Governance in a Globalizing World

Governance in a Globalizing World

by Joseph S. Nye

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Far from being another short-lived buzzword, "globalization" refers to real changes. These changes have profound impacts on culture, economics, security, the environment —and hence on the fundamental challenges of governance. This book asks three fundamental questions: How are patterns of globalization currently evolving? How do these patterns affect

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Far from being another short-lived buzzword, "globalization" refers to real changes. These changes have profound impacts on culture, economics, security, the environment —and hence on the fundamental challenges of governance. This book asks three fundamental questions: How are patterns of globalization currently evolving? How do these patterns affect governance? And how might globalism itself be governed? The first section maps the trajectory of globalization in several dimensions —economic, cultural, environmental, and political. For example, Graham Allison speculates about the impact on national and international security, and William C. Clark develops and evaluates the concepts of "environmental globalization." The second section examines the impact of globalization on governance within individual nations (including China, struggling countries in the developing world, and the industrialized democracies) and includes Elaine Kamarck's assessment of global trends in public-sector reform. The third section discusses efforts to improvise new approaches to governance, including the role of non-governmental institutions, the global dimensions of information policy, and Dani Rodrik's speculation on global economic governance.

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Editorial Reviews

From the Publisher

"some welcome analytic clarity on a notoriously slippery subject" —John Ikenberry, Foreign Affairs, 4/18/2001

"Overall this is a welcome departure from the uneveness and lack of focus typically found in an edited volume. This work can easily serve as a starting point for anyone, scholar to student, who wants to grapple with the meaning and implications of globalization." —P. O'Neil, University of Puget Sound, Choice, 7/1/2001

"... a stimulating introduction to the subject of globalization that contains... some rich insights for the specialist in the field." —George F. Botjer, University of Tampa, Perspectives on Political Science, 10/1/2001

"Essays on such topics as the impact of globalization on national security and on the design of international institutions." — Chronicle of Higher Education, 1/12/2001

"Amid the mountains of studies available in this genre, this is one of the few that deserves a place in the personal library of anyone interested in this most controversial of subjects.... Their collaborative effort has produced a most insightful volume, which usefully contradicts many (unsubstantiated) assertions that one hears or reads in the media- and indeed in much scholarly work.... There are no weak chapters in this volume. They all give abundant food for thought and raise fascinating questions and issues that will challenge even the best-informed of readers." —Omar Sanchez, Oxford University, Latin America Politics and Society, 7/1/2002

"... well-developed and thought provoking.... the volume has aptly illustrated that globalism and globalization have created both an opportunity and a need for governance." —Paula L'Ecuyer, University of South Carolina, Journal of Politics, 2/1/2002

"'Governance in a Globalizing World' provides useful information, makes a promising start towards a new vision, raises many good questions, and offers... helpful answers." —David M. Trubek, University of Wisconsin-Madison, American Journal of International Law, 7/1/2002

"The book's strength is its clear argument for a new global governance model." —Donald E. Klinger, Professor of Public Affairs, University of Colorado, Public Administration Review, 11/1/2004

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Governance in a Globalizing World

Edited by Joseph S. Nye Jr. and John D. Donahue

Brookings Institution Press

Copyright © 2000 The Brookings Institution Press.
All rights reserved.
ISBN: 0815764081

Chapter One


Robert O. Keohane
Joseph S. Nye Jr.

Globalization became a buzzword in the 1990s, as "inter-dependence" did in the 1970s. Sometimes, it seems to refer to anything that the author thinks is new or trendy. But globalization, as this book shows, refers to real changes of fundamental importance. These changes have profound implications for politics as well as for economics, military activities, and the environment. In this book we ask three fundamental questions. One, how are patterns of globalization evolving in the first part of the twenty-first century? Two, how does this affect governance, previously closely associated with the nation-state? Three, how might globalism itself be governed?

    Globalization will affect governance processes and be affected by them. Frequent financial crises of the magnitude of the crisis of 1997–99 could lead to popular movements to limit interdependence and to a reversal of economic globalization. Chaotic uncertainty is too high a price for most people to pay for somewhat higher average levels of prosperity. Unless some aspects of globalization can be effectively governed, it may not be sustainable in its current form. Complete laissez-faire was not a viable option during earlier periods of globalization and is not likely to be viable now. The question is not—will globalization be governed?—but rather, how will globalization be governed?

Defining Globalism

Globalism is a state of the world involving networks of interdependence at multicontinental distances.1 These networks can be linked through flows and influences of capital and goods, information and ideas, people and force, as well as environmentally and biologically relevant substances (such as acid rain or pathogens). Globalization and deglobalization refer to the increase or decline of globalism. In comparison with interdependence, globalism has two special characteristics:2

    —Globalism refers to networks of connections (multiple relationships), not simply to single linkages. We would refer to economic or military interdependence between the United States and Japan but not to globalism between the United States and Japan. U.S.-Japanese interdependence is part of contemporary globalism but by itself is not globalism.

    — For a network of relationships to be considered "global," it must include multicontinental distances, not simply regional networks. Distance is of course a continuous variable, ranging from adjacency (for instance, between the United States and Canada) to opposite sides of the globe (for instance, Britain and Australia). Any sharp distinction between "long-distance" and "regional" interdependence is therefore arbitrary, and there is no point in deciding whether intermediate relationships— say, between Japan and India or between Egypt and South Africa—would qualify. Yet "globalism" would be an odd word for proximate regional relationships. Globalization refers to the shrinkage of distance but on a large scale. It can be contrasted with localization, nationalization, or regionalization.

    Some examples may help. Islam's quite rapid diffusion from Arabia across Asia to what is now Indonesia was a clear instance of globalization; but the initial movement of Hinduism across the Indian subcontinent was not, according to our definition. Ties among the countries of the Asia-Pacific Economic Cooperation Forum (APEC) qualify as multicontinental interdependence, because these countries include the Americas as well as Asia and Australia; but the Association of Southeast Asian Nations(ASEAN) is regional.

    Globalism does not imply universality. At the turn of the millennium, a quarter of the American population used the World Wide Web compared with one hundredth of 1 percent of the population of South Asia. Most people in the world today do not have telephones; hundreds of millions of people live as peasants in remote villages with only slight connections to world markets or the global flow of ideas. Indeed, globalization is accompanied by increasing gaps, in many respects, between the rich and the poor. It does not imply homogenization or equity.3 As Jeffrey Frankel and Dani Rodrik show in their chapters, an integrated world market would mean free flows of goods, people, and capital, and convergence in interest rates. That is far from the facts. While world trade grew twice as fast and foreign direct investment three times as fast as world output in the second half of the twentieth century, Britain and France are only slightly more open to trade (ratio of trade to output) today than in 1913, and Japan is less so. By some measures, capital markets were more integrated at the beginning of the century, and labor is less mobile than in the second half of the nineteenth century when 60 million people left Europe for new worlds.4 In social terms, contacts among people with different religious beliefs and other deeply held values have often led to conflict.5 Two symbols express these conflicts: the notion of the United States as the Great Satan, held by Islamic fundamentalism in Iran; and student protestors' erection in Tiananmen Square in China, in 1989, of a replica of the Statue of Liberty. Clearly, in social as well as economic terms, homogenization does not follow necessarily from globalization.

The Dimensions of Globalism

Interdependence and globalism are both multidimensional phenomena. All too often, they are defined in strictly economic terms, as if the world economy defined globalism. But other forms of globalism are equally important. The oldest form of globalization is environmental: climate change has affected the ebb and flow of human populations for millions of years. Migration is a long-standing global phenomenon. The human species began to leave its place of origin, Africa, about 1.25 million years ago and reached the Americas sometime between 30,000 and 13,000 years ago. One of the most important forms of globalization is biological. The first smallpox epidemic is recorded in Egypt in 1350 B.C. It reached China in 49 A.D., Europe after 700; the Americas in 1520, and Australia in l789.6 The plague or Black Death originated in Asia, but its spread killed a quarter to a third of the population of Europe between 1346 and 1352. When Europeans journeyed to the New World in the fifteenth and sixteenth centuries they carried pathogens that destroyed up to 95 percent of the indigenous population.7 Today, human impact on global climate change could affect the lives of people everywhere. However, not all effects of environmental globalism are adverse. For instance, nutrition and cuisine in the Old World benefited from the importation of such New World crops as the potato, corn, and the tomato.8

    Military globalization dates at least from the time of Alexander the Great's expeditions of 2,300 years ago, which resulted in an empire that stretched across three continents from Athens through Egypt to the Indus. Hardest to pin down, but in some ways the most pervasive form of globalism, is the flow of information and ideas. Indeed, Alexander's conquests were arguably most important for introducing Western thought and society, in the form of Hellenism, to the eastern world.9 Four great religions of the world—Buddhism, Judaism, Christianity, and Islam — have spread across great distances over the past two millennia; and in this age of the Internet other religions such as Hinduism, formerly more circumscribed geographically, are doing so as well.10

    Analytically, we can differentiate dimensions according to the types of flows and perceptual connections that occur in spatially extensive networks:

    —Economic globalism involves long-distance flows of goods, services, and capital, and the information and perceptions that accompany market exchange. It also involves the organization of the processes that are linked to these flows: for example, the organization of low-wage production in Asia for the U.S. and European markets. Indeed, some economists define globalization in narrowly economic terms as "the transfer of technology and capital from high-wage to low-wage countries, and the resulting growth of labor-intensive Third World exports."11 Economic flows, markets, and organization, as in multinational firms, all go together. In chapter 2, Jeffrey Frankel describes the current state of economic globalism.

    —Military globalism refers to long-distance networks of interdependence in which force, and the threat or promise of force, are employed. A good example of military globalism is the "balance of terror" between the United States and the Soviet Union during the cold war. Their strategic interdependence was acute and well recognized. Not only did it produce world-straddling alliances, but either side could have used intercontinental missiles to destroy the other within thirty minutes. It was distinctive not because it was totally new, but because the scale and speed of the potential conflict arising from interdependence were so enormous. In chapter 3, Graham Allison explains how military and other forms of globalism are changing conceptions of security. — Environmental globalism refers to the long distance transport of materials in the atmosphere or oceans or of biological substances such as pathogens or genetic materials that affect human health and well-being. Examples include the depletion of the stratospheric ozone layer as a result of ozone-depleting chemicals; human-induced global warming, insofar as it is occurring; the spread of the AIDs virus from central Africa around the world beginning at the end of the 1970s. As in the other forms of globalism, the transfer of information is important, both directly and through the movement of genetic material and indirectly as a result of inferences made on the basis of material flows. Some environmental globalism may be entirely natural—the earth has gone through periods of warming and cooling since before the human impact was significant—but much of the recent change has been induced by human activity, as William C. Clark describes in chapter 4.

    —Social and cultural globalism involves movements of ideas, information, and images, and of people—who of course carry ideas and information with them. Examples include the movement of religions or the diffusion of scientific knowledge. An important facet of social globalism involves imitation of one society's practices and institutions by others: what some sociologists refer to as "isomorphism."12 Often, however, social globalism has followed military and economic globalism. Ideas and information and people follow armies and economic flows, and in so doing, transform societies and markets. At its most profound level, social globalism affects the consciousness of individuals and their attitudes toward culture, politics, and personal identity. Indeed, as Neal M. Rosendorf describes in chapter 5, social and cultural globalism interacts with other types of globalism, since military and environmental, as well as economic, activity convey information and generate ideas, which may then flow across geographical and political boundaries. In the current era, as the growth of the Internet reduces costs and globalizes communications, the flow of ideas is increasing independent of other forms of globalization. Deborah Hurley and Viktor Mayer-Schoenberger explore the information dimensions of social globalism in chapter 6.

    One could imagine other dimensions. For example, political globalism could refer to that subset of social globalism that refers to ideas and information about power and governance. It could be measured by imitation effect (for example, in constitutional arrangements or the number of democratic states) or by the diffusion of government policies, or of international regimes. Legal globalism could refer to the spread of legal practices and institutions to a variety of issues, including world trade and the criminalization of war crimes by heads of state. Globalization occurs in other dimensions as well—for instance, in science, entertainment, fashion, and language.

    One obvious problem with considering all these aspects of globalism to be dimensions on a par with those we have listed is that when categories proliferate, they cease to be useful. To avoid such proliferation, therefore, we treat these dimensions of globalism as subsets of social and cultural globalism. Political globalism seems less a separate type than an aspect of any of our four dimensions. Almost all forms of globalization have political implications. For example, the World Trade Organization (WTO), Non-Proliferation Treaty (NPT), Montreal Convention, and United Nations Educational, Scientific, and Cultural Organization are responses to economic, military, environmental, and social globalization.

    In the aftermath of Kosovo and East Timor, ideas about human rights and humanitarian interventions versus classical state sovereignty formulations were a central feature of the 1999 UN General Assembly. UN Secretary General Kofi Annan argued that in a global era, "The collective interest is the national interest," and South African President Thabo Mbeki stated that "the process of globalization necessarily redefines the concept and practice of national sovereignty." President Abdelaziz Bouteflika of Algeria, the head of the Organization of African Unity, replied that he did not deny the right of northern public opinion to denounce breaches of human rights, but "sovereignty is our final defense against the rules of an unequal world," and that "we [Africa] are not taking part in the decision-making process."13 These were debates about the political implications of social and military globalization, rather than about political globalization as distinct from its social and military dimensions.

    The division of globalism into separate dimensions is inevitably somewhat arbitrary. Nonetheless, it is useful for analysis, because changes in the various dimensions of globalization do not necessarily co-vary. One can sensibly say, for instance, that "economic globalization" took place between approximately 1850 and 1914, manifested in imperialism and in increasing trade and capital flows between politically independent countries; and that such globalization was largely reversed between 1914 and 1945. That is, economic globalism rose between 1850 and 1914 and fell between 1914 and 1945. However, military globalism rose to new heights during the two world wars, as did many aspects of social globalism. The worldwide influenza epidemic of 1918–19, which took 21 million lives, was propagated by the flows of soldiers around the world.14 So did globalism decline or rise between 1914 and 1945? It depends on the dimension of globalism one is referring to. Without an adjective, general statements about globalism are often meaningless or misleading.

Thick Globalism: What's New?

When people speak colloquially about globalization, they typically refer to recent increases in globalism. Comments such as "globalization is fundamentally new" only make sense in this context but are nevertheless misleading. We prefer to speak of globalism as a phenomenon with ancient roots and of globalization as the process of increasing globalism, now or in the past.

    The issue is not how old globalism is, but rather how "thin" or "thick" it is at any given time.15 As an example of "thin globalization," the Silk Road provided an economic and cultural link between ancient Europe and Asia, but the route was plied by a small group of hardy traders, and the goods that were traded back and forth had a direct impact primarily on a small (and relatively elite) stratum of consumers along the road. In contrast, "thick" relations of globalization involve many relationships that are intensive as well as extensive: long-distance flows that are large and continuous, affecting the lives of many people. The operations of global financial markets today, for instance, affect people from Peoria to Penang. "Globalization" is the process by which globalism becomes increasingly thick.

    Often, contemporary globalization is equated with Americanization, especially by non-Americans who resent American popular culture and the capitalism that accompanies it. In 1999, for example, some French farmers protecting "culinary sovereignty" attacked McDonald's restaurants.16 Several dimensions of globalism are indeed dominated today by activities based in the United States, whether on Wall Street, in the Pentagon, in Cambridge, in Silicon Valley, or in Hollywood. If we think of the content of globalization being "uploaded" on the Internet, then "downloaded" elsewhere, more of this content is uploaded in the United States than anywhere else.17 However, globalization long predates Hollywood and Bretton Woods. The spice trade and the intercontinental spread of Buddhism, Christianity, and Islam preceded by many centuries the discovery of America, much less the formation of the United States. In fact, the United States itself is a product of seventeenth- and eighteenth-century globalization. Japan's importation of German law a century ago, contemporary ties between Japan and Latin American countries with significant Japanese-origin populations, and the lending by European banks to emerging markets in East Asia also constitute examples of globalization not focused on the United States. Hence, globalism is not intrinsically American, even if its current phase is heavily influenced by what happens in the United States.

    Globalism today is America-centric, in that most of the impetus for the information revolution comes from the United States, and a large part of the content of global information networks is created in the United States. However, the ideas and information that enter global networks are downloaded in the context of national politics and local cultures, which act as selective filters and modifiers of what arrives. Political institutions are often more resistant to transnational transmission than popular culture. Although the Chinese students in Tiananmen Squa re in 1989 built a replica of the Statue of Liberty, China has emphatically not adopted U.S. political institutions. Nor is this new. In the nineteenth century, Meiji reformers in Japan were aware of Anglo-American ideas and institutions but deliberately turned to German models because they seemed more congenial.18 For many countries today, as Frederick Schauer shows, Canadian constitutional practices, with their greater emphasis on duties, or German laws, restrictive of racially charged speech, are more congenial than those of the United States.19 And Kamarck's chapter shows that the current wave of imitation of government reform started in Britain and New Zealand, not the United States.

    The central position of the United States in global networks creates "soft power": the ability to get others to want what Americans want.20 But the processes are in many respects reciprocal, rather than one way. Some U.S. practices are very attractive to other countries—honest regulation of drugs, as in the Food and Drug Administration (FDA); transparent securities laws and practices, limiting self-dealing, monitored by the Securities and Exchange Commission (SEC). U.S.-made standards are sometimes hard to avoid, as in the rules governing the Internet itself. But other U.S. standards and practices—from pounds and feet (rather than the metric system) to capital punishment, the right to bear arms, and absolute protection of free speech—have encountered resistance or even incomprehension. Soft power is a reality, but it does not accrue to the United States in all areas of life, nor is the United States the only country to possess it.

    Is there anything about globalism today that is fundamentally different? Every era builds on others. Historians can always find precursors in the past for phenomena of the present, but contemporary globalization goes "faster, cheaper and deeper."21 The degree of thickening of globalism is giving rise to increased density of networks, increased "institutional velocity," and increased transnational participation.

    Economists use the term "network effects" to refer to situations in which a product becomes more valuable once many other people also use it. This is why the Internet is causing such rapid change.22 Joseph Stiglitz, former chief economist of the World Bank, argues that a knowledge-based economy generates "powerful spillover effects, often spreading like fire and triggering further innovation and setting off chain reactions of new inventions. . . . But goods—as opposed to knowledge—do not always spread like fire. "23 Moreover, as interdependence and globalism have become thicker, the systemic relationships among different networks have become more important. There are more interconnections among the networks. As a result, "system effects" become more important.24 Intensive economic interdependence affects social and environmental interdependence, and awareness of these connections in turn affects economic relationships. For instance, the expansion of trade can generate industrial activity in countries with low environmental standards, mobilizing environmental activists to carry their message to the newly industrializing but environmentally lax countries. The resulting activities may affect environmental interdependence (for instance, by reducing cross-boundary pollution) but may generate resentment in the newly industrializing country, affecting social and economic relations.

    The extensivity of globalism means that the potential connections occur worldwide, sometimes with unpredictable results. Even if we thoroughly analyzed each individual strand of interdependence between two societies, we might well miss the synergistic effects of relationships between these linkages between societies.

    Environmental globalism illustrates the point well. When scientists in the United States discovered chlorofluorocarbons (CFCs) in the 1920s, they and many others were delighted to have such efficient chemicals available for refrigeration (and other purposes) that we re chemically inert , hence not subject to explosions and fires. Only in the 1970s was it suspected, and in the 1980s proved, that CFCs depleted the stratospheric ozone layer, which protects human beings against harmful ultraviolet rays. The environmental motto, "Everything is connected to everything else," warns us that there may be unanticipated effects of many human activities, from burning of carbon fuels (generating climate change) to genetically modifying crops grown for food.

    As William C. Clark's chapter shows, environmental globalism has political, economic, and social consequences. Discoveries of the ozone- depleting properties of CFCs (and other chemicals) led to this issue being put on international agendas, intranational, international, and trans- national controversies about it, and eventually a series of international agreements, beginning at Montreal in 1987, regulating the production and sale of such substances. These agreements entailed trade sanctions against violators, thus affecting economic globalism. They also raised people's awareness of ecological dangers, contributing to much greater transnational transmission of ideas and information (social globalism) about ecological processes affecting human beings.

    Another illustration of network interconnections is provided by the impact, worldwide, of the financial crisis that began in Thailand in July 1997. Unexpectedly, what appeared first as an isolated banking and currency crisis in a small "emerging market" country, had severe global effects. It generated financial panic elsewhere in Asia, particularly in Korea and Indonesia; prompted emergency meetings at the highest level of world finance and huge "bail-out" packages orchestrated by the International Monetary Fund; and led to a widespread loss of confidence in emerging markets and the efficacy of international financial institutions. Before that contagious loss of confidence was stemmed, Russia had defaulted on its debt (in August 1998), and a huge U.S.-based hedge fund, Long-Term Capital Management, had to be rescued suddenly through a plan put together by the U.S. Federal Reserve. Even after recovery had begun, Brazil required a huge IMF loan, coupled with devaluation, to avoid financial collapse in January 1999.

    The relative magnitude of foreign investment in 1997 was not unprecedented. Capital markets were by some measures more integrated at the beginning than at the end of the twentieth century. The net outflow of capital from Britain in the four decades before 1914 averaged 5 percent of gross domestic product, compared with 2 to 3 percent for rich countries today.25 The fact that the financial crisis of 1997 was global in scale also had precursors: "Black Monday" on Wall Street in 1929 and the collapse of Austria's Credit Anstalt bank in 1930 triggered a worldwide financial crisis and depression. (Once again, globalism is not new.) Financial linkages among major financial centers have always been subject to the spread of crisis, as withdrawals from banks in one locale precipitate withdrawals elsewhere, as failures of banks in one jurisdiction lead to failures even of distant creditors. Nevertheless, despite the greatly increased financial sophistication of this era compared with the interwar period, the crisis was almost totally unanticipated by most economists, governments, and international financial institutions. The World Bank had recently published a report entitled "The Asian Miracle" (1993), and investment flows to Asia rose rapidly to a new peak in 1996 and remained high until the crisis hit. In December 1998 Federal Reserve Board Chairman Alan Greenspan said, "I have learned more about how this new international financial system works in the last twelve months than in the previous twenty years."26 As David Held and others argue, sheer magnitude, complexity, and speed distinguish contemporary globalization from earlier periods.27

    There are also interconnections with military globalism. In the context of superpower bipolarity, the end of the cold war represented military deglobalization. Distant disputes became less relevant to the balance of power. But the rise of social globalization had the opposite effect. Humanitarian concerns interacting with global communications led to dramatization of some conflicts and military interventions in places like Somalia, Bosnia, and Kosovo. At the same time, other remote conflicts such as Southern Sudan, which proved less accessible, were largely ignored. At the tactical level, the asymmetry of global military power and the interconnections among networks raise new options for warfare. For example, in devising a strategy to stand up to the United States, some Chinese officers are proposing terrorism, drug trafficking, environmental degradation, and computer virus propagation. They argue that the more complicated the combination—for example, terrorism plus a media war plus a financial war—the better the results. "From that perspective, 'Unrestricted War' marries the Chinese classic The Art of War by Sun Tzu, with modern military technology and economic globalization."28

    The general point is that the increasing thickness of globalism—the density of networks of interdependence—is not just a difference in degree from the past. Thickness means that different relationships of interdependence intersect more deeply at more different points. Hence, effects of events in one geographical area, on one dimension, can have profound effects in other geographical areas, on other dimensions. As in scientific theories of "chaos," and in weather systems, small events in one place can have catalytic effects, so that their consequences later and elsewhere are vast.29 Such systems are very difficult to understand, and their effects are therefore often unpredictable. Furthermore, when these are human systems, human beings are often hard at work trying to outwit others, to gain an economic, social, or military advantage precisely by acting in an unpredictable way. As a result, we should expect that globalism will be accompanied by pervasive uncertainty. There will be a continual competition between increased complexity, and uncertainty, on the one hand; and efforts by governments, market participants, and others to comprehend and manage these increasingly complex interconnected systems, on the other.

Globalization and Levels of Governance

By governance, we mean the processes and institutions, both formal and informal, that guide and restrain the collective activities of a group. Government is the subset that acts with authority and creates formal obligations. Governance need not necessarily be conducted exclusively by governments and the international organizations to which they delegate authority. Private firms, associations of firms, nongovernmental organizations (NGOs), and associations of NGOs all engage in it, often in association with governmental bodies, to create governance; sometimes without governmental authority.

    Contrary to some prophetic views, the nation-state is not about to be replaced as the primary instrument of domestic and global governance. There is an extensive literature on the effects of globalism on domestic governance, which in our view reaches more nuanced conclusions (summarized below). Instead, we believe that the nation-state is being supplemented by other actors—private and third sector—in a more complex geography. The nation-state is the most important actor on the stage of global politics, but it is not the only important actor. If one thinks of social and political space in terms of a nine-cell matrix, more governance activities will occur outside the box represented by national capitals of nation- states (figure 1-1).

    Not only is the geography of governance more complex, but so are its modalities at all three levels. As Lawrence Lessig argues, governance can be accomplished by law, norms, markets, and architecture. Taking a local example, one can slow traffic through a neighborhood by enforcing speed limits, posting "children at play" signs, charging for access, or building speed bumps in the roads. Lessig describes an Internet world in which governance is shifting from law made by governments to architecture created by companies. "Effective regulation then shifts from lawmakers to code writers."30 At the same time, private firms press governments for favorable legal regimes domestically and internationally, as do actors from the third sector. The result is not the obsolescence of the nation-state but its transformation and the creation of politics in new contested spaces.

    Many writers in talking about the governance of globalism use what Hedley Bull referred to as the "domestic analogy."31 It is commonplace for people to think of global governance as global government, because the domestic analogy is so familiar. Michael Sandel, for instance, argues that just as the nationalization of the American economy in the nineteenth century led to the nationalization of American government in the Progressive era, globalization of the world economy should lead to world government.32 But the structure of federalism already existed in the United States, and it rested on a common language and political culture. (And even that did not prevent a bloody civil war in the middle of the century.)

    Another example is the UN World Development Report, which portrays global governance in terms of strengthening UN institutions. It calls, for example, for a bicameral General Assembly, an investment trust that will redistribute the proceeds of taxes on global transactions, and a global central bank.33 But it is state structures, and the loyalty of people to particular states, that enable states to create connections among themselves, handle issues of interdependence, and resist amalgamation, even if it might seem justified on purely functional grounds. Hence, world government during our lifetimes seems highly unlikely, at least in the absence of an overwhelming global threat that could only be dealt with in a unified way. In the absence of such a threat, it seems highly unlikely that peoples in some two hundred states will be willing to act on the domestic analogy for well into the new century. World government might or might not be desirable—we think it could have many adverse consequences—but in any event, it is hardly likely to be feasible.

    Although we think world government is infeasible, we are not complacent about the effects of globalization without some coherent means of governance. Karl Polanyi made a powerful argument that the inability of polities to cope with the disruptive effects of nineteenth century globalization helped cause the great disturbances of the twentieth century — communism and fascism.34 Along similar lines, Jeffrey Williamson has more recently documented how the "late nineteenth-century globalization backlash made a powerful contribution to interwar deglobalization."35 Without regulation—or what was traditionally known as "protection"— personal insecurity for many individuals can become intolerable. As Polanyi, with his dramatic flair, put it, "To allow the market mechanism to be sole director of the fate of human beings and their natural environment . . . would result in the demolition of society."36

    If world government is unfeasible and laissez-faire a recipe for a backlash, we need to search for an intermediate solution: a set of practices for governance that improve coordination and create safety valves for political and social pressures, consistent with the maintenance of nation-states as the fundamental form of political organization. Such arrangements will, we argue, involve a heterogeneous array of agents—from the private sector and the third sector as well as from governments. And the governmental agents will not necessarily be operating on orders from the "top levels" of governments. The efficacy of these agents will depend on the networks in which they are embedded and their positions in those networks. And no hierarchy is likely to be acceptable or effective in governing networks.

    One could refer very generally to the governance structures we envisage as "networked minimalism." Networked—because globalism is best characterized as networked, rather than as a set of hierarchies. Minimal— because governance at the global level will only be acceptable if it does not supersede national governance and if its intrusions into the autonomy of states and communities are clearly justified in terms of cooperative results.

    To speak of "networked minimalism" is, of course, not to solve the problems of global governance but merely to point toward a generic response to them. In particular, such a phrase begs the question of accountability, which is crucial to democratic legitimacy.


Excerpted from Governance in a Globalizing World by Joseph S. Nye Jr. and John D. Donahue. Copyright © 2000 by The Brookings Institution Press. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

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