A MODIFIED ‘FIRST WAVE’: GLOBALIZATION AS TRANSFORMATION

3 A MODIFIED ‘FIRST WAVE’: GLOBALIZATION AS TRANSFORMATION

4 While severe doubts have been raised about the hyperglobalization

5 school of thought, we can also identify a modified first wave of

6 scholarship. This version presents globalization as a process that is

7 fundamentally changing the nature of international politics – but

8 recognises that states are able to adapt and survive in this competitive

9 new global order. The changing nature of the state under conditions

30 of globalization is encapsulated in Philip Cerny’s (1990) concept of

1 the ‘competition state’. While the immediate post-Second World War

2 era saw the establishment (at least in the richer, industrialized nations

3 of the world) of welfare states committed to full employment,

4 redistributive taxation and welfare services, today (competition) states

5 are motivated more by the need to attract foreign investment within

6 the context of ‘the competitive rat race of the open world economy’

7 (Cerny 1990: 229). Thus they tend to pursue neo-liberal policies

such as spending cut-backs, labour market deregulation (for example such as spending cut-backs, labour market deregulation (for example

This modified first wave of scholarship has been labelled a ‘transformationalist’ perspective (Higgott and Reich 1998) – the emphasis being on the ‘transformation’ rather than the ‘end’ of the state. The emergence of this literature in the late 1980s and the early 1990s offered a direct challenge to traditional (realist) IR theory. For example, scholars like Susan Strange (1994b) argued that the discipline of IR was very much out of synch with the kinds of issues that IPE scholars were concerned with. In an article entitled ‘Wake Up, Krasner, the World has Changed!’, Strange (1994b) berated a fellow academic for failing to take seriously the way in which globalization was changing the face of the discipline. For Strange, the realist underpinnings of IR meant that scholars like Stephen Krasner continued to write about IR as if the world was exactly the same as it had been during the Cold War – dominated by the politics of powerful states. In Strange’s view such a position was untenable in a world characterized by systems of international trade, communication, money markets and production.

The transformationalist scholarship should be taken seriously because it represents a far more nuanced understanding of the relationship between globalization and the state than that provided by the hyperglobalizers. Importantly, while the transformationalist scholarship tends to view state power as being fundamentally constrained and refashioned by globalization, it also recognises that globalization is not a straightforward process of economic integration. Unlike the extreme liberal hyperglobalization position in which economic globalization is viewed as the inevitable outcome of market integration, transformationalists point to the role that states themselves played in the creation of the processes associated with globalization. In this sense states themselves enabled globalization to happen through their commitment to economic neo-liberal policies of privatization and deregulation that enabled money, goods and services to move quickly and easily across national boundaries. For example, the growth of global financial markets noted above was possible only because the leading economic powers agreed to deregulate their currencies in the 1970s, to move from a system of fixed to floating exchange rates (so whereas in the past currency