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Global Governance 5 (1999), 483-496

Globalization

David Held and Anthony McGrew, with David Goldblatt and

Jonathan Perraton

Globalization: n. a process (or set of processes) that embodies a trans- formation in the spatial organization of social relations and transactions, generating transcontinental or interregional flows and networks of activ- ity, interaction, and power.

Although everybody talks about globalization, few people have a clear un- derstanding of it. The "big idea" of the late twentieth century is in danger of turning into the clich6 of our times. Can we give it precise meaning and content, or should globalization be consigned to the dustbin of history?

The reason there is so much talk about globalization is that everyone knows that something extraordinary is happening to our world. We can send e-mail across the planet in seconds; we hear that our jobs depend on economic decisions in far-off places; we enjoy films, food, and fashion from all over the world; we worry about an influx of drugs and how we can save the ozone layer. These growing global connections affect all aspects of our lives-but it is still not clear what globalization really means.

There has been a heated debate about whether globalization is occur- ring at all. The debate rages between those who claim that globalization marks the end of the nation-state and the death of politics and those who dismiss the globalization hype and say that we have seen it all before. This debate has continued for a decade, leading to ever more confusion. It is not that these positions are wholly mistaken. In fact, both capture elements of a complex reality. But it is the wrong debate to have when there is no com- mon ground about what globalization is. Until we know what globalization actually means, we will not be able to understand how it affects our lives, our identities, and our politics.

In this essay, we try to go beyond the rhetoric of entrenched positions and produce a richer account of what globalization is, how the world is changing, and what we can do about it. So what does globalization mean? We show that globalization is made up of the accumulation of links across the world's major regions and across many domains of activity. It is not a single process but involves four distinct types of change:

484 Globalization

" It stretches social, political, and economic activities across political frontiers, regions, and continents.

" It intensifies our dependence on each other, as flows of trade, in- vestment, finance, migration, and culture increase.

" It speeds up the world. New systems of transport and communica- tion mean that ideas, goods, information, capital, and people move more quickly.

" It means that distant events have a deeper impact on our lives. Even the most local developments may come to have enormous global consequences. The boundaries between domestic matters and global affairs can become increasingly blurred.

In short, globalization is about the connections between different regions of the world-from the cultural to the criminal, the financial to the en- vironmental-and the ways in which they change and increase over time.

We show that globalization, in this sense, has been going on for cen- turies. But we also show that globalization today is genuinely different both in scale and in nature. It does not signal the end of the nation-state or the death of politics. But it does mean that politics is no longer, and can no longer be, based simply on nation-states. We cannot predict the future or know what the final outcome of globalization will be. But we can now define the central challenge of the global age-rethinking our values, in- stitutions, and identities so that politics can remain an effective vehicle for human aspirations and needs.

First, we need to understand what is distinctive about globalization today. We can do this only by studying the forms it has taken throughout history in all areas of activity-the environment, the economy, politics, and culture. The thread that ties these things together is people, and so it is with the movements of people that we must start.

People on the Move

Globalization began with people traveling. For millennia, human beings have migrated-settling new lands, building empires, or searching for work. Most migrations in history have not been global. But from the six- teenth century onward, Europeans traveled the world, conquering the Americas and Oceania before making colonial incursions into Africa and Asia. The first great wave of modern migration was the transatlantic slave trade. Nine to twelve million people were shipped as slaves from Africa to the Americas by the mid-nineteenth century. But this was dwarfed by the extraordinary outpouring of Europe's poor to the New World from the

David Held & Anthony McGrew 485

mid-nineteenth century onward. More than thirty million people moved in this way between 1880 and World War I.

Levels of global migration have fluctuated dramatically with political and economic conditions. During World War I, international migration plummeted. European migration stopped, beyond a few forced migrations like that of Armenians and Greeks from Turkey. North America closed its borders and created the first systematic immigration legislation in the modern era. But the bitter struggles and ethnic violence of World War II led to unprecedented levels of forced migrations, refugees, and asylum movements. Ethnic Germans fled the Soviet Union and Eastern Europe. Jews headed for Israel. Pakistan and India exchanged millions of people. And Koreans flooded south.

In the 1950s and 1960s, millions of people poured into Europe, at- tracted by the rebirth of Western European economies. After the oil shocks of the 1970s, politicians closed many of these migration programs. But they couldn't stop the foreign population and ethnic mix continuing to grow. A combination of family reunions, unpoliceable borders, and sheer demand for labor have continued to drive migration from the European pe- ripheries of Turkey and North Africa and from the distant outposts of old European empires in Asia and Africa. There has also been a takeoff in legal and illegal migration to the United States and Australasia, enormous flows to the oil-rich and labor-scarce Middle East, and new patterns of re- gional migration throughout the world.

Today, we are living with the consequences of centuries of migration and conquest. There is more ethnic diversity than ever before in states of the Organization for Economic and Community Development (OECD), es- pecially in Europe. The process can never be reversed, particularly when in countries like Sweden more than 10 percent of the population are for- eign born. Moreover, the United States is experiencing levels of migration that are comparable to the great transatlantic push of the late nineteenth century. In the mid-1990s, this involved more than a million immigrants per year, mainly from Asia, Latin America, and Central America. And it is not just economic migration. There has also been an astronomical rise in asylum seeking, displaced persons, and refugees from wars as states are created and collapse in the developing world. More than half a million ap- plicants for asylum were received per annum by OECD countries in the 1990s.

International attempts to regulate the flow of people have not suc- ceeded. Some states are highly dependent on migrant labor; others find it difficult to win support for tracking illegal migrants. All states have to re- assess what national citizenship is and what it means as an era of diver- sity transforms identities and cultures. The long history of migration is coming home to roost.

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The Fate of National Cultures

When people move, they take their cultures with them. So, the globaliza- tion of culture has a long history. The great world religions showed how ideas and beliefs can cross the continents and transform societies. No less important were the great premodern empires that, in the absence of direct military and political control, held their domains together through a com- mon culture of the ruling classes. For long periods of human history, there have been only these global cultures and a vast array of fragmented local cultures. Little stood between the court and the village until the invention of nation-states in the eighteenth century created a powerful new cultural identity that lay between these two extremes.

This rise of nation-states and nationalist projects truncated the process of cultural globalization. Nation-states sought to control education, lan- guage, and systems of communication, like the post and the telephone. But as European empires became entrenched in the nineteenth century, new forms of cultural globalization emerged with innovations in transport and communications, notably regularized mechanical transport, and the tele- graph. These technological advances helped the West to expand and en- abled the new ideas that emerged-especially science, liberalism, and so- cialism-to travel and transform the ruling cultures of almost every society on the planet.

Contemporary popular cultures have certainly not yet had a social im- pact to match this, but the sheer scale, intensity, speed, and volume of global cultural communications today is unsurpassed. The accelerating dif- fusion of radio, television, the Internet, and satellite and digital technolo- gies has made instant communication possible. Many national controls over information have become ineffective. Through radio, film, television, and the Internet, people everywhere are exposed to the values of other cul- tures as never before. Nothing, not even the fact that we all speak different languages, can stop the flow of ideas and cultures. The English language is becoming so dominant that it provides a linguistic infrastructure as pow- erful as any technological system for transmitting ideas and cultures.

Beyond its scale, what is striking about today's cultural globalization is that it is driven by companies, not countries. Corporations have replaced states and theocracies as the central producers and distributors of cultural globalization. Private international institutions are not new, but their mass impact is. News agencies and publishing houses in previous eras had a much more limited impact on local and national cultures than the con- sumer goods and cultural products of global corporations today.

Although the vast majority of these cultural products come from the United States, this is not a simple case of "cultural imperialism." One of the surprising features of our global age is how robust national and local cultures have proved to be. National institutions remain central to public

David Held & Anthony McGrew 487

life, and national audiences constantly reinterpret foreign products in novel ways.

These new communication technologies threaten states that pursue rigid closed-door policies on information and culture. For example, China sought to restrict access to the Internet but found this extremely difficult to achieve. In addition, it is likely that the conduct of economic life every- where will be transformed by the new technologies. The central question is the future impact of cultural flows on our sense of personal identity and national identity. Two competing forces are in evidence: the growth of multicultural politics almost everywhere and, in part as a reaction to this, the assertion of fundamentalist identities (religious, nationalist, and eth- nic). Although the balance between these two forces remains highly un- certain, it is clear that only a more open, cosmopolitan outlook can ulti- mately accommodate itself to a more global era.

The Territorial State and Global Politics

One thousand years ago, a modern political map of the world would have been incomprehensible. It is not just that much of the world was still to be "discovered." People simply did not think of political power as something divided by clear-cut boundaries and unambiguous color patches. But our contemporary maps do not just misrepresent the past. By suggesting that territorial areas contain indivisible, illimitable, and exclusive sovereign states, they may also prove a poor metaphor for the shape of the politics of the future.

Modern politics emerged with and was shaped by the development of political communities tied to a piece of land, the nation-state. This saw the centralization of political power within Europe, the creation of state struc- tures, and the emergence of a sense of order between states. Forms of democracy were developed within certain states, while at the same time the creation of empires saw this accountability denied to others.

Today, we are living through another political transformation, which could be as important as the creation of the nation-state; the exclusive link between geography and political power has now been broken.

Our new era has seen layers of governance spread within and across political boundaries. New institutions have both linked sovereign states to- gether and pooled sovereignty beyond the nation-state. We have developed a body of regional and international law that underpins an emerging sys- tem of global governance, both formal and informal, with many layers.

Our policymakers experience a seemingly endless merry-go-round of international summits. Two or three congresses a year convened 150 years ago. Today more than four thousand convene each year. They include summits of the UN, the Group of Seven, the International Monetary Fund,

488 Globalization

the World Trade Organization, the European Union (EU), the Asia-Pacific Economic Cooperation bloc, the regional forum of the Association of Southeast Asian Nations, and Mercado Comdn del Sur (Mercosur). These summits and many other official and unofficial meetings lock governments into global, regional, and multilayered systems of governance that they can barely monitor, let alone control.

Attention has tended to focus on the failure of global institutions to live up to the vast hopes that their birth created. But they have significant achievements to their credit. Although the UN remains a creature of the interstate system with well-documented shortcomings, it does deliver sig- nificant international public goods. These range from air traffic control and the management of telecommunications to the control of contagious diseases, humanitarian relief for refugees, and measures to protect our oceans and atmosphere.

However, it is regional institutions that have done most to transform the global political landscape. The EU has transformed Europe from post- war disarray to a situation where member states can pool sovereignty to tackle common problems. Despite the fact that many people still debate its very right to exist, the view from 1945 would be of astonishment at how far the EU has come so quickly. Although regionalism elsewhere is very different from the European model, its acceleration in the Americas, in the Asian Pacific, and (somewhat less) in Africa has had significant conse- quences for political power. Despite fears of Fortress Europe and protec- tionist blocs, regionalism has been a midwife to political globalization rather than a barrier to it. In fact, many global standards have resulted from negotiations involving regional groupings.

Another feature of the new era is the strengthening and broadening of international law. States no longer have the right to treat their citizens as they think fit. An emerging framework of "cosmopolitan law"-governing war, crimes against humanity, environmental issues, and human rights- has made major inroads into state sovereignty. Even the many states that violate these standards in practice accept general duties to protect their cit- izens, to provide a basic standard of living, and to respect human rights.

These international standards are monitored and vociferously lobbied for by a growing number of international agencies. In 1996, there were nearly 260 intergovernmental organizations and nearly 5,500 international non- governmental organizations. In 1909, the former numbered just 37 and the latter a mere 176. There has also been a vast increase in the number of inter- national treaties and regimes, such as the nuclear nonproliferation regime.

The momentum for international cooperation shows no sign of slow- ing, despite the many vociferous complaints often heard about it. The stuff of global politics already goes far beyond traditional geopolitical concerns and will increase whenever effective action requires international cooper- ation. Drug smugglers, capital flows, acid rain, and the activities of

David Held & Anthony McGrew 489

pedophiles, terrorists, and illegal immigrants do not recognize borders; neither can the policies for their effective resolution.

This transformation of international politics does not mean that the na- tion-state is dead. The multilateral revolution, rather than replacing the fa- miliar world of nation-states, overlays and complicates it. Many familiar political distinctions and assumptions have been called into question. The context of national politics has been transformed by the diffusion of polit- ical authority and the growth of multilayered governance (which we dis- cuss further in the section on governing globalization). But it is not en- tirely clear which factors will determine how far old institutions can adapt and whether new institutions can be invested with legitimacy.

The Globalization of Organized Violence

Ironically, war and imperial conquest have been great globalizing forces in history. Countries and peoples have met often on the battlefield. Although we live in an era distinguished by the absence of empires, great-power conflict, and interstate war, military globalization is not a thing of the past. It works very differently now but in many ways is more significant than ever. New threats to our security and our responses to these threats have made countries much more interdependent.

One major change comes from weapons themselves. Military compe- tition has always been about developing more powerful weapons. But the last half-century has not just created the most powerful weapons the world has ever seen-including weapons of mass destruction that can travel across entire continents. It has also seen some of these tools of war fall into the hands of an unprecedented number of countries and regimes. This has "shrunk" the world and made it more dangerous. Although the end of the Cold War has undermined the political logic of the global arms dynamic, the Cold War itself accelerated the diffusion of military- technological innovation across the world. Whereas it took two centuries for the gunpowder revolution to reach Europe from China in the Middle Ages, it took less than five decades for India to acquire its existing nuclear capability.

Meanwhile, the same infrastructures that have facilitated global flows of goods, people, and capital have generated new societal security threats. Cyberwar, international and ecological terrorism, and transnational orga- nized crime cannot be satisfactorily dealt with either by traditional military means or solely within a national framework.

These changes have transformed power relationships in the world mil- itary order, creating new global and regional risks that demand multilateral action. Global and regional security institutions have become more impor- tant. Most states today have chosen to sign up to a host of multilateral

490 Globalization

arrangements and institutions in order to enhance their security. Few states now see unilateralism or neutrality as a credible defense strategy.

But it is not just the institutions of defense that have become multina- tional. The way that we make military hardware has also changed. The age of "national champions" has been superseded by a sharp increase in li- censing, coproduction agreements, joint ventures, corporate alliances, and subcontracting. This means that few countries today-not even the United States-can claim to have an autonomous military production capacity. This is especially so because key civil technologies such as electronics, which are vital to advanced weapons systems, are themselves the products of highly globalized industries.

Arms producers have also become increasingly reliant on export mar- kets. This is why, despite the end of the Cold War, global arms sales (in real terms) have remained above the level of the 1960s. In fact, since the mid-1990s, their volume has increased. The number of countries manufac- turing arms (forty) or purchasing arms (a hundred) is greater than at any time since the crisis-ridden 1930s.

The paradox and novelty of the globalization of violence today is that national security has become a multilateral affair. For the first time in his- tory, the one thing that did most to give nation-states a focus and a pur- pose, the thing that has always been at the very heart of what sovereignty is, can now be protected only if nation-states come together and pool re- sources, technology, intelligence, and sovereignty.

The Global Economy

When people are not fighting, they have always made things and sold them to each other. And indeed when most people think about globalization, they think of economics. So what is happening to trade, production, and fi- nance? How do they relate to each other-and how are they changing our world?

Trade

The world has never been more open to trade than it is today. The dis- mantling of trade barriers has allowed global markets to emerge for many goods and services. The major trading blocs created in Europe, North America, and the Asian Pacific are not regional fortresses but remain open to competition from the rest of the world. Developing and transition economies have also opened up and seen their shares of world trade rise as a result. The consequence of these trading networks is not just that trade today is greater than ever before. Trade has changed in a way that links national economies together at a deeper level than in the past.

David Held & Anthony McGrew 491

Competitive pressures have blurred the division between trade and do- mestic economic activity. Countries not only increasingly consume goods from abroad but depend on components from overseas for their own pro- duction processes. The massive growth of intraindustry trade, which now forms the majority of trade in manufactures among developed economies, further intensifies competition across national boundaries. The production process can now easily be sliced up and located in different countries- creating a new global division of labor and new patterns of wealth and in- equality.

No economic activity can easily be insulated from global competition. A greater proportion of domestic output is traded than in the past. This does not mean that countries' fortunes are simply determined by their na- tional "competitiveness." The basic rules of economics still apply. Coun- tries still specialize according to comparative advantage; they cannot be competitive in everything or nothing. National economies can still gain, overall, from increased trade.

What has changed is the distribution of these gains from trade. These are highly uneven-and in new ways. There are clear winners and losers, both between and within countries. More trade with developing countries hurts low-skilled workers while simultaneously increasing the incomes of more highly skilled workers. National governments may protect and com- pensate those who lose out from structural change, but employers in trad- able industries vulnerable to global competition will increasingly resist the costs of welfare provision. The welfare state is under pressure from both within and without.

Despite the creation of global markets, regulation remains largely na- tional. The banana dispute waged between the EU and the United States il- lustrates the international friction that trade can generate. The weakness of international regulation also means that we cannot easily correct for mar- ket failures and externalities in global markets. The World Trade Organi- zation, a powerful advocate of deregulation and trade liberalization, is in its infancy in harmonizing national regulatory regimes. It confronts a le- gitimation deficit-as the banana dispute shows-that can be effectively removed only by greater transparency and by wider participation (of those significantly affected by disputes) in its rule making.

Production

Global exports may be more important than ever, but transnational pro- duction is now worth even more. To sell to another country, increasingly you have to move there; this is the main way to sell goods and services abroad. The multinational corporation has taken economic interdepen- dence to new levels. Today, 53,000 multinational corporations and 450,000 foreign subsidiaries sell $9.5 trillion of goods and services across

492 Globalization

the globe every year. Multinational corporations account for at least 20

percent of world production and 70 percent of world trade. A quarter to a

third of world trade is intrafirm trade between branches of multinationals. Such impressive figures nevertheless underestimate the importance of

multinational corporations to global economic prosperity: multinationals

also form relationships that link smaller national firms into transnational production chains. Although multinationals typically account for a minor-

ity of national production, they are concentrated in the most technologi- cally advanced economic sectors and in export industries. They also often control the global distribution networks on which independent exporters depend, especially in developing countries, and are of fundamental impor-

tance in the generation and international transfer of technology. Multinationals are concentrated in developed countries and a small

number of developing ones, but their impact is felt across the world. Al- most all countries have some inward foreign direct investment and com-

pete intensely for more. Investment is spreading out, with an increasing share to developing countries and rapid increases in Central and Eastern Europe and in China.

How powerful are multinational corporations today? They have de-

veloped transnational networks that allow them to take advantage of dif- ferences in national cost conditions and regulations. Domestic economies are also suffering because multinational companies are becoming gen-

uinely more multinational as they find it increasingly difficult to win com-

petitive advantage from their home base alone. In the past, even large multinational corporations like Sony retained many national characteris- tics. Technological advantages were largely realized in their country of origin and were shared among various national stakeholders. This is less and less possible due to the significant growth of transnational corporate

alliances, mergers, and acquisitions (such as Chrysler-Daimler) and the tendency of multinationals to invest in foreign innovation clusters.

Nevertheless, multinationals are not "footloose." Production has to

take place somewhere, and the costs of shifting can be high-especially where an area of industrial specialization gives strong reasons to stay. But

their exit power, as recent events in Sweden and Germany show, has in-

creased over time. And governments increasingly see multinationals as de- termining the balance of economic power in the world economy, with the

power to play different governments off against each other to win extra

subsidies for inward investment or changes to regulatory requirements. In the short term, governments will continue to respond to this pres-

sure by trimming their national regimes to balance domestic priorities and conditions with the demands of global capital. But we can expect increas- ing pressure for the transnational harmonization of corporate practices, taxes, and business regimes as an escape route from this Dutch auction.

David Held & Anthony McGrew 493

Finance

Alongside multinationals the power of global finance has been most cen- tral to economic globalization. World financial flows are so large that the numbers are overwhelming. Every day, $1.5 trillion is traded on the for- eign exchange markets-as a few thousand traders seem to determine the economic fate of nations. Most countries today are incorporated into global financial markets, but the nature of their access to these markets is highly uneven. When foreign exchange markets turn over sixty times the value of world trade, this is not just a staggering increase; it is a different type of activity altogether. The instantaneous transactions of the twenty-

four-hour global markets are largely speculative, where once most market activity financed trade and long-term investment.

The fact that these global markets determine countries' long-term in- terest rates and exchange rates does not mean that the financial markets simply determine national economic policy. But they do radically alter both the costs of particular policy options and, crucially, policymakers' perceptions of costs and risk. Speculative activity on this scale brings both unprecedented uncertainty and volatility-and can rapidly, undermine fi- nancial institutions, currencies, and national economic strategies. It is not surprising that policymakers take a distinctly risk-averse approach and therefore adopt a more conservative macroeconomic strategy as a result. Even if there is often more room for maneuver with hindsight, future pol- icy will change only marginally when the risks of getting it wrong appear to be, and are, potentially so catastrophic.

The 1997 East Asian crisis forcibly demonstrated the impact of global financial markets and the shifting balance between public and private power. The global financial disruption triggered by the collapse of the Thai baht demonstrated new levels of economic interconnectedness. The "Asian tiger" economies had benefited from the rapid increase of financial flows to developing countries in the 1990s and were held up as examples to the rest of the world. But these heavy flows of short-term capital, often channeled into speculative activity, could be quickly reversed, causing currencies to fall very heavily and far in excess of any real economic imbalances. The inability of the existing international financial regime to prevent global economic turmoil has created a wide-ranging debate on its future institutional architecture-and the opportunity to promote issues of legitimacy, accountability, and effectiveness.

Another important change on the policymaking menu arises from the exchange rate crises of the 1990s. Fixed exchange rates are ceasing to be a viable policy option in the face of global capital flows of this scale and in- tensity. The choice that countries face is increasingly between floating rates and monetary union-shown by the launch of the euro and discus- sion of dollarization in Latin America.

494 Globalization

Globalization and the Environment

Environmental change has always been with us. What is new today is that some of the greatest threats are global-and any effective response will have to be global too. For most of human history, the main way in which environmental impacts circulated around the earth was through the unin- tentional transport of flora, fauna, and microbes. The great plagues showed how devastating the effects could be. The European colonization of the New World within a generation wiped out a substantial proportion of the indigenous populations of the Caribbean, Mexico, and parts of Latin America. Over the following centuries, these societies saw their ecosys- tems, landscapes, and agricultural systems transformed. Early colonialism also damaged the environment in new ways. The Sumatran and Indian forests were destroyed to meet consumer demand in Europe and America. Seals were overhunted to dangerously low levels. And some species of whale were hunted to extinction.

But most forms of environmental degradation were largely local until the middle of this century. Since then, the globalization of environmental degradation has accelerated. Fifty years of resource-intensive and high- pollution growth in the OECD countries and the even dirtier industrializa- tion of Russia, Eastern Europe, and the ex-Soviet states have taken their toll on the environment. The South is now industrializing at breakneck speed, driven by exponential growth of global population. We also know much more about the dangers and the damage that we have caused.

Humankind is increasingly aware that it faces an unprecedented array of truly global and regional environmental problems, which no national community or single generation can tackle alone. We have reacted to global warming; to ozone depletion; to destruction of global rainforests and loss of biodiversity; to toxic waste; to the pollution of oceans and rivers; and to nuclear risks with a flurry of global and regional initiatives, institutions, regimes, networks, and treaties. Transnational environmental movements are also more politically visible than ever. But there has sim- ply not been the political power, domestic support, or international au- thority so far on a scale that can do any more than limit the very worst ex- cesses of these global environmental threats.

Governing Globalization

Contemporary globalization represents the beginning of a new epoch in human affairs. In transforming societies and world order, it is having as profound an impact as the Industrial Revolution and the global empires of the nineteenth century. We have seen that globalization is transform- ing our world, but in complex, multifaceted, and uneven ways. Although

David Held & Anthony McGrew 495

globalization has a long history, it is today genuinely different both in scale and in form from what has gone before. Every new epoch creates new winners and losers. This one will be no different. Globalization to date has already both widened the gap between the richest and poorest countries and further increased-divisions within and across societies. It has inevitably become increasingly contested and politicized.

National goverpments-sandwiched between global forces and local demands-must now reconsider their roles and functions. But to say sim- ply that states have lost power distorts what is happening, as does any sug- gestion that nothing much has changed. The real picture is much more complex. States today are at least as powerful, if not more so, than their predecessors on many fundamental measures of power-from the capac- ity to raise taxes to the ability to hurl force at enemies. But the demands on states have grown very rapidly as well. They must often work together to pursue the public good-to prevent recession or to protect the environ- ment. And transnational agreements, for example dealing with acid rain, will often force national governments to adopt major changes in domestic policy.

So state power and political authority are shifting. States now deploy their sovereignty and autonomy as bargaining chips in multilateral and transnational negotiations, as they collaborate and coordinate actions in shifting regional and global networks. The right of most states to rule within circumscribed territories-their sovereignty-is not on the edge of collapse, although the practical nature of this entitlement-the actual ca- pacity of states to rule-is changing its shape. The emerging shape of gov- ernance means that we need to stop thinking of state power as something that is indivisible and territorially exclusive. It makes more sense to speak about the transformation of state power than the end of the state; the range of government strategies stimulated by globalization are, in many funda- mental respects, producing the potential for a more activist state.

But the exercise of political and economic power now frequently es- capes effective mechanisms of democratic control. And it will continue to do so while democracy remains rooted in a fixed and bounded territorial conception of political community. Globalization has disrupted the neat correspondence between national territory, sovereignty, political space, and the democratic political community. It allows power to flow across, around, and over territorial boundaries. And so the challenge of globaliza- tion today is ultimately political. Just as the Industrial Revolution created new types of class politics, globalization demands that we re-form our ex- isting territorially defined democratic institutions and practices so that pol- itics can continue to address human aspirations and needs.

This means rethinking politics. We need to take our established ideas about political equality, social justice, and liberty and refashion these into a coherent political project robust enough for a world where power is

496 Globalization

exercised on a transnational scale and where risks are shared by peoples across the world. And we need to think about what institutions will allow us to tackle these global problems while responding to the aspirations of the people they are meant to serve.

This is not a time for pessimism. We are caught between nostalgia for causes defeated and ideas lost, and excitement at the new possibilities that we face. We need to think in new ways. Globalization is not bringing about the death of politics. It is reilluminating and reinvigorating the con- temporary political terrain. S

Note

David Held is professor of politics and sociology at the Open University in the United Kingdom. At the same university, Anthony McGrew is senior lecturer in government and David Goldblatt is lecturer in social sciences. Jonathan Perraton is lecturer in economics at Sheffield University. They are joint authors of Global Transformations: Politics, Economics and Culture (1999).