Paradoxes of the Competition State: Political Globalization PDF

PARADOXES OF THE COMPETITION STATE: THE DYNAMICS OF POLITICAL GLOBALIZATION by Philip G. Cerny Professor of International Political Economy...

PARADOXES OF THE COMPETITION STATE: THE DYNAMICS OF POLITICAL GLOBALIZATION by Philip G. Cerny Professor of International Political Economy Department of Politics University of Leeds Leeds LS2 9JT United Kingdom Tel.: +44-113-233-4399 Fax: +44-113-233-4400 Email: [email protected] This article appeared in a special issue of Government and Opposition: “Paradoxes of the Competition State: The Dynamics of Political Globalization”, Government and Opposition, vol. 32, no. 2 (Spring), pp. 251-274. An earlier version was presented at the Joint Conference of the International Studies Association and the Japanese Association for International Relations, Makuhari, Japan, 20-22 September 1996.  PARADOXES OF THE COMPETITION STATE: THE DYNAMICS OF POLITICAL GLOBALIZATION I. Introduction The transformation of the nation-state into a 'competition state' lies at the heart of political globalization. This relationship between the competition state as a collective agent on the one hand, and wider structual changes in the world economy on the other, raises key questions of structure and agency in the globalization process; structures constrain actors, but they do not establish and reproduce themselves automatically. In seeking to adapt to a range of complex changes in cultural, institutional and market structures, both state and market actors are attempting to reinvent the state as an quasi- 'enterprise association' in a wider world context, a process which involves three central paradoxes. The first paradox is that this process does not lead to a simple decline of the state but may be seen to necessitate the actual expansion of de facto state intervention and regulationCat the same time making it more complexCin the name of competitiveness and marketization. Furthermore, in a second paradox, closely intertwined with the first, state actors and institutions are themselves promoting new forms of complex globalizationCinvolving not merely structural convergence but significant forms of divergence tooCin the attempt to adapt state action to cope more effectively with what they see as global 'realities'. This interaction of economic transformation and state agency is leading to a restructuration of the state itselfCof its political practices, policy orientations and institutional formsCat a wide range of levels. Although embedded state forms, contrasting modes of state interventionism and differing state/society arrangements persist, such models are feasible in the medium term only where they constituteCand/or are perceived to beCrelatively efficient alternative modes of adaptation to economic and political globalization. At the same time, however, pressures for 1 homogenization are likely to continue to erode these different models where they proveCand/or are perceivedCto be economically inefficient in world markets and therefore unattractive to state and market actors. In this sense, a growing tension between economic globalization and embedded state/society practices increasingly constitutes the principal terrain of political conflict within, among, and across competition states. Thus a third and final paradox is that the development of this new political terrain in turn problematizes the capacity of state institutions to embody the kind of communal solidarity or Gemeinschaft which gave the modern nation-state its deeper legitimacy, institutionalized power and social embeddednessCthereby undermining the social and political capacity of the state to resist globalization. The combination of these three paradoxes means that the consolidation and expansion of the competition state is itself driving a process of political globalization which is increasingly relativizing the sovereignty of states, and, indeed, forcing the pace of globalization in economic, social and cultural spheres too. 2 II. Competing Explanations of Globalization and the Relativization of Sovereignty It is perhaps ironic that although the nation-state has only in recent decades become the quasi- universal form of political organization of the modern world, it is thought to be in increasing danger of being undermined and superseded. Sovereignty seemed to be making a real comeback in the 1960s and 1970s, as newly independent nations copied Western forms; the Soviet empire was confronted with claims for 'different roads to socialism';i and the so-called 'free world' felt the impact of Vietnamese nationalism, Gaullismii and the new-found neo-realism of the American foreign policy establishment.iii Today, however, national boundaries are under siege at myriad levelsCfrom civil wars and economic transnationalization, from cultural exclusivity and religious revivals, and from political disillusion and institutional decay (and reinvention). What Ghia Ionescu has called 'the relativization of national sovereignty' iv has moved from the realms of internationalist idealism to the top of the agenda of both international and domestic politics. Will such pressures crystallize into a qualitatively new global era? And, if so, how would this happen? There are several candidates for the role of independent variable in any globalization process in the general sense. Three of these are essentially economic. The first is the interpenetration of national markets for various goods and assets, from money to industrial products to labour, across borders. The second is the advent of new technology which, in contrast to the hierarchical technological forms of the Second Industrial RevolutionvCthe age of the industrial state and the welfare stateCis structurally amorphous and rapidly diffused. Is there something fundamentally different about the vast changes in information technology and telecommunications that undermines national divisions, and is that difference enough to undermine national boundaries in general? vi The third candidate, which is often seen as deriving from the first two but which is often seen as playing an analytically independent role, is that of private and public economic institutions, from multinational enterprises to strategic alliances to private and even public regulatory regimes. In all three of these cases, political globalization is seen as a derivative, secondary phenomenon, which changes merely as a (perhaps distorted) function of economic 3 change. In contrast, sociological hypotheses tend to give pride of place to cultural globalization, in which people's perceptions of themselves as subjects or citizens of a particular nation-state are undermined by the crystallization and dissemination of global (or interacting global/local) images and identities.vii Such a process would doubtless be facilitated by technological change, but the real driving force would be its substantive and/or symbolic cultural contentCalthough in Marshall McLuhan's 'global village', the media was the message.viii For post-modernists, furthermore, the global village is not so much a unified culture per se but an intensely speeded-up world where cultural fragmentation is seen as undermining all grand narratives and socio-political projects from underneath rather than from above. ix But once again, the predominant political institutions and practicesCthose of the nation-stateCare primarily seen as epiphenomenal, determined this time by the cultural base. None of the other social sciences is as rooted in the 'modern' world of nation-state institutions and societies as political science and international relations. Globalization as a political phenomenon basically means that this shaping of the playing field of politics itselfCthe main parameters of political organization and the underlying payoff matrices of a multitude of political gamesCis increasingly determined not within insulated units, i.e. relatively autonomous and hierarchically organized structures called states; rather it derives from a complex congeries of multilevel games played on multilayered institutional playing fields, above and across, as well as within, state boundaries. These games are played out by state actors, as well as (and in continuous interaction with) market actors and cultural actors. Thus globalization is a process of political structuration.x In this sense, political globalization derives first and foremost from a reshaping of political practices and institutional structures in order to adjust and adapt to the growing deficiencies of nation-states as perceived and experienced by such actors. Central to this experience is a deeply felt failure of both actors and practices to achieve the kind of communal goals which have been their raison d'être of the Western state since collapse of feudalism and especially since the national democratic and social revolutions of the 18th, 19th and 20th centuries. Democracy and 4 authoritarianism, socialism and capitalism, liberalism and conservatism, have all seen their goals as embodied in and pursued through the national project, and the core of the national project has been domestic, rooted in the perceived common good of distinct (and ideally homogeneous) 'peoples' or citizenries respectively sharing their own relatively insulated territorial spaces. International relations, both as a phenomenon and as a quasi-discipline, has often been seen as merely concerning a secondary, more primitive level of anarchical interactionsCimportant only insofar as national goals are pursued in and through international cooperation or conflict among self-interested states per se, i.e. through peace or war. The modern world has seen only two truly internationalist political projects, liberalism and Marxism. But dominant as they have been as social, political and philosophical movements, both were also assimilated into the confines and practices of the nation-state early in their historical trajectories, the first through the British, French and American Revolutions, the second through the Russian and Chinese Revolutions. Only then did they attain institutionalized power, for it was at the nation-state level that the most fundamental structures and institutions of society and politics had become embedded. The apparent history of the modern world thus was absorbed into a historiography of nation-states. The concept of globalization in general challenges that prevailing framework in two ways. The first is through a rethinking of history. The emergence, consolidation and rise to structural pre-eminence of the nation-state itself is increasingly understood as having been the product of a global conjunction of events and longer-term structural developments, a quasi-accident reflecting the global situation of the late feudal period. The second challenge arises through the emergence of a new social-scientific discourse of globalization itself. This discourse challenges the significance of the nation-state as a paradigm of scholarly research, xi suggesting that nation-state-based 'normal science' in history and the social sciencesCsometimes referred to as 'methodological nationalism'Chas been sufficiently undermined by new challenges and findings at a range of different analytical levels that its usefulness in constituting a prima facie scholarly agenda is rapidly being lost. The uneven transnationalization of market structures in a range of economic sectors, xii the emergence of a complex global culture (what Roland Robertson has 5 called 'a form of institutionalization of the two-fold process involving the universalization of particularism and the particularization of universalism' xiii) and the development of intricate three-level games cutting across national and international politics, xiv all point towards a reshaping of the theoretical questions which have dominated 'modern' political philosophy and their reformulation in a more complex global context. Globalization in all its complexity, then, challenges that which is most profoundly rooted in Western historiography, political science, sociology, and economics. And nowhere is that challenge more profound than in political globalization. The very idea of what constitutes a societyCand therefore a political communityChas crystallized, at least since Machiavelli, in the territorial nation-state, a Janus-faced institutional structure looking both outwards to the system of states and inwards to those ties of justice and friendship which Aristotle saw as distinguishing the politeia from the other. Despite this ambiguityCor even perhaps because of itCthe state superseded the kaleidoscope of overlapping and intertwined communities and authorities characteristic of the feudal era in a process of 'institutional selection'xv which lasted until the latter half of the 20th century. In turn, the conceptions of common interest and community which have legitimated the institutional authority of the nation-state over the past several centuriesChowever predatory in practice its origins and developmental trajectoryxviChave given the politics of the state an essential character well beyond pragmatism and 'interest' in the narrow meaning of that term. They involve attributing to the state a holistic character, a sense of organic solidarity which is more than any simple social contract or set of pragmatic affiliations. Indeed, it involves that essential sense of immanent belongingness that Ferdinand Tönnies called Gemeinschaft.xvii If there is an increasingly paradigmatic crisis of the state today, it concerns the erosion of this posited underlying bond, and the demotion of the state to a mere pragmatic association for common endsCwhat Tönnies called Gesellschaft and Michael Oakeshott called an 'enterprise association'.xviii This demotion, as Tönnies knew a century ago, was rooted in the inextricably intertwined structural forces of modern capitalism and rationalized bureaucratic organization, which increasingly replaced Gemeinschaft 6 with mere Gesellschaft. But so long as the welfare of the people in a capitalist society was secured at least minimally by the state and protected from the full commodification of the market by national politics (the welfare state, or social state, in the broadest sense of those terms)Cthen the image of a national Gemeinschaft as the route to the common good could persist, even strengthen and expand, over the entire globe. The latent crisis of the nation-state today, and the paradigmatic challenge of the globalization process, involve the erosion of that Gemeinschaft and the fragmenting of the political community from both above and below. Whatever wider changes are taking place in the socio-economic context, it is only when the dynamics of political globalization take hold that the modern era will be superseded by the globalCan issue which will address in Section III. Globalization itself is an elusive concept. xix To some observers it is both bounded and well- defined, with a simple, sometimes even unidimensional, core or driving force (e.g., the convergence of interest rates or stock market prices, or the information technology revolution xx). To others, however, it represents a qualitatively new stage in the development of human society. At yet another level of analysis, globalization has all too frequently been assumed to be a process of convergence, a homogenizing force; increasingly, however, analysts are arguing that globalization is fundamentally complex and 'heterogenizing'Ceven polarizingCin its nature and consequences. xxi Complexity means the presence of many intricate component parts. It can mean a sophisticated and elegantly coordinated structure, but it can also mean that the different parts mesh poorly, leading to friction and even entropy. A globalizing world is intricately structured at many levels, developing within an already complex social, economic and political context. Many varied dimensions of convergence and divergence can and do coexist. Different markets, firms and economic sectors are organized in distinct ways, whether because of the imperatives of market and hierarchyxxii or as the result of different social-structural histories.xxiii Owners of capital 'arbitrage' across these categories precisely because they are differently structuredCand provide different rates of return. Even more problematic are the subnational, transnational and suprantional ethnic cleavages, tribalism and other revived or invented identities and traditionsCfrom local groups to the 7 European UnionCwhich abound in the wake of the uneven erosion of national identities, national economies and national state policy capacity characteristic of the 'global era'. xxiv Globalization can just as well be seen as the harbinger not simply of a 'new world order' but of a new world disorder, even a 'new medievalism' of overlapping and competing authorities, multiply loyalties and identities, prismatic notions of space and belief, and so on. xxv Another contested dimension of substance concerns the forces which drive the process itself. Globalization is usually seen as primarily an economic phenomenon, but the discipline of sociology has taken it firmly to heart as a cultural process too, even a hegemonic oneCdespite, or rather because of, its very complexity. Geographers increasingly question the nature of territory per se as it has constituted the physical and psychological field of state, economy and society, speaking of the increasing restructuring of human life around complex 'virtual spaces' in a postmodern world.xxvi The pure and applied sciences, of course, have always been 'global' in their essence (despite attempts by ideological hierarchies to nationalize, spiritualize or politicize science), but this traditional universalism has been dramatically intensified through the information revolution and the ever more rapid diffusion of complex technologies and ideas. In Political Science and International Relations, where states as both actors and 'political systems' have provided much of the raison d'être of the discipline itself, resistance has been greater and there has been a profusion and confusion of alternatives. Nevertheless, as I argue here, it has been the transformation of the state itself which has been the main dynamic of change. Beyond this complex contestation, furthermore, it is important to understand that globalization can not simply be verified empirically according to measurable criteria such as the convergence (or not) of corporate forms or social structures. Perhaps its most crucial feature is that it constitutes a discourseCand increasingly, a hegemonic discourse which cuts across and gives meaning to the kinds of categories suggested above. In this sense, the spread of the discourse itself alters the a priori ideas and perceptions which people have of the empirical phenomena which they encounter; in so doing, it engenders strategies and tactics which in turn may restructure the game itself. With the erosion of old axioms, what 8 might be called 'paradigmatic selection' follows. And in this process, the concept of globalization is coming increasingly to shape the terms of the debate. Analysts who emphasize 'interdependence' or 'internationalisation', as supposedly distinct from globalization, by and large posit that the international political playing field is still essentially one which is constituted by the interaction of states concerned with their relative power positions (whether military or economic power, or both). In this sense, writers like Robert Keohane, one of the coiners of the term 'complex interdependence', xxvii retained dominant elements of Waltz's 'neorealism'xxviii in his attempt at a synthesis which he has called 'neoliberal institutionalism'.xxix Patterns of collective action by and among states in the international system, shaped by complex (mainly economic) interdependence, is thus seen as leading to the formation of both informal and formal international structures and institutions which can take on an autonomy of their own at the international level. Indeed, interdependence is said by John Ruggie and others to be leading to a 'new multilateralism', this time rooted in socio-economic behavioral imperatives rather than in idealist-type legal or constitutional structures. xxx The traditional distinction between domestic and international levels of analysisCembodied in 'two-level games'Cis blurred, but not fundamentally undermined.xxxi In contrast, the notion of globalization is an inherently more complex and heterogeneous phenomenon economically, socially and politically, involving at least three-level games.xxxii Globalization, therefore, is not an inexorable, exogenous process shaped by some invisible hand of market forces, technological innovation or transnational flows of information. It is not part of a march to a higherCor indeed lowerCform of civilization. It is a path-dependent process, rooted in real historical decisions, non-decisions and conjunctural turning points. In Granovetter's terms, social, economic and political institutions emerge in an environment where there is not one simple pathway or end point; there are in economic terminology 'multiple equilibrium points' available. However, once social relationships are established and power structures set in place in particular conjunctural settings, institutions tend to become 'locked in' and to resist fundamental restructuring. As the globalization process takes shape, then, it does not involve some sort of linear process of the withering away of the state as a bureaucratic 9 power structure; indeed, paradoxically, in a globalizing world states play a crucial role as stabilizers and enforcers of the rules and practices of global society. Furthermore, states and state actors are probably the most important single category of agent in the globalization process. As new forms of political organization surrounding, cutting across and coexisting withCand fostered byCthe state crystallize, states and state actors are the primary source of the state's own transformation into a residual enterprise association. III. From the Welfare State to the Competition State xxxiii The path-dependent development of the competition state reflects the heterogeneous character of globalization itself. State actors have acted and reacted in feedback loop fashion to the more complex structure of constraints and opportunities characteristic of the new environment. This situation is not 'hard-wired', to use the language of the new genetics; these constraints and opportunities do not create a rigid cage within which state and market actors are forced to work. Rather, international market, institutional and cultural structures, while generating new complex challenges for politics and the state, comprise a range of multiple potential equilibrium points. The outcome of the institutional selection processCthe ultimate choice as to which equilibrium is eventually reached (if any) in attempting to cope with new pressuresCdepends upon the way agents react in real time in the real world. Given changing exogenous conditions, however, this transformation increasingly entails a fundamental shift of organizational goals and institutional processes within state structures themselves. As international and transnational constraints limit the things that state and market actors believe the state can do, this shift is leading to a potential crisis of liberal democracy as we have known itCand therefore of the things people can expect from even the best-run government. In this context, for example, a new and potentially undemocratic role is emerging for the state as the enforcer of decisions and/or outcomes which emerge from world markets, transnational 'private interest governments', and international quango-like regimes.xxxiv 10  The essence of the postwar national welfare state lay in the capacity which state actors and institutions had gained, especially since the Great Depression, to insulate certain key elements of economic life from market forces while at the same time promoting other aspects of the market. These mechanisms did not merely mean protecting the poor and helpless from poverty and pursuing welfare goals like full employment or public health, but also regulating business in the public interest, 'fine tuning' business cycles to promote economic growth, nurturing 'strategic industries' and 'national champions', integrating labor movements into corporatist processes to promote wage stability and labor discipline, reducing barriers to international trade, imposing controls on 'speculative' international movements of capital, and the like. The expansion of the economic and social functions of the state was seen to be a crucial part of the process of social, economic and political 'modernization' for any 'developed' country. But this compromise of domestic regulation and international openingCwhat John Ruggie famously called 'embedded liberalism' xxxvCwas eroded by increasing domestic structural costs (the 'fiscal crisis of the state'xxxvi) as well as the structural consequences of growing external trade and, perhaps most importantly, of international financial transactions. xxxvii The crisis of the welfare states lay in their decreasing capacity to insulate national economies from the global economy, and the combination of stagnation and inflation which resulted when they tried. The world since then has seen the emergence of a quite different beast, the competition state. Rather than attempt to take certain economic activities out of the market, to 'decommodify' them as the welfare state was organized to do, the competition state has pursued increased marketization in order to make economic activities located within the national territory, or which otherwise contribute to national wealth, more competitive in international and transnational terms. The main features of this process have included attempts to reduce government spending in order to minimize the 'crowding out' of private investment by state consumption and the deregulation of economic activities, especially financial markets.xxxviii The result has been the rise of a new discourse and practice of 'embedded financial orthodoxy',xxxix which is in turn shaping the parameters of political action everywhere. 11  In the contemporary world, there have been fundamental changes in the ways in which states and economies interact. Transnational factors and three-level games have forced four specific types of policy change to the top of the political agenda: (1) a shift from macroeconomic to microeconomic interventionism, as reflected in both deregulation and industrial policy; (2) a shift in the focus of that interventionism from the development and maintenance of a range of 'strategic' or 'basic' economic activities in order to retain minimal economic self-sufficiency in key sectors to one of flexible response to competitive conditions in a range of diversified and rapidly evolving international marketplaces, i.e. the pursuit of 'competitive advantage' as distinct from 'comparative advantage'; xl (3) an emphasis on the control of inflation and general neoliberal monetarismCsupposedly translating into non-inflationary growthCas the touchstone of state economic management and interventionism; and (4) a shift in the focal point of party and governmental politics away from the general maximisation of welfare within a nation (full employment, redistributive transfer payments and social service provision) to the promotion of enterprise, innovation and profitability in both private and public sectors. In this context, there have been some striking similarities as well as major differences between leading capitalist countries. The general rule in mainstream (classical and neoclassical) economic theory is, of course, that the state should intervene as little as possible beyond maintaining the legal framework necessary for a working market system (private property rights, sanctity of contracts, etc.), a currency system, defence, and so forth. State intervention can also be justified in this context, however, where it attacks or restricts obstacles to efficient market behaviour or counteracts 'market failure'Ce.g., through demand management at the macroeconomic level and/or regulation at the mesoeconomic and microeconomic levels. A further widely-accepted exception to the rule is the argument that some activities are simply not amenable to being organised and run according to market principles in the long term or are in particular danger from 'exogenous shocks'Cnatural monopolies, public goods, or 'strategic industries'. But these activities are essentially pathological. The market mechanism is seen to be 'natural'. The state is an artificial imposition to remedy specific defects, and its interventions are prone to serious opportunity costs. 12  The modern 'welfare state', using that term in a broad sense, was seen to combine a series of such interventions. However, this combination is linked with, articulated through, and mobilised by more specifically political (i.e., non-'economic') factors such as the organisational and electoral influence of the working class, welfare-type goals of social solidarity, etc., and the organisational logic of the bureaucratic apparatus established to carry out these tasks. Nevertheless, welfare spending, for example, can be 'justified' in mainstream economic terms by its demand management role, stabilising the economic system and thus permitting the maximisation of growth-oriented market choices. Market-enforcing regulation, such as anti-monopoly legislation or stock market regulation, is justified not only by norms of 'public interest', but also as preventing 'unfair competition' and anti-competitive (and thus anti-market) behaviour by monopoly firms, cartels, or organisations such as trade unions. Even indicative planning is rationalised as a market-clearing exercise.xli And more direct, non-market control or regulation is legitimised by reference to the need to organise production by natural monopolies, the provision of public goods and services, or the need to maintain basic or strategic industries. This is a powerful package of potential interventions indeed, especially when politically galvanised by a social objective such as full employment, social justice or increased economic growth. What must be remembered, however, is that all of these forms of interventionism have one thing in common: that they take for granted a fundamental division of function, even an incompatibility of kind, between the market, which is seen as the only really dynamic wealth-creating mechanism in capitalist society (despite its susceptibility to 'market failures'), on the one hand; and the state, which is seen as a hierarchical and essentially static mechanism, unable to impart a dynamic impetus to production and exchange (except in wartime), on the other.xlii The state is thus seen as characterised by a mode of operation which undermines market discipline and substitutes 'arbitrary prices' for 'efficiency prices' xliiiCat best a necessary evil, at worst inherently parasitic on wealth created through the market. The welfare state was therefore based on a paradox. It might save the market from its own dysfunctional tendences, but it carried within itself the potential to undermine the market in turn. From a 13 market perspective, then, the welfare state must be both (a) restrained in its application and (b) regularly deconstructedCderegulatedCin order to avoid the 'ratchet effect' which leads to stagflation, the fiscal crisis of the state and the declining effectiveness of each new increment of demand reflation and functional expansion. If this were not to be done, the result would be the emergence of a lumbering, muddling, 'overloaded' state. In this context, of course, the international recession of the 1970s and early 1980s had dramatic consequences for the economic policies of advanced industrial states generally, and its perceived lessons, as assimilated by political actors and major social groups, have undermined the very legitimacy of a wide range of policy measures identified with the welfare state. Political decisionmakers have undergone a fundamental learning process which has altered the norms according to which they operate on both a daily and a long-term basis. This 'overloaded' state was seen to bump up against four main types of constraint. In the first place, chronic deficit financing by governments in a slump period is seen (a) to soak up resources which might otherwise be available for private capital allocation and to cause interest rates to increase, in ways which 'crowd out' private investment, (b) to raise the cost of capital, and (c) to channel resources both into consumption (increasing inflationary pressures and import penetration) and into non-productive financial outlets.xliv Second, nationalised industry and tripartite wage bargaining (neocorporatism) are blamed for putting further wage-push pressure on inflation, while at the same time preventing rises in productivity and/or the shedding of newly redundant labour (given the increasing obsolescence of much fixed capital and the pressing need for reconversion), thus lowering profitability through rigidities in the labour market. Thirdly, attempts to maintain overall levels of economic activityCto maintain demand and infrastructure, and to prevent unemploymentCare seen to lock state interventionism into a 'lame duck' syndrome in which the state takes responsibility for ever wider, and increasingly unprofitable, sectors of the economy. And fourthly, all of these rigidities, in an open international economy, have negative consequences for the balance of payments and for the exchange rate. Protectionism as a response to such pressures may invite retaliation and/or simply act as a drag on international trade generally; while devaluation (supposedly 14 automatic in a regime of floating exchange rates, but in fact manipulated in various ways) can have a knock-on effect, exacerbating the other three. All four of these constraints interact in recessionary conditions to restrict the capacity of private capital to perform its supply-side or productive function. Thus the challenge for state actors today, as viewed through the contemporary discourse of globalization, is to confront the perceived limitations of the stateCmainly to attempt to combine a significant measure of austerity with the retention of a minimal welfare net to sustain sufficient consensus, while at the same time promoting structural reform at the mesoeconomic and microeconomic levels in order to improve international competitiveness. In the industrial world generally, major changes in government policy have resulted, changes which have serious consequences for the welfare state modelCespecially a shift in the focus of economic policy away from macroeconomic demand management towards more targeted mesoeconomic and microeconomic policies. 15 IV. Divergences and Convergencs: Competing Forms of the Competition State Despite the vulnerability of the welfare state model, however, national policy-makers have a range of potential responses, old and new, with which to work. The challenge of the competition state is said to be one of getting the state to do both more and less at the same time. Getting more for less has been the core concept, for example, of the 'reinventing government' movement which is a major manifestation and dimension of the competition state approach. xlv The competition state involves both a transformation of the policy roles of the state and a multiplication of specific responses to change. In terms of policy transformation, several levels of government activity are affected. Among more traditional measures is, of course, trade policy, including a wider range of non-tariff barriers and targeted strategic trade policies. The core issue in the trade issue-area is to avoid reinforcing through protection the existing rigidity of the industrial sector or sectors in question, while at the same time fostering or even imposing adaptation to global competitive conditions in return for temporary protection. Transnational constraints are growing rapidly in trade policy, however, as can be seen in the establishment of the North Atlantic Free Trade Area, the Asia-Pacific Economic Cooperation group, and the World Trade Organization. Two other traditional categories, monetary and fiscal policy, are perhaps even more crucial today, and the key change is that relative priorities between the two have been reversed; tighten monetary policy (although with mixed results) is pursued alongside looser fiscal policy through tax cuts. And exchange rate policy, difficult to manage in the era of floating exchange rates and massive international capital flows, is none the less still essential, as the British devaluation of 1992 and the American devaluation of 1985-87 have shown; however, it is increasingly intertwined with monetary and fiscal policy. xlvi Potentially more innovative, combining old and new measures, is the area of industrial policy and related strategic trade policy. By targeting particular sectors, supporting the development of both more flexible manufacturing systems and transnationally viable economies of scale, and assuming certain costs of adjustment, governments can alter some of the conditions which determine competitive advantage: encouraging mergers and restructuring; promoting research and development; encouraging private 16 investment and venture capital, while providing or guaranteeing credit-based investment where capital markets fail, often through joint public/private ventures; developing new forms of infrastructure; pursuing a more active labour market policy while removing barriers to mobility; and the like. The examples of Japanese, Swedish and Austrian industrial policy have been widely analysed in this context. A third category of measures, and potentially the most explosive, is, of course, deregulation. The deregulation approach is based partly on the assumption that national regulations, especially the traditional sort of regulations designed to protect national market actors from market failure, are insufficiently flexible to take into account the rapid shifts in transnational competitive conditions characteristic of the interpenetrated world economy of the late 20th century. As I have argued elsewhere, however,xlvii deregulation must not be seen just as the lifting of old regulations, but also as the formulation of new regulatory structures which are designed to cope with, and even to anticipate, shifts in competitive advantage. Furthermore, these new regulatory structures are often designed to enforce global market- rational economic and political behaviour on rigid and inflexible private sector actors as well as on state actors and agencies. The institutions and practices of the state itself are increasingly marketized or 'commodified', and the state becomes the spearhead of structural transformation to market norms both at home and abroad. Although each of these processes can be observed across a wide range of states, however, there are significant variations in how different competition states cope with the pressures of adaptation and transformation. Here I will focus primarily on the more advanced industrial states; the equation gets even more complex in the developing and underdeveloped worlds. There is a dialectic of divergence and convergence at work, rather than a single road to competitiveness. The original model of the competition state was the strategic or developmental state which writers like John Zysman and Chalmers Johnson associated with France and Japan. xlviii This perspective, which identifies the competition state with strong- state technocratic dirigisme, lives on in the analysis of newly industrializing countries (NICs) in Asia and other parts of the Third World. However, the difficulty with this approach has been that the scope of 17 control which the technocratic patron-state and its client firms can exercise over market outcomes diminishes as the integration of these economies into global markets and the complexities of third-level games proceeds. The developmental state can play a crucial role in nurturing new industries and reorienting economic structures and actors to the world marketplace, but beyond a certain threshold even the most tightly bound firms and sectors will act in a more autonomous fashion. And as more firms and sectors become linked into new patterns of production, financing and market access, often moving operations offshore, their willingness to follow the script declines. However, there are distinctions even here. Within this category, for example, Japanese administrative guidance and the ties of the keiretsu system have remained relatively strong despite a certain amount of liberalization, deregulation and privatization, whereas in France the forces of neoliberalism have penetrated a range of significant bastions from the main political parties and to major sectors of the bureaucracy itself xlix. In contrast, the orthodox model of the competition state today is not the strategic state but the neoliberal state (in the European sense, i.e. orthodox free-market economic liberalism, or what is called '19th-century liberalism' in the United States). Thatcherism and Reaganism in the 1980s provided both a political rationale and a power base for the renascence of free-market ideology generallyCnot just in the United Kingdom and the United States but throughout the world. The flexibility and openness of Anglo- Saxon capital markets, the experience of Anglo-American elites with international and transnational business and their willingness to go multinational, the corporate structure of American and British firms and their (relative) concern with profitability and shareholder returns rather than traditional relationships and market share, the enthusiasm with which American managers have embraced lean management and downsizing, and the relative flexibility of the US and UK labour forces, combined with an arms-length state tradition in both countries, are widely thought to have fought off the strategic state challenge and to have eventually emerged more competitive today. Indeed, the heady rise of Wall Street in the mid-1990s, frequently attacked by bears and doomsayers, represents, according to respected New York Times 18 columnist Thomas Friedman, a 'globalization premium'. That is a sense among global investors that somehow the whole mix of AmericaCits society, its culture, its technology, its business environment and its geographyCmeshes more naturally with globalization than either Europe or Japan. It is a sense that while many in Europe are still trying to adjust to the demands of globalization, and are barely up to the starting line, the United States is already around the first turn. l Nevertheless, liberalization, deregulation and privatization have not reduced the role of state intervention overall, just shifted it from decommodifying bureaucracies to marketizing ones. 'Reinventing government', for example, means the replacement of bureaucracies which directly produce public services by ones which closely monitor and supervise contracted-out and privatized services according to complex financial criteria and performance indicators. And industrial policy is alive and well too, secreted in the interstices of a decentralized, patchwork bureaucracy which is the American tradition and the new British obsession. Throughout the debate between the Japanese model and the Anglo-American model, however, the European neocorporatist model, rooted in the postwar settlement and given another (if problematic) dimension through the consolidation of the European Community (now the European Union), has been presented by many European commentators as a middle way. Both Gaullist and post-Gaullist France on the one hand, with its strategic state and its 'corporatism without labour',li and Britain with its arms-length financial market system on the other, were always on the margins of European constructionCand indeed remain so, despite the futile attempts of the French to hitch their monetary horse to the Bundesbank's wagon through the franc fort and plans for a single European currency. (Financial markets will always regard the franc as a vulnerable currency no matter how high the French level of unemployment is permitted to grow.) In bringing labour into institutionalized settings, not only for wage bargaining but for other aspects of the social market, in doggedly pursuing conservative monetary policies, in promoting extensive training policies, and in possessing a universal banking system which nurtured and stabilized industry without strategic state interventionism, the European neocorporatist approach (as practiced in varying 19 ways in Germany, Austria and Sweden in particular) has seemed to its proponents to embody the best aspects of both the Japanese and the Anglo-American models. However, despite the completion of the single market and the signing of the Maastricht Treaty, the signs of what in the early 1980s was called 'Eurosclerosis' have reappeared; the European Monetary Union project is widely regarded as deflationary in a context where costs are unevenly spread; and the liberalizing, deregulatory option is increasingly on the political cards again (as it was, for a while, in the 1980s), especially in the context of rapidly rising German unemployment. The competition state, then, comes in myriad forms, only a few of which can be superficially addressed here; the key is not whether these forms converge, but how they cope with a range of cross-cutting pressures to adapt to a more complex world and how they embody and shape the more diverse practices which come with globalization, in turn reinforcing and shaping globalization itself. 'National developments'Ci.e., differences in models of state/economy relations or state/societal arrangementsCas Zysman writes, 'have, then, driven changes in the global economy.' lii At another level, of course, states and state actors seek to convince, or pressure, other statesCand transnational actors such as multinational corporations or international institutionsCto adopt measures which shift the balance of competitive advantage. Such pressure will generally combine elements of neo- mercantilistic self-interest, limited reciprocity, and multilateral hard bargainingCwhether to limit trade in sensitive sectors such as textiles, automobiles or semiconductors, to develop new regional initiatives such as the European single market, to expand multilateral trade regimes in agriculture or services, or to reach agreements in areas such as exchange rate policy (e.g., the relatively loose Plaza and Louvre Accords, or the much tighter notion of European Monetary Union). The search for competitive advantage in a relatively open world adds further layers and cross-cutting cleavages to the world economy which may undermine pure multilateralism, but which increase the complexity and density of networks of interdependence and interpenetration. Finally, transnational pressures can developCwhether from multinational corporations or from nationally or locally based firms and other interests (such as trade unions) caught in the crossfire of the search for international competitivenessCfor the establishment or 20 expansion of transnational regimes, transnational neocorporatist structures of policy bargaining, transgovernmental linkages between bureaucrats, policymakers and policy communities, and the like. In all of these settingsCthe shifting utility and effectiveness of different policy instruments, the ways that differently structured state-society arrangementsliii adapt to and reshape complex globalization, how states interact with each other and reconfigure patterns of interdependence, and the sharp increase of cross-cutting linkages and third-level games which alter the very stakes of the political and governmental gameCthe state is no longer able to act as a decommodifying hierarchy (i.e., taking economic activities out of the market). It must act more and more as a collective commodifying agentCi.e., putting activities into the market)Cand even as a market actor itself. It is financier, middleman, advocate, and even entrepreneur, in a complex economic web where not only do the frontiers between state and market become blurred, but also where their cross-cutting structures become closely intertwined and their behavioural modes become less and less easy to distinguish. National differences therefore do not so much concern the possibility of resisting globalizing trends per se, but are best seen instead as representing different modes of managing a complex transition in which emerging political and economic structures are thought to be closely interwined but not yet terribly clear, and the possibilities for alternative equilibria are fluid. Of course, this interconnection has always existed at least to some extent. States and markets have always been intertwined and mutually supporting. The primary goals of traditional nation-states were survival and internal integration in an emerging capitalist world-system; the indispensable core of the welfare state has been to manipulate, articulate and blend domestic policy instruments and economic factors in order to promote national economic growth in a context of embedded liberalism; and the sine qua non of the contemporary 'competition state' is rapid adjustment to shifts in competitive advantage in the global marketplace. But whereas the development of the autonomy of the state in the past has involved the differentiation of the state as a social structure (its increasing distinctness from other social structures), its autonomy in the contemporary world depends on a complex process of differentiation and 21 'de-differentiation'.liv Today the state remains the central focus for consensus, loyalty, and social disciplineCthe 'collective capitalist' maintaining the social fabric while fractions of capital compete. But this role today puts the state into an increasingly contradictory location in political economy terms. Not only is the 'collective capitalist' role one which has to be exercised in a more and more complex field comprising both other states and transnational economic and social actors, but states are also increasingly quasi-market actors and commodifying agents themselves. In such complex conditions, the state is sometimes structurally fragmented, sometimes capable of strategic actionCbut, in a growing number of situations, which form it takes becomes more and more dependent upon cross-cutting global/transnational/domestic structural and conjunctural conditions. Such is the predicament of today's state in the wider global marketplace. Under pressure from recessionary conditions in a relatively open world economy, first in the 1970s and then in the early 1990s, then, the problems faced by all capitalist industrial states have given rise to certain similarities of responseCin particular, the shift from the welfare state model, nurtured by the long boom from the 1950s to the oil crisis of 1973-74, to a more differentiated repertoire of state responses to the imperatives of growth and competitiveness. However, despite these elements of convergence, significant divergences remain, for different states have different sets of advantages and disadvantages in the search for international competitiveness. They differ in endogenous structural capacity for strategic action both domestically and internationally. lv They differ in the extent to which their existing economic structures, with or without government intervention, can easily adapt to international conditions. lvi And they differ in their vulnerability to international and transnational trends and pressures. V. The Scope and Limits of the Competition State The 'competition state', then, is a complex actor in a complex 'structured action field',lvii compelled to wear different hats at different times and in differently structured situations. State actors and market actors intermingle in changing international and transnational conditions. This complexity is nowhere 22 more evident than in such fields as, for example, financial market regulation and environmental protection. Deregulation and reregulation in general are already full of complex casualties, side effects, and unanticipated consequences. On the one hand, given the centrality of finance and financial structures to states, markets, transnational structures, and modes of productionC 'the infrastructure of the infrastructure'Cfinancial market deregulation is of particular significance for understanding not only the nature of the competition state, but also that of the new, more complex regulatory structures characteristic of a more integrated global financial marketplace.lviii On the other hand, environmental protection has gone through cycles of both regulation on a national level and deregulation or regulatory restructuring in the more freewheeling pro-market atmosphere of the early-to-mid-1980s; at the beginning of the 1990s, however, with environmental protection coming to be seen as not only as a cross- border issue but also as representing a truly transnational public good, the dynamic of reregulation is once again at the forefront. Labour markets and transnational neo-corporatism manifest analogous tendencies. But the rapid rise of the competition state, in an increasingly crowded and heterogeneous world economy, has given rise to a further paradox. As states and state actors have attempted to promote competitiveness in this way, they haveCseemingly voluntarilyCgiven up a range of crucial policy instruments. The debate rages over whether, for example, capital controls can be reintroduced or whether states are still able to choose to pursue more inflationary policies without disastrous consequences.lix The 'genie is out of the bottle'C David Andrews has called it hysteresislxCand states are seeing their policy capacity and political autonomy eroding in ways which may not be recuperable. Political and social development is not merely a question of frictionless rational choices and cost-benefit analyses, but is inherently path-dependent and 'sticky', a process where conjunctural shifts can have structural consequences. The nation-state, of course, is not dead, but its role has changed. In the first place, citizens will probably have to live more and more without the kind of public services and many of the redistributive 23 arrangements characteristic of the national welfare states. The 'new public management' seeks not only to reorganize the state along the lines of private industry lxi, but also to replace public provision with private provision (pensions, prisons, etc.) and to replace direct payments for unemployment compensation, income support for the poor, etc., with time-limited, increasingly means-tested or work- related measures (or none at all)Cwhat President Clinton has called 'the end of welfare as we know it'. In the second place, the principal goal of state actors is increasingly one of minimizing inflation, in order to maintain the confidence of the international business and financial community. Central bankers have always played this role but are doing so to an ever-increasing extent. In this context, states are less and less able to act as 'strategic' or 'developmental' states, and are more and more 'splintered states'. lxii State actors and different agencies are increasingly intertwined with 'transgovernmental networks'Csystematic linkages between state actors and agencies overseeing particular jurisdictions and sectors, but cutting across different countries and including a heterogeneous collection of private actors and groups in interlocking policy communities. Furthermore, some of these linkages specifically involve the exchange of ideas rather than authoritative decision-making or power-brokingCwhat have been called 'epistemic communities'.lxiii The functions of the state, although central in structural terms, are increasingly residual in terms of the range of policy instruments and outcomes which they entail. In international terms, states in pursuing the goal of competitiveness are increasingly involved in what John Stopford and Susan Strange have called 'triangular diplomacy', consisting of the complex interaction of state-state, state-firm, and firm-firm negotiations. lxiv But this concept must be widened further. Interdependence analysis has focused too exclusively on two-level games and the state as a Janus-faced institutional structure. Although this is an oversimplification, I argue that complex globalization has to be seen as a structure involving (at least) three-level games, with third- levelCtransnationalCgames including not only 'firm-firm diplomacy' but also transgovernmental networks and policy communities, internationalized market structures, transnational cause groups and many other linked and interpenetrated markets, hierarchies and networks. As states and state actors get drawn more 24 and more into the minutiae of cross-cutting and transnational economic relations, their activities become further constrained by the less manageable complexities of complex situations. Thus the actual amount of government imbrication in social life can increase while at the same time the power of the state to control specific activities and market outcomes continues to diminish. One example is the way financial globalization and deregulation have intensified pressures for governments to increase monitoring of financial markets, criminalization of insider trading and the like. The growth, as the neo-medievalists say, of competing authorities with overlapping jurisdictions does not reduce interventionism; it merely expands the range of possibilities for splintered governments and special interests to carve out new fiefdoms, both domestically and transnationally, while undermining their overall strategic and developmental capacity. The political dimension of complex globalization, then, is no less 'embedded' than the social dimension, despiteCor because of?Cthe continuing significance of the state as institutional structure, political playing field and focus of discourse. Such changes have a crucial socio-psychological function too. lxv If it is suggested that Gemeinschaft is a necessary part of human existence, as is the case in much social and political philosophy, then the question can be reformulated in two parts. On the one hand, can the residual state maintain this gemeinschaftlich bond in spite of the circumscription of its gesellschaftlich functions? On the other, might there be some alternative structural form which could evolve into a repository for this feeling of social belonging? As the state is likely to retain a range of key political and economic functions despite (and partly because of) globalization, the decay of gemeinschaftlich loyalty will be uneven, and in relatively stronger states this decay will proceed more slowly than in economically weaker states. For example, if Reich is correct in his analysis in The Work of Nations,lxvi then economic globalization is likely to lead to two kinds of socio-economic stratification: (a) between a relatively large class of 'symbolic analysts' (managers, technicians, researchers, intellectuals, etc.) consisting of about 20-40% of the population in advanced societies, on the one hand, and a low-paid service sector covering most of the rest (advanced societies having lost much of their labor-intensive production to the Third World), on the other; 25 and (b) between countries with differential capacities for providing 'immobile factors of capital'. Some countries, because of their infrastructure, education systems, workforce skills, and quality-of-life amenities, are able to attract mobile, footloose capital of a highly sophisticated kind (employing lots of symbolic analysts engaging in 'high value-added activities'); others may increasingly have to depend upon low- wage, low-cost manufacturing or agricultural production. If the developed 'trilateral' states of the United States, Europe, and Japan (along with perhaps some others) are able to provide these advanced facilities better, then gemeinschaftlich loyalty in those states may erode more slowly or perhaps even stabilize. On the other hand, mobile international capital may well destabilize less favored states, whose already fragile governmental systems will be torn by groups attempting to recast those gemeinschaftlich bonds through claims for the ascendancy of religious, ethnic, or other grass-roots loyalties. In this context, today's revival of nationalism is not of the state- bound, 19th century variety; it is more elemental, and leads to the break-up of states rather than to their maintenance. Max Singer and Aaron Wildavsky have characterized this bifurcation of the world as leading to the differentiation of 'zones of peace' and 'zones of turmoil', lxvii but it is unclear whether the zones of peace will expand or contract. However, the outcome may depend far more on how the residual state adapts to the carrying out of its new, circumscribed range of political and economic functions than on science fiction-like attempts to relocate gemeinschaftlich loyalties on new but more problematic levels. If we want to look for an alternative way of conceiving of the residual state, probably the best place to look is at American state governments. These governments can claim only a partial loyalty from their inhabitants, and their power over internal economic and social structures and forces has been limited indeed. However, they have been required to operate over the course of the past two centuries in an increasingly open continental market, without there being such a thing as state 'citizenship' (only residence, alongside the free movement of persons within the United States as a whole). Nevertheless, they doClike counties, provinces and regions in other countriesCfoster a sense of identity and belonging that can be quite strong. In economic policy matters they represent the essence of the 'competition state.' 26 Their taxing and regulating power has been seriously constrained in many spheres by the expansion of the weight and the legal prerogatives of the Federal Government. However, at the same time, their ability to control development planning, to collect and use the tax revenues they do impose (as well as offering tax incentives and subsidies), to build infrastructure, to run education and training systems, to enforce law and order, and the like, gives these subnational states a capacity to influence the provision of immobile factors of capital in significant waysCindeed more than many governments in Third World countries. The main focus of the competition state in the worldCin a way that is partly analogous to the focus of American state governmentsCis the promotion of economic activities, whether at home or abroad, which will make firms and sectors located within the territory of the state competitive in international markets. In this process, however, the state becomes an agent of its own transformation from civil association to enterprise association. Rather than providing public goods or other services which cannot be efficiently provided by the marketCin other words, rather than acting as a 'decommodifying' agent where market efficiency failsCthe state is drawn into promoting the commodification or marketization of its own activities and structures (including the internal fragmentation of the state itself) as well as promoting marketization morewidely in both economic and ideological terms. But there is a difference between promoting market activities as a general public good and being itself transformed into a market-based organization per se. In effect, it is in the transformation of the predominant mix of goods affected by and through state policy from public-dominated to private- dominated which in turn transforms the state from a primarily hierarchical, decommodifying agent into a primarily market-based, commodifying agent. At the same time that the state faces these changes, however, the search is on to find new ways for it to function and new roles for it to play. The most important changes have been analogous to the changing structures of production and distribution in the Third Industrial Revolution. The attempt to make the state more 'flexible' has moved a long way over the past decade or so, not only in the United States and BritainCwhere deregulation, privatization, and liberalization have evolved furthestCbut also in a 27 wide range of other countries in the First and Third Worlds (and more recently in the Second World too). Some of these changes have become controversial not only because they have challenged tried and tested ways of making and implementing public policy or confronted important cultural values, but also because their prescriptions can only be tested at the risk of failure. Privatization and deregulation are particularly important because they involve the increasing interweaving of the domestic economy and the global economy. The 'ratchet effect'Cthe term used by Mrs. Thatcher's guru Sir Keith Joseph for what was once called 'creeping socialism,' i.e. that each attempt to use the state to achieve a new discrete policy goal ratchets up the size and unwieldiness of the state as a wholeChas been turned on its head. In a globalizing world, the competition state is more likely to be involved in a process of competitive deregulation and creeping liberalization. State actors, in ever closer contact with 'globalizing' market actors, pursue policies which they believe will make their countries more competitive; the dynamic process at the heart of the competition state is policy arbitrage. VI. Conclusion: Globalization and the Competition State As Paradoxes French intellectuals have a love for analyzing any particularly knotty problem by calling it a paradox. The central paradox of globalization itselfCof the displacement of a crucial range of economic, social and political activities from the national arena to a cross-cutting global/transnational/domestic structured field of actionCis that rather than creating one big economy or one big polity, it also divides, fragments and polarizes. Convergence and divergence are two sides of the same coin. This lack of holistic simplicity has its drawbacks, of course, especially as it gives rise to fundamental misunderstanding and caricatureCwhat has been called the 'airport bookshop' image of globalization. But in some ways globalization is not even a single discourse, but a contested concept giving rise to several distinct but intricately intertwined discourses, while national and regional differences belie the homogenous vision as well. Nevertheless, the concept and the practice of globalization, in its different forms, will undoubtedly increase in significance as the trends outlined above continue to crystallize. 28  Indeed, the power of globalization itself as process, practice and discourseCand thus as a paradigmClies in this very complexity. Whether the forces of convergence will lead a complex but stable, pluralistic world based on liberal capitalism and the vestiges of liberal democracy, lxviii or the forces of divergence and inequality are creating a more volatile worldCthe possibilities range from Kaplan's apocalyptic 'coming anarchy' to Singer and Wildavsky's division of the world into 'zones of peace' and 'zones of turmoil' and Alain Minc's notion of a continuing 'durable disorder'Cremains to be seen. Whatever direction the future takes, however, it will be a path-dependent one where hard political choices will have to be made and the very complexities of globalization will increasingly shape both the problematic and the understanding of potential solutions. The state is no longer the overarching institutional structure it once seemed to be, and the 'nation' as it has been known in the West is also succumbing to Gemeinschaft fatigue in the face of the democratic deficit, the challenge of transnational pressures, and the political and ideological forces of religious revival and new tribalisms. Political strategies and projects, therefore, will increasingly become multilayered and globally orientedCwhether on the Right ('globalization' in the sense of pursuing economic efficiency in a liberalized world marketplace) or on the Left (a regeneration of genuinely internationalist socialism?). In this wider perspective, today's competition state is increasingly becoming a narrower form of Gesellschaft, a limited 'enterprise association' which is perceived as legitimate and valuable only so long as it delivers the goods, literally speaking. Although state apparatuses are becoming bureaucratically more powerful and more intrusive in terms of monitoring economic activity, they has become residual in terms of the pursuit of some more profound form of common good. Social bonds are being reformulated around and through other structures and processes, and new types of embeddedness are crystallizingCin international finance, in ethnic groups both subnational and, indeed, transnational, in the world of international communications and the media, in strategic alliances among firms, in the mindset of international investors, in transgovernmental policy networks and transnational pressure groups, and in the discourse and practices of state actors themselves. In this context, different national models of 29 state/economy relations or state/societal arrangements will at one level continue to shape developments in the global economy precisely because of the interaction of their differences, to qualify Zysman's formulation;lxix at the same time, however, that very interaction will generate new political pressures for convergence.lxx A new architecture of world politics is starting to take shape, although it is early days yet; there still exist multiple equilibrium points and the institutional selection process has hardly begun. The post-modern irony of the state is that rather than simply being undermined by inexorable forces of globalization, the competition state is becoming increasingly both the engine room and the steering mechanism of a political globalization process which will further drive and shape economic, social and cultural globalization too. 30 NOTES 31 32 33 34 i. Ghiţa Ionescu, The Break-up of the Soviet Empire in Eastern Europe, Harmondsworth, Penguin, 1966. ii. P.G. Cerny, The Politics of Grandeur: Ideological Aspects of de Gaulle's Foreign Policy (Cambridge: Cambridge University Press, 1980). iii. Kenneth Waltz, Theory of International Politics, Reading, MA, Addison-Wesley, 1979; cf. Robert O. Keohane, ed., Neorealism and its Critics, New York, Columbia University Press, 1986. iv. Ghiţa Ionescu, 'The Impact of the Information Revolution on Parliamentary Sovereignties', Government and Opposition, Vol. 28, No. 2, Spring 1993, p. 235. v. Alfred D. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism, Cambridge, MA, The Belknap Press of Harvard University Press, 1990. vi. This question, and the conviction that the world is entering upon a qualitatively new industrial- technological era, was at the heart of Ghia Ionescu's work throughout his academic career, from his understanding of change in Eastern Europe and the Soviet Union, through Centripetal Politics (London, Hart-Davis, MacGibbon, 1975, especially chapter 1) and his interest in Saint- Simon, to his article on the information revolution in Government and Opposition in 1993, op. cit. vii. Roland Robertson, Globalization: Social Theory and Global Culture, London and Thousand Oaks, CA, Sage, 1992. viii. Marshall McLuhan, Explorations in Communication, edited by E.S. Carpenter, Boston, Beacon Press, 1960. ix. Ian R. Douglas, 'Globalization, Governance and the Assembly of Forces: J'Accuse', paper presented to a Workshop on Globalization and Governance, Indianapolis, Indiana, 11-13 October 1996. x. On structures and political structuration, see P.G. Cerny, The Changing Architecture of Politics: Structure, Agency and the Future of the State, London and Thousand Oaks, Sage, 1990, chs. 1-4. xi. See Thomas Kuhn, The Structure of Scientific Revolutions, Chicago, Chicago University Press, 1962, for the notion of paradigms. xii. P.G. Cerny, 'Globalization and the Changing Logic of Collective Action', International Organization, Vol. 49, No. 4, Autumn 1995, pp. 319-342. xiii. Robertson, op. cit., p. 102. xiv. P.G. Cerny, 'Globalization and Other Stories: The Search for a New Paradigm for International Relations', International Journal, vol. LI, no. 4, Autumn 1996, pp. 617-637. xv. Hendrik Spruyt, 'Institutional Selection in International Relations: State Anarchy a Order', International Organization, Vol. 48, No. 4, Autumn 1994, pp. 527-547. 35 xvi. Margaret Levi, 'The Predatory Theory of Rule', Politics & Society, Vol. 10, No. 4, Autumn 1981, pp. 431-465. xvii. Ferdinand Tönnies, Community and Association, East Lansing, MI, Michigan State University Press, 1957 (originally published as Gemeinschaft und Gesellschaft, 1887). xviii. See Josiah Lee Auspitz, 'Individuality, Civility, and Theory: The Philosophical Imagination of Michael Oakeshott', Political Theory, Vol 4, no. 3, August 1976, pp. 261-352; also Michael Oakeshott, 'On Misunderstanding Human Conduct: A Reply to my Critics', in ibid., pp. 353-367. xix. Paul Hirst and Grahame Thompson, Globalization in Question: The International Political Economy and the Possibilities of Governance, Cambridge, Polity Press, 1995; Robert Boyer and Daniel Drache, eds., States Against Markets: The Limits of Globalization, London, Routledge, 1996; John Zysman, 'The Myth of a "Global" Economy: Enduring National Foundations and Emerging Regional Realities', New Political Economy, vol. 1, no. 1, Summer 1996, pp. 157-184; Louis W. Pauly and Simon Reich, 'Enduring Differences in the Era of Globalization: National Structures and Multinational Corporate Behavior', International Organization, vol. 51, no. 2, Spring 1997. xx. Samuel Brittan, 'Keynes and Globalisation', Financial Times, 6 June 1996, p. 16. xxi. Hugo Radice, 'The Question of Globalization: A Review of Hirst and Thompson', presented at the annual meeting of the Conference of Socialist Economists, Newcastle upon Tyne, 12-14 July 1996. xxii. Oliver Williamson, Markets and Hierarchies, New York, Free Press, 1975; Williamson, The Economic Institutions of Capitalism, New York, Free Press, 1985; Cerny, 'Globalization and the Changing Logic of Collective Action', op. cit.; Cerny, 'Communication', Political Studies, vol. XLV, no. 1, March 1997, pp. 1-2. xxiii. Mark Granovetter, 'Economic Action and Social Structure: The Problem of Embeddedness', American Journal of Sociology, vol. 91, no. 4, November 1985, pp. 50-82; Granovetter, 'Economic Institutions as Social Constructions: A Framework for Analysis', Acta Sociologica, no. 35, 1992, pp. 3-11. xxiv. Jean Comaroff and John Comaroff, Of Revelation and Revolution, vol. 1, Chicago, Chicago University Press, 1991. xxv. Alain Minc, Le nouveau Moyen Âge, Paris, Gallimard, 1993; Robert D. Kaplan, 'The Coming Anarchy', The Atlantic Monthly, February 1994, pp. 44-76; Bruce Cronin and Joseph Lepgold, 'A New Medievalism? Conflicting International Authorities and Competing Loyalties in the Twenty- First Century', paper presented to the annual meeting of the International Studies Association, Chicago, 23-27 February 1995; Stephen Kobrin, 'Back to the Future: Neomedievalism and the Post-Modern World Economy', paper presented to the annual meeting of the International Studies Association, San Diego, CA, 17-21 April 1996. xxvi. Peter J. Taylor, The Way the Modern World Works, London, Wiley, 1996; Eleanore Kofman and Gillian Youngs, eds., Globalization: Theory and Practice, London, Pinter, 1996. xxvii. Robert O. Keohane and Joseph S. Nye, Jr., Power and Interdependence, Boston, Little Brown, 1977. 36 xxviii. Waltz, op. cit. xxix. Robert O. Keohane, After Hegemmony: Cooperation and Discord in the World Political Economy, Princeton, Princeton University Press, 1984; Keohane, International Institutions and State Power: Essays in International Relations Theory, Boulder, CO, Westview, 1989. Note that the term 'liberal' (and, in Keohane's case, 'neoliberal') in the United States is often used to mean not classical free- market liberalism (as the term is generally used in Europe and elsewhere) but rather a capacity for limited economic interventionism of a Keynesian or social-democratic type. xxx. John Gerard Ruggie, James A. Caporaso, Steve Weber and Miles Kahler, Symposium: Multilateralism, special section in Interntional Organization, vol. 46, no. 3, Summer 1992, pp. 561- 708. xxxi. Robert O. Keohane and Helen Milner, eds., Internationalization and Domestic Politics, Cambridge, Cambridge University Press, 1996. xxxii. I have dealt at greater length elsewhere with the economic and social dimensions of globalization and will not do so here; Cerny, 'Globalization and the Changing Logic of Collective Action' and Cerny, 'Globalization and Other Stories', ops. cit.. xxxiii. Parts of the following sections are revised from Cerny, Changing Architecture, op. cit., and Cerny, 'The Limits of Deregulation: Transnational Interpenetration and Policy Change', European Journal of Political Research, vol. 19, nos. 2&3, March/April 1991, pp. 173-196. xxxiv. A 'quango', or quasi-autonomous non-governmental organization, is an authoritative body licensed by the state to carry out public regulatory functions but made up of appointed representatives of private sector interests. It is probably best considered to be a variant of state corporatism. xxxv. John Gerard Ruggie, 'International Regimes, Transactions, and Change: Embedded Liberalism in the Post-War Order', International Organization, vol. 36, no. 4, Autumn 1982, pp. 379-415; Ruggie here also uses the word 'liberalism' in its American meaning (note 35, above). xxxvi. James O'Connor, The Fiscal Crisis of the State, New York, St. Martin's Press, 1973. xxxvii. Fred L. Block, The Origins of International Economic Disorder: A Study of United States Monetary Policy from World War II to the Present, Berkeley and Los Angeles, University of California Press, 1977; Susan Strange, Casino Capitalism, Oxford, Blackwell, 1986. xxxviii. P.G. Cerny, ed., Finance and World Politics: Markets, Regimes and States in the Post-Hegemonic Era, Cheltenham, Glos., and Brookfield, VT, Elgar, 1994; Eric Helleiner, States and the Reemergence of Global Finance: From Bretton Woods to the 1990s, Ithaca, NY, Cornell University Press, 1994. xxxix. P.G. Cerny, 'The Infrastructure of the Infrastructure? Toward "Embedded Financial Orthodoxy" in the International Political Economy', in Ronen P. Palan and Barry Gills, eds., Transcending the State-Global Divide: A Neostructuralist Agenda in International Relations, Boulder, CO, Lynne Reinner, 1994, pp. 223-249. 37 xl. The distinction between comparative andvantage and competitive advantage is a central theme of John Zysman and Laura d'Andrea Tyson, eds., American Industry in International Competition, Ithaca, NY, Cornell University Press, 1983; cf. Michael Porter, The Comparative Advantage of Nations, London, Macmillan, 1990. xli. Saul Estrin and Peter Holmes, French Planning in Theory and Practice, London, Allen & Unwin, 1982. xlii. The contrast between the dynamic, self-expanding market, and the relatively static, hierarchical state, is the theme of much current work in International Political Economy; see Robert Gilpin, The Political Economy of International Relations, Princeton, Princeton University Press, 1987. xliii. Charles E. Lindblom, Politics and Markets: The World's Political-Economic Systems, New York, Basic Books, 1977. xliv. For the concept of the 'overdraft economy', see Michael Loriaux, France After Hegemony: International Change and Financial Reform, Ithaca, NY, Cornell University Press, 1991. xlv. David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, From Schoolhouse to Statehouse, City Hall to the Pentagon, Reading, MA, Addison-Wesley, 1992. xlvi. Jeffry A. Frieden, 'Invested Interests: The Politics of National Economic Policies in a World of Global Finance', International Organization, vol. 45, no. 4, Autumn 1991, pp. 425-451. xlvii. Cerny, 'The Limits of Deregulation', op. cit.; a similar argument is developed more extensively in Steven K. Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries, Ithaca, NY, Cornell University Press, 1996. xlviii. John Zysman, Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change, Ithaca, NY, Cornell University Press, 1983; Chalmers Johnson, M.I.T.I. and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975, Stanford, CA, Stanford University Press, 1982. xlix. P.G. Cerny, 'The "Little Big Bang" in Paris: Financial Deregulation in a dirigiste State', European Journal of Political Research, vol. 17, no 2, April 1989, pp. 169-192; Loriaux, op. cit.; Vogel, op. cit. l. Tomas Friedman, 'Cut Out for Globalization and Feeling Quite Good', International Herald Tribune, 10 February 1997, p. 8. li. Martin A. Schain, 'Corporatism and Industrial Relations in France', in P.G. Cerny and M.A. Schain, eds., French Politics and Public Policy, London and New York, Pinter and Methuen, 1980, pp191- 217. lii. Zysman, 'The Myth of the "Global" Economy', op. cit. liii. Jeffrey A. Hart, Rival Capitalists: International Competitiveness in the United States, Japan and Western Europe, Ithaca, NY, Cornell University Press, 1992. liv. Pierre Birnbaum, 'Sur la dé-différentiation de l'État', International Political Science Review, vol. 6, no. 1, January 1985, pp. 57-63; Cerny, Changing Architecture, op. cit., chapter 7. 38 lv. Zysman, Governments, Markets, and Growth, op. cit.; Vogel, op. cit. lvi. Michael J. Piore and Charles F. Sabel, The Second Industrial Divide: Possibilities for Progress, New York, Basic Books, 1984. lvii. Michel Crozier and Erhard Friedberg, L'acteur et le système: les contraintes de l'action collective, Paris, Editions du Seuil, 1977. lviii. Cerny, ed., Finance and World Politics, op. cit.; P.G. Cerny, 'The Dynamics of Financial Globalization: Technology, Market Structure, and Policy Response', Policy Sciences, vol. 27, no. 4, November 1994, pp. 319-342. lix. John B. Goodman and Louis W. Pauly, 'The Obsolescence of Capital Controls? Economic Management in an Age of Global Markets', World Politics, vol. 46, no. 4, October 1993, pp. 50-82; Ethan B. Kaplan, Governing the Global Economy: International Finance and the State, Cambridge, MA, Harvard University Press, 1994; Eric N. Helleiner, 'Post-Globalization: Is the Financial Liberalization Trend Likely to be Reversed?', in Boyer and Drache, eds., op. cit.; P.G. Cerny, 'International Finance and the Erosion of State Policy Capacity', in Philip Gummett, ed., Globalization and Public Policy, Cheltenham, Glos., and Brookfield, VT, Elgar, 1996, pp. 83-104. lx. David M. Andrews, 'Capital Mobility and State Autonomy: Toward a Structural Theory of International Monetary Relations', International Studies Quarterly, vol. 38, no. 2, June 1994, pp. 193-218. lxi. Patrick Dunleavy, 'The Globalization of Public Services Production: Can Government Be "Best in World"?', Public Policy and Administration, vol. 9, no. 1, Summer 1994, pp. 36-64. lxii. Howard Machin and Vincent Wright, eds., Economic Policy and Policy-Making Under the Mitterrand Presidency, 1981-84, London, Pinter, 1985. lxiii. Peter Haas, ed., Knowledge, Power, and International Policy Coordination, special issue of International Organization, vol. 46, no. 1, Winter 1992; cf. Diane Stone, Capturing the Political Imagination: Think-Tanks and the Policy Process, London, Frank Cass, 1996. lxiv. John Stopford and Susan Strange, Rival States, Rival Firms: Competition for World Market Shares, Cambridge, Cambridge University Press, 1991. lxv. Parts of the following passages are revised from Cerny, 'What Next for the State?', op.cit.. lxvi. Robert B. Reich, The Work of Nations: Preparing Ourselves for 21st-Century Capitalism, New York, Knopf, 1991. lxvii. Max Singer and Aaron Wildavsky, The Real World Order: Zones of Peace/Zones of Turmoil, Chatham, NJ, Chatham House Publishers, 1993. lxviii. Francis Fukuyama, The End of History and the Last Man, New York, Free Press, 1992. lxix. Zysman, 'The "Myth" of a Global Economy', op. cit., p. 164. 39 lxx. Recent developments in Japanese politics, especially the Hashimoto Government's renewed commitment to financial deregulation (or more properly, market-oriented reregulation), would seem to undermine Vogel's claim, op. cit., that such reregulation will continue to reinforce existing state practices. 40 653563ANN The Annals of the American AcademyTwenty-First-Century Globalization and Illegal Migration research-article2016 Also labeled undocumented, irregular, and unauthor- ized migration, illegal migration places immigrants in tenuous legal circumstances with limited rights and protections. We argue that illegal migration emerged as a structural feature of the second era of capitalist glo- balization, which emerged in the late twentieth century and was characterized by international market integra- tion. Unlike the first era of capitalist globalization (1800 to 1929), the second era sees countries limiting and controlling international migration and creating a Twenty-First- global economy in which all markets are globalized except for labor and human capital, giving rise to the Century relatively new phenomenon of illegal migration. Yet despite rampant inequalities in wealth and income between nations, only 3.1 percent of all people lived Globalization outside their country of birth in 2010. We expect this to change: threat evasion is replacing opportunity seeking and Illegal as a motivation for international migration because of climate change and rising levels of civil violence in the Migration world’s poorer nations. The potential for illegal migra- tion is thus greater now than in the past, and more nations will be forced to grapple with growing popula- tions in liminal legal statuses. Keywords: illegal migration; globalization; unauthor- ized migration; undocumented migration; climate change; violence By KATHARINE M. DONATO and DOUGLAS S. MASSEY M igration is a fundamental means of human adaption, commonly used both to avoid risks and access opportunities. Homo sapiens emerged in East Africa about 150,000 years ago and through migration settled the entire globe within a very short span of geological time, reaching East Asia and Australia about 50,000 years ago, Northern Europe about 40,000 years ago, the Americas about 12,000 years ago, and Katharine M. Donato is a professor of sociology at Vanderbilt University. Her recent work examines the effects of environmental stress on out-migration from villages in southwestern Bangladesh. In 2015, she published (with Donna Gabaccia) Gender and International Migration: From the Slavery Era to the Global Age (Russell Sage Foundation). Correspondence: [email protected] DOI: 10.1177/0002716216653563 ANNALS, AAPSS, 666, July 2016 7 Downloaded from ann.sagepub.com by guest on June 16, 2016 8 THE ANNALS OF THE AMERICAN ACADEMY the most distant Pacific islands about 2,000 years ago (Oppenheimer 2003). No other organism has moved through space and time so widely or quickly. Humans are a migratory species. It is hardly surprising, therefore, that migration is being widely used by people today to adapt to the unequal distribution of risks and opportunities that prevail in the contemporary world. Modern tim