Neoliberal ideas are hegemonic on a global
scale in so far as they have
genuinely captured the common sense of the age about economic matters.
This hegemony is discernable in the behaviour of the opponents of neolib-
eralism; it is striking that although a great many groups have presented
strong critiques of economic globalization, positive alternatives are fewer
on the ground. Thus, for example, the demonstrators on the streets in the
‘Battle of Seattle’ at the major WTO conference in November 1999 and on
several subsequent occasions agreed they were opposed to the WTO and
‘world capitalism’, but were much less clear about what they favoured –
and when alternatives were mooted they tended to be mutually contradic-
tory. The opponents included economic nationalists, socialists, ‘deep-green’
opponents of industrial society as well as more
moderate environmentalists
and human rights activists, and their inability to find even the elements of
a common programme seriously hampers their effectiveness as pressure
groups. One May Day demonstrator in 2001 in London held aloft a banner
reading ‘Replace Capitalism with Something Nicer’ – even if this was meant
as a joke, it actually is as straightforward an illustration of the inability to
present a coherent alternative to neoliberalism as one could ask for, and
a clear sign of the latter’s hegemony.
In the above discussion, neoliberalism has been treated as a set of ideas,
but, of course, it is far more than that; it is not
necessary to be a Marxist to
think that the triumph of neoliberalism represents the triumph of certain
kinds of interests – although, clearly, Marxists will have a particular account
of the kind of interests that will shape systems of thought. One of the forces
driving neoliberalism has been the emergence of giant corporations in
whose interests many of the precepts of neoliberalism work, while the rise
of the giant corporation is itself partly shaped by the rise of neoliberal ideas.
There is a dialectic at work here which makes it difficult if not impossible to
say that one of these forces created the other. The spread of neoliberal ideas
has been hastened by the restructuring of the world production system that
has taken place over the last 20 years,
and vice versa.
Before accepting the hegemonic
status of neoliberalism, however, it might
be as well to ask whether the options available to states are quite as limited
as both the neoliberals and their Gramscian opponents argue. The role of
the state may have changed but it has not disappeared; certainly globalization
has made some forms of state intervention ineffective, but the political chal-
lenge posed by globalization has encouraged states to develop new tech-
niques, and, perhaps most of all, new attitudes. What we may be seeing is
the emergence of a new kind of diplomacy involving firms and states
(Strange 1992, 1996). As technology comes to
dominate production processes,
so firms in advanced sectors come to find that their long-run survival
depends upon their ability to conduct the R & D that will keep them in the
forefront of their sector. Absolute size is crucial here which means access
170
Understanding International Relations
to markets is crucial, either directly or via arrangements with other firms.
Since states can, at a pinch, control access to markets – and can sanction or
forbid franchising arrangements or take-overs – the desire that firms have to
expand gives states a degree of leverage over their activities. On the other
hand, states want successful, technologically-advanced
firms to be located
on their territories – inward investment generates employment, supports
regional policy, provides a tax base and contributes to the export capacity
of a country. This means that firms have something to offer states, and thus
a good bargaining position.
Put another way, both states and firms are concerned with ‘market share’;
firms want the largest market share they can get, and states want firms
with the largest market share they can get on their territories. The new
diplomacy is about the ways in which firms and states achieve their ends.
It is a triangular diplomatic system. States negotiate and bargain with other
states – about access to each other’s markets and,
within the European Union,
for example, about the crucial rules governing what degree of ‘local content’
is required for, say, a Toyota Corolla constructed in Britain to count as a British
as opposed to a Japanese car. States negotiate and bargain with firms –
about the terms and conditions upon which the latter are allowed to oper-
ate on the territory of the former, the tax concessions that new investment
will attract, the location of this investment, the employment it will provide,
and, currently in the case of the UK, the impact of joining or not joining the
single European currency. Firms negotiate and bargain with other firms –
about co-production, about pooling R & D, about franchising, sometimes
about co-ownership. Each of the three sides of
this diplomacy affects the
other two. The attractiveness of one state over another as a location for new
investment (state–firm diplomacy) will often depend on its ability to guar-
antee access to the markets of other states (state–state diplomacy) and the
degree to which incoming firms are able to negotiate deals with at least
some of those already in the market (firm–firm diplomacy).
This new diplomacy changes the agenda on MNCs; much of the past
literature on MNCs paid great attention to the repatriation of profits, the
implication being that foreign corporations exploited the local economy for
the benefit of
rentiers back home. Nowadays any corporation, local or
global, that does not invest most of its profits in R & D will not be around
very long to pay out dividends to its shareholders. Perhaps most of all, the
notion of ‘sovereignty at bay’ is highly misleading (Vernon 1971). On the
one hand, as we have seen, sovereignty in the old
sense of complete control
of a territory probably never existed, and, in any event, is now long gone;
on the other hand, the ability to be effectively sovereign today – to meet the
welfare needs of one’s population, to promote economic growth – depends
crucially on getting into a healthy relationship with international business.
A strong state is a state that is able to use MNCs for its own ends, not one
Globalization
171
that excludes them or prevents them from making a profit. It is here that the
‘good governance’ referred to above with respect to developing countries
becomes crucial – corrupt, undemocratic, irresponsible
local elites will not
be successful in using MNCs for national ends, although they may be very
successful at filling their own offshore bank accounts.
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