Why we need to talk about the state in globalization

In current international studies, the idea of globalization is omni-present and probably the key background concept to most research efforts. The other side of this globalization-coin — namely the state — only recently got back on the agenda of scholars, but still lacks the broad recognition as a core category in understanding globalization. I first propose to engage more in discussions about state power in the global economy in order to broaden our understanding of current global transformations. Second, I suggest a categorization of the main ambiguities in thinking about state as a concept today. I end with the call to being open to these ambiguities in our efforts to understand state and corporate power in the 21st century.

Globalization everywhere

One of the buzzwords of International Political Economy (IPE) research in the last two decades is surely “globalization”. Intuitively, it is the concept that drives and shapes global economic discussions like no other (check out this telling figure from Rasmus Christensen on keyword occurrence in articles of one of the leading journals in the field, Review of International Political Economy). In a nutshell, advocates of a strong understanding of globalization stress the qualitative change that happened in the global economy during the 1980s and 90s: the rise of a truly transnationally integrated (or global) economy as opposed to the “old” world of the interdependent world economy (Robinson 2004, pp. 9).

Indicators for this qualitative shift are e.g. the exploding numbers of cross-border mergers and acquisitions (M&A’s, see Figure 1), the unprecedented growth of FDI-flows and consequently the new power of multi-or transnational corporations towards the end of the 20th century.

Figure 1:. Global mergers & acquisitions 1985–2017 (bn USD). Source: Babic et al. 2017, p. 25. Original figure by @fichtner_jan (University of Amsterdam)

One can also disagree with a strong, i.e. qualitative, reading of globalization and understand it more as a quantitative progression fueled by revolutions in technology and communication. But there is little doubt that this development has serious implications for international relations and politics. This means that a range of issues, starting from the nature of the international environment up to the quality of economic statistics in the age of globalization (see this working paper from our Amsterdam colleagues of the Fickle Formulas group) are up for debate. The (alleged) decline of US power (Fichtner 2017) and the rise of new economic forces (like multinationals or the BRICS) are hot topics, as are global wealth chains and offshore finance (Seabrooke and Wigan 2017; Garcia-Bernardo et al. 2017). Looking closer at these phenomena becoming more central in the course of globalization, we can see that they are almost entirely related to the mere antithesis of globalization: the (nation) state.

But then there is the state

Literally every phenomenon related to globalization involves a more or less prominent reference to the concept of the state. Terms like jurisdictions, cross-border flows, country-by-country reporting, territoriality and space-time compression refer implicitly to the question of how to think about the state now that it seems to fade away, fragmented and dissolved by the adamant forces of globalization. Thinking dialectically, it is thus not a surprise that state (power) seems to be back on the table in international studies research, as a series of publications in the recent years suggests (e.g. van Apeldoorn et al. 2012; Starrs 2013; Stephen 2014; Bremmer 2010; Starrs 2017; Finnemore and Goldstein 2013; Babic et al. 2017).

What seems to be a natural reaction to the emphasis of the anti-state (i.e. globalization), is in fact much more complicated: scholars are not so much “bringing back” the state, but rather discussing it in an outright new historical setting. And this necessarily leads to debates, disputes and eventually also misunderstandings of what we mean when we refer to the “state” in the economy of the 21st century. The rise of globalization, transnational capitalism and all the changes this brought about necessarily imply that “state” is today something different than it was 50 or 100 years ago. However, what it exactly entails is a question of perspectives and opinions and leads to more confusion when analyzing the state as a core category.

Contrary to the easy (but understandable) solution of avoiding discussion by defining away ambiguities in one’s own research, we should engage in broader debates about the state as a multidimensional phenomenon. This means that we need to speak more about the state as an analytical concept that is closer to themes of globalization than any other.

How can we think about the state?

The consequential follow-up to this demand would be a research agenda or some kind of proposed solution. Instead, I want to point out in brief central ambiguities within the concept we face today, which can help to locate and better integrate particular discussions in the field.

IR and IPE. Or: states and markets

The first point I want to address is maybe the least “problematic” one, because the concerned ambiguity results from different theoretical perspectives of International Relations (IR) and International Political Economy (IPE) research. Although it might appear that there are some clear distinction lines between them (such as the role and weight of economic issues in international relations), both disciplines get intertwined when it comes to questions of statehood and state power in international politics. Classic IR scholars might see the rise of China and other “statist” forces as a clear sign of a comeback of the state, but they do so mostly based on impressive economic numbers that challenge Western dominance in the global economy. On the other hand do IPE scholars engage in interesting debates about whether the rise of statist economies accordingly implies a challenge to neoliberal globalization. With a grain of salt: there is a state-centric and a more market-centric perspective on these developments.

The core ambiguity here is that IR — as the study of the “political” — and IPE — as the study of the “economic” — each necessarily need to make claims and draw conclusions from their own analyses that interfere with core claims of the “other” side. Being clear about these processes might help us to understand that different verdicts about the “same” thing might be more nuanced than it looks on paper. Claims like “the state is back” could then be also acceptable for a political economist that would not necessarily draw these conclusions from the perspective of the global economy. Still, even with a clear idea of what we mean when we articulate something, the ambiguities will not disappear, but maybe become more manageable.

State theory and globalization studies

Another important ambiguity concerns the ultimate drivers of globalization as a historical structure: is it state or corporate power? In everyday research, we often find both narratives and angles to be present, varying with factors such as the specific area of inquiry, the existing literature and problem focus as well as the available data (e.g.: is the data aggregated at the country level or not?). In fact, it makes a lot of sense to take either perspective and try to make sense of globalization by explaining variation in outcomes by examining the agency of states and/or corporations. What is usually problematic is the fact that ascribing core agency to one social force makes it hard to plausibly integrate other aspects that would contradict the initial theoretical decisions.

While this might seem trivial given that researches need to make similar decisions in literally every theoretical reflection, it is not: in the study of globalization we tend to be limited in choice when it comes to identifying the ultimate drivers of the process. Often, these choices are boiled down to state vs. non-state actors, which reflects the importance of the nation state in the genealogy of our thinking about international politics. If we buy the notion that we are living in times of crucial international transformations from a state-centric to a globalized world, it is comprehensible that these ambiguities will not disappear by taking a side. As a process, these transformations carry the notions of the past (state power) and the future (corporate (?) power), while we are thinking about it in the middle of this process. Naturally, this creates ambiguities.

Nation states and states as actors

The last point I want to address is one that goes a bit into the specifics of our empirical frameworks for research. When we talk about states as actors, we usually treat a complex social phenomenon as an unity or agent. This can quickly be associated with a tendency towards methodological individualism, rational choice assumptions or treating the state like a subject in the great game of globalization. The other perspective would be to understand states as nation states with a specific historical record, a particular set of cultural aspects and domestic politics; of a political culture, a shared territory and ultimately a sense of (social) solidarity that rarely transcends national borders. In short, there are people living in this thing called state.

In a state-as-actor-perspective this might be reduced to an agent that acts on the basis of self-interest, its role in global structures or some other factor that is not so much determined by its characteristic as a nation-state. The tendency in this ambiguity is to drop the other half of the equation and either understand states as nation-states or as unitary actors. Again, there are a lot of good reasons for both sides and most research designs or questions demand at some point a decision between the two. But as elaborated above, the ambiguity does not disappear for a reason: we come from a world that understood international politics as inhabited by a conglomerate of sovereign nation states that in a way or another relate to each other. Even in this rather straightforward setting, a lot of debates about the nature of the international environment and the role of domestic politics were daily routine in international studies. Why would this become less complicated or clearer in a world that is now inhabited by new powerful players that cross borders, blur classical categories and in which the state itself transforms and takes new roles such as a corporate owner in the global economy? At the same time, we see the supposed repercussions of these developments in the return to national(ist) sentiments and economic nationalism à la Trump.

Conclusion: From ambiguities to acceptance

An interesting and often underestimated aspect of globalization is the fact that we cannot really come to grips with who its actual agents are. Whereas previous transformations of the international environment were led by more or less recognizable actors (mostly nation states), today´s transformations seem to be anarchic, multidimensional and awfully complicated: multinational corporations make investment decisions, drive technological revolutions and conquer the globe with their products. But states (un)do trade agreements, open or close borders and exert authority beyond their territories. And what about other non-state actors? We face these intricacies perhaps just due to the fact that we are in the midst of a transformative process and cannot look at it in retrospective in order to determine who is driving it and to what extent.

The more important it seems to me that we should re-consider the role of the state as an analytical category in this undertaking, since literally all our concepts to understand the global economy relate implicitly to its existence. At the same time, we can do a better job at confronting the delineated (and many more) ambiguities: not by defining them away, but by being aware of their existence and by allowing them to be present in the endeavor to make sense of globalization.

This blog post was written by Milan Babic, PhD candidate in the CORPNET group at the University of Amsterdam

References:

Babic, M., Fichtner, J. and Heemskerk, E. 2017: States versus Corporations: Rethinking the Power of Business in International Politics. The International Spectator 52, no. 4: 20–43.

Bremmer, I. 2010: The End of the Free Market. Who Wins the War between States and Corporations? London: Penguin Books.

Fichtner, J. 2017: Perpetual decline or persistent dominance? Uncovering Anglo-America’s true structural power in global finance. Review of International Studies 43, no. 1: 3–28

Finnemore, M. and Goldstein, J. (eds.) 2013: Back to Basics: State Power in a Contemporary World. Oxford: University Press.

Garcia-Bernardo, J., Fichtner, J., Heemskerk, E.M. and Takes, F.W. 2017: Uncovering Offshore Financial Centers: Conduits and Sinks in the Global Corporate Ownership Network. Scientific Reports 7, article 6246.

Robinson, W.I. 2004: A Theory of Transnational Capitalism. Production, Class, and State in a Transnational World. Baltimore: John Hopkins University Press.

Seabrooke, L., and Wigan, D. 2017: The governance of global wealth chains. Review of International Political Economy 24, no. 1: 1–29.

Starrs, S.K. 2013: American Economic Power Hasn’t Declined — It Globalized! Summoning the Data and Taking Globalization Seriously. International Studies Quarterly 57, no. 4: 817–30.

Starrs, S.K. 2017: The Global Capitalism School Tested in Asia:
Transnational Capitalist Class vs Taking the State Seriously. Journal of Contemporary Asia 47, no. 4: 641–658.

Stephen, M. D. 2014: Rising Powers, Global Capitalism and Liberal Global Governance: A Historical Materialist Account of the BRICs Challenge. European Journal of International Relations, 20, no. 4: 912–938.

Van Apeldoorn, B., N. de Graaff and H. Overbeek 2012: The Reconfiguration of the Global State-Capital Nexus. Globalizations 9, no. 4: 471–86.