Francis Fukuyama, a prominent American political scientist, famously points out that the world has reached “the end of history” after the Cold War ended because the battle of ideas has already been won: State-led development projects, such as Keynesian economics and communism, turned out to be a failure, while market-based programs of capitalism triumphed. As it turned out, almost all barriers to markets have been drastically lowered, and countries have become more interconnected than ever before. Moreover, they have also become more interdependent because of the increasing structural linkage of the world markets, in terms of economic, financial, trade, communications; people, companies, and governments of different nationalities can connect to one another more easily as well. This process is known as “globalization.”
Due to an increasing number of actors in the world political economy and the abandonment of faith in the state after the Cold War, one may easily think that states are becoming weaker and weaker, less and less relevant. However, this perception is seriously mistaken. Although globalization has altered the role of the state, it does not mean that the state is now irrelevant.
On the contrary, I argue that globalization has changed the role of the state in a way that would further facilitate capital accumulation on a world scale, not just the domestic one. In this sense, the ideal role of the state in the age of globalization is to maintain the balance, or a clear separation between politics and economics, so that democracy no longer functions behind factories’ closed doors.
This obligation is paramount, because capital cannot operate at its full capacity and internationally by its own; it requires a strong, authoritarian state to implement rules and regulations. Otherwise, capital accumulation will always be interrupted democratic concerns, to name a few, minimum wage, progressive taxes, labor strike against unfair treatments towards employees, and so on.
To elaborate more on this argument, I divide this essay into five sections. First, I will discuss the concept of “globalization” as the post-Cold War tactic of the United States to expand its empire. For the second and the third parts, I will explain how “globalization” has altered the role of the state in favor of domestic and international capital accumulation, respectively. In the forth section, I will discuss the impacts the effects of the altered role of the state. And finally, I will conclude with key challenges to the conduct of economic diplomacy.
Maintaining the American Empire
After the collapse of the Soviet Union, the US stood alone as the uncontested world power. Due to this new political landscape, its tactics to rule the world had to also change. Peter Gowan (1946-2009), a professor of international relations at London Metropolitan University, points out that the Post-Cold War tactics of the US is neoliberalism/globalization, so according to this explanation, it is also important to include the concept of “neoliberalism” in this discussion to really understand the new role of the state. In this sense, they are two sides of the same coin: while globalization aims to liberalize trade and finance at the international level, neoliberalism aims to restructure the power relations at the national level in a way that favors the financial sector over the real sector. Moreover, they also reinforce one another: the restructured power relations architected by neoliberalism will benefit social groups that already are in support of globalization, and at the same time, globalization will also allow the financial sector and other corporate identities to invest anywhere they wish. In short, the role of the state has been redesigned especially to satisfy these purposes.
The Role Of The State Within The Boundaries
To prepare capital to operate on a world scale, a government would first have to implement policies according to the Holy Trinity of neoliberalism: Privatization, which transfers the ownership of public facilities to the private sector; Deregulation, which lowers all barriers to competition so that businesses are able to unleash their full potential; and Dismantling of welfare state, which leads to cutbacks in social spendings. In consequence, it is clear that the working people would have been abandoned; they have to bear all the burden by themselves. These neoliberal policies are unquestionably politically unpopular, and no sane governments, which have to look forward to their upcoming elections, would ever want to even propose them. Hence, to successfully implement them, the state would require a strong, centralized, authoritarian power.
The social critic Naomi Klein elaborates that this process is done through the Shock Doctrine, which explains the use of crisis to justify politically unpopular neoliberal policies in a very opportunistic way: First, the people are shocked by an unexpected occurrence of a crisis; Second, the the people are shocked by a surprising implementation of neoliberal policies; And third, the people are shocked (electrified) when they try to oppose those policies. For example, in the 1970s Chile, General Augusto Pinochet took advantage of the coup against the democratically elected President Salvador Allende, made himself President, and suppress all the oppositions, so he could neoliberalize the country, thereby leading to a military dictatorship. In Thailand, similarly, the opportunity arrived with the Asian financial crisis, so the IMF stepped in and provided fund under strict conditions, whose goal is to readjust the structure of the economy to favor investment, known as the Structural Adjustment programs. In the end, this led to the illiberal democratic government of Thaksin Shinnawatra.
In short, in the age of globalization, though its role in providing welfare to citizens disappeared, the state has become even more powerful. In this sense, Mark Fisher (1968-2017), a renowned British writer of the Left, is absolutely correct to say,
“There is no withering away of the State, only a stripping back of the State to its core military and police functions.”
(To be continued in the next issue)
I’m looking forward to the second part of the story, it is a very interesting read.
What I think is important or what you should come back to in the end is the effect on the people living in the states.
Why was America so interest in expanding their empire? Do you think it’s because they wanted to do their people any good? What I’m afraid of is that the focus will remain on the same power groups as before, just under a different name. Ask yourself what would happen, if governments loose the taxes of international corporations.
I would love to get your opinion on that!
But not to get this wrong I really enjoyed the article.