Economic Governance in the Age of Globalization

Economic Governance in the Age of Globalization

Copyright Date: 2004
Pages: 528
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  • Book Info
    Economic Governance in the Age of Globalization
    Book Description:

    Rapid growth, reduced poverty, and stable societies: the announced benefits of the world economy celebrated by neoliberal proponents of "the Washington consensus" have failed to materialize. What does this failure mean for future world order and the U.S. role as global hegemon? Addressing this crucial question, William Tabb argues that global economic institutions such as the World Bank and the International Monetary Fund constitute a nascent international state for which all previous models of sovereignty, accountability and equity are inadequate. Integrating economics and political science, Tabb traces the emergence of this global state from the closing days of World War II and examines its future prospects.

    Even as the United States will continue to dominate the emerging structures of world governance, Tabb maintains, it will have to change the assumptions behind its championing of classical models of international free trade. A new financial architecture must encompass debt forgiveness, multilateral agreements on investment, and a more inclusive model of growth in the twenty-first century.

    eISBN: 978-0-231-50575-8
    Subjects: Business, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. CHAPTER ONE Introduction
    (pp. 1-14)

    A reading of globalization at the start of the twenty-first century needs to reconsider such concepts as stateness, sovereignty, governance, efficiency, and social justice. I undertake this task here within a framework combining elements of critical theory drawn from mainline political economy, Gramscian and materialist understandings of the international political economy (throughout ipe will be used for the international political economy which is “out there” and IPE to denote the academic study of the ipe) drawing on classical institutionalism and other strands of heterodox political economy. It is about the disjuncture between understandings of the world political economy among elites,...

  4. CHAPTER TWO The Verb and the Noun
    (pp. 15-38)

    To many IPE scholars as well as policymakers and political pundits “globalization rules.” It is the technological imperative of our time. It demands an open global economy and an end to statist interference on pain of slowing growth and depriving the world of its fullest benefits. Politics in this view should not be allowed to “interfere.” Intervention would slow the process of transformation. It might avoid some pain in the short run but encourages resistance by interest groups attempting to protect their status quo privileges and so allocates resources inefficiently, allowing appropriation through rent seeking in distributional aspects of state...

  5. CHAPTER THREE Debating Globalization
    (pp. 39-68)

    Awareness of globalization grew in the last decades of the twentieth century as indices of interconnectedness all shot upward. The ratio of exports to gross domestic product doubled between 1960 and 1990 for the OECD countries. Foreign direct investment rose three times faster than trade. By the mid-1980s, on a world scale, a third of employment and of sales of the sixty-eight largest manufacturing corporations was accounted for by their foreign subsidiaries. All multinationals together controlled a third of the world’s private sector’s productive assets. The global stock of foreign direct investment jumped more than tenfold between 1980 and 2002,...

  6. CHAPTER FOUR The Nature and Scope of International Political Economy
    (pp. 69-101)

    In the 1970s, President Nixon’s decision to end American commitment to the fixed gold parity for the dollar and the irreversible damage done to the Bretton Woods system of fixed exchange rates, followed eighteen months later by the OPEC (Organization of Petroleum Exporting Countries) dramatic price increase, ushered in an era dominated by issues that, as Susan Strange (1995a: 151) argued, “were superficially economic—but also fundamentally political in the sense that outcomes were the product of changing policies as well as of changing markets.” It came to be widely understood that elections were won and lost on the basis...

  7. CHAPTER FIVE The Postwar Economic Order and Global State Economic Governance Institutions
    (pp. 102-140)

    The dominance of traditional diplomacy in IR theory has meant the last half of the twentieth century is seen through the lens of the Cold War. This has tended to obscure the ways American capital through the agency of the U.S. executive branch pursued its interests in the global arena. We will offer an alternative perspective in Chapter 6 focusing on the emergence of global state economic governance institutions. Here they are discussed in terms of the concentric club formation and negotiation processes, which build consensus for soft law regulation. In this chapter the postwar economic order is revisited. Its...

  8. CHAPTER SIX Clubs, Soft Law and International Financial Governance
    (pp. 141-183)

    The question of what sort of limits should be placed on the financial sector in an age of globalization is far from settled. It is an issue which attracts attention beyond the community of interest within the financial sector and regulator fraternity. Yet it has been slow to engage the wider polity, perhaps because the issues seem too complex and technical. Considering challenges to financial stability at the international level is difficult. The number of participants in the discussion of global finance has increased dramatically even as cross currents of competing interests and understandings make following the overlapping conversations more...

  9. CHAPTER SEVEN The Bretton Woods Institutions In Operation
    (pp. 184-219)

    As the GSEGIs become more powerful there is the attempt to apply the same rules everywhere. What results can be called a global regime or perhaps a set of interlocking and mutually supporting regimes which together represent a mode of global governance. Financial issues have come to command attention beyond technocratic specialist circles as awareness has grown that disputes concerning the structure and operation of these institutions set the terms of a global macroeconomic policy regime. Their policy advice increasingly constrains microeconomic market regulation as well to produce procedural rules that lay down broadly what is appropriate to do in...

  10. CHAPTER EIGHT Finance: Orthodox and Heterodox
    (pp. 220-258)

    Without a smooth functioning financial structure the economy will not be able to perform well. Banking is a unique sort of business. It needs effective prudential controls because unlike other enterprises banks can be insolvent but not illiquid. Most businesses run out of cash and the ability to borrow as their net asset position deteriorates with falling profitability. Banks can maintain the illusion of solvency even when there is little real chance that borrowers will repay loans (which can be maintained on the books at face value). Banks can disguise their situation and continue to attract funds by offering higher...

  11. CHAPTER NINE Transnational Corporations and Trade Theory
    (pp. 259-288)

    For some time now the death of the state has been announced. The nation state was just through as an economic unit (Kindleberger 1969: 207). It was clear that there might be a problem. Raymond Vernon wrote, “multinational enterprises are not easily subjected to national policy” (1970: 373) and as trade barriers became less effective in the face of technological developments it was the state which would be in trouble, for multinational corporations unleash changes which “raise issues of sovereignty that may, in the end, dwarf the multinational problem” (Vernon, 1970: 399–400). There was increasing realization that it was...

  12. CHAPTER TEN From the International Trade Organization to the World Trade Organization
    (pp. 289-330)

    As the nature of its economic interactions with the rest of the world evolves, the United States has taken the initiative in bringing the international trade regime into conformity with what it understands from its vantage point as the needs of the time. This has required a shift in emphasis favoring a new set of rules covering an expanded agenda of within-border issues. In the 1970s and 1980s U.S. producers of standard manufacturing goods used orderly marketing agreements and voluntary export restraints to slow the market penetration of Asian producers. At the same time many American-based companies increased their sourcing...

  13. CHAPTER ELEVEN Market Efficiency Versus Labor Rights and Environmental Protection
    (pp. 331-372)

    The rules and decisions of courts and international administrative organizations such as the WTO, the ILO, and the OECD impact more widely as the interconnectedness of economies increase. Linkages have grown more complex. Where once the organizations dealt mainly with cross-border disputes, increasingly controversies involve conflicting domestic practices and how different nations’ laws are to be harmonized in a world of presumably sovereign states. High on some lists of international economic law issues for cross-border harmonization are labor rights and environmental protection. In an increasingly interdependent world will such international standards be established and enforced? And if so, how? Optimists...

  14. CHAPTER TWELVE Redecorating and New Architecture
    (pp. 373-416)

    The capacity of those exercising power to frame the agenda in the areas which have been a key topic this study is illustrated by the extent to which official concern has focused on the need to develop new financial architecture, a discourse initiated by the countries of the core fearing a financial global meltdown. Of course other countries would suffer from such a calamity but it is not their interests which guide this discussion, nor are issues of development, poverty eradication, social justice, workers’ rights, or the environment arguably central concerns of elite decisionmakers beyond a certain rhetoric of good...

  15. CHAPTER THIRTEEN The Evolving Political Economy
    (pp. 417-430)

    Globalization has many faces. This book has examined its features in the hope of broadening the perspective with which we examine the interrelated phenomena associated with the emergence of global state economic governance institutions and the regimes of which they are a part. My central argument has been that the interests of transnational corporations and international financiers prompted the creation of a new law merchant in cooperation with government policymakers in the most powerful states. Above others the United States, through a process of soft law agreements and concentric club formation, has produced rules and regulations for global finance, trade,...

    (pp. 431-486)
  17. INDEX
    (pp. 487-520)