The Decline of Political Efficacy of States

In the world of rapid globalization, the average citizen seems to have a declining trust in their government. Along with this is the increasing awareness of citizens that they cannot grasp much of their government’s affairs, let alone influence them. This decline in efficacy is largely due to the growing influence of non-state actors in state affairs. These non-state actors, such as the World Bank, the World Trade Organization, and the International Monetary Fund, can influence a nation’s policy in many complicated and intricate ways, making it more confusing than ever for a citizen to put faith in their government. Along with the rise of these organizations came the decline in the ability to make decisions and create policy for themselves for some countries, primarily developing nations.

Non-state actors have increasingly taken power away from developing nations that are in desperate need of loans and placed them largely under the thumb of developed nations that can afford to fund these loans. The International Monetary Fund has programs that grant the governments of countries in need access to IMF loans, but receiving nations must comply with specific policy conditions. These conditions can affect the lives of individuals living in these nations very deeply, affecting everything from roads, schools, debt repayment, interest rates, and the value of national currency. International politics play a huge role in these loans because powerful members of the IMF can use their influence to pursue political goals. In these situations, the organization often appears to exercise even more authority than their own government. Developing nations risk losing their funding if they do not comply with the terms of their IMF loan.

The challenge for the World Trade Organization was to establish rules that enabled a compromise between the quest for open and nondiscriminatory markets and the domestic welfare and development of objectives of states. With the WTO, the global trade regime now has a firm legal foundation, a strong organizational basis, and an effective dispute settlement mechanism to ensure the enforcement of multilateral trade rules and disciplines. However, the WTO has been subjected to immense pressures and strains since the late 1990s, leading to many questioning the relevance of the WTO. Lack of leadership by major economic powers, the clash of interests and values that comes from having a more diverse membership, the increasing propensity for governments to liberalize, the growing backlash against liberalization in some Western countries, the contested nature of the WTO’s mandate, the WTO’s cumbersome approach to decision making, and more generally- distrust with the WTO are all current issues that the organization is grappling. However, if the World Trade Organization did not exist, the challenges of managing globalization would demand that it be reinvented.

Indonesia can be seen as a prime example of globalization’s failures. The Bre-ex fiasco- a story of how the self-conscious creating of spectacle as a necessary aid for gathering investment funds can go terribly wrong- was just one example of the perils of the downsized, over competitive economy, and the sad entrepreneurship of selling worthless stock certificates. The spectacle created by the company Bre-ex led to massive investment in the nonexistent gold schemes of this company that is shrouded in confusion and lies. In Indonesia, no mining company can extract minerals without a CoWs, or a Contract of Work. Ideally, CoWs guarantee that resource extraction activities work in the interest of the Indonesian nation,, by specifying conditions that create mutual benefits shared between the nation and its foreign investors. However, it has created “franchise cronyism,” which means that in exchange for supplying the money to support the national leaders who can make the state secure, investors are offered the certainties of the contract, which ensures title to mineral deposits, fixes taxation rates, and permits export of profit. The CoW’s offered contracts to irresponsible companies, wrote away local rights, and utilized military presence to enforce entrepreneurial schemes, creating a model of government in which administrators double as entrepreneurs.

The Global Justice Movement was formed as a response to increasing awareness that there is no accountability, let alone no democratic influence, over institutions such as the IMF, the WTO and the World Bank. The GJM was an anti-globalization movement that had mass protests over WTO negotiations. The main idea was that the economic model of neoliberal capitalist globalization was extremely flawed and led to extremely negative consequences for people and the environment, and that representative models of democracy were failing to represent the interest and desires of the citizens and did not allow citizens sufficient input into the decisions that affected their own lives and that of those around the world. The formation of the Global Justice Movement is an illustration of citizens all over the world recognizing and fighting the decline of political efficacy of the state due to increasing globalization and the increasing influence of non-state actors.

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