Saturday, January 24, 2009

Book Review - Regulating Globalisation: Critical Approaches to Global Governance



Book Review
Regulating Globalisation: Critical Approaches to Global Governance
Pierre de Senarclens and Ali Kazancigli (eds); United Nations University Press, 2007


A vast amount of literature is produced on the issue of Globalisation. But most of it ends up limiting itself to either being a votary of globalisation or takes a critical view of globalisation and argues in favour of the wider category called the ‘anti-globalisation’ movement. The book Regulating Globalisation: Critical Approaches to Globalisation moves beyond this limitation. It undertakes a rigorous theoretical engagement with Globalisation and its interface with the categories of state, citizenship, regionalism, governance and global governance.

At the outset, the title of the book appears paradoxical. How can something as widespread, diffused and free-flowing thing like globalisation be regulated? But the paradox is resolved as we go through the various essays in this book. The book does not question the process of globalisation, it rather sees it as an inevitable phenomenon. Based on this assumption, it argues that the root of globalisation is political. And it is through ‘politics’ that globalisation can be ‘managed’, the inequalities that it creates can be mitigated. This forms the main argument of this book.

The arguments made in this book become all the more relevant in the current financial crisis. When the G20 convened in December to deal with the financial crisis, two diverse views dominated the proceedings. The EU, led by the enthusiastic French President Nicholas Sarkozy, argued for creating global regulatory mechanisms that would help curb irregularities in financial matters (specifically in case of capital movement). The other view was espoused by USA, which was averse to any global regulatory mechanism and wanted national regulators to deal with the financial matters in their respective countries. Between this debate are the core concerns regarding the role of state, the growing importance of non-state actors and rising dominance of private capital. In all this the ‘global’ space is becoming less and less democratic, common citizens are being left out.

This is dealt by Virgile Perret in his essay- ‘Financial Globalisation, “global governance” and the erosion of democracy.’ He argues that ‘global governance[1]’ discourse is used to conceal the erosion of democracy.’ Perret argues that the ‘embedded liberalism’ that emerged after the Second World War slowly gave away to a ‘internationalisation of banking’ fuelled by the 1973 oil shocks. This process was accompanied by ‘disintermediation, securitisation and the rise of private institutional channels of credit.’ Disintermediation refers to the decline of the traditional role of the banks as intermediaries between borrowers and lenders, whereas securitisation broadly describes the process by which financial intermediation has been moving banks to capital markets. Specifically, securitisation refers to transformation of traditional bank assets like mortgages into marketable instruments- this rings the bell of the origin of the current financial mess, the sub-prime crisis in USA. In such cases the role of rating agencies becomes important, and this business is dominated by handful of firms, the main being Moodys and S&P. All this has aided financial globalisation, and this given ‘structural power’ to private bodies argues Perret. States now compete with each other to attract capital and thus get dictated by private capital interest- more so the developing countries. The short term movement of capital undermines the roots of democracy. Moreover, the market forces privilege the already privileged-the elite. Perret makes a forceful and theoretically sound argument to expose the ‘undemocratic’ nature financial globalisation.

The decline and modification of the state as an institution forms an important part of studies on globalisation. The liberal approach to International Relations has even termed state sovereignty as anachronous, challenging the basic realist postulate of primacy of state in world affairs. The growth of NGOs, MNCs, Inter-Governmental Organisations (IGOs) and the overwhelming power of 3 Ms- Market, Money and Media have severely encroached on the jurisdiction of the state. The essay by Kazancigli challenges this view without taking the realist position. He categorises states as regulatory states (prioritising social issues), competitive states (prioritising market forces) and failed states (lacking regulatory and competitive capacities). Kazanciglis argues that states –regulatory and competitive- have retained their internal and external capacities to exercise their sovereignty as they participate in global governance. The capitalist system and subsequent globalisation were driven by the state. The global space now is structured around two spaces- interstate space (ISS) and the transnational public space (TPS), these two spaces share a dynamic relationship.

The ISS comprises of sovereign states-as the principle agents and intergovernmental organisation as dependent agents. The TPS is a newly emerged heterogeneous space comprising of MNCs, NGOs and other bodies of global civil society. This space is characterised by questions of legitimacy, high degree of inequality and issues of representation. Both ISS and TPS work in cooperative and conflictual manner. Kazancigli after thorough analyses of these two spaces argues that multilateralism as developed in post-1945 phase is no longer relevant. He calls for a transformative approach rather than reformist approach to make global governance more effective and democratic. The transformative approach would entail involvement of actors (from ISS and TPS) at various levels- sub-state, state and regional level.
Kazancigli’s suggestions of a transformative approach are based on sound theoretical framework. But seem a bit vague when we seek them to apply. Global Governance is based on three factors – norms, institutions and mechanisms. Norms organise, facilitate, constraint and determine the interaction among the actors. Institutions in global governance work at different levels- from sub-state to regional to global. These include IGOs, NGOs, MNCs, the sovereign states and local networks at the sub-state level. Mechanism refers to how actors interact in accordance with the norms. Kazancigli’s proposition does not dwell about how the ‘transformative approach’ will incorporate these three factors.
Pierre de Senarclens in his essay argues that reforming the United Nations offers the best chance to have democratic and transparent global governance. Most of the suggestions (like expanding the UNSC and better mandated Trusteeship Council) made by Senarclens have already been made by various UN reform committees, notably the reform suggested by Kofi Annan. But he does make some new points, like replacing the G8 negotiations with a new body called Economic and Social Security Council which will have representation on regional basis. The Council would be entrusted with the responsibility of increasing international liquidity, harmonize regional monetary systems, oversee balance of payment difficulties and manage the debt crisis. This recommendation echoes the views expressed at the recent meeting of G20. It is evident that G8 has been effectively challenged by G20, but setting up a Council in place of it would be politically difficult. Nonetheless, the idea of the Council, may be with some modifications is a valuable suggestion in wake of the current financial crisis.

L. Fawcett emphasises the role of regional organisations in evolving an effective structure for global governance. He argues that states tend to favour regional groupings instead of international bodies, as regional organisations provide them more manoeuvring space and also help them exercise better control. International Organisations can become unwieldy at times, paralysing the entire decision making process. Fawcett’s arguments have some validity to them, but regional organisations can end up being impediments to global governance. The constant failure of WTO talks and concurrent rise of regional economic agreements indicates that while states are uncomfortable with international norms and institutions, they are willing to cooperate with other states in a limited framework that regional groupings provide. Thus the path of reaching the goal of effective global governance through regional organisations may be slippery and protracted.

Jean-Marc Coicaud in his essay deals with the tricky of question of can and how can globalisation and its governance be made legitimate. He says that legitimacy requires coherence between norms and agency in global governance. And the criterion for this is human rights. Human rights are seen as benchmarks for good global governance and also as a framework for good policy making. Coicaud performs the crucial task of raising the question of legitimacy of globalisation and global governance. But the criterion he puts forward is bereft with problems. Various strands in liberal school of International Relations Theory have seen human rights as a universal principle and consider it as duty of humanity to safeguard them irrespective of the sovereign state system. Human Rights as a principle have often been viewed with suspicion by the non-Western world. The principle of human rights has often turned into a political tool of convenience.

Overall this collection of essays is one of the most theoretically sound work produced on globalisation. It attempts to bring out the subtle theoretical concerns of domestic-international divide, state-citizens relations, role of civil society and the question of legitimacy all in context of globalisation. This book contains ample material that will stimulate further research and this perhaps is the most important contribution of the book.

[1] The Commission on Global Governance defines global governance as involving intergovernmental relationships, NGOs, citizens movements, MNCs and the global capital market.