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How Governments Best Tackle Globalization

Should primacy in determing the path of globalization go to markets — or governments?

November 9, 2001

Should primacy in determing the path of globalization go to markets — or governments?

We know that this new world is very exciting and rife with opportunities. But what many of us, especially those of us in government, still need to come to terms with is the fact that there are also looming challenges. Some are well-known, but many others are still emerging and unclear.

At the core of the challenge is the fact that, in the face of monumental economic changes, the political authority of countries has become undermined by what I consider the major paradox of our time.

Put differently, political spaces are tending to fragment even as economic spaces are increasingly integrating. Placed in a now fragile situation, the state can no longer assume the responsibilities to which its citizens have become accustomed.

At the core, this is what frustrates so many people so much. They simply do not see any effective state power over issues that they regard as critical to the long-term benefit of citizens around the world, such as the environment and human rights.

Under these circumstances, it is up to us — and the leaders and thinkers of the next generation — to manage the transition in a way that provides comfort to individuals in these turbulent times and ensures that groups in society are not left behind. This is a tall order, which calls for creative new approaches.

Markets are undoubtedly the best system we have for creating prosperity and generating economic growth. But it would be foolish of us to expect markets to answer all of the social needs of our citizenry. So, with the growing emergence of the influence of the market, we need to think creatively about how to govern in this new world.

In short, globalization ignores political borders — and merges economic spaces. And thus, on the margin of the state’s areas of responsibility, there has emerged a new anonymous and stateless power.

This is the “horizontal” power of the marketplace. It is at once intoxicating and fearsome to watch, as it gradually replaces the “vertical” power of the state. And this trend toward horizontal power has gone well beyond just the marketplace.

We are also seeing increased flexibility and power of other horizontal organizations working throughout the world, such as NGOs (non-governmental organizations), and scientific and other bodies.

I understand why people have grown concerned. For the truth is that markets and corporations are adjusting quickly to the new world, and in many cases are encouraging the pace of change. Meanwhile, governments everywhere are having trouble defining their role and coming up with a plan for how to deal with this phenomenon!

The WTO meeting in Seattle in late 1999 was, in essence, a meeting between international order and global disorder. The international world was represented by democratically elected governments, who had come to negotiate deals representing the best interests of their population.

That being the case, they understood that if the people did not like the deals, they would, at least in most cases, have the opportunity to “fire” the government at the next election.

And then there is an emerging world, and that is the real world of globalization. This other world is a “multicentric” world, composed of an almost infinite number of participants who must be acknowledged as having a capacity for international action that is more or less independent of the state under whose jurisdiction they technically exist.

The juxtaposition of these two worlds yields a very complex configuration of allegiances. The world of the state is based on the exclusivity of its citizens’ allegiances, and depends on its capacity to act while fully engaging a given number of individuals.

In contrast, the multicentric world is based on a network of allegiances that are not at all well-codified, whose nature and intensity depend on the free will of the players concerned. So, to put it bluntly, these two worlds met in Seattle — and they didn’t like one another very much.

We previously had this wonderful, predictable, international system. So predictable that we knew everyone’s speech ahead of time, because it is has usually been repeated so often. And, in any case, everyone checks it in advance with everyone else — just to make sure that no one will be offended.

And then comes this new world, quite anonymous, quite bizarre, absolutely unpredictable because of the number of participants, and it is sometimes real, often virtual.

Too many people think globalization is a policy that governments have dreamed up rather than something that we are confronted with. It is not something that is being imposed by corporations and big business either, because many of them are finding it very tough and challenging.

Who can deny that the political leaders who had come to Seattle were sent back to do their homework, with instructions to be true to the humanistic values that the West so strives to promote? And who can deny that the intention at Seattle was to remind us of the human purpose of economic activity?

Who can deny that we saw the differences in reaction time — we, the governments, are slow, and they, the protestors, are fast — and spheres of influence of the official national and international public authorities on the one hand, and of the informal international groups on the other?

Who can deny the claims and concerns of those preoccupied with accountability, who maintain that this new era of globalization has brought a “democratic deficit,” with governments losing power and influence while horizontal — and non-democratic — bodies of all types see their power and influence grow? In short, who can deny that a new model came to light in Seattle?