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A mericans feel their lives affected more and more by events originating outside the country. Terrorists from halfway around the world wrought havoc in New York and Washing-

ton. Or to take an economic example, who would have thought that imprudent banking practices in a small economy such as Thailand in 1997 would lead to the collapse of the Russian ruble, massive loans to stave off crisis in Brazil, and the New York Federal Reserve Bank’s in- tervention to prevent the collapse of a hedge fund from harming the American economy? In an ecological example, helicopters recently fumigated many American cities in an attempt to eradicate the po- tentially lethal West Nile virus, which might have arrived in the blood of a traveler, via a bird smuggled through customs, or in the gut of a mosquito that flitted into a jet.1 Fears of “bioinvasion” led some environmental groups to place full-page ads in the New York Times calling for a reduction in global trade and travel.2 And as the twenty-first century began, rioters protesting globalization filled the streets of Washington, Prague, Quebec, Genoa, and other cities where leaders met.

globalization

Nye, J. S. (2003). The paradox of american power : Why the world's only superpower can't go it alone. ProQuest Ebook Central <a onclick=window.open('http://ebookcentral.proquest.com','_blank') href='http://ebookcentral.proquest.com' target='_blank' style='cursor: pointer;'>http://ebookcentral.proquest.com</a> Created from du on 2021-01-25 16:14:23.

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made in america?

Globalization — the growth of worldwide networks of interdepen- dence — is virtually as old as human history. What’s new is that the networks are thicker and more complex, involving people from more regions and social classes.3 The ancient Silk Road that linked me- dieval Europe and Asia is an example of the “thin” globalization that involved small amounts of luxury goods and elite customers (though a broader part of the European population suffered from the im- ported viruses that accompanied the traders). Economic globaliza- tion increased dramatically in the nineteenth century. In their 1848 Communist Manifesto, Karl Marx and Friedrich Engels argued that “all old-established national industries have been destroyed or are being destroyed. . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations.”4

The idea that globalization equals Americanization is common but simplistic. The United States itself is the product of seventeenth- and eighteenth-century globalization. As Adam Smith wrote in 1776, “the discovery of America, and that of a passage to the East Indies by the Cape of Good Hope, are the two greatest and most important events recorded in the history of mankind . . . by uniting, in some measure, the most distant parts of the world.”5 But it is also true that the United States is a giant in the contemporary phase of globaliza- tion. In the words of French foreign minister Hubert Vedrine, “The United States is a very big fish that swims easily and rules supreme in the waters of globalization. Americans get great benefits from this for a large number of reasons: because of their economic size; because globalization takes place in their language; because it is organized along neoliberal economic principles; because they impose their le- gal, accounting, and technical practices; and because they’re advo- cates of individualism.”6

It is understandable, and probably inevitable, that those who re- sent American power and popular culture use nationalism to fight it. In the 1940s, French officials sought to ban Coca-Cola, and it was not finally approved for sale in France until 1953.7 In a well-publicized

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1999 case, José Bové, a French sheep farmer (who incidentally spent the early years of his life in Berkeley, California), became a French hero and earned global press coverage by protecting “culinary sovereignty” through destroying a McDonald’s restaurant.8 No one forces the French public to enter the golden arches, but Bové’s success with the media spoke to the cultural ambivalence toward things American. As Iran’s president complained in 1999, “The new world order and glob- alization that certain powers are trying to make us accept, in which the culture of the entire world is ignored, looks like a kind of neo- colonialism.”9

Several dimensions of globalization are indeed dominated today by activities based in Wall Street, Silicon Valley, and Hollywood. However, the intercontinental spread of Christianity preceded by many centuries Hollywood’s discovery of how to market films about the Bible. And the global spread of Islam, continuing to this day, is not “made in USA.” The English language, which is spoken by about 5 percent of the world’s people, was originally spread by Britain, not the United States.10 Ties between Japan and its Latin American dias- pora have nothing to do with the United States, nor do ties between French-, Spanish-, and Portuguese-speaking countries, respectively. Nor does the contemporary spread of AIDS in Africa and Asia. Nor European banks lending to emerging markets in Asia and Latin America. The most popular sports team in the world is not Ameri- can: it is Manchester United, with two hundred fan clubs in twenty- four countries. Three of the leading “American” music labels have British, German, and Japanese owners. Some of the most popular video games come from Japan and Britain.11 The rise of reality pro- gramming, which has enlivened or debased the standards of televi- sion entertainment in recent years, spread from Europe to the United States, not vice versa.

As British sociologist Anthony Giddens observes, “Globalization is not just the dominance of the West over the rest; it affects the United States as it does other countries.”12 Or in the words of Singapore diplo- mat Kishore Mahbubani: “The West will increasingly absorb good minds from other cultures. And as it does so, the West will undergo a major transformation: it will become within itself a microcosm of the

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new interdependent world with many thriving cultures and ideas.”13

Globalization is not intrinsically American, even if much of its current content is heavily influenced by what happens in the United States.

Several distinctive qualities of the United States make it uniquely adapted to serve as a center of globalization. American culture is pro- duced by and geared toward a multiethnic society whose demo- graphics are constantly altered by immigration. America has always had a syncretic culture, borrowing freely from a variety of traditions and continuously open to the rest of the world. And European con- cerns over American influence are not new. A number of books were published on the subject a century ago — for example, a British au- thor, W. T. Stead, wrote The Americanization of the World in 1902. The United States is also a great laboratory for cultural experimentation, the largest marketplace to test whether a given film or song resonates with one subpopulation or another, or perhaps with people in gen- eral. Ideas flow into the United States freely and flow out with equal ease — often in commercialized form, backed by entrepreneurs draw- ing on deep pools of capital and talent. A Pizza Hut in Asia looks American, though the food, of course, is originally Italian. There seems to be an affinity between opportunities for globalization and these characteristics of American society.14

American culture does not always flow into other societies un- changed, nor does it always have political effects. The ideas and infor- mation 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. McDonald’s menus are different in China, and American movies are dubbed in varying Chinese accents to re- flect Chinese perceptions of the message being delivered.15 Political institutions are often more resistant to transnational transmission than popular culture. Although the Chinese students in Tiananmen Square in 1989 built a replica of the Statue of Liberty, China has em- phatically not adopted American political institutions.16

Globalization today is America-centric, in that much of the infor- mation revolution comes from the United States and a large part of the content of global information networks is currently created in the United States and enhances American “soft power.” French culture

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minister Jack Lang warned that soft power “moved mostly in one di- rection because Americans were so closed-minded and provincial, if not grossly ignorant of other cultures.”17 But Lang misses the open- ness of American society, which accepts and recycles culture from the rest of the world. Moreover, some U.S. practices are very attractive to other countries: honest regulation of drugs, as by the Food and Drug Administration (FDA); transparent securities laws and practices that limit fraudulent 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. stan- dards and practices — from pounds and feet (rather than the metric system) to capital punishment and the right to bear arms — have en- countered puzzlement or even outright hostility in other nations. Soft power is a reality, but it does not accrue to the United States in all areas of activity, nor is the United States the only country to possess it. Glob- alization is more than just Americanization.

the nature of the beast

Globalization — worldwide networks of interdependence — does not imply universality.18 As we saw in the last chapter, at the beginning of the twenty-first century almost one-half of the American population used the World Wide Web, compared to 0.01 percent of the popula- tion of South Asia. Most people in the world today do not have tele- phones; 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 either homogenization or equity.19

Even among rich countries, there is a lot less globalization than meets the eye.20 A truly globalized world market would mean free flows of goods, people, and capital, and similar interest rates. In fact we have a long way to go.21 For example, even in the local NAFTA market, Toronto trades ten times as much with Vancouver as with Seattle, though the distance is the same and tariffs are minimal.

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Globalization has made national boundaries more porous but not ir- relevant.22 Nor does globalization mean the creation of a universal community. In social terms, contacts among people with different religious beliefs and other deeply held values have often led to con- flict: witness the great crusades of medieval times or the current no- tion of the United States as “the Great Satan,” held by some Islamic fundamentalists.23 Clearly, in social as well as economic terms, ho- mogenization does not follow necessarily from globalization.

Globalization has a number of dimensions, though all too often economists write as if it and the world economy were one and the same. But other forms of globalization have significant effects on our day-to-day lives. The oldest form of globalization is environmental interdependence. For example, the first smallpox epidemic is recorded in Egypt in 1350 b.c. The disease reached China in a.d. 49, Europe af- ter 700, the Americas in 1520, and Australia in 1789.24 The plague or black death originated in Asia, but its spread killed a quarter to a third of the population of Europe in the fourteenth century. Euro- peans carried diseases to the Americas in the fifteenth and sixteenth centuries that destroyed up to 95 percent of the indigenous popula- tion.25 Since 1973, thirty previously unknown infectious diseases have emerged, and other familiar diseases have spread geographically in new drug-resistant forms.26 The spread of foreign species of flora and fauna to new areas has wiped out native species, and efforts to control them may cost several hundred billion dollars a year.27 On the other hand, not all effects of environmental globalization are ad- verse. For instance, nutrition and cuisine in both Europe and Asia benefited from the importation of such New World crops as pota- toes, corn, and tomatoes, and the green revolution agricultural tech- nology of the past few decades has helped poor farmers throughout the world.28

Global climate change will affect not only Americans but the lives of people everywhere. Thousands of scientists from over a hundred countries recently reported that there is new and strong evidence that most of the warming observed over the last fifty years is attributable to human activities, and average global temperatures in the twenty- first century are projected to increase between 2.5 and 10 degrees

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Fahrenheit. The result could be increasingly severe variations in cli- mate, with too much water in some regions and not enough in others. The effects in North America will include stronger storms, floods, droughts, and landslides. Rising temperatures have lengthened the freeze-free season in many regions and cut snow cover since the 1960s by 10 percent. The rate at which the sea level rose in the last century was ten times faster than the average rate over the last three millennia.29 As Harvard scientist James McCarthy notes, “What is different now is that Earth is populated with 6 billion people and the natural and human systems that provide us with food, fuel, and fiber are strongly influenced by climate.” As climate change accelerates, “future change may not occur as smoothly as it has in the past.”30 It does not matter whether carbon dioxide is placed in the atmosphere from China or the United States; it affects global warming in the same way. And the impact on American policy was clear in the reac- tions of other countries in the early days of George W. Bush’s admin- istration. After foreign protests and a National Academy of Sciences report, President Bush had to reverse his early position that there was inadequate evidence of human effects on global warming.31

Military globalization consists of networks of interdependence in which force, or the threat of force, is employed. The world wars of the twentieth century are a case in point. During the Cold War, the global strategic interdependence between the United States and the Soviet Union was acute and well recognized. Not only did it produce world-straddling alliances, but either side could have used intercon- tinental missiles to destroy the other within the space of thirty min- utes. Such interdependence was distinctive not because it was totally new, but because the scale and speed of the potential conflict were so enormous. Today, terrorist networks constitute a new form of mili- tary globalization.

Social globalization is the spread of peoples, cultures, images, and ideas. Migration is a concrete example. In the nineteenth century, some eighty million people crossed oceans to new homes — far more than in the twentieth century.32 But ideas are an equally important aspect of social globalization. Four great religions of the world — Buddhism, Judaism, Christianity, and Islam — have spread across

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great distances over the last two millennia, as has the scientific method and worldview over the past few centuries. Political global- ization (a part of social globalization) is manifest in the spread of constitutional arrangements, the increase in the number of countries that have become democratic, and the development of international rules and institutions. Those who think it is meaningless to speak of an international community ignore the importance of the global spread of political ideas such as the antislavery movement in the nineteenth century, anticolonialism after World War II, and the envi- ronmental and feminist movements today.

Changes in the various dimensions of globalization can move in opposite directions at the same time. Economic globalization fell dramatically between 1914 and 1945, while military globalization in- creased to new heights during the two world wars, as did many as- pects of social globalization. (War disrupts existing societies and spreads new ideas.) So did globalization increase or decrease between 1914 and 1945? The economic deglobalization that characterized the first half of the twentieth century was so deep that the world econ- omy did not reach the 1914 levels of international trade and invest- ment again until the 1970s. This was in part a reflection of the enormous disruption of World War I, but there was another problem as well. The industrial world had not come to terms with the inequal- ities created by rapid economic globalization. Markets outran poli- tics in Europe, and the great political movements of communism and fascism stemmed in part from popular reactions to the inequali- ties that accompanied laissez-faire world markets.33

Is such economic deglobalization and attendant political disruption likely in the years to come? It’s possible, but less likely than it was a cen- tury ago. For one thing, after 1945 the creation of the welfare state put a safety net under poor people in most developed countries, which acted as a safety valve that made open economies and economic globaliza- tion more acceptable. There is a positive correlation between the strength of the welfare state and the openness of economies.34 Global- ization is not destroying (as opposed to constraining) the welfare state in Europe and the postmodern societies. While political reac- tions to economic globalization have been growing in postindustrial

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societies, they are not like the mass movements that overturned the political systems in Europe in the first half of the twentieth century. At the same time, international inequality has increased in some regions, including countries such as China. In much of the less developed world, the absence of safety nets could become a cause of political re- action against economic globalization.35 International protest move- ments that include American citizens and organizations have increased and, as we shall see below, are raising difficult policy questions.

In short, globalization is the result of both technological progress and government policies that have reduced barriers to international exchange. The United States has been a major instigator and benefi- ciary of the contemporary phase of globalization, but we cannot con- trol it. Moreover, if protests and government policies were to curtail the beneficial economic dimensions of globalization, we would still be left with the detrimental effects of military and environmental globalization. Globalization is a mixed blessing, but like it or not, it creates new challenges for American foreign policy.

twenty-first-century globalization: what’s new?

While globalization has been going on for centuries, its contemporary form has distinct characteristics. In a phrase, it is “thicker and quicker.” Globalization today is different from how it was in the nineteenth cen- tury, when European imperialism provided much of its political struc- ture, and higher transport and communications costs meant fewer people were involved directly with people and ideas from other cul- tures. But many of the most important differences are closely related to the information revolution. As Thomas Friedman argues, contempo- rary globalization goes “farther, faster, cheaper and deeper.”36

Economists use the term “network effects” to refer to situations where a product becomes more valuable once many other people also use it. As we saw in the last chapter, one telephone is useless, but its value increases as the network grows. This is why the Internet is causing such rapid change.37 A knowledge-based economy generates

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“powerful spillover effects, often spreading like fire and triggering fur- ther innovation and setting off chain reactions of new inventions . . . But goods — as opposed to knowledge — do not always spread like fire.”38 Moreover, as interdependence has become thicker and quicker, the relationships among different networks have become more im- portant. There are more interconnections among the networks. As a result, system effects — where small perturbations in one area can spread throughout a whole system — become more important.39

Financial markets are a good example of system effects. As men- tioned above, the 1997 Asian financial crisis affected markets on sev- eral continents. The relative magnitude of foreign investment in 1997 was not unprecedented. The net outflow of capital from Britain in the four decades before 1914 averaged 5 percent of its gross domestic product, compared to 2 to 3 percent for rich countries today.40 The fact that the financial crisis of 1997 was global in scale also had pre- cursors: Black Monday on Wall Street in 1929 and the collapse of Austria’s Credit Anstalt bank in 1930 triggered a worldwide financial crisis and global depression.

But today’s gross financial flows are much larger. Daily foreign ex- change flows increased from $15 billion in 1973 to $1.5 trillion by 1995, and the 1997 crisis was sparked by a currency collapse in a small emerging market economy, not by Wall Street. Further, the 1997 crisis caught most economists, governments, and international financial institutions by surprise, and complex new financial instruments made it difficult to understand. 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.”41 Sheer magnitude, com- plexity, and speed distinguish contemporary economic globalization from earlier periods and increase the challenges it presents to Ameri- can foreign policy.42

Military globalization also became more complex. The end of the Cold War brought military deglobalization — that is, distant disputes between the superpowers became less relevant to the balance of power. But the increase in social globalization over the past several decades had the opposite effect and introduced new dimensions of

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military globalism: humanitarian intervention and terrorism. Hu- manitarian concerns interacting with global communications led to pressure for military interventions in places such as Somalia, Bosnia, and Kosovo. And fundamentalist reactions to modern culture inter- acted with technology to create new options for terrorism and for asymmetrical warfare. For example, in devising a strategy to stand up to the United States, some Chinese midlevel officers proposed terror- ism, drug trafficking, environmental degradation, and computer virus propagation. They argued that the more complicated the com- bination — 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.”43

As American officials fashion foreign policies, they encounter the increasing thickness of globalism — the density of the networks of interdependence — which means that the effects of events in one ge- ographical area or in the economic or ecological dimension can have profound effects in other geographical areas or on the military or so- cial dimension. These international networks are increasingly com- plex, and their effects are therefore increasingly unpredictable. Moreover, in human systems, people are often hard at work trying to outwit each other, to gain an economic, social, or military advantage precisely by acting in an unpredictable way. As a result, globalization is accompanied by pervasive uncertainty. There will be a continual competition between increased complexity and uncertainty, on one hand, and efforts by governments, corporations, and others to com- prehend and manipulate to their benefit these increasingly complex interconnected systems. Frequent financial crises or sharp increases in unemployment could lead to popular movements to limit interde- pendence and to a reversal of economic globalization. Chaotic un- certainty is too high a price for most people to pay for somewhat higher average levels of prosperity. Unless some aspects of globaliza- tion can be effectively governed, as we shall see below, it may not be sustainable in its current form.

Quickness also adds to uncertainty and the difficulties of shaping policy responses. As mentioned at the outset, modern globalization

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operates at a much more rapid pace than its earlier forms. Smallpox took nearly three millennia to conquer all inhabited continents, finally reaching Australia in 1775. AIDS took little more than three decades to spread from Africa all around the world. And to switch to a metaphor- ical virus, in 2000 the Love Bug computer virus needed only three days to straddle the globe. From three millennia to three decades to three days: that is the measure of the quickening of globalization.

Sometimes globalization’s challenges are viewed solely in terms of the speed of information flow, but that is too simple.44 The velocity of individual messages has not changed very significantly since the telegraph became more or less universal toward the end of the nine- teenth century. But institutional velocity — how rapidly a system and the units within it change — reflects the thickness of globalism. Mar- kets react more quickly than before, since information diffuses so much more rapidly and huge sums of capital can respond at a mo- ment’s notice. An NGO can report an event from the Brazilian rain forest and spread it around the world on the Internet in a matter of minutes. Individual news items do not travel much faster from Sara- jevo to New York than they did in 1914, but the institutions and eco- nomics of cable television and the Internet made news cycles shorter and have put a larger premium on small advantages in speed. In 1914, one newspaper did not normally scoop another by receiving and pro- cessing information an hour earlier than another; as long as the infor- mation could be processed before the next day’s issue was put to bed, it was timely. But today, an hour — or even a few minutes — makes the critical difference whether a cable television network is on top of a story or behind the curve. Sometimes CNN scoops official reporting, and I have often entered the office of a Pentagon or State Department official and found CNN tuned in on a television set in the corner.

Direct public participation in global affairs has also increased in rich countries. Ordinary people invest in foreign mutual funds, gam- ble on offshore Internet sites, travel, and sample exotic cuisine that used to be the preserve of the rich. Friedman termed this change the “democratization” of technology, finance, and information, because diminished costs have made what previously were luxuries available to a much broader range of society.45 Democratization is probably the

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wrong word, however, since in markets, money votes, and people start out with unequal stakes. There is no equality, for example, in capital markets, despite the new financial instruments that permit more people to participate. A million dollars or more is often the en- try price for hedge fund investors. Pluralization might be more accu- rate, suggesting the vast increase in the number and variety of participants in global networks. In 1914, according to John Maynard Keynes, “the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep.”46 But Keynes’s Englishman had to be wealthy to be a global consumer. Today virtually any American can do the same thing. Supermarkets and Internet retailers extend that capacity to the vast majority of the people in postindustrial societies.

As we saw in the last chapter, nongovernmental organizations — whether large ones such as Greenpeace or Amnesty International, or the proverbial three kooks with a fax machine and a modem — can now raise their voices, worldwide, as never before. Whether they es- tablish the credibility to get and hold anyone’s attention has become the key political question.

This vast expansion of transnational channels of contact at multi- continental distances, generated by the media and a profusion of nongovernmental organizations, means that more issues are up for grabs internationally, including regulations and practices (ranging from pharmaceutical testing to accounting and product standards to banking regulation) that were formerly regarded as the prerogatives of national governments. Large areas of the governance of transna- tional life are being handled by private actors, whether it be the cre- ation of the code that governs the Internet or the establishment of safety standards in the chemical industry.

Some observers go so far as to argue that communications costs have erased the significance of distance. In some domains, such as fi- nancial markets, this is largely true, but as a generalization, it is a half-truth. First, participation in global interdependence has in- creased, but many people are only tenuously connected to any com- munications networks that transcend their states, or even their

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localities. Most people in the world, as we have noted, do not own telephones, and many peasant villages in Asia, Africa, and Latin America are linked to the world as a whole only through slow and of- ten thin economic, social, and political links. Furthermore, even for those people tied closely into global communications networks, the significance of distance varies greatly by issue — economic, ecologi- cal, military, and so forth. If globalization implies the shrinking of distance, those distances have shrunk at different rates for different people and different issues.47

Distance is indeed irrelevant if a stock can be sold instantaneously in New York or Hong Kong by an investor in Abidjan to one in Moscow. But physical goods move more slowly than capital, since au- tomobiles and textiles cannot be transformed into digits on a com- puter. Orders for them can be sent without regard to distance, but the cars or clothes have to move physically from Japan or Guatemala to Johannesburg or Rome. Such movement is faster than it once was — flowers and shoes are now sent thousands of miles by jet air- craft — but is by no means instantaneous or inexpensive. Even more constrained by distance are personal services: people who desire face- lifts cannot get them online.

Variability by distance applies to other dimensions of globalism as well. The actual movement of ideas and information is virtually in- stantaneous, but their comprehension and acceptance depend on cultural differences. UN secretary general Kofi Annan can talk about human rights and sovereignty simultaneously to people in Boston, Belgrade, Buenos Aires, Beijing, Beirut, Bombay, and Bujumbura — but the same words are heard very differently in these seven cities. Likewise, American popular culture may be interpreted by young people in some cultures as validating fundamentally new values and lifestyles, but in other settings it may be viewed merely as essentially trivial symbols, expressed only in baseball caps, T-shirts, and music. Cultural distances resist homogenization. Finally, elements of social globalization that rely on the migration of people are highly con- strained by distance and by legal jurisdictions, since travel remains costly for most people in the world, and governments everywhere seek to control and limit migration.

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What the information revolution has added to contemporary globalization is a quickness and thickness in the network of intercon- nections that make them more complex. But such “thick globalism” is not uniform: it varies by region and locality, and by issue. As we shape our foreign policy for this new century, we will have to re- spond to issues that involve greater complexity, more uncertainty, shorter response times, broader participation by groups and individ- uals, and an uneven shrinkage of distance. The world is more upon us, but in terms of our policy responses, one size will not fit all.

globalization and american power

With the end of the Cold War, the United States became more pow- erful than any state in recent history. Globalization contributed to that position, but it may not continue to do so throughout the cen- tury. Today globalization reinforces American power; over time it may dilute that power. Globalization is the child of both technology and policy. American policy deliberately promoted norms and insti- tutions such as GATT, the World Bank, and the IMF that created an open international economic system after 1945. For forty-five years, the extent of economic globalization was limited by the autarkic policies of the communist governments. The end of the Cold War re- duced such barriers, and American economic and soft power bene- fited both from the related ascendance of market ideology and the reduction of protectionism.

The United States plays a central role in all dimensions of contem- porary globalization. Globalization at its core refers to worldwide networks of interdependence. A network is simply a series of connec- tions of points in a system, but networks can take a surprising num- ber of shapes and architectures. An airline hub and spokes, a spiderweb, an electricity grid, a metropolitan bus system, and the In- ternet are all networks, though they vary in terms of centralization and complexity of connections. Theorists of networks argue that un- der most conditions, centrality in networks conveys power — that is, the hub controls the spokes.48 Some see globalism as a network with

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an American hub and spokes reaching out to the rest of the world. There is some truth in this picture, as the United States is central to all four forms of globalization: economic (the United States has the largest capital market), military (it is the only country with global reach), social (it is the heart of pop culture), and environmental (the United States is the biggest polluter, and its political support is neces- sary for effective action on environmental issues). As argued above, the United States has played a central role in the current phase of globalization for a variety of reasons, including its syncretic culture, market size, the effectiveness of some of its institutions, and its mili- tary force. And this centrality has in turn benefited American hard and soft power. In this view, being the hub conveys hegemony.

Those who advocate a hegemonic or unilateralist foreign policy are attracted to this image of global networks. Yet there are at least four reasons it would be a mistake to envisage contemporary net- works of globalism simply in terms of the hub and spokes of an American empire that creates dependency for smaller countries. This metaphor is useful as one perspective on globalization, but it does not provide the whole picture.

First, the architecture of networks of interdependence varies ac- cording to the different dimensions of globalization. The hub-and- spokes metaphor fits military globalism more closely than economic, environmental, or social globalism because American dominance is so much greater in that domain. Even in the military area, most states are more concerned about threats from neighbors than from the United States, a fact that leads many to call in American global power to redress local balances. The American presence is welcome in most of East Asia as a balance to rising Chinese power. That is, the hub- and-spokes metaphor fits power relations better than it portrays threat relations, and as we saw in chapter l, balancing behavior is heavily influenced by perceptions of threat. If instead of the role of welcome balancer, the United States came to be seen as a threat, it would lose the influence that comes from providing military protec- tion to balance others. At the same time, in economic networks a hub-and-spokes image is inaccurate. In trade, for example, Europe and Japan are significant alternative nodes in the global network.

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Environmental globalization — the future of endangered species in Africa or the Amazonian rain forest in Brazil — is also less centered around the United States. And where the United States is viewed as a major ecological threat, as in production of carbon dioxide, it is less welcome, and there is often resistance to American policies.

Second, the hub-and-spokes image may mislead us about an ap- parent absence of reciprocity or two-way vulnerability. Even militar- ily, the ability of the United States to strike any place in the world does not make it invulnerable, as we learned at high cost on Septem- ber 11, 2001. Other states and groups and even individuals can em- ploy unconventional uses of force or, in the long term, develop weapons of mass destruction with delivery systems that would en- able them to threaten the United States. Terrorism is a real threat, and nuclear or mass biological attacks would be more lethal than hi- jacked aircraft. As we saw in the last chapter, global economic and so- cial transactions are making it increasingly difficult to control our borders. When we open ourselves to economic flows, we simultane- ously open ourselves to a new type of military danger. And while the United States has the largest economy, it is both sensitive and poten- tially vulnerable to the spread of contagions in global capital mar- kets, as we discovered in the 1997 “Asian” financial crisis. In the social dimension, the United States may export more popular culture than any other country, but it also imports more ideas and immigrants than most countries. Managing immigration turns out to be an ex- tremely sensitive and important aspect of the response to globalism. Finally, the United States is environmentally sensitive and vulnerable to actions abroad that it cannot control. Even if the United States took costly measures to reduce emissions of carbon dioxide at home, it would still be vulnerable to climate change induced by coal-fired power plants in China.

A third problem with the simple hub-and-spokes dependency im- age that is popular with the hegemonists is that it fails to identify other important connections and nodes in global networks. New York is important in the flows of capital to emerging markets, but so are London, Frankfurt, and Tokyo. In terms of social and political globalization, Paris is more important to Gabon than Washington is;

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Moscow is more important in Central Asia. Our influence is often limited in such situations. The Maldive Islands, only a few feet above sea level in the Indian Ocean, are particularly sensitive to the poten- tial effects of producing carbon dioxide in the rest of the world. They are also completely vulnerable, since their sensitivity has to do with geography, not policy. At some time in the future, China will become more relevant to the Maldives than the United States is, because they will eventually outstrip us in the production of greenhouse gases. For many countries, we will not be the center of the world.

Finally, as the prior example suggests, the hub-and-spokes model may blind us to changes that are taking place in the architecture of the global networks. Network theorists argue that central players gain power most when there are structural holes — gaps in commu- nications — between other participants. When the spokes cannot communicate with each other without going through the hub, the central position of the hub provides power. When the spokes can communicate and coordinate directly with each other, the hub be- comes less powerful. The growth of the Internet provides these inex- pensive alternative connections that fill the gaps.49

As the architecture of global networks evolves from a hub-and- spokes model to a widely distributed form like that of the Internet, the structural holes shrink and the structural power of the central state is reduced. It is true, for now, that Americans are central to the Internet; at the beginning of the twenty-first century, they comprise more than half of all Internet users. But by 2003, projections suggest, the United States will have 180 million Internet users, and there will be 240 million abroad.50 This will be even more pronounced two decades hence, as Internet usage continues to spread. English is the most prevalent language on the Internet today, but by 2010, Chinese Internet users are likely to outnumber American users.51 The fact that Chinese web sites will be read primarily by ethnic Chinese na- tionals and expatriates will not dethrone English as the web’s lingua franca, but it will increase Chinese power in Asia by allowing Beijing “to shape a Chinese political culture that stretches well beyond its physical boundaries.”52 And China will not be alone. With the in- evitable spread of technological capabilities, more-distributed net-

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work architectures will evolve. At some time in the future, when there are a billion Internet users in Asia and 250 million in the United States, more web sites, capital, entrepreneurs, and advertisers will be attracted to the Asian market.

The United States now seems to bestride the world like a colossus, to use The Economist’s phrase.53 Looking more closely, we see that American dominance varies across realms and that many relation- ships of interdependence go both ways. Large states such as the United States — or, to a lesser extent, China — have more freedom than do small states, but they are rarely exempt from the effects of globalization. And states are not alone. As we saw in the last chapter, organizations, groups, and even individuals are becoming players. For both better and worse, technology is putting capabilities within the reach of individuals that were solely the preserve of government in the past.54 Falling costs are increasing the thickness and complexity of global networks of interdependence. The United States promotes and benefits from economic globalization. But over the longer term, we can expect globalization itself to spread technological and economic capabilities and thus reduce the extent of American dominance.

globalization and local cultures

Local culture and local politics also set significant limits on the ex- tent to which globalization enhances American power. Contrary to conventional wisdom, globalization is not homogenizing the cul- tures of the world.

Although they are related, globalization and modernization are not the same. People sometimes attribute changes to globalization that are caused in large part simply by modernization.55 The moder- nity of the industrial revolution transformed British society and cul- ture in the nineteenth century. The global spread of industrialization and the development of alternative centers of industrial power even- tually undercut Britain’s relative position. And while the modernity of the new industrial centers altered their local cultures so that in some ways they looked more like Britain than before, the cause was

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modernization, not Anglicization. Moreover, while modernity pro- duced some common traits such as urbanization and factories, the residual local cultures were by no means erased. Convergence toward similar institutions to deal with similar problems is not surprising, but it does not lead to homogeneity.56 There were some similarities in the industrial societies of Britain, Germany, America, and Japan in the first half of the twentieth century, but there were also important differences. When China, India, and Brazil complete their current process of industrialization, we should not expect them to be replicas of Japan, Germany, or the United States.

In the same vein, though the United States is widely perceived as being at the forefront of the information revolution, and though the information revolution results in many similarities in social and cul- tural habits (such as television viewing or Internet use), it is incorrect to attribute those similarities to Americanization. Correlation is not causation. If one imagines a thought experiment in which a country introduces computers and communications at a rapid rate in a world in which the United States did not exist, one would expect major so- cial and cultural changes to occur from the modernization (or, as some say, postmodernity). Of course, since the United States exists and is at the forefront of the information revolution, there is a cur- rent degree of Americanization, but it is likely to diminish over the course of the century as technology spreads and local cultures mod- ernize in their own ways.

Evidence of historical proof that globalization does not necessarily mean homogenization can be seen in the case of Japan, a country that deliberately isolated itself from an earlier wave of globalization carried by seventeenth-century European seafarers. In the middle of the nineteenth century it became the first Asian country to embrace globalization and to borrow successfully from the world without los- ing its uniqueness. During the Meiji Restoration Japan searched broadly for tools and innovations that would allow it to become a major power rather than a victim of Western imperialism. It sent young people to the West for education. Its delegations scoured the world for ideas in science, technology, and industry. In the political realm, Meiji reformers were well aware of Anglo-American ideas and

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institutions but deliberately turned to German models because they were deemed more suitable to a country with an emperor.

The lesson that Japan has to teach the rest of the world is not sim- ply that an Asian country can compete in military and economic power, but rather that after a century and a half of globalization, it is possible to adapt while preserving a unique culture. Of course, there are American influences in contemporary Japan (and Japanese influ- ences such as Pokémon in the United States). Thousands of Japanese youth are co-opting the music, dress, and style of urban black Amer- ica. But some of the groups dress up like samurai warriors onstage. As one claims, “We’re trying to make a whole new culture and mix the music.”57 One can applaud or deplore or simply be amused by any particular cultural transfers, but one should not doubt the per- sistence of Japan’s cultural uniqueness.

The image of American homogenization also reflects a mistakenly static view of culture. Few cultures are static, and efforts to portray them as unchanging often reflect conservative political strategies rather than descriptions of reality. The Peruvian writer Mario Vargas Llosa put it well in saying that arguments in favor of cultural identity and against globalization “betray a stagnant attitude towards culture that is not borne out by historical fact. Do we know of any cultures that have remained unchanged through time? To find any of them one has to travel to the small, primitive, magico-religious communities made up of people . . . who due to their primitive condition, become progressively more vulnerable to exploitation and extermination.”58

Vibrant cultures are constantly changing and borrowing from other cultures. And the borrowing is not always from the United States. For example, as mentioned above, many more countries turned to Canada than to the United States as an example for constitution building in the aftermath of the Cold War. Canadian views of how to deal with hate crimes were more congenial to South Africa and the countries of East- ern Europe than were American First Amendment practices.59

And as mentioned above, globalization is a two-edged sword. In some areas, there is not only a backlash against American cultural imports but an effort to change American culture itself. American policies toward capital punishment may now have majority support

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inside the United States, but they are regarded as egregious violations of human rights in much of Europe and have been the focus of transnational campaigns led by human rights groups. American en- vironmental attitudes toward climate change or genetic modification of food bring similar criticism. As the British author Jonathan Freed- lund says, “In the past, anti-Americans saved their bile for two sepa- rate areas of U.S. misconduct. They were appalled, first, by America’s antics abroad. They were disgusted, second, by the way Americans behaved inside their own country. . . . Now thanks to globalization, the two older forms of hostility have converged.”60

Finally, there is some evidence that globalization and the informa- tion revolution may reinforce rather than reduce cultural diversity. In one British view, “globalization is the reason for the revival of local culture in different parts of the world. . . . Globalization not only pulls upwards, but also pushes downwards, creating new pressures for local autonomy.”61 Some French commentators express fear that in a world of global Internet marketing, there will no longer be room for a culture that cherishes some 250 different types of cheese. But on the contrary, the Internet allows dispersed customers to come together in a way that encourages niche markets, including many sites dedicated only to cheese. The information revolution also allows people to es- tablish a more diverse set of political communities. The use of the Welsh language in Britain and Gaelic in Ireland is greater today than fifty years ago.62 Britain, Belgium, and Spain, among others in Europe, have devolved more power to local regions. The global information age may strengthen rather than weaken many local cultures.

As technology spreads, less powerful actors become empowered. Terrorism is the recent dramatic example, but consider also the rela- tions between transnational corporations and poor countries.63 In the early stages, the multinational company, with its access to the global resources of finance, technology, and markets, holds all the high cards and gets the best of the bargain with the poor country. With time, as the poor country develops skilled personnel, learns new technologies, and opens its own channels to global finance and markets, it success- fully renegotiates the bargain and captures more of the benefits. When the multinational oil companies first went into Saudi Arabia,

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they claimed the lion’s share of the gains from the oil; today the Saudis do. Of course, there has been some change in Saudi culture as engineers and financiers have been trained abroad, incomes have risen, and some degree of urbanization has occurred, but Saudi cul- ture today certainly does not look like that of the United States.

Skeptics might argue that modern transnational corporations will escape the fate that befell the giant oil companies because many are virtual companies that design products and market them but farm out manufacturing to dozens of suppliers in poor countries. The big companies play small suppliers against each other, seeking ever lower labor costs. But as the technology of cheap communications allows NGOs to conduct campaigns of “naming and shaming” that threaten their market brands in rich countries, such multinationals become vulnerable as well. As we saw in the previous chapter, some techno- logical change benefits the stronger parties, but some helps the weak.

Economic and social globalization are not producing cultural ho- mogeneity. The rest of the world will not someday look just like the United States. American culture is very prominent at this stage in global history, and it contributes to American soft power in many, but not all, areas. At the same time, immigrants as well as ideas and events outside our borders are changing our own culture, and that adds to our appeal. We have an interest in preserving that soft power. We should use it now to build a world congenial to our basic values in preparation for a time in the future when we may be less influen- tial. As globalization spreads technical capabilities and information technology allows broader participation in global communications, American economic and cultural preponderance may diminish over the course of the century. This in turn has mixed results for Ameri- can soft power. A little less dominance may mean a little less anxiety about Americanization, fewer complaints about American arro- gance, and a little less intensity in the anti-American backlash. We may have less control in the future, but we may find ourselves living in a world somewhat more congenial to our basic values of democ- racy, free markets, and human rights. In any case, the political reac- tions to globalization will be far more diverse than a unified reaction against American cultural hegemony.

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political reactions to globalization

Political protests against globalization have increased in recent years. The 1999 “battle of Seattle” inaugurated a long string of street protests against the effects of globalization.

Global effects are powerful, but they do not enter societies in an unmediated way. On the contrary, they are filtered through domestic political alignments. How global information is downloaded in dif- ferent countries is a function of domestic politics. In that sense, even in an age of globalization, all politics remains local. The protesters do not represent some undifferentiated mass of civil society, notwith- standing their frequent claims to do so. For example, José Bové, a star of the poor peoples’ economic forum at Porto Alegre in 2001, staunchly defends Europe’s common agricultural policy, which dam- ages farmers in poor countries. Away from the protests, the reality is that different political systems have different capacities to shape the economic, sociological, environmental, and military forces that im- pinge on them; their people have different values relative to those forces; and their political institutions react differently with those val- ues to produce policies of response.

Domestic institutions channel responses to change. Some coun- tries imitate success, as exemplified by democratizing capitalist soci- eties from South Korea to Eastern Europe. Some accommodate in distinctive and ingenious ways: for instance, small European states such as the Netherlands or Scandinavia have maintained relatively large governments and emphasized compensation for disadvantaged sectors, while the Anglo-American industrialized countries have, in general, emphasized markets, competition, and deregulation. Capi- talism is far from monolithic, with significant differences between Europe, Japan, and the United States. There is more than one way to respond to global markets and to run a capitalist economy.

In other societies such as Iran, Afghanistan, and Sudan, conservative groups resist globalization strongly, even violently. Reactions to global- ization help stimulate fundamentalism.64 In some ways, the Al Qaeda terrorists represent a civil war within Islam, which seeks to transform into a global clash of civilization. Global forces can reformulate ethnic

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and political identities in profound and often unanticipated ways. In Bosnia, political entrepreneurs appealed to traditional identities of peo- ple in rural areas in order to overwhelm and dissolve the cosmopolitan identities that had begun to develop in the cities with devastating re- sults. And Iran has seen struggles between Islamic fundamentalists and their more liberal opponents — who are also Islamic but more sympa- thetic to Western ideas.

As mentioned earlier, rising inequality was a major cause of the po- litical reactions that halted an earlier wave of economic globalization early in the twentieth century. The recent period of globalization, like the half century before World War I, has also been associated with in- creasing inequality among and within some countries. The ratio of incomes of the 20 percent of people in the world living in the richest countries to those of the 20 percent living in the poorest countries in- creased from 30:1 in 1960 to 74:1 in 1997. By comparison, it increased between 1870 and 1913 from 7:1 to 11:1.65 In any case, inequality can have political effects even if it is not increasing. “The result is a lot of angry young people, to whom new information technologies have given the means to threaten the stability of the societies they live in and even to threaten social stability in countries of the wealthy zone.”66 As increasing flows of information make people more aware of inequality, it is not surprising that some choose to protest.

Whatever the facts of inequality, there is even less clarity concern- ing its causation or the most effective remedies to it. In part, in- creases in inequality by country are a straightforward result of rapid economic growth in some but not all parts of the world. They demonstrate that movement out of poverty is possible, although of- ten hindered by political factors as well as resource constraints. Most of the poorest countries in the world — whether in Africa or the Middle East — have suffered from misrule, corruption, and inept macroeconomic policies. The weakness of their political systems can be blamed in part on colonialism and nineteenth-century globaliza- tion, but the sources of their recent poor performance are more com- plex.67 Several countries in East Asia that were equally poor in the 1950s used networks of globalization to greatly increase their wealth and status in the world economy. It is difficult to find any countries

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that have prospered while closing themselves off from globalization, but openness alone is not sufficient to overcome inequality.68

Equally striking is the uneven distribution of the benefits of glob- alization among individuals within and across countries. For in- stance, in Brazil in 1995, the richest tenth of the population received almost half of the national income, and the richest fifth had 64 per- cent, while the poorest fifth had only 2.5 percent and the poorest tenth less than 1 percent. In the United States, the richest tenth re- ceived 28 percent of income, and the richest fifth had 45 percent, while the poorest fifth had almost 5 percent and the poorest tenth 1.5 percent.69 Across countries, inequalities are even more dramatic: the richest three billionaires in the world in 1998 had combined assets greater than the combined incomes of the six hundred million peo- ple in the world’s least developed countries.70

Consider also China, a poor country that has been growing very fast since its leaders decided to open their economy in the 1980s, thus exposing their society to the forces of globalization. China’s “human development index” as calculated by the United Nations — reflecting life expectancy, educational attainment, and GDP per capita — showed dramatic gains.71 Hundreds of millions of Chinese were made better off by market reforms and globalization, but hundreds of millions of others, particularly in the western parts of the country, saw little or no gain. And some will be made worse off, particularly as China exposes inefficient state-owned enterprises to international composition under the terms of its accession to the World Trade Or- ganization (WTO). How China handles the resulting politics of in- equality will be a key question in its future.72

Will this inequality create problems for American foreign policy? In the late nineteenth century, inequality rose in rich countries and fell in poor countries; up to half of the rise in inequality could be at- tributed to the effects of globalization. Many of those changes were due to mass migration, which explained about 70 percent of the real wage convergence in the late nineteenth century.73 The political con- sequences of these shifts in inequality are complex, but the historian Karl Polanyi argued powerfully in his classic study The Great Transfor- mation that the market forces unleashed by the industrial revolution

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and globalization in the nineteenth century produced not only great economic gains but also great social disruptions and political reac- tions.74 There is no automatic relationship between inequality and political reaction, but the former can give rise to the latter. Particu- larly when inequality is combined with instability, such as financial crises and recessions that throw people out of work, such reactions could eventually lead to restrictions on economic globalization.

The recent surge in protests against globalization is, in part, a reac- tion to the changes produced by economic integration. From an economist’s view, imperfect markets are inefficient, but from a polit- ical view, some imperfections in international markets can be con- sidered “useful inefficiencies” because they slow down and buffer political change. As globalization removes such inefficiencies, it re- moves the buffers and becomes the political victim of its economic successes. In addition, as described above, as global networks become more complex there are more linkages among issues that can create friction — witness the various cases of trade and the environment that have proved contentious at the WTO. But a large part of the cur- rent protest movement is the result of social globalization, increased communication across borders, reduced costs, and greater ease in co- ordinating protests among individuals and NGOs. In 1997, even be- fore the so-called battle of Seattle, NGOs used the Internet to coordinate protests that helped scuttle a multilateral agreement on investment being negotiated in Paris.

Unlike the mass working-class movements of socialism in the nineteenth and early twentieth centuries, the current protests tend to be elite rather than mass movements. While their leaders often claim to speak on behalf of the poor and to represent global civil society, they tend to be relatively well-off self-selected groups from wealthy countries. The groups that protested at meetings of the WTO, the In- ternational Monetary Fund, the World Bank, and the Group of Eight in Seattle, Washington, Prague, Genoa, and elsewhere were odd coali- tions. Among them were old leftist opponents of capitalism, trade unionists trying to protect well-paid jobs against competition from poor countries, environmentalists wishing for stronger international regulation, young idealists wishing to show solidarity with the poor,

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and young anarchists rioting for fun and profit. As one young Scan- dinavian protester told a New York Times reporter in Genoa, “Global- ization is fashionable at the moment, just the way the environment or health care were in recent years, but we are targeting the system and globalization is one chapter.”75

Some protesters wanted more international regulation that would intrude on national sovereignty; others wanted less infringement of sovereignty. But whatever the incoherence of the coalitions, they were able to capture global attention from media and governments. Their concerns about corporate domination of “neoliberal” global- ization, about growing inequality, about cultural homogenization, and about absence of democratic accountability managed to touch responsive chords, if not to ignite a mass movement.76 To the extent that the United States wants to see economic globalization continue, it will have to think more clearly about the responses to such charges and about the governance of globalism, as we shall see be- low and in chapter 5.

the governance of globalism

If laissez-faire economics has built-in instability, and networks of in- terdependence are stretching beyond the boundaries of the nation- state, how is globalism to be governed? A world government is not the answer. Some writers draw an analogy from American history, asking today’s nation-states to join together as the thirteen colonies did. Just as the development of a national economy in the late nine- teenth century led to the growth of federal government power in Washington, so the development of a global economy will require federal power at the global level.77 Some see the United Nations as the incipient core.78 But the American analogy is misleading. The thirteen original colonies shared far more in English language and culture than the more than two hundred nations of the world share today, and even the Americans did not avoid a bloody civil war. By the time a continental economy developed, the framework of the American federation was firmly in place. Rather than thinking of a hierarchical world government, we should think of networks of gov-

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ernance crisscrossing and coexisting with a world divided formally into sovereign states.

Many countries’ first response to global forces is to take internal ac- tion to decrease their vulnerability to outside influences — they resort to protectionism when they can do so at reasonable cost. Sometimes they are limited by costly retaliation, as in recent trade cases between the United States and the European Union. In agriculture and textiles, however, the rich countries’ protective responses impose costs on poor countries who are ill placed to retaliate. On the other hand, some unilateral responses can be positive. In the 1980s, United States firms reacted to Japanese and European competition in automobiles by implementing internal changes that increased their efficiency. In some instances, such as general accounting procedures or transparent regulation of security markets, companies and governments unilater- ally adopted external standards to enhance their access to capital. Competition in standards need not lead to a race to the bottom, as countries may unilaterally decide to race to the top. For example, Is- rael decided to adopt the European Union’s pesticide standards, and a number of Latin American countries have espoused U.S. standards.79

These examples reinforce a relatively obvious point: for now, the key institution for global governance is going to remain the nation- state.80 In the face of globalization, however, even countries as strong as the United States will find that unilateral measures will often be insufficient, will fail, or will generate reactions. Countries facing in- creased globalization will become, therefore, increasingly willing to sacrifice some of their own legal freedom of action in order to con- strain, and make more predictable, others’ actions toward them- selves. They will find, like Molière’s character who discovered that he had been speaking prose all his life, that the world has long had co- operative institutions for managing common affairs. Hundreds of organizations and legal regimes exist to manage the global dimen- sions of trade, telecommunications, civil aviation, health, environ- ment, meteorology, and many other issues.

To achieve what they want, most countries, including the United States, find that they have to coordinate their activities. Unilateral action simply cannot produce the right results on what are inherently multilateral issues. Cooperation may take the form of bilateral and

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multilateral treaties, informal agreements among bureaucracies, and delegation to formal intergovernmental institutions. Regulation of global flows will often grow by layers of accretion rather than by a sin- gle treaty and will long remain imperfect. Some cases are easier than others. For example, cooperation on prosecution of child pornogra- phy on the Internet is proving easier than regulation of hate mail, as there are more shared norms in the former case than in the latter.81

Finally, some attempts at governance will not involve states as coher- ent units but rather will be either transgovernmental (meaning that components of states engage with one another) or transnational (in- volving nongovernmental actors). That is, alongside the necessary but imperfect interstate institutional framework, there is developing an in- formal political process that supplements the formal process of cooper- ative relations among states. In the public sector, different components of governments have informal contact.82 Rare is the embassy of a large democratic country today in which foreign-service personnel form a majority of those stationed abroad. Instead, the majority of officers in American embassies come from agencies such as agriculture, trans- portation, commerce, energy, NASA, defense, intelligence, and the FBI.

On the private side, transnational corporations and offshore fund managers are playing a larger-than-ever role in creating rules and standards. Their practices often create de facto governance. Interna- tional commercial arbitration is basically a private justice system and credit rating agencies are private gate-keeping systems. They have emerged as important governance mechanisms whose authority is not centered in the state.83 In the nonprofit sector, as we have seen, there has been an extraordinary growth of organizations — still largely Western, but increasingly transnational. For reasons discussed in chapter 2, these organizations and the multiple channels of access across borders are able to put increasing leverage on states and inter- governmental organizations as well as transnational corporations.

The soft power of these organizations is frequently seen in the mobilization of shame to impose costs on national or corporate rep- utations.84 Transnational drug companies gave up lawsuits in South Africa over infringement of their patents on AIDS drugs because, in the words of the Financial Times, “demands for greater social respon- sibility from business are getting louder, better organised, and more

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popular. They cannot be ignored. The climbdown by the drug com- panies was the most significant event. It amounted to a recognition that their legal battle in South Africa was a public relations disas- ter.”85 Similar campaigns of naming and shaming have altered the in- vestment and employment patterns of companies like Mattel and Nike in the toy and footwear industries. Some transnational corpora- tions such as Shell have set up large staffs just to deal with NGOs. Jean-François Rischard of the World Bank, for instance, advocates “global issues networks” that would issue ratings that measure how well countries and private businesses are doing in meeting norms on the environment and other issues that affect the welfare of the planet. The process would be quick and nonbureaucratic, and the sanctions would be through imposing damage on reputations.86

The results may or may not be consistent with government prefer- ences. For example, if transnational corporations were to respond to an NGO campaign by agreeing to raise the age of child labor in their facto- ries, they might be countermanding the decision of the elected govern- ment of a sovereign country like India more effectively than any formal international vote taken in the World Trade Organization. The evolu- tion of these civil and business networks has been largely uncoordi- nated, and it remains unclear how they could fit together in a representative form of global governance. Neither can claim to repre- sent citizenry as a whole.87 The networks of private and transnational actors are contributing to the governance of an incipient, albeit imper- fect, civil society at the global level. Because these networks deal with partial perspectives of business and nonprofit advocates, some ob- servers have suggested adding the input of governments or parts of gov- ernments to represent broader public interests. Global policy networks exist on such issues as corruption (led by Transparency International), the construction of large dams (led by the World Commission on Dams), debt relief for poor countries (led by Jubilee 2000), polio eradi- cation (led by the World Health Organization), and numerous others.88

How should we react to these changes? Our democratic theory has not caught up with global practice.89 Financial crises, climate change, migration, terrorism, and drug smuggling ignore borders but pro- foundly affect American citizens’ lives. British sociologist Anthony Gid- dens believes that because they escape control by sovereign democratic

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processes, they are one of the main reasons for “the declining appeal of democracy where it is best established.”90 For some, such as under- secretary of state John Bolton, the solution is to strengthen U.S. democracy by pulling out of intrusive institutions and rejecting any constraints on sovereignty.91 But even the unilateralists and sover- eigntists will find that international institutions are necessary because many of the issues raised by globalization are inherently multilateral.

Antiglobalization protesters call into question the legitimacy of global institutions and networks on the grounds that they are unde- mocratic.92 For example, Lori Wallach, one of the organizers of the coalition that disrupted the WTO in Seattle, attributed half of its suc- cess to “the notion that the democracy deficit in the global economy is neither necessary nor acceptable.”93 Institutional legitimacy can also rest on tradition and efficacy, but in today’s world, consistency with democratic procedures has become increasingly important.

In fact, these global institutions are quite weak. Even the much- maligned WTO is a weak organization with a small budget and staff, hardly the stuff of world government. Moreover, unlike nonelected NGOs (some of which have larger budgets than the WTO), interna- tional institutions tend to be highly responsive to national govern- ments, which are the real source of democratic legitimacy. Other defenders say that the question of democracy is irrelevant, since in- ternational institutions are merely instruments to facilitate interstate cooperation. Their legitimacy derives from the democratic govern- ments that created them and from their effectiveness.

Except for the most technical organizations, which fall below the political radar, such defenses based on the weakness of international institutions are probably not enough to protect them from attacks on their legitimacy. In a world where the norm of democracy has be- come the touchstone of legitimacy, protesters will charge that they suffer from a democracy deficit. Even though the organizations are weak, their rules and resources can have powerful effects. Moreover, the protesters make three interesting points. First, not all the coun- tries that are members of the organizations are democratic. Second, long lines of delegation from multiple governments and lack of transparency often weaken accountability. Third, although the orga- nizations may be agents of states, they often represent only parts of

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states. For example, trade ministers attend the meetings of the WTO, finance ministers participate in the meetings of the IMF, and central bankers meet at the Bank for International Settlements in Basel. To functional outsiders, even in the same government, these institutions look like closed and secretive clubs. To develop the legitimacy of in- ternational governance will require three things: (1) greater clarity about democracy, (2) a richer understanding of accountability, and (3) a willingness to experiment.

Democracy is government by officials who are accountable and re- movable by the majority of people in a jurisdiction (albeit with pro- visions for protections of individuals and minorities). But who are “we the people” in a world where political identity at the global level is so weak? The principle of one state, one vote respects sovereignty, but it is not democratic. On that formula a citizen of Nauru, a UN member, would have ten thousand times more voting power than a citizen of China. On the other hand, treating the world as one global constituency implies the existence of a political community in which citizens of around two hundred states would be willing to be contin- ually outvoted by more than a billion Chinese and a billion Indians. (Ironically, such a world would be a nightmare for many of the protesting NGOs that seek to promote international environmental and labor standards as well as democracy.)

Minorities acquiesce in the will of a majority when they feel they participate in a larger community. There is little evidence that a suffi- ciently strong sense of community exists at the global level or that it could soon be created.94 In the absence of a much stronger sense of community than now exists, the extension of domestic voting proce- dures to the global level is neither practical nor just. A stronger Euro- pean Parliament may reduce a sense of “democratic deficit” as the relatively homogeneous democratic states of the European Union evolve, but it is doubtful that the analogy or terminology (parliament) makes sense under the conditions of diversity that prevail on the global scale. Adding legislative assemblies to global institutions, ex- cept in a purely advisory or consultative role, might well produce an undemocratic body that would interfere with the delegated account- ability that now links institutions to democracy. Those who argue for a global parliament are correct in stating that unelected interest

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groups cannot “speak for the citizenry as a whole,” but they are wrong in thinking the only serious answer is “some type of popularly elected global body”— at least not until the world develops a widespread sense of identity as “a citizenry as a whole.”95 Alfred Lord Tennyson’s “Parliament of Man” made great Victorian poetry, but it does not yet make good political analysis, even in a global information age.

We should not assume that globalization in its current form will inevitably continue as it has. Political reactions against globalization and its rudimentary institutions of governance are now common- place. Concerns about instability, inequality, and cultural identity are justified, even if overstated. The fact that democratic accountability is difficult to achieve in a globalized world makes policies that foster globalization vulnerable to attack. The results are not likely to be the same as those seen in the period between the onset of World War I and the end of World War II, but the possibility of a protectionist set- back for economic globalism cannot be excluded if there is great in- stability or a prolonged economic downturn. Ironically, if the current political backlash leads to a rash of unilateral protectionist policies, it might slow or reverse the world’s economic integration even as global warming, transnational terrorism, or the spread of AIDS con- tinues apace. It would be ironic if current protests curtailed the posi- tive aspects of globalization while leaving the negative dimensions.

On balance, Americans have benefited from globalization. To the extent that we wish to continue to do so, we will need to deal with its discontents. This cannot be accomplished by resorting to slogans of sovereignty, unilateral policies, or drawing inward, as the unilateralists and sovereigntists suggest: “If we can’t do it our way, then we just won’t do it. But at least we the people, the American people, will remain mas- ters of our ship.” This prescription mistakes the abstractions of sover- eignty for the realities of power.96 The result would be to undermine our soft power and America’s ability to influence others’ responses to globalization. Instead, the United States should use its current preemi- nence to help shape institutions that will benefit both Americans and the rest of the world as globalization evolves. Americans will have to factor multilateral institutions and governance into a broader concep- tion of our national interests, as we shall see in chapter 5.

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