Globalization as an Enabling Force

Does the increased economic openness associated with globalization reduce the capacity of the state to manage the economy? The contributors to Linda Weiss’s States in the Global Economy consistently answer this question with a fairly strong ‘‘no.’’ In the process, they point to the importance of domestic institutions as a criticalFperhaps the criticalFmediating variable in determining how states manage openness. Why do the contributors see domestic institutions as a decisive source of difference? Clearly not because they accept the usual globalization storyFwhich sees capital mobility and an ever tightening web of international trade and investment agreements as a constraint on state policy and a force for homogenization that reduces state capacity. Instead, as Weiss points out in her extensive opening essay, they see globalization as an enabling force. Specifically, by increasing economic insecurity, globalization generates political pressures for increased social protection and economic pressures for innovation. But domestic institutions bring diverging normative orientations and organizational capacities with their responses to globalization. As a result, domestic institutions generate great differences as states translate these globally sparked domestic political pressures into new policies. Does this mean that divergent state responses to globalization will also generate heterogeneity among economies rather than convergence? Here Weiss’s interesting conclusion ultimately reflects her earlier work (Weiss 1998) and her association with Michael Mann (1986). In her concluding essay, Weiss argues that the analyses in the book show that a convergence on a new model is indeed occurring, but it is not the neoliberal model long predicted by the crude globalists she critiques. Instead, Weiss argues, the book’s chapters demonstrate a growing convergence around ‘‘governed interdependence.’’ Governed interdependence is an institutionalized relationship of negotiation between the state and, preferably, sectorally coherent business organizations. In this relationship, each side maintains their autonomy, but the state sets broad developmental goals and monitors businesses’ achievement of those goals. Governed interdependence works through political exchange between the state and societal actors. The state receives the information and cooperation it needs from societal organizations to transform the economy. In return, the state legitimates those organizations, ameliorates social risks surrounding investment, and provides a focal point for resolving struggles among firms and sectors. Weiss thus argues that governed interdependence enhances state capacity, understood as Mann’s infrastructural power. She predicts that globalization will cause a withering of both French style statism and US style arm’s length regulation in favor of governed interdependence. Weiss has mobilized a sufficiently broad array of contributors to test this proposition across an array of issues that exceeds most similar volumes: taxation, the welfare state, and industrial governance. John Hobson’s essay attacks the conventional wisdom that globalization will cause a race to the bottom on taxation or a shift