The globalisation debate revisited: an assessment of the > of fiscal policies of the nation-state.

• Author: Camargo Brito, Ricardo

What does 'globalisation' really mean? If we were to evaluate the concept of globalisation in terms of the frequency of its use we would conclude that it refers to a concrete and unquestionable reality. However, this conclusion is far from adequate. Indeed, globalisation is a very controversial concept that has originated diverse political and academic debates. Held et al (1999,)for example, in establishing a now classic trilateral typology, have distinguished between authors who assume an optimistic, sceptical or critical vision in order to understand and explain the potential impact of globalisation on the Nation-State (1), as well as other dimensions. Starting from this typology as a Framework for analysis, this paper re-examines the specific debate on the impact of globalisation upon one of the more traditionally exclusive spheres of the Nation-State: fiscal policies. It concludes that if regulated according to 'economic invariable laws', far from being an inevitably constraining phenomenon, globalisation is better understood if it is observed as an economic political process (historically determined), as insistently emphasized by classic political economy.

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1. The globalisation debate

   In general terms, commentators agree that globalisation refers to an increasing process of world wide interconnectedness of many aspects of contemporary social life. This process would include economic, cultural, political and spiritual dimensions [Held et al (1999): 2]. However, beyond this general acknowledgement, there is substantial disagreement concerning the conceptua-lisation, causal dynamics, socio-economic consequences, implications for state power and governance, and historical trajectory of globalisation.

   One of the first comprehensive characterisations of such a debate was offered by Held et al, (1999) who propose a typology that distinguish among three main theoretical streams: 'hyperglobalisers', 'sceptics' and 'transformationalists' (2).

   'Hyperglobalisers' include authors who characterize 'globalisation' as quite a novel phenomenon that would define a new era of human history in which the logic and discipline of the global market would not only be predominant but would also replace the historical role of the nation-state. Furthermore, in this sense, globalisation --as asserted by a popular commentator- would mean that > [Ohmae (1995): 5]. According to most hyperglobalisers, the main cause of globalisation is the emergence of the global economy through the establishment of a sort of transnational network of production, trade and finance [Held et al (1999): 3]. Furthermore, for those scholars, economic globalisation has originated new forms of social organisation that tend to replace the societal, economic and political role of the nation-state. The result is a view that assumes that the role of state is reduced to little more than a > or a > [Held et al (1999): 3]. However, although most of 'hyperglobalisers' share the premise that the market has imposed its rule over the state (3), they can be classified into neo-liberals--those who assume the emergence of a single global market as an advanced stage of human progress [Ohmae (1995)], and neo-Marxists--those who highlight economic globalisation as an imposition of an oppressive global capitalism, which in many respects might have given rise to a more uneven and savage international order [Greider, (1997)].

   It is worthwhile noting, however, that both approaches agree that globalisation is producing a new division of labour, explained by an increasing process of transnationalisation of production, that may have replaced the traditional North-South division. However, while the neo-liberal perspective assumes that global economic competition does not necessarily produce zero-sum outcomes (because countries are able to specialise in accordance with their comparative advantages, and scale economies, generating enough wealth that would allow winners to compensate losers and still remain better off), neo-Marxists stress that globalisation has not only failed to resolve global inequalities, but has also created and reinforced structural patterns of inequality between and within countries.

   'Sceptics', in turn, comprise scholars who definitely refute the idea that globalisation has given rise to a process of integrated worldwide economy in which states would be increasingly redundant. Instead, sceptical commentators point out that globalisation is, at best, a process of internationalisation, which according to them means no more than a process of interactions which take place predominantly between nation-states [Hirst and Thompson (1999): Ch. 4]. Indeed, for sceptics, globalisation is fundamentally a myth in two main senses. First of all, current levels of global economic integration would not really be historically unprecedented. On the contrary, they would be less intense than world flows of trade, investment and labour in the nineteenth century. Second, contemporary globalisation, far from creating a completely integrated global market, would be focused solely on the 'triad' formed by the three main economic blocs of the European Union, NAFTA and APEC [Ruigrok and Tulder (1995): 148-51; Boyer and Drache (1996); Hirts and Thompson (1999): Ch. 4]. This process of economic regionalism, which is purportedly contradictory to the globalisation process, is really the most predominant feature of the current international economy [Weiss (1998)].

   Moreover, hyperglobalisers's insistence in defining globalisation as a process that brings about a new, less state-centric order [Held et al (1999): 5] is strongly rejected by the sceptic's thesis, that not only denies that the nation-state is in retreat, but also considers that states are the real promoters of internationalisation. It is alleged that this is particularly true in the case of the United States, a superpower that after the Second World War began supporting a multilateral economic order, abandoning its formerly traditional unilateralism This is considered to be the real cause of the beginning of an increasing process of liberalisation of national economies worldwide, and not the other way around [Gilpin (1987)]. Naturally, sceptics admit that internationalisation might constrain the range of action of governments, but for them, such constraints do not immobilize governments at all. In fact, in many cases internationalisation of capital might > [Weiss (1998): 184].

   For sceptics, a far more important fact are the consequences that a process of economic internationalisation would produce in an international order, such as a huge increase in the economic marginalisation of many developing countries as a direct result of extreme concentration of trade and investment flows within developed countries. Furthermore, some sceptical commentators also refute the thesis of the emergence of a new international division of labour, linked to the North's de-industrialisation and the extension of new webs of production in the South. Indeed, these authors emphasize that the belief that the world economy is dominated by global corporations without regard for any traditional jurisdiction is another >. In fact, the patterns of foreign investment flows show clearly that they are mostly concentrated in developed countries and that most multinational corporations are, in fact, strongly linked to their home state or regions. Therefore, far from considering that a new global economic order has emerged as a consequence of internationalization, sceptics assert that in structural terms, the deeply rooted patterns of inequality and hierarchy of the world economy have only experienced marginal modifications over the last century [Held et al (1999): 6]. Despite hyperglobalisers belief, sceptics argue that increasing patterns of inequality in the contemporary world economy are failing to generate a global civilization. On the contrary, they have contributed to the rise of both fundamentalism and extreme nationalism, which, in tuna, have led to a world fragmented in cultural and ethnic enclaves.

   Finally, 'transformationalists' area group of scholars who agree with hyperglobalisers in assuming that globalisation is a historically unprecedented process experienced by societies and governments around the world, characterised by a weakening of the distinction between international and domestic affairs [Rosenau (1990); Cammilleri and Falk (1992); Ruggie (1993); Linklater and MacMillan (1995); Sassen (1996)].

   Furthermore, they view globalisation as a central driving force that is modifying the social, political and economic aspects of modern societies and the world order [Giddens (1990); Scholte (1993) (2005); Castells (1996)]. Indeed, Giddens (1996) for instance, characterises the changes generated by globalisation as a 'massive shake-out' of societies, economies, institutions of governance and the whole world order. However, while hyperglobalists assume that the final product of globalisation will be the emergence of a single global market and the disappearance of the nation-state, 'transformationalists' argue that the direction of globalisation is both uncertain and unpredictable, preventing a reliable forecasting [Held et al (1999): 7]. Indeed, globalisation is characterised as a contingent and open-ended historical process that has countless variables, most of which would have contradictory effects.

   It is also worthwhile noting that 'transformationalists' do not consider that the emergence of a single global system is equivalent to a balanced and equal world society. By contrast, they associate globalisation with the emergence of new patterns of global stratification, which, in turn, determine different levels of social, community and national integration of the global order. The rise of a new form of global power relations, which is a central point of the transformationalist thesis, might have replaced traditional characterisations...