantage or unequal access to resources in many areas of lifecould lead to the condition of nautonomy. Nautonomical outcomesfrustrate the ability of democracy to operate and thus require an exten-sive political framework to entrench the principle of autonomy.


Such a political framework is provided by “democratic public law”which is the law where “the principle of autonomy” is “entrenched asboth a foundation and a constraint” upon political life (Held 1995:155). By embedding the principle of autonomy into law this creates a “common structure of political action” for all (Held 1995: 190).According to Held (1995: 185) “autonomy is, in short, structuredthrough power”. Democratic public law “would set down an axialprinciple of public policy – a principle that stipulated the basis of selfdetermination and equal justice for all and, accordingly, created aguiding framework to shape and delimit public policy” (Held 1994:234). In order to participate, citizens will require a set of rights thataddress any disadvantage or inequality that may affect their ability toparticipate and thereby enjoy the structural principle of autonomy. Assuch, if democracy is to be pursued, redistribution must exist to avoidnautonomy and make democracy operate.

So long as power is located in the state, is it possible that democraticpublic law could effectively support democracy within the state? Heldmaintains that due to the disjunctures that frustrate the congruencebetween a public and the state, that the state is not a viable location toenable democratic public law and thereby enable individual autonomy.Rather, in the context of globalisation, the only way to overcome thesedisjunctures is to include everyone in decisions that affect them andthereby make the apposite site for democracy a global one. This leads tocosmopolitan democracy and the comprehensive and global extensionof the principle of autonomy.

Cosmopolitan democracy

In order to create a “common structure of action” that upholds theprinciple of autonomy, democratic public law must encompass boththe decision-makers and the public. Now that the state bound congru-ence of decision-makers and the public has been broken by decisionsand activities occurring at a global level that affect people across theworld, democratic law must work to that extent as well. Cosmopolitandemocracy is Held’s model of governance that supports the principle ofautonomy and democratic law at a global level by developing a demo-cratic public law that is “entrenched within and across borders” (Held1995: 227).

The cosmopolitanism of Held derives from Immanuel Kant. Whileagreeing with Kant that war is a major threat to autonomy and hencerequires an international union to entrench peace between states, Held


(1995: 226–7) believes that war is not the only threat to autonomy.Held supports Kant’s principle of hospitality, which affirms that for-eigners should be tolerated and not “treated as an enemy upon hisarrival in another’s country” because “a transgression of rights in oneplace in the world is felt everywhere” (Kant 1983: 118–9). However,Held (1995: 228) dramatically extends such principles beyond just con-duct towards foreigners to include a fundamental respect for autonomy.In practice

universal hospitality must involve, at the minimum, both the enjoy-ment of autonomy and respect for the necessary constraints onautonomy. That is to say, it must comprise mutual acknowledgmentsof, and respect for, the equal rights of others to pursue their ownprojects and life-plans. Moreover, in a highly interconnected world,“others” include not just those found in the immediate community,but all those whose fates are interlocked in networks of economic,political and environmental interaction.

For universal hospitality to exist cosmopolitan democratic public lawis required. This entails the development that Kant (1983: 1120)sketched in the eighteenth century of a federation of states under “iuscosmopoliticum” (cosmopolitan law). According to Held (1995: 231),this union or federation of states falls short of a world state and requiresthe assent of people and states, but once joined there is a clear duty to uphold the federation and the law because the union ceases to bevoluntary.

Cosmopolitan democracy operates as a system of governance thathas a core set of principles and legal rules that operate as a globally inte-grated framework that infuses all levels of governance. As a basis ofauthority, cosmopolitan democracy operates as

a system of diverse and overlapping power centres, shaped anddelimited by democratic law. In this context, secession could take ona new meaning – the break-up of old political entities within a com-mon framework of politics, that is, the reshaping of traditional polit-ical communities, on the one hand, while, on the other establishingthe possibility of new communities within the framework of atransnational structure of democratic action (Held 1995: 234–5).

Thus, the system of states is not the only form of governance operat-ing within cosmopolitan democracy. City-states, communities, and


even functional organisations such as TNC’s will be subject to cosmo-politan democratic law. This also raises the distinct need for clear rulesto determine what sorts of issues are dealt with at which level of gov-ernance. The response from Held (1995: 236) to this question is toestablish a boundary court that determines public issues on the basis ofthe number of people affected, the intensity of effect of the issue onpeople and the “comparative efficiency” of why lower levels of gover-nance cannot deal with the issue.

Cosmopolitan democracy’s determination of a global common struc-ture of action develops a comprehensive system of authority thatsignifies a radical departure from the democratic state. Held’s image ofcosmopolitan democracy provides a universal entrenchment of demo-cratic public law that informs and shapes the composition of statecitizenship, state constitutions and systems of decision making at alllevels. While Held (1995: 278) contends that cosmopolitan democracywill consist of individuals, organisations and groups all “pursuing theirown projects”, “these projects must also be subject to the constraints ofdemocratic processes and a common structure of political action”. Thisexpansion of the institutional and legal elements of democratic rulerepresents a transformation in both the scale of the infrastructure ofpolitical life and the long-term objectives. The political infrastructureincludes the eventual establishment of a global parliament and execu-tive; a boundary court that rules on disputes as to what level of gover-nance is applicable to particular public issues; a more general globallegal and court system; an increased accountability of transnationalbodies and states; as well as the public funding of electoral processesand referenda (Held 1995: 279). At a social level, the long-term empha-sis would be on programmes that develop a diverse civil society, thedevelopment of investment priorities being determined partiallythrough public deliberation, and the provision of a guaranteed basicincome (Held 1995: 280). While ambitious, these political and socialdevelopments are critical if the processes of deliberation and the prin-ciple of autonomy are to be fulfilled in the long term.

Given that democratic public law cannot be effectively upheld by thestate, the role of the state within cosmopolitan democracy is both alimited and diminishing one. The role is a limited one because cosmo-politan democracy rests on “‘splitting the state’” and carrying out thefunctions of the state at different levels, directing some functions globaland some local, with some functions remaining with the state (Held1995: 234). The cosmopolitan law embedded in each state’s constitu-tion, as well as the global constitution, also limits state activity, and the


activity of other organisations or individuals. While Held (1998: 24)claims that “cosmopolitan democracy would not call for a diminutionper se of state power” – it does signal a considerable departure from aworld where democracy and legitimacy is contained within states. Byhis own reasoning, states would “‘wither away’”, by which Held (1995:233) means, “that states would no longer be, and no longer be regard-ed as, the sole centres of legitimate power within their own borders”.While states are not the sole power within their borders in many casesalready, as Held indicates, within cosmopolitan democracy they wouldalso have to adjust their laws and practices in alignment with cosmo-politan democratic law. Within this legal framework the state would be“‘relocated’ within and articulated with, an overarching global demo-cratic law” (Held 1995: 233). Ultimately, this “relocation” is in effect acomplete re-contextualisation of the state that removes popular sover-eignty and places decision-making capabilities within the limits pre-scribed by democratic public law.

Held’s (1995: 233) cosmopolitan democratic public law entails a com-mon legal structure that is entrenched across and within a range of“diverse political communities” and “multiple citizenships”. The pro-tections, entitlements and avenues of participation associated withdemocratic public law are irrespective of citizenship and are upheldwithin and across all states. Democratic public law will operate throughstate citizenship, extending through world politics to include otherinstitutions and levels of governance within an elaborate “bindingframework” (Held 1995: 233). Held’s conception differs from Falk’s inthat there is little emphasis on a common imagined community and noform of association binds people within the cosmopolitan democracyother than the common restraint of a respect for cosmopolitan demo-cratic public law. Although it should be noted that Held (2004: 166)does see NGOs, along with Europe and developing countries as beingan important impetus for developing cosmopolitan democracy.

The purpose of this framework is to promote the autonomy of peopleeverywhere. Held is aware that democratic public law on a global scaleis no easy or short-term task. As a part of the promotion of the auto-nomy and welfare of all people, Held indicates there are some short-term policies of cosmopolitan democracy conceived within a socialdemocratic understanding of social objectives – what Held refers to as a“global covenant” (Held 2004). These policies encompass reforming theUN Security Council so that developing countries have a stronger voice,creating a second – democratically elected – UN chamber, developingregional groupings such as the EU, extending international courts,


developing new coordinating agencies for economic management, andthe creation of an international force for peacekeeping operations (Held1995: 279; see also 2004: Chp 9). In terms of social goals, Held advocatesideas that point towards the democratisation of economic activity.These include the extension of non-market solutions for the organisa-tion of society, publicly determined private ownership limits for “key‘public shaping’ institutions” such as the media, and the provision ofresources to the most vulnerable to defend their interests (Held 1995:280). More specifically, this means challenging the core ideas of theWashington Consensus with a cosmopolitan social democratic pro-gramme that seeks to publicly assist the excluded while ensuring thatglobalisation works in more economically inclusive manner. This neces-sitates “international regulation with efforts to reduce the economicvulnerability of the poorest countries by transforming market access,eliminating unsustainable debt, reversing the outflow of net capitalassets from the South to the North, and creating new facilities for devel-opment purposes” (Held 2004: 156 and Chp 3). While these reforms arenot easy to develop, they will set the scene for reaching the institutionalcontext necessary for the development and reproduction of cosmopoli-tan democracy in the long term.

As such, cosmopolitan democracy departs significantly from the ideaof deregulated capitalism. The goal of “democratic autonomy and publicdeliberation” ultimately requires “bringing the economy into the ‘sphereof democracy’” (Held 1995: 264–5). As Held (1995: 251) contends;

If democracy is to prevail, the key groups and associations of theeconomy will have to be rearticulated with political institutions sothat they become part of the democratic process – adopting, withintheir very modus operandi, a structure of rules, principles and prac-tices compatible with democracy. The corporate capitalist systemrequires constraint and regulation to compensate for the biases gen-erated by the pursuit of the “private good”.

Held (1995: 235–6, 2004: Chp 3) points to the necessity for “theintroduction of new clauses into the ground rules or basic laws of thefree-market and trade system” in order to be able to constitute a “com-mon structure of political action in economic affairs”. Because theseeconomic processes operate globally, legislation that enacts this com-mon structure would have to be global and therefore embedded withincosmopolitan democratic law. While these regulatory reforms will bedifficult to develop, they are crucial to the redistribution that is needed


to enable autonomy in the sense of economic autonomy through theprovision of a minimum income as well as addressing “the most press-ing cases of avoidable economic suffering and harm” (Held 1995: 256).These regulatory efforts also point towards a path that constrains mar-kets from determining political outcomes and in turn provide a form ofgovernance that offers better social opportunities and improved socialprotection than those proffered by contemporary globalisation andneo-liberalism.

Held’s model of cosmopolitan democracy represents an articulationof democracy in an era of globalisation that seeks to eventually achievecomprehensive representation and equality. Inequality is seen not justas a social problem associated with the rise of economic globalisa-tion but more broadly as a problem that limits political participation.Globalisation stretches decision-making processes to a global levelthereby disenfranchising representation within purely state leveldemocracy. Upholding liberty entails upholding cosmopolitan demo-cratic public law across states and other polities. This is achieved by afar-reaching legal system that is entrenched within all levels of gover-nance anchored by global courts and constitutional principles.

The elements of cosmopolitan governance

The arguments of Richard Falk and David Held present key features of a liberal cosmopolitan governing strategy. In institutionalising cos-mopolitanism, they entrench universal rules that regulate social andeconomic relations in order to promote democracy and the welfare ofall humanity, thereby addressing the adverse effects of contemporaryglobalisation. While there are some differences between the two writers,there are four fundamental points of convergence that characterise theinstitutionalisation of liberal cosmopolitanism.

The first principle of cosmopolitan governance is the development of acomprehensive system of global law coupled with the global extension ofdemocracy across states. In the short term, this means the continuedexpansion of a universal system of human rights via international law and the development of global civil society. In the long term, thisentails a global constitution and boundary courts, as well as a globalparliament and executive which are all to be governed by extendingdemocratic principles to the operation of international institutionsoverseen by a global public.

The second key principle of cosmopolitan governance is that the sub-ject of these global democratic and legal structures is the individual via


the development of a set of individual rights and entitlements defendable ata global level. Cosmopolitan governance creates limits as to how statesand other organisations can treat individuals. The routes of legalrecourse extend to a global level and while interpretations of statecitizenship will vary across the face of the world, they can only do sowithin limits determined by a global constitution and the notion of acommitment to humanity.

The third principle of cosmopolitan governance necessarily stemsfrom the first two: a profound restriction on the authority of the state.Within the context of cosmopolitan governance, the role of the state isconstrained by limits laid down by the laws of the global legal system.Once part of this system, compliance would be compulsory.

The fourth principle of cosmopolitan governance is the extension ofdemocracy to include a publicly determined regulation of economic life.While there is no suggestion to replace capitalism, deregulated capital-ism is not compatible with the goal of public participation and socialwelfare. As such, both Falk and Held’s projects point to the rules of eco-nomic life being determined both globally and democratically.

The ambitious programme of cosmopolitan governance is a morallycompelling position that seeks a universal and comprehensive frame-work for all individuals despite the cultural diversity that exists in theworld and the fundamental unevenness in social opportunities acrossthe world. Unlike the ideas of extended neo-liberalism and contractualnationalism, cosmopolitan governance is an articulation of liberalismthat stretches beyond supporting the global extension of markets or thepromotion of the interests of prosperous states. It seeks to establish auniversal political framework that addresses the fundamental deficien-cies in equality and representation of the poor across the world, as well as being concerned about the long-term future of all humanity.Cosmopolitan governance entails creating a global democratic andconstitutional counter balance to the global organisation of capitalismin order to address the social inequality and insecurity of market driv-en globalisation.

Despite the compelling nature of this rationale, I contend that thereare significant practical problems with the account of cosmopolitangovernance. The claim that contemporary globalisation provides suit-able grounds to formulate cosmopolitan governance, as Falk and Heldargue, does not automatically mean that cosmopolitan governance is aviable alternative to neo-liberal governance. The remainder of thischapter addresses two practical problems that cosmopolitan gover-nance faces in addressing the adverse social effects of economic global-isation. The first is that the world order of economic globalisation and


neo-liberal governance provides resistance to practices of cosmopolitangovernance at the same time as it accepts principles of a more passivemoral cosmopolitanism. The resistance that capital and neo-liberalgovernance would have to a global democracy that places democraticlimits on capital would be extensive and this would, in all probability,weaken and compromise the already long-term nature of the cosmo-politan project. The second problem of cosmopolitan governancerelates to the weak social foundations that it would be built on as well as the weak basis for redistribution that the cosmopolitan mindsetprovides. In isolation, these two problems are damaging to the cosmo-politan project, but taken together they pose a serious obstacle tocosmopolitan governance being able to address the adverse effects ofeconomic globalisation or indeed governing effectively in a globalisingcontext.

Nevertheless, it must be clear that I am not claiming that cosmopol-itan governance is not desirable in an ethical sense or indeed couldnever be possible as a global political structure in the future. Rather, I am claiming that economic globalisation and the practices of neo-liberal governance that currently hold sway, provide serious impe-diments to cosmopolitan governance being able to address theformidable social effects intrinsic to economic globalisation. While cos-mopolitan governance may be possible in the future, the claim here isthat at present it is not a viable political alternative to the prevailingsocial forces supportive of economic globalisation.

Economic globalisation and cosmopolitan governance

Both Falk and Held contend, in differing ways, that contemporary glob-alisation provides the conditions by which cosmopolitan governancecan come into being. Falk emphasises the growing global consciousnessevident in the proliferation of various social movements resisting eco-nomic globalisation, while Held points to the presence of disjuncturesthat undermine democracy within the nation-state. However, despitethese important observations, it is my contention that there are otherfeatures of contemporary globalisation that work against the directionof opening up alternatives to economic globalisation. In essence, thedebates regarding globalisation that I examined in Chapter 1 have anextremely important significance when it comes to proffering alterna-tives to contemporary globalisation. If globalisation is “fundamentallya spatial phenomenon”, as Held and the transformationalist account ofglobalisation argue (cited in Guibernau 2001: 1), then cosmopolitangovernance looks like a viable panacea. However, if contemporary


globalisation is also significantly contextualised by the ideas and formsof power that buttress this type of globalisation, as I argued in Chapter2 with reference to neo-liberalism and the social forces that supporttransnational capitalism, then cosmopolitan governance is placed in anentirely different light.

Consequently, a critical political economic perspective on globalisa-tion emphasises the material, institutional and ideational factors thatshape the world order of contemporary globalisation. This perspectiveis more politically insightful than the transformationalist account inthat it emphasises the considerable weight that neo-liberal practicessuch as deregulation and liberalisation, as well as the forms of compet-itiveness that shape the operation of the global economy, all have inshaping contemporary globalisation. Furthermore, the prevailing formof globalisation is ultimately underpinned by neo-liberal governance,or a “new normativity” as Sakia Sassen puts it, that represents a depar-ture from earlier moral underpinnings of world economic activity. Notonly does this normative shift explain important institutional andideational elements of contemporary globalisation, it also explains in alarge part the inequality and insecurity that stems from this type ofglobalisation. Understanding contemporary globalisation as being aworld order of economic globalisations poses proponents of cosmopol-itan governance with a series of challenges.

These challenges are evident in the ways economic globalisationaccepts some forms of cosmopolitanism just as much as it resists cos-mopolitan governance. It is crucial to stress that the difference betweencosmopolitanism and cosmopolitan governance is substantial. It is not just that “cosmopolitanism about ethics does not necessarily implycosmopolitanism about institutions” (Beitz 1999a: 287), but cosmo-politanism regarding ethics does not necessarily imply ethics thatempower people through the development of rights and correlativeduties. In its weakest sense, cosmopolitanism means shying away from special consideration of nationalism or patriotism in determiningquestions of what is right or good. It can represent a principled rejec-tion of a dominant allegiance to local political community in favour of a universal moral code but can also justify unprincipled detachmentfrom involvement and real responsibility in any community (Barber1996: 30). Thus, we can identify three distinct species of cosmopoli-tanism: cosmopolitanism as an unattached and unprincipled attitude;cosmopolitanism as a universal ethical standard; and cosmopolitanismas a framework that should be institutionalised – cosmopolitan gov-ernance. It is my contention that economic globalisation largely


abides the first two senses of cosmopolitanism but resists cosmopolitangovernance.

In the era of global capitalism, a cosmopolitan attitude, in the firstunprincipled and detached sense, can be said to exist among some sec-tors of the elite and the wealthy (Castells 1996: 415–6; see also Reich1991b: 309–10). This does not necessarily mean that such elites denythat comprehensive principles exist. Rather that there is little enthusi-asm for any wide-ranging attempt to institutionalise rights and duties ata global level and develop global forms of regulation and financialredistribution. By contrast, cosmopolitan governance entails a com-mon system of governance, including a common frame of rights andobligations that authorises an overarching conception of legality andliberty. The globally binding nature of cosmopolitan governance wouldfilter through all levels of governance and social life across the globeand bind the poorest pauper and the wealthiest capitalist into essen-tially the same democratic legal system. Transnational capital is cos-mopolitan in the sense of being detached from any locality but wouldeschew any democratic regulation of capitalism or global responsibilitythat pins down everyone to a common set of rights and standards forhumane treatment of which actual treatment below these standards isillegal and punishable. Not only would such cosmopolitan regulationconfound the differentials between locales that are necessary for capi-talism to exploit by placing various forms of regulation in place but alsoglobal redistribution is unlikely to be popular amongst most corporateinterests. Cosmopolitanism in a passive and unattached ethical sense isconsistent with individual choice and deregulated capitalism. The idealof cosmopolitan governance and the global regulation of capitalism isanother matter entirely.

It is also important to see that cosmopolitanism in the secondstronger ethical sense, which still falls short of cosmopolitan gover-nance, has been influential in the prevailing form of global governance(Held et al 1999: 70–4). However, while there are clearly processes ofnormative innovation afoot in global governance in response to glob-alisation, the innovations and programmes initiated by the UN andregional organisations have not included the extension of democracyacross states in anywhere except the European Union. As such, devel-opments associated with human rights law can be seen to constitute aninnovation of liberal internationalism reflecting liberal-cosmopolitanvalues, but not cosmopolitan governance. In addition, the extension ofglobal governance has done little to moderate the adverse effects of eco-nomic globalisation and in effect, via the ascendancy of neo-liberal


governance, has supported the framework and the processes of economicglobalisation. While contemporary globalisation may be seen as a promptfor global democracy or a humane intent within global civil society, theworld order that constitutes economic globalisation may actually impedeand frustrate the realisation of cosmopolitan governance.

Consequently, neo-liberalism can be seen to embrace cosmopoli-tanism in some senses but reject and resist the development of cosmo-politan governance; especially of the kind that would involve globalregulation or redistribution. To use Falk’s terminology, it is unlikely thatthe purveyors of globalisation from above want to share predominancewith the advocates of globalisation from below within the channels ofglobal civil society, not to mention a global democratic structure. Infact neo-liberal governance, and the anti-democratic practices of newconstitutionalism, actively wards off social movements that operate tochallenge economic globalisation at a local or transnational level. Thishas been clear in regards to the demonstrations against the WTO inSeattle in 1999, the G8 in Genoa two years later and numerous otherhigh-level meetings of policy-makers within the global economic archi-tecture. The agents of globalisation from below have had few opportu-nities to contribute their alternatives to global governance in officialnegotiations because there is little or no constructive role for alterna-tive social movements within formal institutions of the global eco-nomic architecture, and a broad disregard of their ideas by the policy-makers within these institutions. Consequently, the impact of socialmovement reform on neo-liberal governance has been at the “fringes”of policy and has ultimately produced only “marginal reforms” (Scholte2000a: 117). It is important to emphasise that the impact of these socialmovements has changed and complicated policy-making, as well asremoving any perception that states are the only actors that representthe “public interest” (O’Brien et al 2000: 206). Nevertheless, “while sig-nalling an alteration to the method of governance, it is less clear thatthere is a change either in the content of governing policies or in thebroad interests they represent” (O’Brien et al 2000: 206). This is evendespite the “victories” of the anti-globalisation movement in respect tothe MAI and its contribution to problematising neo-liberalism.Additionally, it is debateable if the diversity of groups involved in thevarious protests, while a source of the strength for the resistancemounted by the anti-globalisation movement, would be such astrength in the development of an alternative to economic globalisa-tion, much less a cosmopolitan alternative.

In short, the ethos and structures of neo-liberal governance areactively opposed to the ethical trajectory of cosmopolitan governance.


This is not to say that global social movements and NGOs are notimportant to global politics; clearly they are. Social movements haveplayed central roles in dismantling Apartheid in South Africa, facilitat-ing the International Criminal Court, and acting upon various humanrights and environmental issues (see Keck and Sikkink 1998).Nevertheless, it is important to be aware of the limits of these move-ments in respect to economic globalisation and the powerful states andsocial forces – social movements for global capitalism – entrenchingthis world order (Gill 2000: 139). The marginalisation of those wishingto reform globalisation is also evident within the clearly delimited rolethat the UN has in respect to economic issues compared with the WTO, IMF and World Bank. In addition, while there has been a shift inrhetoric within the organisations that frame economic globalisation,with organisations such as the IMF placing renewed emphasise onpoverty alleviation, the free market is still seen as the legitimate modelfor development (Scholte 2000a: 116–7; World Bank 2001: 11–2).

In addition to dominating the global economic architecture, neo-liberal ideas and norms have infused into many states. While the linebetween foreign and international politics is being blurred as pro-ponents of the transformationalist account of globalisation argue, thestate is still a site of significant institutional power and popular legiti-macy. The nation-state under the aegis of the practice of the competi-tion state both supports the persistence of the nation-state as well asthe entrenchment of the institutional and ideational networks of neo-liberal governance and the extension of economic globalisation. As Isuggested in Chapter 3, there are problems with the ways in which thecompetition state, in advanced capitalist societies at least, maintainspublic legitimacy and a sense of national community in light of itsemphasis on competitiveness, economic growth and maintainingfinancial market credibility. However, despite these tensions it seemseconomic globalisation and nation-states embedded within this worldorder can withstand a significant level of dissent regardless of whetherit comes from the significant regressive and xenophobic social move-ments around the world or progressive-cum-cosmopolitan social move-ments (Falk 1997b: 22). Indeed, many governments seem to be partic-ularly eager to satisfy chauvinistic social groups by responding todemands to restrict immigration while at the same time persisting withthe liberalisation of finance and trade (Sassen 1995: 59–62). States oper-ating within the logic of the competition state remain strategic actorsthat are capable of manipulating public forms of dissatisfaction in waysthat transnational bodies like the WTO simply cannot. The persistenceof such states are a significant obstacle to the idea of cosmopolitan


governance because these states remain locked into economic globali-sation and most states seem to have a remarkable capacity to absorbprotests and ward off strong cosmopolitan moral duties or modes ofdemocracy that could possibly affect the operation of free markets.

It is clear from the preceding observations that I am not confidentthat the social forces supportive of cosmopolitan governance have thepower to confront neo-liberal governance in the near future. While dis-quiet is rising in respect to the consequences of economic globalisation,the social response is more likely to be the regressive backlash politicsthat Falk fears, than the progressive cosmopolitanism he hopes for.Likewise, it seems the disjunctures that Held underlines are paperedover by the promises of economic growth and the continued referenceto nationalism. If cosmopolitan governance is to oppose economicglobalisation and set the stage for democratically contoured economy,it will have to prevail politically over the social forces arrayed behindeconomic globalisation.

The weak foundations of cosmopolitan governance

The problems facing cosmopolitan governance are not limited to issuesof political strategy. Charles Beitz (1999a: 290–1) states that cosmopoli-tanism “typically evokes doubts” and is seen to be unrealistic on twogrounds;

one is that such theories are unrealistic in one (or both) senses:either they require more extensive international reform than seemslikely politically or they require the establishment of internationalinstitutions with a degree of coercive power that states are not likelyto concede. … Of course… it might be argued that the real problemwith cosmopolitanism is not that it is unrealistic in an empiricalsense but rather that it is unrealistic in a moral sense. It might besaid, in particular, that cosmopolitanism misunderstands people’slocal affiliations …

These criticisms, which are levelled at cosmopolitanism wheneverthese ideas are espoused, are salient to whether cosmopolitan gover-nance can harness public support and act as foil for global capitalism.The first sense that Beitz refers to was addressed in the previous section,although my argument was that cosmopolitan governance did nothave the political faculty to overcome neo-liberal governance ratherthan being inherently unfeasible in political terms. We now turn to the second sense that Beitz points to, that while cosmopolitanism is


clearly a desirable and practical value system, it may be too weak andderacinated to build a robust polity upon, or to mobilise people andresources to act to redress social problems.

Primarily, there is the claim that the ethic of cosmopolitan gover-nance is counterfactual to real ethical and political experience.Benjamin Barber (1996: 34) claims that “no one actually lives” in a cos-mopolitan world, rather they live in a “particular neighbourhood of theworld”. Michael Walzer (1996: 126) likewise suggests; “how odd it is toclaim that my fundamental allegiance is, or ought to be, to the outer-most circle. My allegiances, like my relationships, start at the centre”.Cosmopolitan governance not only defends the importance of the out-ermost circle but also claims that governance should be based on theimperatives that stem from this circle. In Falk’s model of humane gov-ernance, the attempt is made to build a global democracy and consti-tution upon pre-existing relationships and desires. The claim is madethat ethical experience is now essentially global. Held attempts toextend democracy across and within other relationships across theglobe, because if democracy is to realise individual autonomy in a glob-alising context, it can only be achieved universally. Both these posi-tions, however, come down to extending the centrality of abstract lawand not the particularistic values of human groups.

Clearly, there are real differences that complicate any cosmopolitaneffort to develop universal political structures. These differencesinclude uneven economic development, differing political and culturalpractices including “local and national solidarities” that are not neces-sarily compatible with democracy or liberalism (Resnick 1998: 129).There is also the criticism that cosmopolitanism is a “theoreticaljustification” that masks Western dominance and vindicates potentialpacification of the non-western world and the extension of universalvalues by powerful western interests (Zolo 1997: xiv). More telling,however, is the nature of cosmopolitan social relations. JurgenHabermas (2001: 109) contends that outside a “common political cul-ture” there is the absence of “common values orientations and sharedconceptions of justice”. Habermas is not alone in noting the absence of“thick” morality in world politics (see also Resnick 1998: 136; Walzer1994: 2–4). The absence of a thick sense of morality has profound con-sequences for the political vitality of cosmopolitan governance.Habermas (2001: 108) notes that

even a worldwide consensus on human rights could not serve as thebasis for a strong equivalent to the civic solidarity that emerged in the framework of the nation-state. Civic solidarity is rooted in


particular collective identities; cosmopolitan solidarity has tosupport itself on the moral universalism of human rights alone.

These observations obviously complicate the capacity of a globaldemocracy to cultivate civic values, elicit sacrifices from the global“public” and legitimate authoritative political action. Therefore, theabsence of this “civic solidarity” can be seen as an objection to the fea-sibility of the cosmopolitan project to attempt to regulate the agentsand frameworks of global capitalism.

While these objections complicate the development of an effectivecosmopolitan response to neo-liberal governance, they do not totallydiscredit the cosmopolitan project nor deny that there is the need for“political governance at the global level” to manage the rising com-plexity of global interaction and interdependence (Resnick 1998: 141).In addition there are clear developments in international institutionsand human rights that suggest that a normative shift towards cosmo-politan values is underway (Archibugi and Held 1995). However, sucha shift is partial, with actual cosmopolitan developments steering awide course around regulating or interfering with capitalist activity. Asstated earlier, passive cosmopolitanism is backed by capitalist and neo-liberal systems that systematically preclude a deeper cosmopolitanengagement. Nonetheless, the objections noted above point to theweakness of public sentiment cosmopolitanism would be built upon.The concern is that cosmopolitanism is incapable of developing a wide-spread public ethos that can establish a strong form of governance thatis able to enact a common structure of action that regulates the adversesocial effects of capitalism. It is important at this point to recall G. A.Cohen’s point from the previous chapter, that in order to effectivelyaddress inequality there needs to be the development of a public ethosthat addresses inequality – not just a new economic and political struc-ture. There are significant doubts, given the critiques of cosmopoli-tanism noted above, whether such a public sentiment can be producedat a global level.

The absence of a public ethos that resists inequality and insecurity is a particular problem for effective economic regulation and redistri-bution. While the picture of the rich north and the poor south still is largely true in respect to the geographical distribution of wealth,economic globalisation generates new patterns of wealth and povertyacross the world. In the same way that the networks of global capitalcut across the nation-state, these networks cut across the globe eitherlinking people into webs of prosperity or into large gaps of social dislo-cation. The redistributive programme to counteract this pattern of


uneven global development, while necessary to uphold cosmopolitanaspirations, is a massive and complex task. Without a motivating ethospeople will be likely to want to make the most of the global economyif it operates favourably near them or compete to bring the networks tothem. The absence of a motivating ethos will prevent the regulation ofglobal capitalism, the provision of global public goods or redistributionof wealth from the clusters of wealth production. Likewise “the absenceof a global culture strong enough to provide stability and motivate con-tribution, could generate an unending series of transfers from societiesprudent enough to invest rather than consume to those imprudentenough to do the opposite” (Beitz 1999a: 291). Proponents of cosmo-politan governance also tend to understate the coercion required toenforce such redistribution, as well as the potential of global “authori-ties” to act in tyrannical ways. As Danilo Zolo (1997: 153) forcefullyclaims, cosmopolitan governance “could not emerge as anything otherthan a despotic and totalitarian Leviathan, which could have no otheroption open to it than to counter the predictable spread of anti-cosmopolitan terrorism with methods of an equally terrorist nature”.While this point is rather hyperbolic, cosmopolitan governancenonetheless requires the institutional means of economic regulation andredistribution. While this is difficult, cosmopolitan governance alsorequires the even more difficult realisation of a public ethos in the formof a strong and principled public sentiment in order to legitimise globalredistribution and regulation.

The development of this public sentiment within a context of cul-tural pluralism and neo-liberal governance is questionable. It is not justthat this sentiment has to be global, but that it has to be democratic inthe sense of people being willing to enter dialogue and regard the inter-ests of others. Democracy is still far from a universal practice in statesaround the world and in many places its exercise is limited or con-strained by various cultural or socio-economic factors. In addition,across much of the world, neo-liberal values and governance also sys-tematically sideline and constrain democratic practice especially as itrelates to economic affairs. This does little to augment the notion of aglobal democratic sentiment. Of particular concern with cosmopolitangovernance, according to a range of critics, is the idea that the valuesystem of democracy and citizenship can be exported or imposed(Barber 1996: 278–9; see also Miller 1999: 79; UNDP 2002: 5). RobertReich (1991b: 309) indicates that without practicing the responsibilityand reciprocity of democracy and citizenship within a “real politicalcommunity” people may well “find these ideals to be meaninglessabstractions”.


For democracy to develop it must be practised. The irony and dangerof cosmopolitan democracy is that just as the ideas of world citizenshipand global civil society are gaining momentum, the practice of statecitizenship is under grave threat because of the individualist and instru-mentalist thinking of neo-liberalism and the practices of the competi-tion state. The impact of the practice of the competition state do notjust frustrate the development of cosmopolitan governance becausethese practices embrace a detached and passive sense of cosmopoli-tanism and reject the constraints of cosmopolitan governance. The fur-ther, deeper frustration provided by the competition state to the notionof cosmopolitan governance stems from the dilapidated nature of civiclife and citizenship within states across much of the western world and beyond (Cerny 1999; see Alesina and Wamiarg 2000). The compe-tition state, enmeshed within neo-liberal governance, fosters a distancebetween citizen and decision-makers that does little to create a vibrantpublic sphere or trust in political life (Cox 1997). Of course, the socialfragmentation and inequality across the world is also responsible forconditions of political life that are neither robust nor constructive topolitical participation. If democracy and citizenship were practicedwithin the state with more distinction, the ideal of cosmopolitan gov-ernance would have far stronger foundations. In short, there seems tobe missing foundations to edifice of cosmopolitan governance.

Cosmopolitan aspirations are not easy to enact. Clearly neo-liberalgovernance, while not the only influence over political and social life,significantly shapes the political terrain that cosmopolitan governancemust be developed from and developed on. While cosmopolitan gov-ernance represents an extension of the cosmopolitan tradition, it alsorepresents a principled response to an era of increasing social fragmen-tation and globalising integration. However, as an approach to gover-nance, the attempt to institutionalise cosmopolitanism is confrontedby the realities of economic globalisation and neo-liberal governance.It may very well be the case that the effects of economic globalisationwill have to be moderated first in order to construct cosmopolitan gov-ernance. The interactions of global capital, while constituting the basisfor economic and political globalisation, do “not go hand-in-hand withany discernible process of planetary social integration” in the senserequired for the principled cosmopolitanism of Falk or Held (Zolo 1997:145). This point is made in a more hopeful way by Philip Resnick (1998:132), who claims that even if economic globalisation “runs counter to the spirit of global democracy … in a contemporary version ofHegel’s cunning of reason, it may help set the stage for the eventualbreakthrough to something more genuinely democratic”. In order to


establish global democracy and global citizenship it may be necessaryto first cultivate democracy and citizenship within the state. It may takea significant period of time to develop the values and preconditionsneeded for cosmopolitan governance. Cosmopolitan governance, farfrom being a solution to the effects of economic globalisation, is anidea that may be possible after this challenge has been met. In thissense, cosmopolitan governance does not have the measures or strategyto construct a framework of governance that can moderate the worstaspects of economic globalisation and thus be a viable alternative to thecurrent ascendency of neo-liberal governance.

Conclusion: not the cosmopolitan moment

The criticisms that I have levelled at cosmopolitan governance do notmaintain that the ideas of cosmopolitan governance are as problematicin moderating economic globalisation as the approaches of extendedneo-liberalism and contractual nationalism. Falk and Held leave meconvinced that cosmopolitan governance is superior to these twoliberal alternatives. They see contemporary globalisation as requiring aturn away from economistic liberalism towards an account of liberal-ism that embraces the regulation and redistribution of capitalism aswell as of conceiving effective governance as being a global endeavour.Moreover, cosmopolitan governance also convinces me that principledcosmopolitanism needs to be institutionalised into law. There can beno doubt that the ideas of principled cosmopolitanism have and willcontinue to influence global politics, but principle alone will not besufficient to enact a “common structure of political action in economicaffairs” or counter balance global capitalism.

Nevertheless, cosmopolitan governance does not persuade me that theinstitutionalisation of cosmopolitanism is currently a possible way thatcan effectively moderate economic globalisation. It is my contentionthat cosmopolitan governance is lacking the political vigour to resist thepractices of neo-liberal governance and in repudiating prevailing formsof political association, relies upon a thin political association that wouldhave problems enabling shared burdens and redistribution even if aglobal structure of political action could be formed. In particular, devel-oping a global political system and community does not seem to be aplausible response to the weakened exercise of democratic association inan era of neo-liberalism and the competition state. The successful appli-cation of regulatory and redistributive policies is central to effectivelydealing with economic globalisation, but these policies are dependentupon public support and building upon public sentiments that do exist.


By resting upon the thin morality of cosmopolitanism rather than thethick morality of existing political communities, cosmopolitan gover-nance would simply struggle to provide the ethos to enact a democrati-cally determined will and policies on capital. Cosmopolitan governancewill only be in a position to restrain the worst edges of economic glob-alisation once there are stronger civic foundations to base such a polityon. While some people of the world might increasingly be “world citi-zens” it is not the cosmopolitan moment just yet.

Ultimately, while cosmopolitan governance provides the right prin-ciples and intent, I am not persuaded that this approach possesses thepower needed to enact liberty within the context of economic globali-sation. Held claims that “autonomy is, in short, structured throughpower”. This is surely correct, but where is the source of power?Democratic public law or an emerging world citizenship needs powerthat stems from people working together to enable their liberty, butwhere is the public? David Miller (1999: 78) criticises Falk’s idea of the“citizen pilgrim” on the basis that the “only city of which a pilgrimcould be a citizen was the Heavenly Jerusalem”! Miller’s point is thatcitizens need not be activists but they do need to be embedded in socialrelations of negotiation and responsibility for political institutions con-stituted by these social relations. Held’s emphasis on power and Falk’sattempt to reconcile cosmopolitanism with patriotism point to theimportance of people protecting themselves from economic globalisa-tion without resorting to inward looking nationalism. As Resnick main-tains, there is a need to be realistic about the public sentiment neededfor solidarity and citizenship. He claims that it means taking “at a min-imum, patriotism, to be an enduring and necessary feature in the build-ing of a global democratic order”;

Having roots in a particular country is not incompatible with a senseof cosmopolitanism and open-mindedness towards the inhabitantsof other states. We need to foster such a cosmopolitanism; but formost of us this cannot come at the price of denying some primaryloyalty to our fellow citizens (Resnick 1998: 136).

As such, we need to turn to a strand of political thought outside liberalism that seeks to institutionalise liberty via the exercise of patri-otism and public power within a democratic state. The chapter that follows provides an account of governance that seeks liberty within a neo-Roman republican understanding of good government thatechoes some of the ideas found within cosmopolitan governance, butemphasises the need to restore civic life within the state.


Part III

The Republican Restoration of the State

7Global Civic Republicanism:Retrieving the State

The political liberty of the subject is a tranquility of mind,arising from the opinion each person has of his safety. Inorder to have this liberty, it is requisite the government be soconstituted as one man need not be afraid of another(Montesquieu 1977: 202).

In differing ways, the liberal approaches examined in Part Two arguethat neo-liberal governance is unable to produce stable and securesocieties across the world or guarantee prosperous capitalism in thefuture. The considerable levels of social dislocation and inequality areof particular concern to the approaches of contractual nationalism andcosmopolitan governance, thereby leading these approaches toadvocate measures that seek to ameliorate these social problems.Nonetheless, from the point of addressing the social and politicalproblems of economic globalisation, there are problems with all threealternate formulations of liberalism. The next two chapters argue thatdespite the clear and significant problems of neo-liberal governance itis extremely doubtful that any of the alternatives examined couldenact policies and institutions that would moderate the adverse effectsof economic globalisation. The claim here is that it is not possible tomoderate the social effects of economic globalisation and to promoteliberty around the world without the public regulation of global capi-talism. Furthermore, just as deregulation depends on the state, regula-tion in the public interest of the agents and infrastructure of globalcapitalism is scarcely possible without the authority of the state.

As I indicated at the conclusion of the last chapter, cosmopolitanismis not enough. While cosmopolitan governance offers a compellingethical stance in relation to regulating economic globalisation, its

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political means are of limited substance. With cosmopolitan gover-nance, it is not clear where the power needed for regulation is to comefrom or how an affective global public can develop. The purpose ofthis chapter is to provide a republican departure from cosmopolitanand liberal arguments. The neo-Roman strand of republicanism is anaccount of liberty and good government that provides a strong ration-ale to regulate economic activity. While republicanism agrees with thegoal of individual liberty, in contrast to liberalism, republicanismasserts that liberty is only possible when people are protected fromarbitrary sources of power through public institutions that counteractexisting flows of power, including those forms of domination andvulnerability that reside in the “market place”. In contrast to cosmo-politanism, republicanism asserts that the state is the only potentialfoundation of power that could feasibly be directed towards publicobjectives. That is, we ought to construct public forms of power fromwhere citizens are currently situated not from the Archimedean pointof the cosmopolis. I contend that even though a cosmopolitan aware-ness is important to any effective counter to economic globalisation,the motivating force of patriotism, of people feeling responsible forthe liberty that the state can impart, is a considerably stronger founda-tion for moderating economic globalisation.

This chapter describes an alternative conception of governancereferred to as global civic republicanism that advocates civic states thatare designed to uphold the liberty of their citizens. The political moti-vation for the regulation of transnational capitalism entails a model ofpolitical practice that is described in three steps. The first step detailsthe philosophical legacy of the republican conception of politics andthe state. The second step moves towards detailing the institutionsand policy direction of a state that enacts civic liberty. The third stepexamines the inter-state dimensions of republicanism. It examines theform of cooperation that would exist between civic states as well as thetype of arrangements needed to enable such states to publicly regulateglobal capitalism.

Retrieving the state

The various approaches to liberal governance examined in Part Twosideline the state. This is overtly the case with the diminution of therole of the state within the arguments of extended neo-liberalism andcosmopolitan governance. Within the argument of contractual nation-alism, the state is secondary to the community required to enable and


facilitate high technology capitalism. However, I contend that it is amistake to ignore the potential role of the state because the competi-tion state has actively orchestrated and upheld the world order ofglobal capitalism and it must be shifted away from this stance in orderto envision any alternative to global capitalism as it is presentlydesigned. The alternative that follows avers that the state could facili-tate the democratic regulation of global capitalism and thereby devi-ates markedly from the ideas of contractual nationalism and extendedneo-liberalism. The extent to which citizens of a civic state must beresponsible for their state also demonstrates a distinct difference fromcosmopolitan governance even if being a republican citizen doesinvolve thinking within a context broader than the state.

With this in mind, I advocate the idea of global civic republicanism,a formulation of governance that is inspired by republican thoughtadapted to a world that is increasingly integrated at a global level.Global civic republicanism builds upon neo-Roman republicanism andholds to the precept that individual liberty is only possible whenpeople collectively protect themselves from vulnerability and subjec-tion by creating and being responsible for a republican state. However,protection from the potential or actual harm of economic globalisa-tion cannot be secured by the republican state acting alone. Complexforms of cooperation and delegation of state power are required toenable the joint interstate regulation of global capital and the negoti-ated governance of other global issues. This cooperation would needto extend beyond the current neo-liberal regime of economic agree-ments towards a global regime, while falling short of cosmopolitangovernance, that is more densely and broadly institutionalised arounda republican moral purpose. From the perspective of the republicaninspired vision of liberty, the problem with neo-liberal governance isthat private interests and transnational networks of capital are able todominate public institutions, thereby weakening the public control ofthe state. Reasserting this connection is essential if the state is to fulfila civic purpose and be a public foil for global capitalism that is able tobalance the democratic pursuit of prosperity, social cohesion andliberty – thus moving towards addressing the adverse social conse-quences of economic globalisation. As such, the idea of the civic stateembraces a republican purpose that revolves around the preservationand protection of its public through public deliberation and negotia-tion with other states.

The philosophical basis of global civic republicanism stems from the neo-Roman republican tradition. As an approach to liberty and

Global Civic Republicanism: Retrieving the State 185

government, this strand of republicanism draws its inspiration fromthe Roman period, where Roman scholars interpreted the legacy of theancient Greeks, but only gained coherence in the Italian Renaissancewhen Roman history itself was reinterpreted and when civic human-ism was an influential basis for government in northern Italy (Brugger1999: 16). Central to the historical legacy of republicanism are thefigures of Niccoló Machiavelli, Jean-Jacques Rousseau and CharlesMontesquieu. The intellectual and political presence of republicanismwas notable in the revolutions in England and America (Skinner 1998:ix). While there are different articulations of the republican legacy, themain contemporary articulators of the neo-Roman tradition – of whatis referred to here simply as republicanism – are Quentin Skinner,Philip Pettit, Maurizio Viroli and Richard Bellamy. The central claim ofthese writers is that before the ascendancy of liberalism, the neo-Roman view of liberty was a prominent political conception that“slipped from sight” during the nineteenth century (Skinner 1998:xii). This disappearance also occurred in thinking about politics in aninternational sense (Onuf 1998: 2–3). The revival of neo-Roman repub-licanism by these authors has been largely prompted by the dominionof liberalism in both theory and practice.

The contemporary revival of republicanism has centred on it beingdistinct from both liberalism and communitarianism. As a politicaltheory, republicanism has broadly criticised both liberalism, for itssocial atomism, and communitarianism, for the idea that involvementin a pre-political community can characterise freedom. The republicanconception of liberty differs from liberalism’s concept of negativeliberty, or non-interference of the state, claiming that non-arbitrarystate intervention actually constitutes liberty (Pettit 1999a: 22–3).Republicanism also criticises the idea that a polity should be based pri-marily upon the rights of individuals, claiming that citizenship andthe idea of the public good should be at the heart of a good polity.There is also a substantial difference between republicanism and com-munitarianism, as evident within neo-Aristotelian thought whereliberty is defined as positive liberty and political participation within acommunity is the basis of the “good life”. The neo-Roman republicantradition differs markedly from the position heralded by HannahArendt and continued by neo-Aristotelian authors such as MichaelSandel and Charles Taylor (Bellamy 2000: xii). A clear distinction isdrawn between this tradition and the neo-Roman view of republican-ism that stems from Roman republican authors and Machiavelli(Bellamy 2000: xii; Viroli 1995: 170–1). The neo-Roman account holds


that there is a distinction between the belief that participation in apolitical community is the constitution of liberty in the sense of posi-tive liberty and the neo-Roman republican conception that politicalparticipation is the only means to establish a condition where societyis free from domination. That is, “rather than trading on a moralisticconception of positive liberty, therefore, Machiavelli urged civicinvolvement to avoid the domination of tyrants or elites” (Bellamy2000: xii). Thus, republicanism aims for an individual liberty that isonly possible by the collectively constituted and institutionalisedmoderation of power.

Political activity on the part of citizens is a crucial step in the con-struction of liberty in the republican sense. Nonetheless, the impor-tance of political participation in the development of liberty has notbeen a recurring theme in mainstream liberal thought. Juridical guar-antees of individual rights and constitutional restraints on the statehave been considerably more central to the development of a liberalconception of negative liberty (Pettit 1999a: Chp 1). As such, therepublican tradition posits a political conception of the ethics andinstitutions needed to construct the conditions of liberty. Bellamy(2000a: 120) claims that “the rights and liberties available to usdepend upon the laws, norms and priorities of our particular society”and that “we shall be free only to the extent that we share in deter-mining their character” and, more generally, to the democratic facilita-tion of compromises with society. The clear emphasis of neo-Romanrepublicanism is on political mechanisms and procedures that allowsocial disagreement in a peaceful context of reciprocity that favoursthe political conciliation and negotiation of different ideas and values.Nevertheless, while institutions are important and embed a rationalconception of politics, they are only ever truly animated by citizenshipthat is also patriotic and virtuous – a “love of country” that is a “love of the common liberty of a particular people” (Viroli 1995: 12).Consequently, republicanism relies on a political conception of partic-ipation, negotiation and democracy to construct individual liberty. Tofully explain the way that neo-Roman republican develops individualliberty, it is necessary to examine the political ethics that motivaterepublicanism.

Republican ethics and practice

The neo-Roman strand of republicanism emphasises a series ofinterlocking political ethics and practices. The first is the republican


conception of liberty. According to republican thought, liberty is not anatural attribute, but rather a civic achievement that requires an insti-tutionalised context where citizens are free from subordination. Therepublican conception of “freedom consists not in the presence of self-mastery, and not in the absence of interference by others, but in theabsence of mastery by others: in absence … of domination” (Pettit1999b: 165). Pettit (1999b: 165) claims domination is a relationshipwhere

one person is dominated by another, so I shall assume, to theextent that the other person has the capacity to interfere in theiraffairs, in particular the capacity to interfere in their affairs on anarbitrary basis…In the most salient case it is the capacity to inter-fere as the interferer’s wish or judgement – their arbitrium – inclinesthem…If freedom means non-domination, then such freedom iscompromised whenever a person is exposed to the arbitrary powerof another, even if that power is not used against them.

Consequently, republican liberty, understood as non-domination, isa condition that is defined by the elimination of both the act of arbi-trary intervention and the actual capacity to arbitrarily interfere in aperson’s life. So while domination is a condition where people livewith no recourse in respect to mastery of others, non-domination is acondition where people publicly create protection from the full-rangeof threats that diminish what Montesquieu referred to as their psycho-logical sense of tranquillity.

Republicanism’s sensitivity to the capacity of arbitrary interventionin peoples’ lives leads to a concern with the effects of power on bothindividuals and the body politic. Non-domination reflects a concernwith the ways ambition, self-interest and powerful private or factionalinterests can corrupt the body politic and usher in domination and adependency on the goodwill of these interests, as well as potentiallysilencing other voices in the political process. The objective is for indi-viduals to be free from both “imperium”, that is domination by thestate, and from “dominium”, meaning domination by powerful or sec-tional interests from society (Pettit 1999a: 13). Avoidance of subordina-tion or vulnerability from these sources differs from the liberal fear ofrestraint, in that non-domination is dependent not upon the level ofnon-interference but the “extent that there exist institutional protec-tions against interference” of an arbitrary kind (Brugger 1999: 6–7).Thus, law actually constitutes non-domination in contrast to the


liberal view of non-interference. In the latter, law can only be justifiedby the result of less overall restraint on individuals by the presence oflaw (Pettit 1999a: 40–3). Republicanism stresses transparent, publiclygoverned non-arbitrary law as the way to construct liberty. Libertydefined as non-domination “comes about only by design” – it is the“freedom of the city, not the freedom of the heath” (Pettit 1999a: 122).

A requisite in the design that achieves this resilient sense of liberty isthe publicly directed and constrained exercise of power by a republi-can state. According to republicanism, power is an unavoidable andomnipresent element in social life, thereby necessitating a publiccounterbalance to private forms of potential domination. Publiclydirected power refers to the exercise of law in the interest of protectingthe public from subjection. This activity is best referred to as “publicpower” as it exists to “serve the public weal” (Ralston Saul 1994: 237).Indeed, Denis Diderot declared that public power demonstrates that

the aim of all government is the wellbeing of the society governed.In order to avoid anarchy, to enforce the laws, to protect the citi-zens, to support the weak against the ambitions of the strong, it wasnecessary that each society establish authorities with sufficientpower to fulfil these aims (cited in Ralston Saul 1994: 237–8).

Consequently, public power refers to the source of the power of arepublican state, the transparent means in which power is articulated,and to the ends that such a state is designed to protect. Pettit (1996:589) refers to this activity as a form of “antipower” that is aimed atcurtailing domination. He maintains that

antipower is what comes into being as the power of some overothers – the power of some over others in the sense associated withdomination – is actively reduced and eliminated. Antipower willmaterialize in such a world, as measures are put in place that servecontingently to defeat those conditions.

Thus, it is not just well intentioned laws that help enact the republi-can conception of liberty. It is laws backed by the publicly directed useof power that will counteract multifarious forms of vulnerability anddomination.

The design of enacting non-domination requires that the exercise ofthe public power is structured and delimited within a republic. Arepublic is a form of state where sovereignty is “located in the people”


even if the actual exercise of authority is delegated across a range ofinstitutions and governments (Deudney 1996: 197). Such authority isboth defined and constrained by the principle of democratic self-government that is focused on the common or public good of itscitizens which includes addressing matters of internal and externalsecurity as well as acting on matters of public concern. Nevertheless,republican democracy is not an act of direct democracy but “a mecha-nism for constraining, influencing and producing government and forfacilitating the compromises and rules necessary for the efficient andfair coordination of our lives” (Bellamy 2000: 101). Democracy andthe public responsibility inherent in the republican understanding ofcitizenship play key roles in disciplining the governmental apparatusof the state. Consequently, the publicly controlled state, and the non-arbitrary interference it imparts through the exercise of public power, does not cause liberty but “constitutes” it (Pettit 1999a: 108).Essentially, republicanism argues “that a state would not itself domi-nate its citizens – and could provide a unique protection against dom-ination based on the private power or internal or external enemies –provided that it was able to seek only ends, and employ only means,that derived from the public good, the common weal, the res publica”(Pettit 1999a: 287). Thus, a republic is both an institutional assemblageand a political association encompassing members of a public unitedaround a concern for their mutual liberty.

The republican conception of the public good is understood not as apre-political conception of the good life, or an aggregation of individ-ual interests, but rather as a shared awareness of a dependable andextensive context of common liberty. Non-domination is a shared and constitutive condition that is typified by a secure and peacefulenvironment for individuals to live their chosen lives free from over-bearing forms of power. This context is understood as a public achieve-ment not a private one. This observation is underlined by Pettit’sclaim that non-domination is an “egalitarian good” and a “communi-tarian good” in that it is only realisable if non-domination is enjoyedmore or less equally and has a “common and social” character – it “isnot the atomistic good associated with non-interference” (Pettit1999a: 125). Indeed, Rousseau (1976[1762]: 55) emphasised that equal-ity is important “because liberty cannot subsist without it”. The publicgood of liberty is only possible if constituted collectively and institu-tionalised by a vibrant public sphere and state that is principallydesigned to “track” all the common interests held by the citizenry(Pettit 1999a: 290), and that the state is not beholden or corrupted by


any private interest. A vibrant public sphere is a crucial means toenable this and to ensure the transparent contest of different groupsand social forces in society, because “at the centre of republicanthought is a … clear notion of the common good or the public interestwhich is not simply the result of group pressure” (Brugger 1999: 20).

Consequently, the public good requires political participation andresponsibility by the constituent citizens. Rather than being an end topolitical life, republicanism understands political participation and cit-izenship as crucial components in the promotion of the public goodand the avoidance of domination. Instead of direct participation in allgovernment decisions, republican thought has emphasised the impor-tance of overlapping avenues that enable the public to contest deci-sions that are made by public representatives to ensure that publicdecisions reflect the public good and do not promote particularinterests (Pettit 1999a: 182–200). Republican citizenship is a virtuousconcern for the public good manifest by an inclusive and active inter-est in public affairs. Such a practice requires a willingness to deliberatepublic matters as well as vigilance and a concern for the public goodthat transcends individuals’ pecuniary or particular interests. In thissense, ongoing public participation and active citizenship is the pathto a collective liberty that is both durable and avoids the imposition ofa preordained good (Viroli 1995: 14–7). Thus, rather than a necessaryevil, the state is a crucial artifice of and for the people who are itscitizens.

These interlocking ethics and practices converge on the observationthat liberty can only be realised when citizens act together to controlpower in order to avoid both domination by particular interests andpreventable vulnerability. An appropriately designed state is a vitalcomponent of this task. Both liberalism and republicanism agree thatthe state should seek to uphold liberty whereas liberalism claims this ispossible by ensuring the non-interference in the chosen decisions ofpeople. Republicanism

maintains that this can never be sufficient, since it will always benecessary for the state to ensure at the same time that its citizens donot fall into a condition of avoidable dependence on the goodwillof others. The state has a duty not merely to liberate its citizensfrom such personal exploitation and dependence, but to prevent itsown agents, dressed in a little brief authority, from behaving arbi-trarily in the course of imposing the rules that govern our commonlife (Skinner 1998: 119).


The scope of concern extends, as Skinner explains, not just to wari-ness of the state but to private sources of domination as well. The stateis not only legally and morally constrained from dominating peopleitself, it is also empowered to prevent people being dominated by othersas well as being designed to be transparent and uncorrupted by sec-tional interests within society. The bottom line is that all forms ofpower – both public and private – must be contestable. The republicanstate’s law-making power is designed to remove “certain forms of dom-ination without putting new forms of domination in their place”(Pettit 1996: 588).

This forthright goal of controlling power distances neo-Romanrepublicanism from direct democracy and communitarian argumentsto such an extent that Pettit regards the neo-Roman account as “gas-and-water-works republicanism” that departs from romantic accountsof republicanism or democracy because “constitutionalism anddemocracy come to be stabilized only via arrangements that are nomore intellectually beguiling than the infrastructure of gas and watersupply” (Pettit 1999a: 239). This practical vision is what shapes thecontemporary articulation of republicanism – it does not require a stepback to positive liberty or the “liberty of the ancients”. It is also impor-tant to note that while the state is crucial to the constitution of non-domination, the development of a republican ethos and culture is alsoimportant to the development of republican liberty. That is, non-dom-ination can also be enacted by the ways that citizens behave towardseach other. John Maynor builds upon Pettit’s articulation of republi-canism by emphasising that non-domination is realised not just bypolitical institutions in society but also by civil personal relationshipsthat respect the non-dominated status of other people. Maynor (2003:204) claims neo-Roman republicanism will develop a situation wherepeople “will stand on an equal footing with others and be able to lookthem in the eye” because republicanism will alter “the traditionalpower relationships between competing social agents and insists onrecognition and civility”.

Nevertheless, this republican vision does offer a substantially differ-ent articulation of the state than the liberal account. While the repub-lican state offers more protection to its members than a liberal state, italso requires more attention. As such, a particular public ethos devel-ops not only among citizens but also between the state and the citi-zenry. This ethos entails that citizens cherish the institutions that actas a bulwark against arbitrary forms of power by discharging their civicduties and being wary and vigilant in respect to potential threats to


the public good. At an ethical level the values of civility and patriot-ism become guiding norms of political life, while at an institutionallevel, forums and avenues of democratic oversight over the working ofauthority are indispensable to facilitating non-domination. Thesenorms and institutions are mutually supporting in the sense that theyaim at constituting the civic liberty of non-domination and are there-fore aimed at being responsive to the dangers of both imperium anddominium.

The civic state and imperium

In order to avoid and minimise the possibility of domination by thestate, a republican inspired state embeds three practices. First, a repub-lic requires the practice of citizenship which involves virtuous in-dividual responsibility for the state and an active concern regardingpolitical life. According to Montesquieu (1977: 478) virtuous citizen-ship is a “political virtue” that is “the spring which sets the republicangovernment in motion”. Skinner (1992: 217) emphasises that virtueentails a combination of self-interest and public activity; “if we wish tomaximise our liberty, we must devote ourselves wholeheartedly to alife of public service, placing the ideal of the common good above all consideration of individual advantage”. These qualities implyincreased public oversight of political life but more importantly demandpublic responsibility for political processes and outcomes. Furthermore,republicanism contends that non-domination is attained by the act ofpublic construction. Unlike many liberals, republicans can be seen astrying to “construct rather than deduce the largest set of rights capableof being held simultaneously by a society of roughly free and equalbut widely divergent individuals” (Bellamy 1999: 254). Consequently,the republican conception of citizenship differs from the liberal con-ception on the grounds that citizenship is not a mere status and abundle of rights but also an ongoing stake in the public deliberationand political operation of the state.

Nevertheless, while the republican conception of citizenship is a vir-tuous practice, rather than merely a legal or procedural status, thiscivic practice falls short of a communitarian or conception nationalist.This is despite the fact that republican citizenship and the notion of“the public” are unavoidably particularist in the sense that theydevelop from actual ongoing forms of common political association.While nationalism may well be a “partial replacement” for patriotismin the modern world (Miller 1999: 67), it is not sufficient for the active


political participation embedded in the practice of patriotism.Patriotism and citizenship are “sustained by shared memories of [a]commitment to liberty, social criticism, and resistance against oppres-sion and corruption” (Viroli 1995: 13), not by ethnic or nationalisticnorms. Republicanism invokes an ongoing “love of the political insti-tutions and the way of life that sustain the common liberty of apeople” rather than a love of a nation’s “cultural, linguistic and ethniconeness” (Viroli 1995: 1). Indeed, patriotism rather than nationalismis the moral foundation of republicanism and is a “modest moral com-mitment” that is compatible with pluralism and differing conceptionsof the good life (Rattan 2001: 125), as well as moral and political com-mitments beyond the state. These republican norms entail publicresponsibility and oversight – norms that reflect the social nature ofthe morality that constitutes non-domination. But republican patriot-ism does not stipulate a blinding righteousness. In fact, patriotism isdemanding exactly because it requires a moral commitment to openmindedness beyond citizens’ own private interests, a political involve-ment in the development of the public good and personal vigilance inthe face of threats to the republic. Ultimately, such commitment andsolidarity are only enabled by people feeling that they are “part ofsomething” (Viroli 1995: 13).

The second practice of a republican inspired state that preventsimperium is the constitutional structure of the state itself. Republicanismassumes that the functionaries of the state and the virtue of citizensmay well fail to uphold the public good. As such, republicans insistthat public power should be “non-manipulable” by the government inpower with widely dispersed public institutions and corrective mech-anisms embedded in the constitution and the political system (Pettit1999a: 173). Naturally a civic state must embed the rule of law and the “counter-majoritarian condition” where it is more difficult tochange fundamental laws and the constitution (Pettit 1999a: 180–2).Republicanism also entails the dispersal of power across different levels,bodies and offices of government, the division of powers and the limi-tation or rotation of tenure in public office. The constitution shouldalso embed provisions that facilitate the public good by directing thegovernment to actively “track all and only the common, recognisableinterests of the citizenry” and thereby limit the ability of ambitiousinterests from dominating parts of the state or turning the agencies ofthe state to their own private ends (Pettit 1999a: 290).

The republican dispersal of power across various bodies also includesfederalism and an active concern for local representation. While liber-alism requires a unified and homogeneous state, united largely by


principles of constitutional law, the republican state is more liable tobeing heterogeneous and differentiated because republicans see multi-ple levels of government as multiple protections from arbitrary inter-ference (Ralston Saul 1997: 76). Federalism is seen in the republicanapproach to reconcile the “problem” of scale that faces large states,namely how to have a republic large enough to provide external secu-rity but small enough to construct citizen controlled government(Onuf 1998: 55; see also Deudney 1996: 205–7). Furthermore, NicholasOnuf (1998: 57) claims that in contrast to “organic” conceptions ofthe state, where the national state is conceived as being the only level,the principle of subsidiarity is a republican sentiment that addresses“how to ensure that tasks get done where they should” in order toenable public control. Enabling decisions to be made at local levels ofgovernment also motivates public involvement because the conse-quences of these decisions are more concretely manifest. The idea thatissues should be dealt with at the lowest level of governance followsthe idea that local control and responsibility can strengthen publicvirtue. It also acknowledges that domination can be minimisedwithout relying on distant law or authorities. Indeed, principles of fed-eralism and subsidiarity sharpen the ability of the state to track thecommon interests of citizens without people in a locality being domi-nated by local interests and concerns because appeals to higher levelswill be active possibilities. Naturally, federal measures also allow citi-zens to have their governments in closer view and control.

Third, the avoidance of imperium cannot be entrusted to constitu-tional provisions alone. Democratic processes must also secure non-domination by providing opportunities for contestation wherebypeople can claim that public interests are not being upheld or tracked.Pettit (1999a: 296) advances the idea of “contestatory democracy”where people have both “authorial” and “editorial” powers in relationto government. Editorial contestation need not constitute the powerof veto. Rather, institutionalising oversight seeks to maximise thepresence of minority voices, promote dialogue and keep the actions of government transparent and accountable in order to promotecommon interests. Thus, public input is not limited to the selection ofrepresentatives but includes citizen oversight of government betweenelections. Methods of such oversight include expected procedures suchas the public passage of legislation, freedom of information provisions,a range of consultative measures that include petitions and publiccommittees, and an ability to appeal and reshape law via an independ-ent auditor, judicial and administrative review, and direct referenda.These measures would be backed by rigorous rules that publicise and


limit democratic campaign funding so that economically powerfulgroups are not able to predominate (Pettit 1999a: 194). Democracyalso plays a “central role” in promoting pluralism by “protectingagainst arbitrary rule and enabling the educative engagement withothers” (Bellamy 1999: 122). These measures and forums are depend-ent upon an open public sphere that itself is kept free from domina-tion by private or sectional interests in the media by laws thatminimise concentrations of media ownership (Pettit 1999a: 169). Theobjective of these democratic measures is to ensure that public deci-sion-making processes track “everyone’s relevant interests and ideas”,thereby not allowing any one interest to dominate the institutionsand policy of the state (Pettit 1999a: 188).

The civic state and dominium

The prevention of domination by the state is only part of the enact-ment of non-domination. Institutions and procedures are alsorequired to avoid and minimise the possibility of domination by indi-viduals and groups in society. The act of preventing dominium requiresa state capable of enacting law and policies that identify and intercedein these forms of domination. This publicly directed intention andcapacity for interference is central to the republican goal of maximis-ing the independence that people possess and minimising the vulner-ability that people face in society. This is substantially different to thestance of the liberal state. Pettit (1999a: 132) points out that the liberalidea of non-interference developed in the early period of industrialcapitalism where the new middle and upper classes saw non-interfer-ence as a “convenient” and largely unquestioned good. Ultimately,these classes “could ignore the fact that freedom as non-interference isconsistent with insecurity, with lack of status, and with a need to treada careful path in the neighbourhood of the strong” (Pettit 1999a: 132).In contrast, Maurizio Viroli (1998b: 40–1) reflects on Machiavelli’s ideaof politics as being like “planting trees beneath the shade of whichmankind [sic] lives prosperously and happily”, and suggests that “likea tree, the good republic that politics is supposed to create and pre-serve offers protection and solace to all, regardless of what they dounder its shade”.

The intent of republican structures and policies is to constitute indi-vidual independence by either protecting individuals and dampeningdown flows of power or augmenting the capacity of individuals to


protect themselves from subjection. In a practical sense, Pettit (1996:589–90) claims that

we may compensate for imbalances by giving the powerless protec-tion against the resources of the powerful, by regulating the usethat the powerful make of their resources, and by giving the power-less new, empowering resources of their own. We may consider theintroduction of protective, regulatory and empowering institutions.

The protective efforts of the state are directed towards ensuring acommon sense of security. Most obviously, this includes deterring andguarding against criminal acts, as well as “preemptively” restrictingmaterial, of a racist nature for example, that may endanger certaingroups (Pettit 1996: 590). The empowering functions of republicanismsees systems of government intervention and insurance as being ableto promote individual security and independence so long as thesesystems are prevented from being arbitrary or pernicious. While repub-licanism does not embed “strict material egalitarianism”, it doessupport the provision of state provided welfare that promotes “socio-economic independence” and, as such, tends towards public policiesof an egalitarian nature (Pettit 1999a: 161). This sanctions forms ofresource allocation only under conditions that are established under“law like constraints, not at the discretion of particular authorities”who are able to alter the level of support at will (Pettit 1999a: 161–2).However, there are range of policies to achieve these goals that includeminimum income models and proposals that provide a lump sum ofcapital to people upon adulthood (see Dowding et al 2003). The objec-tive of these republican state interventions is to provide services thatare required for people to be effective citizens, such as civics educa-tion, and promote people’s security from various sources of domina-tion and vulnerability. This entails the promotion of education, socialsecurity and medical services, because the goal is to promote individ-ual independence by developing the “basic capabilities” needed forfunctioning in respective cultures (Pettit 1999a: 158). The overridinggoal of these public policies is to avoid individual subjection withoutthe state itself being domineering or paternalistic.

The regulatory profile of republicanism is crucial to the promotion ofnon-domination. Republicanism attempts to reduce domination by“regulating the resources of the powerful, in particular, the resourceswhereby the powerful may subjugate others” because “those in


economically privileged positions will also dominate certain others –they may dominate employees, customers, or shareholders, for exam-ple – unless the way they exercise their resources is regulated” (Pettit1996: 590). This necessitates familiar regulations that protect workersfrom unfair treatment or dismissal, unsafe working conditions, mis-leading advertising, inside trading and creation of monopoly positions(Pettit 1996: 591). Of course, the domination exerted by powerful eco-nomic actors is not usually just in isolated cases, but also of a moresystematic character. That is, powerful economic actors may dominatepeople in a more generally diffuse sense because while the act of arbi-trary interference may be restricted, the capacity for interference per-sists for as long as there are powerful economic actors. I contend thatthis opens the need for the general but delimited regulation of eco-nomic activity. The republican reason to regulate decisively shifts eco-nomic policy away from deregulated regimes of economic arrangement.

We can clearly see that these forms of republican interference and regulation place the republican relationship with capitalism in a certain light. Clearly, republicanism falls well short of a socialistagenda since it protects private property, promotes commercial activityand the socioeconomic independence of people (Pettit 1999a: 158–63).Nonetheless, Onuf (1998: 247) makes the point that “conspicuouslymissing from republican thought throughout its long and complexhistory is any conception of economic activity, of the economy as asphere of activity that can (if given a chance) operate according to itsown logic”. Or as Cass Sunstein (1997: 7) succinctly puts it, “freemarkets are a tool, to be used when they promote human purposes,and to be abandoned when they fail to do so”. Thus, the republicanaim is a common liberty where everyone in society feels secure, not asociety based on the wealth and interests of a select few individuals –capitalism should not “trump” the common liberty of citizens in thename of property rights or profit. By virtue of promoting the overarch-ing goal of the liberty of its citizens, the republican state ought to be acritical site of influence over the organisation of economic practiceand individual social opportunities, even if it requires regulatingaspects of capitalism that allow domination or vulnerability – so longas the processes of state interference are non-arbitrary and track thecommon interests of member citizens. Thus, we can see that republi-canism encourages capitalism to operate but on the terms dictated bythe “priority of democratic goals” and the common interests of citi-zens (Sunstein 1997: 386). Republicanism cannot abide the agencies orframeworks of capital acting in a way that allows domination to be


practiced against individuals or dictates how the state should operate.To the republican, capitalist actors should not be placed above thecommon arrangement of liberty. Simply put, it makes no sense to havea republican society that protects people against all forms of domina-tion except those produced by deregulated capitalism. Thus, republi-canism provides a rationale for a regulation of capitalism that isdesigned to minimise the potential of domination.

To push this point further, it is important to examine how republi-canism comprehends economic globalisation. Even more so thanliberals, republicans ought to be concerned about the effect of eco-nomic globalisation on liberty and the role that government plays.The processes and consequences of economic globalisation concernrepublicanism in three principle ways. The first and the most obviousconcern is the proliferation of inequality and individual vulnerabilityand its impact on the liberty and virtue of citizens. As Chapter 3demonstrated, inequality is a central consequence of economic global-isation, with dramatic levels of inequality manifest within andbetween nation-states. Republicans from the early modern period haveemphasised the effect of inequality on public life (Onuf 1998: 44).Contemporary republican observers are also worried about abject indi-vidualism stemming from contemporary neo-liberalism (see RalstonSaul 1997). Inequality not only frustrates the ability of citizens to beinvolved politically, but also reduces their capacity to promote thepublic good. Personal involvement in the public good, often involvesplacing particular personal interests second to the public good, isdifficult when people are deprived or particularly vulnerable, thus pro-ducing understandable sentiments of envy and actual insecurity. Theclaim made by Rousseau (1964: 55) that “no citizen shall be richenough to buy another and none so poor as to be forced to sellhimself” (sic), while pointing to the independence of people thatrepublicanism endeavours to promote, seems distant from the realityof a globalised economy.

The second reason that economic globalisation should be of con-siderable concern to republicanism is that the competition staterepresents a travesty of a state that is not dependent upon privateinfluences and that is able or disposed to the public good. States thatincorporate the procedural configuration that is intended to attractcapital and make the most of economic globalisation are typicallygoing to be more responsive to the dictates of global capital flows andcredit rating agencies than to their citizens. Furthermore, they are alsogoing to be subject to a narrow, largely neo-liberal account of political


priorities. While some strands of liberalism are concerned with thesepractices, this apprehension is dramatically sharpened for republican-ism, given the fundamental need of citizens to be able to observe anddiscipline the state. Not only should republican citizens be able toexpress their opinions but they should also be able to contest decisionsto ensure that they are in the public interest. In many ways globalfinance markets and credit rating agencies have the power of veto overpublic policies and domestic political processes. The potential financialgains of interaction with these actors and frameworks do not reducethe concern for republicans precisely because the potential of theseglobal markets, and competition state susceptibility to them, surelyreside in the realm of domination not mere interference because such states function in shadow of influences where state recourse iscurtailed. The arbitrary capacity of financial markets over nation-statesthat are tied to these processes surely undermines the republicannotion of popular sovereignty, the capacity for societies to make publicchoices or indeed prioritise the public interest over powerful transna-tional private interests.

The third concern that economic globalisation presents to republi-canism is the reconfiguration of legal constitutionalism as investigatedby Stephen Gill. Efforts of new constitutionalism, that remove eco-nomic issues from democratic decision-making and protect the rightsof the “sovereign” transnational investor (Gill 1998b: 23), present astark contrast to the role of the constitution in a republican state.Good government, according to republicanism, means avoiding cor-ruption of the state by special interests through constitutions that dis-perse power rather than concentrate it and entrench an expressconcern for public concerns that are commonly held by its citizens.Indeed, Machiavelli (cited in Skinner 1981: 57) defines a “corrupt con-stitution” as one where the powerful are able to enact measures “notfor the common liberty but for their own power”. The purpose of con-stitutions in Machiavelli’s view was to balance the power not only ofthe state itself but also by the interests of powerful groups within therepublic – most notably the interests of “the people and that of therich” (cited in Skinner 1981: 65–7). While republicanism may wellsupport measures to divide the concern for economic management torulemaking bodies that balance interests within society, the idea ofremoving decision-making to distant bodies deliberately isolated fromdemocratic oversight is anathema to republicanism.

Hence, these republican concerns in the face of economic globalisa-tion are even sharper than the concerns that face liberal governance. I


suggested in Chapter 3 that in relation to liberalism there was adilemma of public power in a global age; a concern of how economicglobalisation could be effectively managed and of where governanceshould be anchored. As the various liberal approaches covered in PartII suggest, there are different ways that liberalism can address thisdilemma. However, republicanism has no such dilemma. Given thatrepublicanism regards liberty as a civic achievement, which is onlypossible by people acting as citizens to collectively and publiclycontrol power, the state is the only possible starting point at present.The objective of republicanism is a rational order via a controlledcontext of authority – an avoidance of both imperium and dominium.Economic globalisation poses the spectre of dominium even if eco-nomic gains are produced. A republican inspired state can only existthrough the political practice of its citizens who are intent on bothsupporting and limiting the state in order to protect their liberty.Freedom is only obtained when the republic is defended from unrepre-sentative or arbitrary power, self-interested groups, or a corruption ofits ability to uphold the public good. Thus, the state is not just likeany other organisation. It is an organisation centred on the pursuit ofthe public good, the civic liberty of its citizens.

However, can this civic liberty be created or sustained if the rationalorder that republicanism constructs stops at the border of the state?How can the republican regulation of economic life occur when capi-talism is global in so many respects and therefore how do we moderatethe financial restraints of economic globalisation on the state? Whilethe contemporary articulators of the neo-Roman republican legacyhave not systematically dwelt on the interstate context needed forrepublicanism to operate within contemporary global politics, myaccount of global civic republicanism represents an effort to develop arationale for interstate cooperation and organization in order to effec-tively address the social consequences of economic globalisation.

Republicanism and interstate affairs

While republicanism connotes the unavoidable necessity of the state, Iam going to argue that the republican legacy in international affairsunsettles the notion that republicanism is a form of statism or realism.Essentially, the republican goal of non-domination is a universal aspi-ration where all people ought to be able to live within a condition ofnon-domination by collectively controlling the power that is exertedover them. Republicans see “the domination of others as cause for real


moral and political concern” (Rattan 2001: 127). This is a universalconcern that animates the desire for the minimisation of vulnerabilityand subjection as well as the creation of a context where people are asautonomous as possible from arbitrary sources of power. This cosmo-politan element of republicanism is also an important counterbalanceto any potential for xenophobia or intransigence on the part of repub-lican citizens. However, while non-domination and the control ofpower is the universal condition desired – the means by which non-domination is actually constituted are not centralised or universal.Thus, it can be claimed that republicanism is a form of moral cos-mopolitanism that falls well short of the political cosmopolitanismcovered in chapter 6 (see Rattan 2001; S. White 2002). Republicanismmakes explicit reference to non-domination as being a social condi-tion enabled by the publicly determined control of power through thestate and by reference to particular ways of life and conditions.

While the state can be defended on the grounds that it can play a positive role in world politics, as Hedley Bull did, the republicanjustification for the state is more elaborate. Bull’s (1979: 112–120)defence of the state rested on four main claims: “that the state,whether we approve of it or not, is here to stay”; that global problemssuch as war, social injustice and environmental collapse are not solely due to the states-system; that states can and do cooperate; and that there is no consensus for “transcending the states-system”.Republicanism would add to these attributes that the state is the loca-tion of governance aimed directly at the expression of popular sover-eignty and the construction of liberty – the necessary role of the state.For non-domination to be constituted, not only must there be themeans of organised law making and public power, but people have tofeel an ongoing responsibility for the public power that is exercised,and be able to observe and discipline this power. A republican statefulfils these characteristics and thereby ought to minimise forms ofimperium and dominium. No other institution can presently replicatethis exercise of public power.

As such, republicanism’s emphasis on the state and citizenshipdiffers considerably from cosmopolitan governance outlined in thelast chapter. Ultimately, there is no single way to establish civic libertyand republicans are dubious about the potential of a world statebecause while a nascent global public may be seen to be developing, itdoes not have attachment of patriotic citizenship and association(Viroli 1995: 12–3; Walzer 1994: 1–4). Nonetheless, it is the case thatthe patriotism that animates the republican state is not “exclusive” or a hindrance to interstate solidarity (Viroli 1995: 12). Indeed, this


sensibility enables a “transnational republican solidarity” that “caresabout the common liberty of other peoples/nations” (S. White 2002;258). While republicanism does not license compromising the rela-tionship between the state and the non-dominated status of its citi-zens by transcending the state (Rattan 2001: 127), the universal goal ofnon-domination does open up the need to construct forms of gover-nance, and delegate forms of state power, to enable republican statesto exist and address global issues that cause domination. The aim ofthis activity is to augment the capacity of each state to promote thecommon liberty of its citizens. Ultimately, the republican state is onlypossible within a wider association of republican states. It is the casethat the design of the republic both logically and historically did notstop at the borders of republican constituted states.

There are historical precedents for the operation of republican ideasbeyond the territory of the republic. Daniel Deudney’s illustration ofrepublicanism in the “Philadelphian system” from 1781 until 1861,existing at the edge of the putative Westphalian system is a crucialillustration. In arguing that the states of the American Union “wentbeyond confederation, but stopped short of being an internally sover-eign state”, he offers a historically grounded account of what republi-canism might resemble in practice (Deudney 1996: 191; see alsoJackson 1999: 27–8). Deudney (1996: 197) indicates that the size andscale of the Union meant that popular sovereignty was “recessed” andtherefore expressed in a delegated sense, rather than by direct repre-sentation, but nevertheless was “structured” to serve the public of theUnion states. Of particular concern to the Union was the issue ofinternal and external security. Controlling and checking the provisionof this security was central to the American enactment of republican-ism inside and out. The checks and balances of the internal provisionof liberty and security correspond with the means to prevent imperiumcovered earlier, but the Union demonstrated an external concern for security in a series of novel ways. The Union was confederative in the sense that while the union government was “authorised and equipped” to intervene in order to “prevent revolution or coup”within Union states in extreme situations and the union governmentdid have “significant authority in many functional areas”, it “did nothave the authority to command states” (Deudney 1996: 201 and 204).The fundamental aim of the union was clear according to Deudney(1996: 205):

Because the overall system architecture negates, it is appropriate tocall the structural principle of this order negarchical …Negarchy is


the arrangement of institutions needed to prevent simultaneously theemergence of hierarchy and anarchy.

Thus, we can see that the republican design to provide security elab-orates a sense of sovereignty that differs from exclusive sovereignty.The desire to avoid hierarchy or anarchy produces a context wheremember states are enmeshed in a situation of mutually constrainedpower. Essentially, Deudney finds that republican popular sovereigntyblurs the line between external and domestic politics within theconfederative nature of the Union.

While the confederative nature of the American Union sheds lighton the “external” dimensions of each state within the union, theUnion was never alone in world politics. In this respect, the interactionbetween the Philadelphian system and the European Westphaliansystem is instructive. While within the Union popular sovereignty isdispersed across the member states and the federal government, in theinteractions between the Union and Europe, there was no extendedpopular sovereignty. Deudney (1996: 217–9) claims that rather thanattempting a “balancing” of power with its European contemporariesthe strategies of “hiding” and “binding” became central choices for theUnion. Hiding entails practices of isolationism and non-entanglement,while binding entails the establishment of mutual understandings and“institutional links” that reduce the autonomy of states within theagreements so as to “reduce possible conflict and predatory behaviour”(Deudney 1996: 213–4). A major determinate of the choice betweenhiding and binding was the effect of “geopolitical separation”:

In a situation of little geopolitical separation – of closeness – binding isthe most appropriate and viable foreign policy practice, and its exercisecan result in a nonanarchial system structure. Because of the absenceof material separation, hiding will be nearly impossible and balanc-ing will not achieve security (Deudney 1996: 218–9).

Deudney (1996: 222–3) contends that as increasing global integra-tion and advances in technology reduced the distance between Europeand America, the strategy of binding became more viable.Furthermore, binding also strengthens popular sovereignty because itreduces the external threats of interstate war and anarchy, as well asthe internal threats to democracy from potential despotism associatedwith militarism (Deudney 1996: 215).


The overarching claim here is that the republican desire to design acontext of durable security shaped both the interactions betweenrepublican states, and republican states and other states in such a waythat avoided both anarchy and hierarchy without automaticallyexpanding the notion of the public. The case of the American Unionsuggests republican states aspire to avoid domination through interstatenegotiation and institutions rather than in the absence of such inter-action. Especially in cases of geopolitical proximity, the practice ofbinding demonstrates that republican states are heavily predisposed toinstitutionalising world politics. Indeed, the character of internationalorganisation stemming from republicanism is denser than that prof-fered by liberal internationalism but differs from cosmopolitan gover-nance in that republicanism would interpret a potential globalparliament as hierarchical and devoid of substantial local accountabil-ity. This observation moves us towards the recognition that republi-canism requires external linkages that are less universal thancosmopolitan governance, where the centrality of the state is more dis-tinct, and thereby would at maximum be a confederative associationof states (see Montesquieu 1977: 183). It could be claimed global civicrepublicanism moves towards the “civitas maximus” that ChristianWolff outlined over two hundred years ago, as colourfully detailed byOnuf (1998: 58). However, the confederation is more like Onuf’s char-acterisation of Emmerich de Vattel’s confederation of states: lessnatural than Wolff’s and more consciously constructed (Onuf 1998:60). In this sense the European Union can be seen as a regionalexample of republican binding with a blurring of state sovereignty, aswell as an example of the development of an extended public.

This form of construction can be seen in the development of theEuropean Union (EU), as emphasised by Bellamy and his colleagues(Bellamy and Castiglione 1998; Bellamy and Warleigh 1998). Ratherthan a EU informed by the abstract rights and federalism of cos-mopolitanism or indeed the particular membership of political com-munities as suggested by communitarianism, Bellamy argues for theongoing political negotiation between individuals and national groupswhere they “converge on a range of compatible perspectives on commongoals and endeavours” rather than assuming “a universal consensuson principles and procedures” (Bellamy and Castiglione 1998: 173). Inseeing the EU as a contingent and constantly adapting politicalprocess, the EU takes on a light that differs significantly from a federa-tion or a European “state” even though nation-states would still exist


within this “constructionist” view of a republican inspired EU. Whileit seems that the ability of people to reshape the state in which theyare citizens could be overtaken by the need to shape the EU andpromote the goal of avoiding domination through the EU instead of atthe state level, even within Europe it is not clear that republicanism’ssupport of multi-level governance should or must come at the expenseof being responsible and disciplining the power of the state in whichcitizens reside (see Slaughter 2001: 26–34).

Consequently, global civic republicanism advances both the build-ing of complex forms of interstate cooperation and a civically mindedpublic. While the republican legacy in international affairs could beread as either endorsing the broadening of the extended nature ofpopular sovereignty across states or of extending the act of mutualbinding between popularly sovereign states, for my part I think thatthe choice between a global public and states that are responsible totheir resident citizens collapse on each other in the sense that effectivepublic control of states now requires citizens to think globally. Whilerepublicanism requires a significant change in the way people exercisethe idea of political responsibility within their state in the form of vir-tuous patriotism and citizenship, it also requires citizens to be globallyconscious and responsible. Indeed, although the public sentiments ofpatriotism and citizenship require considerable renovation, the appealof these sentiments can be a powerful resource capable of creating analternative to the inequity and insecurity of economic globalisation. Inthis sense, the dominion of economic globalisation can be seen torevive civic awareness. While a concrete global public is a cosmopo-litan musing for the foreseeable future, extending the existence of extensive interstate institutions coupled with genuine citizenreflection on global politics and the conditions needed for civic libertyare essential to a republican approach that is able to develop non-domination within a globalising context.

Republican global governance

As we have seen, interstate cooperation and institutionalisation arecrucial to republican aims – even though these forms of governancecannot in and of themselves construct the civic liberty of republican-ism. As Pettit (1999a: 152) claims, judicial sovereignty is not “sacred”:

it is going to be in the interest of the republican state to encouragedifferent layers of multinational cooperation and institutionaliza-tion … while the republican state represents an indispensable


means of furthering people’s non-domination… there are somedomestic issues on which it may be better from the point of view ofpromoting freedom as non-domination to give over control tothose bodies and thereby to restrict the local state.

This construction would require checks and balances within theseinstitutions as well as institutional transparency and oversight by thepublic from constituent states. Despite the dangers of possible domi-nation by distant bodies, well-crafted institutional arrangements thatbind states and the delegation of popular sovereignty are not just con-sistent with republicanism but constitutive of republicanism’s goals ina globalising context. The goals of republican global governance aretwofold: first, to allow states to promote the civic condition of non-domination by promoting international stability and dampeningforms of interstate or transnational domination; second, by ensuringthat republican mechanisms of global governance at worst do notdominate people and at best promote the welfare and security ofpeople. These goals require international cooperation and governancethat performs a series of distinctive tasks that reflect an extension ofthe protective, empowering and regulatory institutions outlined byPettit.

In terms of protective institutions, global civic republicanism seeks toexpand upon the multilateral institutions developed since the SecondWorld War in order to address international security, economic man-agement, environmental protection, and human suffering. The pro-motion of international stability and peace is achieved by entrenchinginstitutions that enable civic states to negotiate on equal terms in rela-tion to these matters of common concern in order to produce rulegoverned relations in the interstate realm rather than the Realpolitikgoverned relations of anarchy or hierarchy. Essentially, if powerfulstates can arbitrarily wield economic or military power this is bound todominate citizens in weaker countries. Indeed, in terms of protectingagainst interstate domination “the emergence of institutional order,regional and global, promises to serve the cause of defence more effec-tively than exclusive reliance on military capacity” (Pettit 1999a: 152).As such, the construction of durable international stability requiresforms of “binding” evident in international law and multilateral insti-tutions such as the UN and the EU (Deudney 1996: 225–7). In regardsto transnational forms of domination, evident in forms of transna-tional criminal activity, terrorism and ecological harm, interstate coop-eration would be essential to enable states to resolutely curtail thevarious possible forms of domination that effect people from sources


external to the state because states “can no longer control and regulatesocial processes via the creation of boundaries” (Bohman 2001: 8).Thus, republicanism requires regulatory institutions and internationallaw to prevent strong states or strong transnational non-state actorsfrom dominating other states.

Another important characteristic of extending republican protectiveinstitutions into world politics is that state sovereignty is contingenton the broader moral purpose of the prevention of human dominationand suffering. However, the international promotion of human rightsalone is not enough, as only an appropriately designed republicanstate can provide people with “powers which they can wield as coun-tervailing forces against those who would otherwise dominate them”(Pettit 1999a: 304). As such, rather than seeing sovereignty in strictterms of absolute control, the republican emphasis is to see sover-eignty as a means to non-domination (Bohman 2001: 7). That is,republicanism is not only sensitive to interstate domination andtransnational domination but intrastate domination as well. In refer-ence to intrastate domination, republican global governance wouldstrengthen the current shift in world politics towards not permittingsovereignty to be an excuse for states that egregiously maltreat theircitizens (Buergenthal 1997: 722). This blurring of formal sovereigntyalso opens up forms of social and economic intervention that willassist states to effectively promote non-domination. However, whileforcible humanitarian intervention or subtler forms of intervention ina republican context would be a duty rather than a right in the appro-priate circumstances, the intervention must be transparent, law gov-erned and track the interests and popular sovereignty of thoseintervened with – in short non-arbitrary (Onuf 1998: 161). In order tomaximise effective state autonomy, states have to not only forgo typesof action that actually or potentially dominate other states or individ-uals but also participate in forms of non-arbitrary intervention or“mutual aid” that transcends borders (Onuf 1998: 139–40).

Another distinctive characteristic of republican global governance isthe development of empowering institutions and the facilitation of thebuilding of republican institutions and sentiments within states wher-ever these norms are congenial. Where it is possible to encourage repub-lican sensibilities, republican international institutions could encouragethe development of democracy as well as republican norms and institu-tions. Nevertheless, the goal of national self-determination facilitated bythe UN is insufficient for republicanism in the sense that the goal ofrepublicanism is to ensure that states are designed to publicly guard


against arbitrary power and are able to maintain the actual ability togovern – not to uphold this or that national identity. It may be the casethat historical antagonism makes the formulation of republican institu-tions or a public good impossible within a given nation-state and conse-quently may necessitate separation or federation. Even where it is notpossible to develop full-blown republican states, efforts must still bemade to promote measures that uphold public order through the pro-motion of the rule of law, protection against corruption and public serv-ices that promote human security, meaning the protection ofmarginalised people from various forms of personal vulnerability,including hunger and disease (UNDP 1994: Chp 2). The point remains,in either case, that republican global governance would be committed todeveloping states that enable a public to protect themselves from vul-nerability or subjection.

In pursuing this goal of empowerment, the promotion of develop-ment assistance for developing countries is a crucial area of republi-can global governance. It must be stressed that the ultimate objectiveof global civic republicanism is always individual liberty and theempowerment of people. The ethos of republicanism seeks topromote the “basic capabilities that are required for functioning inthe local culture” and as such the promotion of human developmentis central to this ethos (Pettit 1999a: 158–9; see Sen 1999 and UNDP2002). The presently unrealised 0.7 GDP per capita foreign assistancegoal for developed countries set in 1967 would be an absolutelyminimum goal towards this republican goal (see UNRISD 2000: 27).Although it must be noted that republicans would advocate thatdevelopment assistance itself being rigorously rule governed – so that it is not arbitrary and a system of domination by donor countries – and would generally see these resources as a means topromote human development rather than distributive justice as such(cf Oxfam 2005). Significant measures that assist the most vulnerablepeople around the world such as the promotion of debt relief forhighly indebted countries and achievement of the MillenniumDevelopment Goals are good examples of practices that would corre-spond with republican aspirations and assist in the development ofstable societies. Furthermore, while the Post Washington Consensusappears to address the institutional aspects of development in waythat satisfies republican concerns for accountability and trans-parency, the absence of any substantive account of democracy or awillingness to regulate capitalism limit the suitability of this consen-sus for reaching republican ends. It is apparent that the republican


promotion of development that promotes human capabilities is notpossible without an appropriate regulatory environment.

Regulating global capitalism

The regulatory institutions of republican global governance seek to regu-late the various forms of transnational activity that transmit the capac-ity to dominate people. These principles would reflect a willingness toregulate global capitalism that contrasts with the stance of liberalism,which generally has a reluctance to regulate or intervene in capitalistactivity. As noted previously, republicanism cautiously facilitates capi-talism and commerce. However, the realisation of the republican goalof non-domination is impossible within a global economy wherestates compete with each other for actual regulatory standards andwhere transnational private interests are privileged over the publicinterest within states. Since the onset of economic globalisation, theissue of regulation has become complicated and increasingly contestedas a result of the problems facing economic globalisation. As a result,there have been arguments from all over the political spectrum –including liberals and avid capitalists – for the global regulation oftransnational capital (Scholte 2000b: 294–5; see also Galbraith 2000;Soros 1998–9). There is also the observation that major states have thepower to transform the system if they had the motivation or moralpurpose (see Hirst and Thompson 1996: 189). However, powerfulstates lack the will to systematically regulate the global economybecause of neo-liberalism’s ideological supremacy and a pervasiveconfidence in the outcomes of markets.

The limits of liberal governance were perhaps most telling in the UNinitiative to forge a “Global Compact” between transnational businessand principles already embedded in international agreements. UNSecretary-General Kofi Annan (1999) challenged world business leadersat the World Economic Forum in Davos to “embrace and enact”, bothby their “individual corporate practices and by supporting appropriatepublic policies”, nine principles stemming from The UniversalDeclaration of Human Rights, The International Labour Organization’sDeclaration on fundamental principles and rights at work, and The RioDeclaration of the UN Conference on Environment and Development.These principles are clearly desirable and basically consistent withboth liberal and republican aspirations. But, the global compact is notbinding in any way. Georg Kell and John Ruggie explain that rather “itis meant to serve as a framework of reference and dialogue to stimulate


best practices and to bring about convergence in corporate practicesaround universally shared values” (Kell and Ruggie 2000; 4). Ultimately,the global compact provides no reason that business should addresstheir stance in relation to the compact other than the protection of their“brand names” and image. Far from being a “Faustian bargain” that Kelland Ruggie (2000: 9) suggest that some may see the global compact tobe, it is a bargain without the capacity to be enforced. The liberal reluc-tance to interfere in the operation of capitalism weakens any groundson which the global compact could have any basis to impinge on theunregulated nature of economic globalisation.

Cosmopolitan governance offers a strong alternative to the main-stream liberalism that allows markets to dominate over democraticoversight. Both Richard Falk and David Held advance clear grounds forrejecting deregulated capitalism and seeking to re-regulate capitalismat a global level. Falk makes a strong case for those social movementsthat are critical of economic globalisation, while Held (1995: 256)claims that individual autonomy requires the regulation of economicaffairs via a “common structure of political action in economic affairs”that entails elaborate changes to trade rules and economic regulationat a global level and changes to national and local laws to comply withthe overarching cosmopolitan law. As indicated in the previouschapter, while this moral aim is laudable, the political means to enactthis are not entirely compelling. While a global agreement is requiredto restrain global capitalism, there is the need to buttress this regula-tion with significant power and to elucidate the role that the statecould play in moving beyond economic globalisation.

Republican inspired governance offers a stronger reason for the prin-cipled regulation of global capitalism than liberalism or cosmopolitangovernance. The reason is simply that such regulation is necessary forstates to be able to constitute non-domination. Republican citizenswithin a civic culture will aspire to develop institutions within andbeyond the state to ensure that capitalism operates for public purposesso that societies will be able to make their own public choices, be freefrom the potential domination by the private interests of capitalismand address the social vulnerability produced by unregulated capital-ism. Non-domination can only be realised if there is the recognitionthat states ought to be the prime sources of public power that arelinked to public accountability and the public good of their citizens.This requires a revitalisation of republican citizenship and an embraceof the idea that liberty is a civic achievement. As the UNRISD (2000:18) maintains, “neoliberal globalisation … polarizes and splinters. If


this trend is to be halted, the ‘visible hands’ of governments andcitizens must intervene to reassert the value of equity and social cohe-sion”. In order to realise such intervention, the foundational princi-ples of contemporary governance will have to be shifted away fromneo-liberalism. The republican ethos embedded in global civic republi-canism with its concern of avoiding domination and vulnerability,through the non-arbitrary interference of the state, develops the asser-tion that we can – and ought to – enable global integration that regu-lates global capitalism. The only way states can pursue the public goodwithin their state and pursue collective goods at a global level is viathe development of common level rules for economic negotiations atmore or less a global level. There are four elements to the republicanregulatory reform of the global economic architecture.

First, common level rules would exist in order to enable the capacityof states to make public choices as well as to move towards minimumeconomic and social standards. Regulation in the public interest sug-gests a system of law authored by states aimed at allowing the variouspublic goods of various states to shape the character of multilateralarrangements. Of course, the difficulty is actually arranging – on aglobal scale between widely differing states – the actual institutionalbasis of the economic rules in relation to trade, investment and financethat accommodates all states. In essence, such rules would be able toallow states to make their own choices and priorities within a range ofglobally negotiated limits (see Hutton 1996: 314). These common rulesshould be a form of what Jurgen Habermas (2001: 97) refers to as “posi-tive integration”, that is, able to extend beyond the “negative integ-ration” of deregulation and actually perform “market correctingdecisions” and pursue “ongoing economic and political goals”, includ-ing enabling taxation and redistribution. Thus, impetus of these poli-cies will be “competition-reducing” in effect and thereby require “theupward global harmonisation of standards (including minimum wages,environmental protections and worker rights) by conscious design” inorder “to prevent capital from exploiting regional differences thatwould otherwise exist” and thereby dictate state standards (DeMartino1996: 28; see also Habermas 2001: 105). Thus, it rests with people and governments to agree, at a global level, to restrain those sociallyharmful consequences produced by unfettered markets to ensure non-domination. Common level rules should exist in relation to the “ficti-tious commodities” of money, labour and the environment that KarlPolanyi (1957: 69) pointed to, because these are not made by themarket itself. Enabling some level of state regulation over these aspects


of society, through working conditions, environmental regulations andlending regulations within globally agreed limits, is crucial to a sense ofpublic control and to the protection of society (see Polanyi 1957: 75–6).Such rules would have significant flexibility and permit states time toadapt to these common standards in a similar way that contemporaryinternational financial institutions give time to states for them to liber-alise and deregulate. Such rules do not necessarily rule out the publicuse of market mechanisms for these commodities (Sunstein 1997: 7),tradeable pollution permits for instance, may well be appropriate forpromoting environmental protection.

Second, common level rules would promote the equal access ofstates to the global economy. While global civic republicanism seeks toset out a common standard of regulation of global capitalism, theserules do not seek to diminish prosperity and wealth. This means thatregulations cannot be punitive, or fail to protect property rights and must provide predictability and security for capitalists. Nor dothese rules license rampant protectionism or the agricultural subsidiesevident in the US and EU for example – the rules are not anti-trade buta common standard that seeks to restrain the capacity of powerfulstates and corporate actors to enforce their will on other states. Theserules seek to broaden economic prosperity and widen the access ofpoorer states to trade in other states’ markets. As such, republicanismwould conceive of a close relationship between development and thebroader regulatory environment required for such development tooccur. Common level rules would have to also relate to finance andhighly indebted countries because not only are crushing debts ahumanitarian and development catastrophe, they are a clear exampleof domination. Measures that facilitate the renegotiation of cripplingcontractual agreements are in accord with republican thought (seePettit 1999a: 164). There could also be measures that actually usecapital markets to promote development through provisions thatenable states to get access to flows of capital through public incentivesfor long-term investment.

The third element of republican regulation is the promotion offorms of “positive integration”, which include new modes of regula-tion and global taxes. Clearly, strengthening the Global Compact byembedding these principles into the regime of common level rules is akey way of regulating the activities and power of mobile capital. Thesemeasures would also include antitrust measures that attempt to diffuseconcentrations of private power, although the actual standards wouldlegitimately differ from various jurisdictions and such regulations


would have to accept globally negotiated variation. Generally, thesemeasures reflect the need to legally protect the interests of stake-holders as Will Hutton (1996) maintains. Also, common rules regard-ing taxation would enable the taxation of firms and individuals bystates by circumventing transfer cost price strategies, off-shore bankingand competitive decreases in taxes as well as the development of newglobal taxes (see Habermas 2001: 105). The clearest and most impor-tant example of a global tax is the proposed Tobin tax. The idea of theTobin tax is straightforward: “by implementing a low rate of tax onfinancial transactions involving different currencies, many speculativemovements would become unprofitable and the financial system morestable” (Patomaki 1999: 5). The aim of James Tobin’s proposed tax wasto promote international stability, expand the “autonomy of nationalgovernments” and enable governments to be able to take a longer andwider range view of their responsibilities (Patomaki 1999: 8) – a goalnot only compatible with global civic republicanism but necessary tothe constitution of it.

The last element of regulatory reform of the global economic archi-tecture is the revision of the international financial institutions, espe-cially the IMF, towards enabling states to make their own publicchoices and priorities. Republicanism would also be uncomfortablewith unrepresentative bodies like the G8 and seek to relocate mean-ingful dialogue and negotiation about the world’s problems to repre-sentative bodies such as the UN. This is a return in many ways to theoriginal embedded liberal purpose of international financial institu-tions that enabled states to balance prosperity and social stability.Furthermore, global civic republicanism’s concern for developmentpromotes a wider socio-economic agenda than the narrow neo-liberalagenda of profit and economic growth. Consequently, a republicanreform of the international financial institutions would seek tocounter balance the economic focus of the IMF, World Bank and theWTO with augmented institutions like the ILO, UNDP and UNEP, toallow a more thorough account of the various forms of transnationaldomination and a broader account of development. Indeed, globalcivic republicanism is founded on the longer term purpose of re-regulating the world economy so as to move beyond the dominationof capital and neo-colonial modes of sensibility to enable very differ-ent states around the world to make choices that promote their socio-economic welfare without dominating people in other states.

Ultimately, the “visible hands” need to be backed by citizens sus-taining the public interest at home and “abroad” – a desire that can


only be enforced and justified locally by appealing to the desire ofliving within a free state. Thus, this development of a civic state needsto be coupled with a cosmopolitan awareness to enable a rethink bygovernments and citizens as to what kinds of restraints states (includ-ing their own) should be subjected to in order to construct a commonframework that allows other people to construct non-domination intheir state (see Habermas 2001: 111–2). This cosmopolitan edge torepublican thought prohibits the liberty of people in one state to comeat the expense of the liberty of people in other states. Fundamentally,global civic republicanism seeks to promote a reciprocal trust andrespect between separate republican states because it is the only way toaddress the domineering aspects of contemporary global life. Therepublican approach drawn here is no instantaneous panacea for allthe ills of economic globalisation, but it does permit us to identify,deliberate and ultimately act against the various forms of mastery thatare embedded within economic globalisation. The point of these rulesis not global equality or justice per se. The intent of the rules is to min-imise those forms of economic activity and power that frustrate theability of citizens to effectively discipline their state, to make publicchoices and determine their own liberty.

In addition to protective, empowering and regulatory institutions ata global level, I would also advance the need for reflective institutions –an additional form of institution embedded in the other forms ofrepublican global governance. Reflective institutions are institutionsthat embed public oversight and contestation into the provisionsalready advocated. While the agents of transnational civil society haveplayed a key role in publicising the functions of international financialinstitutions, and would continue to do so, republicans would alsoemphasise more concrete and ongoing forms of oversight – includingpanels of citizens to check the activities of these institutions andforums that enable states to contest the decisions made by these insti-tutions. A further endeavour would be to globalise rules pertaining tothe transparency of campaign funding contributed by economicallypowerful transnational corporations and actors. The goal of thesereflective institutions is to augment the capacity of weaker states tonot only play a role in the global economy but be equally and activelyinvolved in the negotiation of the rules as well. Measures that enableand build the actual technical capacity of developing states to utilisethe services and skills of international financial institutions would bein line with republican desires that promote effective participatoryglobal governance. The goals of these reflective provisions are to be


reflexive and “dynamic” in relation to the changing contours of domi-nation in a complex world that needs “constant reinterpretation andreview as new interests and ideas emerge” (Pettit 1999a: 147). Theseinstitutions would also have the effect of drawing an adaptablebalance between the various goals that are desired by people and gov-ernments around the world and thereby would maximise the legiti-macy of the global economic architecture.

There is one last question that faces the republican rationale for regu-lating economic globalisation: how does global civic republicanismrelate to non-western countries that do not embrace democratic orrepublican notions of governance. I do not think that any move toforcibly impose republican governance can be read into the neo-Romanaccount of republicanism. The development of a civic culture andrepublican citizenship ultimately comes from “below” not “above”.Nevertheless, the goal of global civic republicanism is to create a criticalmass of states that desire to replace the neo-liberal economic architec-ture with one that seeks to promote the non-dominated status ofcitizens around the world. This can only be secured by enabling repub-lican states, but still policies towards non-republican states cannot beremoved from the republican impulse to minimise domination. Policiesand relations with non-republican states would still be moderated bytransparency, civility and measures that seek to minimise domination.Global civic republicanism provides grounds for the promotion ofhuman capabilities wherever it is possible – even if it falls short of therobust non-domination constituted by a republican state.

On matters of economic governance at least, neo-liberal governancehas shown the type of complexity possible of global governance if acommon normative and institutional formation is developed.Ultimately, a vibrant republican ethos for the regulation of economicglobalisation rests upon the idea that liberty is best understood as acondition of non-domination. Non-domination is appealing because itfocuses on the need to avoid vulnerability and subjection from thevarious forms of power that assail people – including those thatemanate from an unregulated global economy. Furthermore, thisconcern is reflected in a strong moral purpose that addresses the needindicated by G. A. Cohen that addressing inequality requires a publicethos that addresses inequality – not just a new economic and politicalstructure, because republicanism sees the vulnerability of others as notonly a cause for concern but a justification for public action throughthe institution of the state and those frameworks set up by the power


of the state. This ethical concern is backed by the ideas of patriotism,solidarity and unparalleled appeal of living in a free state.

A summation of global civic republicanism

This chapter has provided a reason to regulate global capitalism thatincorporates a clear reason to regulate global capitalism and a capacityto delegate sovereignty. I have argued that the republican regulation ofglobal capitalism rests on civic states that cooperate to avoid domina-tion from the agents and frameworks of transnational capital. This isdesirable not just because of the domineering relationship thattransnational capital has over the state but because the competitionstate is currently unable to avoid the social vulnerability that eco-nomic globalisation systematically produces. The republican desire toavoid the domination of the state and people by the agents and frame-works of transnational capital, and the desire to construct a civicliberty demands that transnational capital is regulated jointly bystates. Global civic republicanism is an attempt to balance the con-struction of liberty in particular states around the world with thecapacity and the universal aspiration to address global problems andrealise civic states. The bold intent of global civic republicanism is tousher in a transformation of economic practice at a global level. Itseeks to regulate economic globalisation, not merely make the most ofit or just moderate some of the adverse effects. As such, we can seethat global civic republicanism is characterised by four principles.

First, the account of global civic republicanism follows the republi-can path where liberty is understood to entail a context of non-domination that is only achievable by civic states designed to enable therealisation of the public good. Such states are structured to constitute acommon liberty from vulnerability and domination by either the stateor powerful societal interests. Such civic liberty is only achievablewhen there is vigilant public control of the state through virtuouscitizenship and inclusive public negotiation.

Second, global civic republicanism provides a rationale for the de-limited regulation of capitalism in order to promote non-domination. Suchregulation is aimed at promoting protection from various forms ofsubjection and vulnerability that stem from unregulated forms of cap-italism. In this sense, republicanism conceives markets as processesthat need various forms of public intervention to ward off forms ofdomination of people or the state as a whole.


The third principle of global civic republicanism is that the confeder-ative tendencies of republicanism promote complex forms of interstatenegotiation and institutionalisation. While the goal of non-domination is a universal principle, the desire to avoid anarchy and hierarchynecessitates the delegation of state sovereignty and the active con-struction of interstate institutions that augment the state’s promotionof non-domination.

The fourth principle of global civic republicanism asserts the crucialand constitutive need for civic states to jointly regulate global capitalism.The only way that civic liberty is possible within a context of increas-ing global integration is for states to jointly regulate global capitalism– via common framework of rules for labour, finance and environmen-tal regulation.

Like the cosmopolitan efforts discussed in the previous chapter, theglobal promotion of non-domination is clearly a difficult task becauseit assails the ideas of neo-liberal governance and seeks to constrain thesocial forces supportive of economic globalisation. I have not soughtto argue that the ethos of republicanism is actually present in globalpolitics. While there are signs that republican ethics are shaping globalpolitics (Deudney 1996: 219–30; Brugger 1999: Chp 5) and I feel thatthe dominion of economic globalisation certainly provides a strongimpetus for a revival of republican ideals, the emphasis here has beento sketch the character and plausibility of these principles in avoidingthe social conditions inherent in economic globalisation. The chal-lenge of reinvigorating citizenship within the state in order to do so isthe endeavour that arises from global civic republicanism. While poli-tics is global and requires a form of cosmopolitan awareness on thepart of republican citizens, there is not an ascriptive global public inthe republican sense. Thus, in contrast to cosmopolitanism, the stateremains as a crucial site of the public sentiment and public powerrequired to construct liberty, despite the indispensable need to thinkwithin a global context to regulate global issues such as global capital-ism. While the next chapter will further elaborate the relationshipbetween cosmopolitanism and republicanism, and the underlyingproblem with liberal accounts of governance within the context ofeconomic globalisation, this chapter has forwarded an alternative thatattempts to instil the “tranquility of mind” that Montesquieuendorsed. Moreover, it does so without arguing for global citizenshipor relying on a global public.


8Good Government in a Global Age

This book has challenged the neo-liberal conception of good govern-ment and argued that more attention needs to be paid to ways we enactand defend individual liberty within the context of economic globali-sation. I have also argued that the liberal alternatives to neo-liberal gov-ernance do not articulate strategies that are capable of moderating thesocial and political problems associated with economic globalisation orpromote widespread effective liberty in this context. However, the pre-ceding chapter advocated an approach to governing that provided therationale to meliorate the inequality and social vulnerability stemmingfrom economic globalisation. It demonstrated that this vulnerabilityand insecurity is a concern for republicanism and outlined a strategy ofgovernance that seeks to regulate global capitalism in order to promotenon-domination. Ultimately, republicans “will be politically more opti-mistic and socially more radical” than liberals because “they do notview state action, provided it is properly constituted, as an inherentaffront to liberty: as itself domination”, while being more radical aboutthe nature of social ills because of the belief that vulnerable people areeasily dominated by others if left unaided (Pettit 1999a: 148).

This lesser scepticism about the capacity of the state to constitute lib-erty is an important counterpoint to social effects of economic globali-sation. It is the prescriptive edge of this book that the reinvigoration ofa republican state, with all its checks and balances, requires the devel-opment of a robust civic culture. Such a culture would be sensitive toall forms of domination. Consequently, such a public concern would be the foundation of a republican civic state and a publicly directedglobal system of governance aimed at preventing conditions that per-mit vulnerability and subjection, including those forms arising fromderegulated capitalism.

219

This chapter defends the proposition that global civic republicanismadvances a distinct and superior argument to that of liberalism inregards to governing within a globalising context. My defence of globalcivic republicanism has four steps. First, this chapter stresses why globalcivic republicanism provides strong grounds for the moderation ofeconomic globalisation. Second, this chapter affirms the republicancritique of neo-liberal governance, extended neo-liberalism and con-tractual nationalism by underscoring the ways in which theseapproaches fail to provide a rationale for governance that is capable ofmoderating the social dislocation evident within economic globalisa-tion. The third step examines the sympathies and dissension betweenrepublicanism and cosmopolitan governance. This step seeks to elabo-rate the ways in which global civic republicanism offers an immediateprogramme of action that seeks to refurbish the public nature of thestate rather than invent a new edifice of global governance to replaceneo-liberalism and economic globalisation. Fourth, I furnish someobservations regarding how the civic project of global civic republican-ism could be instituted in practice.

Renovating the state

The practical prescription of global civic republicanism is an invigora-tion of virtuous civic culture. Only the appeal and attachment genera-ted and sustained by public responsibility, patriotism and the appeal ofthe liberty of a free state could muster the public authority required tomoderate economic globalisation. These republican sentiments arepolitical but only obtain a sense of gravitas in reference to the ongoingpublic association of a particular state. The republican philosopherMaurizio Viroli (1995: 13) maintains:

I must emphasize that I do not mean love of the republic in general orattachment to an impersonal republic based on universal values of lib-erty and justice. I mean the attachment to a particular republic withits particular way of living in freedom. A purely political republicwould be able to command the philosopher’s consent, but would gen-erate no attachment. To generate and sustain these sorts of passionsone needs to appeal to the common culture, to shared memories.

It may be construed that this is an appeal to nationalism. Indeed,David Miller (1994: 143) claims that “a viable political communityrequires mutual trust, trust depends on communal ties, and nationality


is uniquely appropriate here as a form of common identity”. While aninvigoration of patriotism may entail elements of nationalism, the twosentiments are distinct (see Viroli 1998a) and only patriotism is able tomuster the sense of public responsibility and political involvementrequired to prioritise the public interest and control the public powerrequired to constitute non-domination. A republican state needs public“commitment and solidarity” as well as “belonging and membership”but it can do so without ethnic or cultural homogeneity even if repub-licans now largely accept nation-state boundaries (Viroli 1995: 13).

While global civic republicanism is not fixated on promotingnational community, reinvigorating the ideas of active citizenship andpatriotism is a difficult process that will vary from country to country.While there are elements of cosmopolitan culture in many nation-states there are also republican cultures that demonstrate a collectivecivic concern for public life and the degree to which concentrations ofpower threaten individual liberty. However, vibrant republican culturesare only strengthened or created in adversity. Tyranny is the primarymotivator for republican ideas and institutions. My interpretation ofrepublicanism has argued that economic globalisation constitutesforms of domination of individuals and many states around the worldand seeks to avoid indifference and neglect in the face of inequality andinsecurity by arguing that political measures are necessary within andbeyond the state to address these concerns. Republicans are also con-cerned with the ways these processes promote a culture of selfish indi-vidualism and political apathy (see Ralston Saul 1997). As such, a vir-tuous civic culture is not a culture where everyone is altruistic; rather,virtue stems from a self-interested desire to collectively moderate powerin order to enable a wider range of choices in life. This requires a nor-mative shift that celebrates widespread public involvement in politicsand public deliberation as a normal part of life.

While the detail about how the institutions of particular states oughtto be refurbished is beyond the scope of this book, ultimately therenovation of state institutions will come from individuals withindomestic civil society who publicly debate the impact of economicglobalisation and consider the institutions outlined in the previouschapter. However, pertinent to all states will be measures that promotecivic education and knowledge about politics, the actions of thoseintellectuals willing to debate public issues, as well as the more generaldevelopment of forums where public issues can be debated in a civilfashion. A politically astute conception of civil society is a crucialimmediate precondition to a more vibrant civic culture. As I will discuss

Good Government in a Global Age 221

shortly, public engagement is both a means and a goal in the creationof republican institutions. Particularly important to the purpose of thisbook is to publicly discuss the consequences of the social and politicalimpact of contemporary globalisation on fellow citizens and citizens inother parts of the world and ask the important questions of to whatextent are poor people free? To what extent is our society able to makepublic choices in respect to global markets? Is the state acting in inter-ests of the public good? This demands we depart from the liberalassumption that politics and economics are separate domains. The pur-pose of this book is to challenge the dominance of neo-liberalism andargue that republicanism is an alternative discourse that enhances thevoices that are already questioning the prudence of economic globali-sation and the circumscribed direction of public life. It is a first step inarguing that economic globalisation is an issue that should concernpublics around the world and that citizens can begin to moderate thisconcern through the further development of a civic culture and, ulti-mately, a republican state.

There are three dimensions to the way this civic culture would be afoundation for an alternative to economic globalisation. The first is aconcern for the impact of economic insecurity on personal liberty andwariness towards private forms of power. As I claimed in the last chap-ter, it makes no sense to promote policies that protect people from var-ious sources of vulnerability except those of an economic nature. Therepublican ethos of empowerment and contestation would requireinstitutional practices that provide empowering resources and avenuesthat expose all the forms of power that could subordinate people,including power integral to the frameworks and agents of capitalism. Itposits an active role for government to counter-balance the variousflows of power that would otherwise compromise people’s liberty,thereby emphasising that individual’s are citizens not merely con-sumers or clients of capitalist systems.

This concern necessarily leads to the second dimension of repub-licanism, which is the enactment of a purposive and delimited reg-ulation of capitalism directed at promoting non-domination. Suchnon-arbitrary law would be backed by the exercise of public power thatis designed with the intent of suppressing forms of power that renderpeople vulnerable to the will of others. Such an exercise of public powerwould create social policies and a regulatory arbitrage for capitalismthat is stable and predictable yet aspires to enable a context that min-imises vulnerability in order to promote the liberty of all members ofsociety. This regulation in the public interest is in direct contrast to


deregulation that allows prosperous and powerful agents to havevirtually free reign.

The third element of civic culture engendered by global civic republi-canism is that this culture must also animate interstate arrangementsand agencies via the delegation of the popular sovereignty that enablesthe contestation and regulation of global capitalism. The delegation ofpopular sovereignty is not the strategic “unbundling of sovereignty”that Saskia Sassen (1995: 28) uses to describe the ways states have set up international financial institutions within the context of economicglobalisation. Rather, the delegation of popular sovereignty is where the“ultimate source” of authority is the citizens who consciously delegatetheir authority to various forms and levels of government in order tosecure their public interests (Deudney 1996: 195–7). This would notresult in a context where states control all economic activity. Rather, fol-lowing Daniel Deudney’s contention, the external infrastructure ofrepublicanism (as was actually evident within the Philadelphian system)would be designed to avoid both hierarchy and anarchy. As we haveseen, this rationale of counter-balance must extend into the economicrealm. The public regulation of capitalism endeavours to moderate thesocial insecurity inherent in deregulated capitalism as well as preventingprivate interests from having the capacity to dominate the structure ofthe state and interstate agencies. The republican argument is that themoral purpose of curtailing power extends institutions beyond the terri-tory of each civic state in such a way that enables and augments thecivic state but does not replace it. Global civic republicanism contendsthat we must build upon the state and eschews suggestions either onlythe state or only global governance are required to moderate social inse-curity; both are necessary to promote non-domination.

The republican argument that I have developed in response to eco-nomic globalisation is that we must transform the role of the statetowards recognising and protecting its citizens from insecurity andtherefore develop and promote strong civic cultures. According toglobal civic republicanism, good government entails the public devel-opment of power directed at protecting people from domination bypublic and private sources. As we have seen, this public sense of con-struction and protection contrasts with liberal arguments, includingthe cosmopolitan argument of enacting a universal structure of gover-nance. Global civic republicanism differs from “mainstream” liberalarguments that adhere to the principles of non-interference, capitalismand a minimised role for the state. As such, the republican critique ofthe various strands of liberalism that have been examined results in a


certain hierarchy of critique. The republican argument of this book is especially critical of the prevailing discourse of neo-liberal governance as well as the visions of good government defended by extended neo-liberalism and contractual nationalism and, albeit in amore sympathetic manner, cosmopolitan governance.

Critiquing mainstream liberalism

This book has argued that neo-liberalism is a significant form of moralinfluence in contemporary global politics – not just an ideology. Theinfluence of neo-liberal norms are manifest in the international finan-cial institutions and in nation-states in many parts of the worldthrough policies of deregulation, liberalisation, privatisation and com-petitiveness. Consequently, economic globalisation is not a natural orinevitable process. As outlined in Part I, economic globalisation andneo-liberalism developed from the interests and agency of the wealthyin powerful countries. This leads to questions not just regarding theinevitability of deregulated capitalism or the appropriate role of thestate but the inevitability of the inequality and social vulnerability thatstems from economic globalisation. While these issues have led to amodest alteration of neo-liberalism in the form of developing PostWashington Consensus ideas, there have also been more dramatic alter-natives proffered.

However, some of the supposed alternatives to neo-liberalism havebeen tied up in extending the power of transnational capitalist inter-ests. Extended neo-liberalism is a governing strategy that seeks toextend beyond the balance that neo-liberal governance has drawnbetween the nation-state and transnational capitalism, as evident inthe MAI and Ohmae’s notion of the region state. By discarding thelegitimacy that the nation-state provides neo-liberal governance,extended neo-liberalism overtly aspires to protect the processes ofderegulation from public and democratic manipulation as well as lim-iting the discretionary power of the nation-state either through aninternational agreement that entrenches the rights of transnationalcapital or through radically federating the nation-state into regionstates. Good government according to extended neo-liberalism requiresa minimal state stripped of its capacity to impede the rationale or flowsof transnational capital in any substantial way. The failure of the origi-nal incarnation of the MAI and the lack of overt support for Ohmae’sregion-state suggest that it is difficult to believe that extended neo-liberalism can give economic globalisation the same predictable con-text via the increasingly contested legitimacy and substantiation that


the nation-state framed by neo-liberalism provides. Extended neo-liberalism also assuredly promises that increased deregulation willenhance economic growth and thereby moderate inequality by spread-ing wealth and promoting innovation. This is contrary to recent shiftsin development thinking that emphasise the institutional underpin-ning of economic growth, as well as state capacity as being essential factors in poverty reduction and social development (UNDP 1996,2003; Fukuyama 2004). It also defies the inherently uneven dynamic ofglobal capital accumulation and investment. Ultimately region-statesor MAI enmeshed states are defined by giving express priority totransnational capital, and are therefore subject to the dictates of globalcapitalism to such an extent that the provision of any sense of securityto all members of a society is limited in the extreme.

While extended neo-liberalism attempts to transcend the social dis-location inherent in neo-liberalism and economic globalisation, con-tractual nationalism addresses the problems of social dislocation moredirectly. The contractual nationalist view of good government is that the state ought to provide the social and political infrastructurerequired for stable conditions that attract and maintain advancedtechnological production without rearranging the basic conditions ofeconomic globalisation. However, while liberalism and transnationalcapital may need a stable community to “ground” the informationtechnology linkages of the global economy, this does not mean thatthis kind of national community is easy to develop. The problem ofhow to foster community looms as a difficult one to balance with theputative needs of global capitalism. While Robert Reich (1991b: 23–4)and especially Will Hutton (1996: Chp 11) have republican edges totheir arguments, they both tend to accept that the current deregulatednature of economic globalisation is intractable. Hence, contractualnationalism easily collapses into the diffident neo-liberalism of theThird Way. The reluctance to significantly rearrange the political infra-structure of economic globalisation means that contractual nationalismoffers little hope in a global sense. It is tailored for nation-states that arewealthy and linked into the technological networks of the global econ-omy; indeed, it seems aimed at allowing wealthy high technologynation-states to keep those positions within a competitive global econ-omy. This narrow focus limits its ability to articulate an alternativeapproach to governance that is more widely applicable to other parts ofthe globe or that can inform global governance over the longer term.

The alternative forms of good government in the shape of extendedneo-liberalism and contractual nationalism do not sufficiently departfrom the practice of neo-liberal governance. These mainstream positions


reside closely to prevailing ideas and practices of economic globalisa-tion. The republican criticism that I have levelled at these mainstreamliberal accounts rest on three grounds. The first is that these liberalaccounts are not sufficiently attentive to the potential of power to compromisepeople’s liberty. While liberalism claims that people are free to the extentthat they are free from actual restraint, republicanism asserts that peo-ple who are vulnerable or arbitrarily subject to the potential restraint ofothers are not free. Ultimately, neo-liberalism, extended neo-liberalismand contractual nationalism are blind in many respects to the potentialof power within contemporary globalisation to compromise people’sliberty and are willing to let the markets determine the fate of wholesocieties. In effect, they consider that the financial benefits of economicglobalisation outweigh the potential or actual vulnerability borne bymany. By contrast, I argue that in order to be free it is necessary forstates to see arbitrary power as a danger that needs to be addressed bypublic action.

The second line of critique is a corollary of the first: the mainstreamliberal arguments I have examined do not provide a rationale for politicalintervention that provides resources or institutions that can help peopleovercome the risk and uncertainty of markets. While there are efforts toremove various impediments to the efficient operation of markets oropen up opportunities for access to the global economy, these positionsdo not systematically provide people with entitlements that enablethem to avoid vulnerability from the market. While republicanism isnot inherently opposed to capitalism, it is opposed to relationships ofdominance that can and do develop within deregulated capitalism.High levels of economic growth do not justify an absence of poli-tical intervention that provides protection for people who otherwisecould be rendered vulnerable to the vacillations of global capitalism.Republicanism holds that the state could be a central counter-balanceto the insecurity of deregulated capitalism.

Lastly, the mainstream liberal positions examined are asocial, in that they rest on laws and the outcomes of markets rather than the politicalactivity of citizens. These accounts rely mostly upon the beneficial out-comes of the markets or the deployment of rights. While laws andrights are necessary, they are not sufficient. There is little sense in themainstream liberal accounts that the role that people play in the pub-lic sphere would have any consequence for how they are governed inrespect to global capitalism. The separation of politics from economicsis entrenched even within contractual nationalism. By contrast, therepublican response rests on the virtuous conduct of citizens engaged


in the civic activity of securing their own liberty by restraining powerthrough public activity. This is a political and social accomplishmentnot a purely legislative one. This civic conduct is rooted in an expandedand socially institutionalised sense of common weal: individual inter-ests are best realisable in a field of politics kept free from tyrants and theinterests of the powerful. The aim is not just prosperity or the provisionof rights. Rather the aim of republican government is the suppressionand negation of forms of power that can render people vulnerable.Liberal governing strategies are generally reluctant to engage in thisactivity in respect to economic affairs.

Cosmopolitan governance and republicanism

Cosmopolitan governance, as illustrated by the work of David Held andRichard Falk, demonstrates a willingness to intervene in the globaleconomy and face the global scope of the social consequences of eco-nomic globalisation directly. These attempts to institutionalise cosmo-politan values take the view that economic globalisation cannot beaccommodated by governance that is localised at the level of the stateand that prioritises neo-liberal conceptions of the market. Cosmo-politan governance argues that good government entails a movementtowards a global system of law and democracy that promotes individ-ual rights across the world and restricts the authority of states. Theprimary impetus for this argument is the spatial effect of intense glob-alisation whereby governments and people are affected by decisionsmade elsewhere.

The central problem with the account of cosmopolitan governance,particularly within the work of Held, is that contemporary globa-lisation has consequences that extend beyond merely spatial effect.Contemporary globalisation entails practices and ideas that containpower relations that constrain and shape the substance of social rela-tions not merely the extent or intensity of them. While cosmopolitangovernance is clearly aware of the effects of power, it does not provide orstrategically analyse the social grounding of the countervailing public powerneeded to counteract the realities of power within the context of econo-mic globalisation. As I suggested in Chapter 6, actually existing liberaldemocracy within the context of the competition state (let alone thepolitical context of authoritarian or quasi authoritarian regimes) is not a sound foundation upon which to build global democracy. Whilecosmopolitan governance is limited in the long term by substantialparts of the world that may be hostile to cosmopolitan values and


governance, in the short term neo-liberal governance poses a seriousimpediment to the development of cosmopolitanism. Undoing thelogic and practices involved with the competition state and cultivatingcitizenship are therefore prerequisites to enacting cosmopolitan gover-nance. Ultimately, cosmopolitan governance overstates the possibilityof a global community or global public emerging with the necessarysentiment to redistribute resources or regulate transnational capital inaccordance with global democratic law. While the potential of cosmo-politan governance beckons at the horizon, the rocks of neo-liberalglobalisation await underfoot. There is a step missing.

The approach of global civic republicanism addresses this step direct-ly. It does so by focusing on reforming the competition state into a civicstate both from below, through the action of citizens, and from above,in the shape of multilateral action by a critical mass of states motivatedby the idea of obtaining the sense of security and public control thatunderpins the republican conception of politics. While republicanismis a form of moral cosmopolitanism in that it sees non-domination asa universal value and shares the cosmopolitan objection to the marketdriven nature of neo-liberalism and recognises the need to act within aglobal context, it does not share the desire to enact a universal globalstructure aimed at the realisation of individual rights. Essentially, globalcivic republicanism stems from a different historical body of thoughtthan political cosmopolitanism. As such, while there are certain sym-pathies between cosmopolitanism and republicanism (see Bohman2001; Walker 1999), the differences are sufficient to be wary of attemptsto conflate the two political projects.

The republican argument against the viability of cosmopolitan gov-ernance is that it does not address or possess the necessary public powerneeded to counter-balance the power that infuses contemporaryglobalisation. The protection provided to individuals by cosmopolitangovernance stems from the legal rights and redress provided by cosmo-politan law. The republican assertion that I have articulated rests on theidea that something more than abstract laws are required. Publiclydirected power, that is, government structured around protecting theliberty particular to a given society, is essential to protection from thepower exercised by economic globalisation. Thus, states can provide acontext domestically and globally that is sensitive to vulnerability andis empowered to counter-balance this vulnerability without resorting tothe convolution of cosmopolitan democratic law. From the republicanpoint of view, the public sentiment that stems from cosmopolitangovernance is problematic for a series of interlocking reasons.


The first problem facing the public sentiment stemming from cosmo-politan governance is that it is inherently abstract. The elaborate trans-formation in public sentiments and institutions that is sought by cos-mopolitan governance may seem attractive given the scale andsignificance of global problems of economic globalisation. After all, cos-mopolitan governance seeks to narrow the authority of the state andbroaden the political loyalties of its citizens. However, the shift awayfrom states to a universal and global authority – to follow the extent ofhuman and market interactions – does not build upon existing institu-tions and sentiments, nor does it automatically address the social soli-darity and legitimacy needed to empower institutions able to protectindividuals from prevailing forms of power (Miller 1999: 70). The repub-lican counterpoint is not just that this transformation is unnecessarybecause states can (and do) cooperate on matters without a cosmopoli-tan framework (Saward 2000; Neff 1999). Rather, as Bernard Crick claimsthe republican perspective is that “free institutions are not a bright ideathat can be dreamed up and voted in: they must expand upon or restoresome traditional institution” (cited in Machiavelli 1998: 42). In contrastto the dramatic shift in authority and sentiment required by theapproach of cosmopolitan governance, global civic republicanism seeksto enhance and build upon existing sentiments and structures. As such,there is a strong element of pragmatism in global civic republicanism. Itseeks to build upon the existing foundation by reworking the alreadyexisting nature of the state and the collaboration of states rather thanenact a new global system of governance.

The second problem is the functional nature of the public arisingfrom cosmopolitan governance’s emphasis on the role of NGOs as wellas regional and global layers of governance. This functional approachto political association is evident within Held’s model of cosmopolitandemocracy, where people engage in political practice on various levelsof governance according to whether the issue at hand affects them(Saward 2000: 33–5; Miller 1999: 76). By contrast, republican practiceentails the social process of people collectively creating a form of pub-lic power that is aimed at upholding their common interests on anongoing basis. While falling short of an inward looking community ora defence of nationalism, republicanism is defined by a historicallyshaped sense of common responsibility for the state by its citizens. Thisongoing activity creates what Michael Saward (2000: 36–7) refers to asa “baseline unit” that is foundational and not merely functional. I usethe term foundational because it suggests that other forms of gover-nance may be built on top of this “level” of governance as well as


suggesting that the civic state is a foundation in terms of being the legit-imate public authority. While republicanism appreciates the presenceof NGOs (as well as regional and global layers of governance), it doesnot see these organisations as being the basis of non-domination. Toproduce a context in which power is restrained, government must bepublicly developed through avenues of contestatory democracy and aresponsible patriotic citizenry. The citizens of civic states are also theultimate authors and monitors of republican global governance.

This attitude of the public construction of governance is central torepublicanism in the sense that practices of contestation and delega-tion require citizens to see themselves as shapers of their state andglobal governance. If citizens relate to their government and state in arepublican sense, and take public responsibility seriously and attemptto develop institutional forms to minimise domination, then they willcreate a distinctive ethical context for future governance that adapts tochanging forms of domination. Not only will this change the contextof domestic politics by putting more responsibility into citizens’ handsand making public negotiation a more definite act, a republican ethoswill also alter the manner in which states relate to each other. Globalcivic republicanism seeks to establish non-domination by citizens dis-ciplining public power that is founded in as close proximity to them aspossible but delegated as far as required to ensure this civic liberty.Ultimately, republicanism is founded on a pragmatic sense of securityrealised by a collective and ongoing responsibility for publicly directedpower starting with the state rather than constituencies that ceaseless-ly shift according to the issue.

Another problem for cosmopolitan governance, stemming from thetwo previous problems, is that the authority arising from such a struc-ture is intangible and removed from citizen oversight. Cosmopolitangovernance takes an Archimedean and dispassionate starting point forauthority in the shape of cosmopolitan law. As Anthony McGrew(1997a: 250) maintains, cosmopolitanism is defined by the principle of“heterarchy” which entails a “divided authority system subject to cos-mopolitan democratic law” rather than hierarchy. However, while cos-mopolitan governance has a bottom up argument, particularly in Falk’sconception of “globalisation from below”, this is the source of resist-ance not authority. The actual redress to this discontent comes fromabove in the form of a structure of global authority. From a republicanperspective, there are concerns that if cosmopolitan governance were tobe too strong, it could become a tyrannical centralised power. If it weretoo weak or abstract, it will not stimulate citizens to act in ways to


address the power of transnational capital or other highly organisedand diffused networks of interest and power, thereby allowing privateforms of power to reign. By contrast, global civic republicanism seeks tobuild authority from the bottom up in the sense that the reconstruc-tion of civic ethics and structures that seek to constrain power withinthe state will ascend into higher layers of governance. As Chapter 7established, the delegation of authority within the account of globalcivic republicanism is animated by the purpose of achieving securitythrough developing a context of “negarchy”. While republicanismseeks to invigorate the responsibility and passions of citizenship, therepublican design of suppressing power and threats to security cannotstop at the borders of the state.

For cosmopolitan governance, multi-level governance constitutes dif-ferent levels whereby people affected by an issue can influence theissue. For global civic republicanism, the global infrastructure of multi-level governance would be an ongoing construction aimed at obtainingsecurity that augments rather than replaces the civic state. However, tocreate a global design that checks forms of private power, complexlevels of governance will be crucial to managing the delegation of pop-ular sovereignty. Global civic republicanism suggests that civic statescan build upon the forms of multilateral governance that have beenaptly if not unevenly demonstrated by the dominance of neo-liberalismin contemporary global governance. In addition, the European Unionhas developed into a potential hope as to the ways citizens can disci-pline and transform multiple levels of governance and their state. Thus,while there are multiple levels of governance that the state is enmeshedin, the purpose of this governance ought to be clearly aimed at enhanc-ing opportunities for the state to protect its citizens.

Ultimately, it is my contention that while there is the exercise ofglobal politics, there is no global public. There is no sense of widerpatriotism that motivates a “thick” sense of global solidarity and reci-procity (Walzer 1994: 8), or that encourages people to think beyondtheir own personal interests (Miller 1999: 77). There is no love of theUN, let alone the WTO. Ultimately, a place that is kept free from inse-curity and vulnerability requires more than activists or policy-makers.It needs broad participation and a passionate sense of political involve-ment and consideration by citizens participating to enact their own lib-erty. Clearly, this is not being exercised consistently in democraciesaround the world. Global civic republicanism seeks to overturn thiscivic disengagement by emphasising that the overbearing impact of economic globalisation ought to provoke civic re-engagement. The


chances are greater of mobilising people in the states in which they liveto develop virtuous public involvement than developing such virtue ina larger and much more abstract context devoid of the history and“familiar life-ways” that can mobilise commitment and citizenship(Walzer 1994: 8). As Falk (1996b: 60) asserts,

citizens are now being challenged to reconfigure the outmodeddichotomy between undifferentiated patriotism and cosmopoli-tanism. If this challenge is met, the vitality of traditional patriotismcan be restored, but only on the basis of extending ideas and prac-tices of participation and accountability to transnational sites ofstruggle.

This is certainly right but it understates the important struggles todevelop the ethics of political responsibility within the state that moti-vates people to entrust considerable power to the state. Clearly, we needto avoid this “outmoded dichotomy” and be wary of patriotism andindeed nationalism, but we should not overlook the desire of people tocreate their own political responses to economic globalisation via pub-lic control of the state. While I concur with Falk (1996b: 60) in regardsto the potential “common commitment” between patriotism and cos-mopolitanism to create a “humane state”, and ultimately a humaneworld, I think the only feasible route is through enhancing patriotismand the civic apprehension for arbitrary power rather than merely enhanc-ing cosmopolitanism. Nevertheless, a cosmopolitan awareness is clear-ly important to enabling globally astute citizens to be able to conductcivic activity that enacts a global concern for arbitrary power.

Consequently, global civic republicanism directly addresses theshortcomings in cosmopolitan governance. It fills in the missing stepwithin cosmopolitan governance by asserting the importance of citi-zens collectively wielding the public power of their state in order toward off vulnerability and insecurity without resorting to inward look-ing nationalism or chauvinism. Republicanism, in contrast to cosmo-politan governance, sees the state as essential to the construction ofliberty. That this public accomplishment develops within a broaderstructure of governance does not validate the potential of a cosmopolisable to provide non-domination or authorise a “global republic” in theforeseeable future. The objective of global civic republicanism is toarticulate an alternative to neo-liberalism and economic globalisationthat unravels the competition state and neo-liberal governance andreplaces them with politics in a broader sense that is aimed at negotia-tion and the construction of non-domination. Such an environment


would still be globalised, but global capitalism would be tempered by common rules that would enable citizens to promote a vision of lib-erty that wards off vulnerability and increases rather than decreasesequality.

Constructing global civic republicanism

The argument that civically constituted states should cooperate tomoderate the social consequences of economic globalisation is open tothe charge that as desirable as it may be it will be simply unattainable.While this book has addressed the governing strategy required to mod-erate the social exclusion of economic globalisation, it is only one stepin a broader endeavour. Further research is required to fully spell outthe policy detail and the political economic ramifications of a republi-can strategy within a global context, especially in the developing world.The republican goal is a pragmatic shift from privileging private inter-ests to protecting public ones and allowing public choices about thedirection of a given society. After all, the shift from embedded liberal-ism to neo-liberalism demonstrates that there are many forms ofcapitalism and that ideas and prevailing social forces do change. Thepossibility that publicly directed principles could reconstruct the rulesunder which global commerce would operate is the possibility that theapproach of global civic republicanism seeks to act out – not just in the-ory but in actual politics within advanced capitalist states as well asstates in the developing world.

Global civic republicanism offers broader reasons for developingstates to embrace it than neo-liberalism or cosmopolitan governance.First, in embracing non-domination via a state directed by its popula-tion it goes further towards dismissing notions of neo-colonialism orimperialism. Second, global civic republicanism accepts that particularhistorical relationships are experiences that can be built upon – thatparticular cultural relationships are ongoing practices – not practices setin stone. While the acceptability of some cultural traditions is a prob-lem for republicanism as much as for liberalism, the ideas of republi-canism are focused upon obtaining a resilient sense of security that willonly disturb dictators and entrenched oligarchies. Ultimately develop-ing states face the pressing need to reconcile the social costs of eco-nomic globalisation even more so than western societies. Crucially,republicanism promotes the creation of strong democratic states toassists human development that extends beyond the measures articu-lated in the Post Washington Consensus. The capacity of developingcountries will be substantially augmented by dependable forms of


development assistance and a rule governed global economy shaped bycommon level rules.

While some states will be supported by the global measures advocat-ed by global civic republicanism, it is the case that civic states cannot“come from above” – they must ultimately come from below by citi-zens who are either threatened by, or uncomfortable with, economicglobalisation. However, the account of global civic republicanismdeparts from the assertion that “globalisation from below” would be a largely organic, natural reaction to neo-liberalism. The reliance onpolitical activity that stems from the republican inspiration of thisaccount also colours the transition from economic globalisation to aworld shaped by civic states. William Everdell (1983: 12) notes thatrepublican liberty requires a design that does not stem from one per-son; ultimately, “people have to do it in the end”. No otherworldlymagical force will promote liberty. I concur with Habermas’ (2001: 112)assertion that the first actors in the “re-regulation of world society” willnot be “governments but citizens and citizens’ movements”. This isparticularly the case with governments from powerful states that willprobably prove to be reluctant to share their privileged power.However, this merely underlines the importance of embarking upon amore rule governed approach to global political life which incorporatesrejuvenating the civic qualities of existing institutions beginning withthe state. Rather than being a spontaneous or natural process, or aprocess that embarks upon the convolutions of a global democracy, thetransnational political action of those from below will have to be pre-meditated, organised and disciplined.

The resistance to economic globalisation and neo-liberalism thatbegan across the world during the late 1990s offers hope that politi-cal activity could transform global politics. This resistance was char-acterised by protests conducted by anti-capitalist social movementsagainst international financial institution meetings around the world(Scholte 2000a; Gill 2000). The defining feature of the protests againsteconomic globalisation was the array of causes present: from social-ists and anarchists to unions and green groups. The essential questionin the development of this form of diverse resistance is whether it willlead to “the creation of new, ethical, and democratic political institu-tions and forms of practice” (Gill 2000: 139)? Can the global protestmovement take on a more solid form? Stephen Gill (2000: 140) hasasked this question whilst arguing that the global protest movementis a “postmodern transnational political party”. By this he means that


despite the diversity of interests embodied within this movement,that the global protest movement is taking on the political agencynot just of education about the problems of economic globalisationbut of the enactment of alternatives as well. Gill (2000: 140) does notnecessarily mean that the movement is moving towards a phase ofinstitutionalisation but he does mean that this resistance is taking ona distinctive realisation of a “collective will”. But can all interestswithin the global protest movement be accommodated in the con-struction of an alternative to economic globalisation? While Gill usesthe term “party” figuratively rather than literally, he is neverthelessseeking to emphasise the planned agency needed to counteract neo-liberal governance. Strategic action is required not just to change pub-lic notions of common sense but to also overturn institutions inwhich these notions operate.

The argument that stems from republicanism is that while the protestmovement against economic globalisation is central to reshaping globalpolitics away from neo-liberal globalisation it is not sufficient to createan alternative. A republican critique of the protest movement wouldclaim that it is too concentrated on the operations of internationalfinancial institutions and not focused enough on the important rolestates have played in promoting neo-liberalism. In other words, resist-ance to neo-liberalism ought to concentrate on transforming the ideasthat shape states. As such, the next step of transnational action oughtto be the domestic transformation of states towards the republican goalsof an active citizenry, a state focused on the public good of its citizensand the desire to co-operate globally for these ends. The means of thisprocess are likely to require continued forms of protest. However, whileit must be acknowledged that the legacy of republicanism has beenassociated with forms of violent protest and revolution in the face oftyranny, these forms of action are not the only (or best) way to developa society based on negotiation and public responsibility. The idea ofglobal civic republicanism is based on the realisation that liberty as non-domination is superior because it de-legitimates privileged private inter-ests and promotes a global concern for vulnerability. Liberty of this sortsecures the liberty of everyone, even if it does run against the self-inter-est of those who seek to perpetuate their unrestrained power. A strongsense of public self-protection accompanies the public regulation ofcapitalism and other forms of globalisation. This circumspect motivecan only be securely realised through a state designed to obtain civicliberty. However, this liberty can only be developed through public


responsibility and wider forms of co-operation with other states sharingthe goal of restraining the capricious power of transnational economicactors. Thus, public protest is only one edge of an ongoing desire tobring global capitalism under a sense of public discipline.Republicanism of this “gas-and-waterworks” kind comes from publicdesign not solely by public agitation.

How then is the pragmatic moderation promised by global civicrepublicanism going to achieve the regulation of capitalism? Whileglobal civic republicanism may involve forms of public protest, themain source of republican public change will need to come from aninvolvement in electoral politics (see Habermas 2001: 112). Shiftingstates from neo-liberalism will require political parties willing toendorse the importance of citizenship, civic liberty and the global reg-ulation of capitalism. These political parties can only be cultivated bygroups who are willing to develop movements able to promote anddeliberate upon republican concerns both locally and globally. While itfalls short of promoting a global common good or the end of the state,a republican could well argue for a global social movement operatingthrough state-based political parties to establish the principle of a “ris-ing tide” of regulatory reform over global capital through the state. Thisis the only realistic method of developing republican policies andshifting the ethics of the state away from neo-liberalism. The goal ofsecuring civic states via transnational political action is the best we canhope for in the immediate future if the regulation of capitalism by thestate is to be achieved.

There is no mystery or sleight of hand here. Global civic republi-canism will only come from citizens who engage in the political act ofdeveloping practical ways to enact non-domination, beginning withthe regulation of global capitalism. While it could be said that thispolitical process would be a slow and tortuous one of developing a crit-ical mass of civic states (and the global republican infrastructure), eco-nomic globalisation and the domination it imparts can be seen to providethe spur for this civic involvement and interaction. The development ofcivic activity that seeks to construct public power to restrain global cap-italism rests on the observation that no one individual and no one statecan restrain the adverse effects of global capitalism. Nevertheless, byworking together, citizens and their states can develop a Lilliputianpublic response that curtails the insecurity and domination inherent inunrestrained capitalism thereby ushering in a more judicious form ofglobal capitalism.


Conclusion

This book is a contribution to the debate of how we should governwithin a globalising context. It has critically examined the neo-liberalethos that underpins contemporary globalisation and the potentialliberal alternatives to neo-liberalism. I have also developed global civicrepublicanism as a critical, realistic and pragmatic alternative strategyof governance. It is critical in the sense that it does not take the worldof economic globalisation as a given, and has sought to challenge this“reality” by questioning how it came into existence and in whose inter-ests it is maintained (Cox 1996b: 90). My proposal is also realistic in thesense that it takes power to be an unavoidable and crucial part of lifethat needs to be vigilantly checked and balanced in order to protectpublic interests. As such, the utilisation of public power and the goal ofcivic liberty are necessary in order to obtain other social goals. The pro-posal of global civic republicanism is also tempered by pragmatism.While developing “gas-and-waterworks” republicanism in a globalisingcontext is a complex task, I do not consider that global civic republi-canism is revolutionary because it seeks to renovate civic politics withinstates rather than develop a global democracy and is consistent withthe sentiments and interests of many people around the world. It is alsosympathetic with many strands of liberalism and socialism that areconcerned with human welfare.

That arguing for regulation in the public weal might be consideredradical is testament to the sway of the current ideological status quowhere unfettered capitalism and private interests reign, leaving vulnera-ble people around the world at the mercy of deregulated and liberalisedeconomic structures. Within this book’s hierarchy of critique the harsh-est criticism levelled here is at neo-liberal governance and extended neo-liberalism. These approaches ultimately leave people open to the capri-cious power of market forces. In an era of transnational capital, and theforms of governance that are required for market driven types of eco-nomic organisation, the effects of power are considerable; dominiumfrom market forces has deepened even in those countries largely pro-tected from the imperium of the state. Next within this hierarchy, is the position of contractual nationalism which moves insufficientlyaway from neo-liberalism to provide a viable response to the social dis-location of economic globalisation. Last in the hierarchy is cosmopoli-tan governance. While this liberal alternative assumes a position that iscritical of neo-liberalism and economic globalisation, it fails to proffer


an alternative frame of governance that is empowered sufficiently to bea plausible alternative to the dominion of neo-liberal governance.

By contrast, global civic republicanism takes power considerablymore seriously. People can only seek to address a world where powerfulprivate interests dominate by reference to a countervailing power thatis publicly designed and directed. As Susan Strange (1996: 198) claims,

what is lacking in the system of global governance… is an opposi-tion. To make authority acceptable, effective and respected, therehas to be some combination of forces to check the arbitrary or self-serving use of power and to see that it is used at least in part for thecommon good.

This book has furnished the argument that the state is the paramountsource of this opposition – so long as it is animated by the republicanethic of non-domination and the republican practice of citizens takingresponsibility for their state. We can only face a world with severe lev-els of inequality and powerlessness by reference to an understanding ofliberty that identifies such vulnerability and provides the moral reasonto act upon this condition via public action. The neo-Roman strand of republicanism provides the historical legacy for such governance.Global civic republicanism builds upon this legacy and provides arationale to regulate transnational capital globally in ways that do notfollow a socialist path of ending capitalism but instead seeks to enablestates to enact civic liberty. Such liberty is defined by a sense of controlover the direction of a given society and a sense of security that directsthe state to protect people from avoidable vulnerability and thus mod-erate the adverse social consequences of economic globalisation.


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agencies, credit rating, 48, 49, 51,199–200

agriculture, 42, 45, 53, 63, 65, 68architecture

economic, 44–49, 133, 142, 172,173, 216

financial, 131social, 131

assets, expropriation, 93–4, 96autonomy, 180

economic, 167individual, 10, 175, 211principle of, 161–4region states, 105–6regional, 116

Bretton Woods, 4, 25, 26, 27, 33, 34,44, 45, 133, 142

capital, 9, 21, 43, 47, 53, 56, 82, 96,107

human, 123, 139, 140, 143, 146mobile, 35, 40, 42, 49movement of, 96, 100transnational, 32, 42, 106, 126,

171, 185, 210, 217, 224–5, 228,231, 237–8

capitalism, 2, 5, 7–9, 10–11, 16, 20,23, 24, 26, 28, 32, 34, 42, 47, 49,53, 55, 74, 78–81, 84, 85, 87, 91,109–10, 113, 121, 131–4, 145,148, 150, 170, 179, 198, 209,217, 222, 235–6

deregulated, 33, 35, 59, 66, 74, 111,166, 168, 171, 219, 224, 226

global, 17, 35, 46, 58, 59, 68, 71, 83,86–7, 92, 103, 104, 107–08,110–12, 115, 118–19, 120, 129,137–40, 143, 146–8, 156, 171,174, 177, 179, 183, 184–5,210–18, 219, 223, 225, 233, 236

high technology, 9, 142, 148, 185libertarian spirit of, 33, 49

neo-liberal, 37, 100prosperous, 88, 183restructuring of, 30, 33

citizenship, 68, 74, 116, 128, 130,131–2, 147, 177–9, 186, 190, 202,206, 221, 231–2, 236

patriotic, 10, 202republican, 193–4, 211, 216social, 132, 135state, 156, 158, 164–5, 168, 178,

218world, 155–7, 178, 180

“civil minimum”, 102, 103, 104,105–7

cohesion, social, 69–70, 110, 111–12,120, 130, 132, 135–6, 137–40,143, 148, 149, 185, 212

communitarianism, 7, 79, 186community, 148, 228

cosmopolitan democracy and, 163development of, 135–6, 140governing through, problems of,

143–6international, 137national, 221, 225political, 154, 170, 177, 179, 187,

205, 220competition, 31–2, 48–51, 69, 71competition-state, 7, 11, 48–54, 56,

69–70, 72–4, 113–14, 118, 140,143–4, 173, 178, 179, 185,199–200, 217, 227–8, 232

competitiveness, 53, 59, 65, 74, 78,91, 147, 173, 224

consensus, 46, 71constitutionalism, 5, 47, 49, 69, 78,

172, 192, 200consumerism, 37–8consumption, 26, 36, 60, 116corporations, 94–5, 100, 116, 122–3,

125transnational see Transnational

Corporation (TNC)

250

Index

cosmopolitanism, 124, 129, 136, 158,170, 174, 176, 178, 180, 183,205, 218, 228, 230, 232

liberal, 150, 167moral, 150, 155, 169, 202, 228neo-liberal, 45political, 150, 202

critical political economy, 4, 19–20,24, 32, 33, 45, 55, 58, 65

critical theory, 4, 7, 11culture, 18, 20, 22

civic, 8, 219, 220–3

decision-makers see policy-makersdemocracy, 5, 10, 47, 56, 59, 60, 69,

71, 81, 85, 87, 91, 98, 109, 117,136, 155–6, 190, 192, 195–6, 208,209, 227

cosmopolitan, 155, 159–67, 229global, 150–80, 234social, 77, 134, 153

deregulation, 5, 8, 10, 29–30, 39, 42,43–4, 45, 46, 48, 49, 50, 51, 54,56, 64, 67, 72, 85, 88, 91, 96, 99,100, 108, 113–14, 129, 142, 170,183, 212, 223, 224, 225

despotism, 75, 204dislocation, social, 57, 59–60, 70–1,

121, 129, 147, 148, 176, 183,220, 225, 237

dispute resolution, 94, 96domination, 188–9, 190, 192–3,

195–6, 198–200, 203, 208, 213,214, 216–17, 219, 221, 223, 230,236

dominium, 188, 202, 237civic state and, 196–201

economics, 4, 26, 38–9, 47, 222economy

critical political, 20–4global, 20, 28, 31–3, 46, 47–50, 82,

91, 95, 100–6, 108, 111–12,114–18, 122, 124–6, 129, 138,148, 170, 177, 210, 213, 215,216, 225–7, 234

globalised, 29informal, 62“interlinked”, 100

international, 16, 20, 26–7, 29, 32,58

local, 93open world, 40, 42political, 99

elites, 37–8, 58, 63, 70, 82, 85, 98,141, 171, 187

employment, 111, 133part-time and casual, 64, 66, 130patterns and conditions of, 129see also work

environment, 77–8, 97, 212, 213entrepreneurialism, 2, 80ethics, 2, 170, 231

republican, 187–93European Union, 97, 152, 160, 165,

171, 205–6, 207, 231exclusion, social, 92, 113

Falk, Richard, 10, 33, 87, 88, 151,152–4, 155–8, 167–8, 169, 172,174, 175, 178, 179, 180, 211,227, 230, 232

fascism, 83, 116federalism, 117, 194–5finance, 18, 60, 212

global, 31, 37, 40, 42, 44, 45, 51,52, 81, 107, 137

forcescultural and political, 113market, 47, 52, 55, 56, 58–9, 69, 71,

91, 95, 96, 108–9, 113, 237popular-democratic, 47social, 22, 30, 36–7, 50, 56, 108,

174fragmentation, social, 65–71, 79, 130,

136, 178

G-7, 29, 34, 36, 42, 49, 76, 78G-8, 46, 172, 214, 234G-20, 46General Agreement on Tariffs and

Trade (GATT), 25, 47globalisation, 1, 6, 8, 15–31, 134, 151,

167, 222definition, 15–16, 18, 159economic, 1–4, 6–11, 15, 19, 20,

24, 30–3, 34–57, 58–88, 92, 98,100, 103, 108, 110–11, 113–15,

Index 251

globalisation – continuedeconomic, 118, 120–2, 131, 133,

138, 139, 140–3, 144–7, 151–3,156, 158, 160–1, 168–74, 176,178–80, 183–5, 199–201, 206,210–11, 215–18, 219, 220–9,231–8

“from above”, 152, 154, 156, 172“from below”, 153–4, 156, 172,

230, 234neo-liberal, 20, 30, 144, 154, 211,

228, 235political, 2, 40, 144, 178protests against, 59, 74–9, 85,

234–6theory, 16–20transformationalist, 17–19, 32, 55

governance, 2–4, 9, 11, 18, 20, 21, 24,35, 36, 39, 52, 67, 78

cosmopolitan, 10, 88, 150–80,183–5, 202, 205, 210, 211, 220,224, 227–33, 237

cosmopolitan democracy and,162–7

democratic, 76, 216desocialised nature of, 53global, 45, 46, 68, 77–8, 115, 137,

148, 151, 153, 154, 171, 207,216, 223, 230, 238

good, 3, 86, 215, 224humane, 154–9, 175inhumane, 152–4, 156liberal, 7, 10, 11, 59, 83–7, 91, 117,

184, 200–1, 210by nation-state, 120–49nation-state as, 92neo-liberal, 5, 8, 9, 40–5, 46–7, 56,

59, 63, 66, 69, 71–4, 78, 82, 85,88, 91, 95, 99–100, 108, 113,114, 116, 118, 120, 139, 147,149, 150, 168–9, 170, 171–4,176–9, 183, 185, 216, 218, 219,220, 224, 225, 228, 232, 235,238

participatory, 86private frameworks of, 48questioning of legitimacy of

prevailing forms of, 65republican global, 206–10, 215

state as form of, 17see also republicanism, global civic

governmentacceptable, 80“big”, 28citizen controlled, 195control of economic policy by, 47critical focus for, 49expenditure of, 46, 51, 63good, 3, 42, 43, 56, 59, 81, 87, 110,

180, 184, 200, 219–38minimum, 36regulation, loose, 131self, 190

Group of Seven see G-7growth

economic, 2, 25–8, 39, 49, 50, 54,56, 59, 60–1, 73, 75, 81–2, 112,133, 147, 148, 173, 225, 226

jobless, 66

Habermasian Critical Theory, 159,161

hegemony, 22, 23, 24, 29, 32Held, David, 10, 16, 17, 18, 87, 88,

151, 159–69, 171, 174, 175, 178,179, 180, 211, 227, 229

historic bloc, concept of, 21–2hospitality, principle of, 163Hutton, Will, 9, 88, 121, 129–33,

134–5, 137, 138–9, 146, 148, 214,225

imperium, 188, 201, 202, 237civic state and, 193–6

individualism, 9, 35, 80, 81, 101, 136,144, 148, 199, 221

inequality, 6, 9, 59, 60–5, 78, 79,85–7, 110, 112, 115, 119, 121,122, 129, 147, 161, 168, 170,176, 178, 183, 199, 206, 216,219, 221, 224–5, 238

minimal state and, 111–13inflation, 46, 47, 52, 54, 64, 67, 133infrastructure, 103, 104, 107, 111–12,

114, 116, 126, 127, 135neo-liberal, economic globalisation

and, 34–57political, 164, 225

252 Index

insecurity, 59, 78, 79, 110, 115, 119,147, 170, 176, 196, 206, 221,223, 231–2

economic, 154, 222social fragmentation and, 65–71

institutionalisation, 8, 118, 155, 206,218, 235

institutionscontested legitimacy of, 87financial, international, 45, 46, 49,

56, 68, 73, 77, 78, 85, 213–215,223, 224

international, 22, 176, 208melioration of, 6political, 15, 88, 137, 180, 194protective, 207public, 92, 184–5, 194reflective, 215republican, 222

integrationglobal, 16, 19–20, 95market, 36negative, 212positive, 212, 213

intellectual property, 45, 63interdependence, 19, 20, 77internationalism, liberal, 77, 137,

150, 151, 155, 171International Monetary Fund (IMF),

25, 36, 44, 63, 67, 68, 160, 172,214, 235

investment, 152, 212developing states and, 65flows, collective bargaining for, 127foreign, 94, 104, 123global, 44, 63in people, 125–6long term, 132public, 123, 135reform, 134rules governing, 96short term, 131social, 139, 148technology, 139

investors, 56, 81, 93, 95, 97, 99, 108,109, 123

mobility of, 63, 127rights of, 47, 94, 96, 117sovereign, 100

justice, 3, 59, 73, 82, 84, 106, 121,129, 145, 162, 175, 209, 215, 220

knowledge, 21, 40

labourglobal divisions of, 64, 112, 123immobility of, 63international division of, 31organised see trade unionspolicies, 66substitution with technology, 28,

130see also workers

law, 5, 40, 47, 50, 54, 132, 136, 150,151, 154–5, 159, 171, 175, 179,188–9, 195–6, 207, 208, 222,226–8

cosmopolitan, 163–5, 166–7, 211,230

democratic public, 162, 163–4, 180global, 167–8Multilateral Agreement on

Investment and, 93–4, 96–7,99, 110

rule of, 39, 46, 74, 137, 158, 194,209

legitimacy, states and, 114, 164liberalisation, 43–4, 51, 56, 70, 85,

88, 91, 96, 100, 108, 110, 142,150, 170, 224

liberalism, 2, 4–6, 8–9, 38, 47,116–17, 134, 153, 168, 175, 179,180, 183, 184, 186, 191, 194,200, 210, 211, 220, 223, 224–7,237

definition, 79–81economic globalisation and, 58–88embedded, 4, 26, 28, 29, 30–1, 33,

36, 42, 50, 70, 72, 233social, 120, 145

liberty, 2, 5, 6, 7–11, 35, 59, 79, 81,117, 140, 145, 167, 171, 180,183–7, 189–91, 193, 194, 211,215, 216, 219, 220, 222, 226–7,232–3

civic, 184, 201, 202, 206, 217, 218,230, 235, 236, 237–8

common, 198–9, 200, 203

Index 253

liberty – continuedindividual, 5, 80, 82, 109, 161, 184,

185, 187, 209, 219, 221negative, 5, 186, 187positive, 186–7, 192public good of, 190republican, 188, 192, 234

logiccapitalist, 152global, 101, 104, 108

markets, 45, 217, 226–7access to, 95–6capitalist, 30deregulation of, 9, 39discipline of, 48financial, 50, 51, 67–8, 72, 73, 133,

200free, 5, 6, 28, 35, 36, 39, 43, 44, 85,

86, 114, 135, 173, 174, 198global, 17, 31, 33, 35, 42, 48, 49,

73, 91, 109, 117, 118, 152–3,200

labour, 52, 53niche, 31opening of, 50regulation, 84self-regulating, 16, 35, 75vacillation of, 81, 83

Millenium Development Goals, 67,86, 209

movementsanti-globalisation, 172protest, 74–9social, 36, 98, 154, 173

Multilateral Agreement onInvestment, 9, 87, 92–100, 108,110, 111, 113, 114, 116, 118,119, 172, 224

nation-state, 9, 15, 17, 19, 25, 26, 27,33, 34–5, 40, 48, 50, 54, 56, 71–5,77, 81, 82, 84, 100, 105, 109–10,117–18, 121, 122, 126, 150, 169,173, 176, 200, 221, 224–5

centralised, 106–7cohesive, 88competitiveness of, 32, 140curtailment of, 92deregulation and, 91

disaggregation of, 88end of, 101–3, 108, 113governance through the, 120–49internal structure of, 92new role of, 107social compact and moral bond in,

128national interest, renewal of, 124–6nationalism, 72, 75, 84, 170, 174,

180, 193–4, 220–1, 229, 232autarchic, 75“banal”, 145contractual, 9, 88, 120–49, 150,

168, 179, 183, 184–5, 220,224–6, 237

economic, 25, 101, 120–1, 157positive economic, 121, 124, 126–9zero sum, 124, 129

neo-imperialism, 25, 233neo-liberalism, 2–8, 11, 16–20, 24, 30,

34, 35–40, 41, 42, 46, 48, 71,80–2, 86, 121, 129–31, 133, 134,140, 143, 147, 148, 149, 170,172, 178, 179, 199, 212, 222,224–6, 228, 231–4, 236, 237

competition state and, 49–54extended, 9, 87, 91–119, 120, 168,

184–5, 220, 224–6, 237trans-national, 28–9

“new constitutionalism”, 47, 95, 99“new normative order”, 43, 57“new normativity”, 170non-interference, 5, 188–9, 190, 191,

196, 223non-domination, 188–9, 190, 192–4,

195, 196, 197, 201–3, 207, 208,210, 211, 212, 215–18, 219, 221,222, 223, 228, 230, 232, 233,235, 236, 238

North American Free Trade Area(NAFTA), 47, 92, 96, 98, 152

Ohmae, Kenichi, 9, 16, 87, 88, 92,100–8, 110, 111–19, 224

order, social, 53, 75, 83–4organisation

economic, 20, 31political, 40socio-economic, 30workplace, 47

254 Index

Organisation for EconomicCooperation and Development(OECD), 49, 92, 93, 94, 112

Multilateral Agreement onInvestment and, 96–9

patriotism, 158, 170, 180, 184, 193–4,202, 206, 217, 220–1, 232

Pettit, Philip, 5, 7, 10, 186, 188–92,194–8, 206–9, 216, 219

pluralism, 136, 144, 146, 177, 194, 196polarisation, 59, 60–5, 70–1, 87, 110,

122, 125, 129policy

economic, 95, 107, 160free market, 129industry, 127neo-liberal, 97“proactive”, 105public, 118, 124, 162social, 53, 78

policy-making, 29–30, 57, 106, 118,153, 159

economic, 52–3, 110policy-makers, 4, 79, 85, 101, 144,

146, 162, 172, 178, 231politics, 4, 5, 10, 11, 43, 47, 160, 173,

196, 221, 226, 231, 233, 236extended neo-liberalism and, 91globalisation of, 19republican perception of, 184, 228world, 19, 21, 22–3, 24, 33, 34, 36,

39, 57, 58–9, 150, 175, 202,218, 224, 234

post-Fordism, 29, 31Post Washington Consensus, 46, 86,

118, 209, 233poverty, 6, 60–3, 78, 111, 112, 131,

176reduction, 86, 225

power, 15, 18, 21, 39, 54, 57, 106,109, 114, 118, 162, 170, 187,200, 216, 229, 238

arbitrary, 10–11, 184, 188, 192,201, 202, 207, 209, 232

corporate, 97hierarchy of, 78political, 84private, 7, 47, 50, 68, 190, 192,

213, 222, 231

private market, 41public, 84, 180, 189–90, 192, 201,

202, 211, 218, 221, 222, 227,228, 232, 237

republican dispersal of, 194social, 74state, 185, 189, 203

privatisation, 5, 30, 39, 43, 46, 52,108, 129, 224

production, 31, 60, 63, 225mass, 26owners of capital and, 45process, flexible, 31transnational organisation of, 35

profit, 81repatriation of, 93

profitability, 27–9, 33, 39, 47, 53, 54,56, 59, 82

prosperity, 109–11, 115, 116, 120,129, 138, 145, 185, 213, 214, 227

region states and, 105protectionism, 51, 56, 75, 100, 124,

213protests, public, against economic

globalisation, 59, 74–9, 85, 234–6

regulation, 40, 132, 171–2economic, 84, 168, 176–7public, 86

regulationalism, 23–4Reich, Robert, 9, 16, 70, 87, 88,

121–4, 133, 134–5, 138–9, 140–1,148, 177, 225

relations, social, 84, 227cosmopolitan, 175global hierarchy of, 65

representation, local, 115–18republic, 189–90republicanism, 7–8, 11, 219, 222–3,

230cosmopolitan governance and,

227–33global civic, 10, 183–218, 220–3,

231, 233–8see also governanceinter-state dimensions of, 184,

201–6neo-roman, 185–6, 216, 238public good and, 190–1

Index 255

restructuring, 64, 66, 153capitalist, 30, 33social, 9, 20

rightshuman, 60, 78, 117, 155, 156, 167,

175–6, 208individual, 168, 186, 187, 227, 228indigenous, 98political, 116–17

secession, 70, 123, 141security, 60, 66–7, 82, 147, 190, 196,

204, 207, 209, 222, 225, 231society

autonomy of, 69civil, 221consequences of economic

globalisation and, 58–88, 91conflict with state, 73free market, 130global civil, 156, 178, 215shaping of by capitalism, 36stakeholder, 121, 129–33structure of, 40

solidarity, 180civic, 175–6cosmopolitan, 176

standardsenvironmental, 97, 98, 117global harmonisation of, 212labour, 97, 98living, 102, 111, 112, 125, 127minimum, 116social, 97, 117wages, 98

stateauthority of, 43, 168, 227balance with market, 137civic liberty and, 184competition see competition-stateconceptions of, 8conflict with society, 73constitutional structure of, 132–3,

200cosmopolitan democracy and,

164–5developmental, 48economic globalisation and, 84extended, 40

as form of governance, 17global, 24global civic republicanism and,

183–217governing without, 91–119humane, 153, 158, 232humane governance and, 157–9legitimacy, challenges to, 73–6minimal, 28, 35, 111–13, 223nation see nation-statenarrow, 40public nature of, 220and region state, 113–15renovation of, 220–4republican, 8, 184–5, 192, 208–9,

215–6, 219, 221, 222retrieval of, 184–7role of, 2, 6, 7, 224“social investment”, 135structure of, 52welfare, 28, 30, 34, 48, 53, 63, 132,

133, 135in world of region states, 106–8

statescapacity to avoid poverty, 63civic, 10, 184, 193–201, 215, 217,

223, 228, 230, 231, 234developing, investment and, 65global economy and, 51, 213globalisation and, 7institutions within, 22interaction between, 20liberal, 6, 196minimal, 54negotiations between, 22power of, 21region, 100, 103–8, 110, 111,

113–17, 120, 224–5strong, development rates and, 66wealthy, 39

stratification, social, 61–2subsidiarity, principle of, 117sustainability, 81–2

taxation, 26, 30, 51, 52, 54, 70, 123,128, 130, 132, 137, 139, 212, 214

technology, 16, 30, 111information, 28, 31, 100

256 Index

investment, 139replacement of labour by, 28, 130

terrorism, 67, 177, 207Third Way, 9, 88, 121, 134–9, 146,

148, 225trade, 18, 20, 44, 212

free, 45, 128liberalisation, 46

trade unions, 64–5, 72–3, 129, 130Transnational Corporation (TNC), 28,

31, 37, 68, 70, 96, 97, 118, 164,215

Trilateral Commission, 28, 29, 37

unemployment, 62, 67, 143United Nations, 47, 77–8, 151,

154–6, 171, 173, 207, 208, 210,214, 231

“vicious cycle”, 126, 130“virtuous cycle”, 126vulnerability, 9, 11, 65, 222, 226, 228,

231–3, 235, 238economic, 7 social, 58, 59, 217, 219, 224

wages, 29, 62, 130, 212war, 77, 154, 162–3, 202wealth, 91, 109, 213

destruction, state as engine of, 102distribution of, 39, 60, 62, 102,

111, 123, 176–7

welfare, 26, 53, 59, 74, 79, 112, 137,197

corporate, 70economic, 103investment, 132of people, 87, 102“positive”, 135–6social, 168

Washington Consensus, 36, 46, 60,85, 166

work, 36conditions, 72forms of, value attached to, 123restructuring of, 29technologically based, 142see also employment

workers, 125interests of, 122mobility of, 127quality of, 127skills of, 64, 123, 143training of, 127see also labour

world, borderless, 100–3World Bank, 8, 25, 37, 44, 63, 68,

160, 173, 214World Economic Forum, 28, 29, 37World Trade Organisation, 45, 59, 76,

77, 99, 172, 173, 214, 231, 234world order, 23, 24, 41

crisis and revolution and, 25–30neo-liberal, 30–2

Index 257

Liberty beyond neo_liberalism__a_republican_critique_of_liberal_governance_in_a_globalising_age

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