Globalization
I.
LECTURE 10A:
GLOBALIZATION
& TRAGEDY OF
THE COMMONS
§
§
§
§
What is Globalization?
Globalization’s Discontents
Globalization and
Development
The Tragedy of the
Commons & Solutions
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§ “Closer integration of the countries and peoples of the world”
§ Fast-paced growth of trade and cross-border investment made possible by the
information, communications, and transportation revolutions
§ Narrow
§ Internationalization: greater interdependence; cross-border transactions
§ Ex. globalization of travel and trade
§ Liberalization: process of removing government barriers to open trade and capital
flows
§ Broad
§ Universalization: spread of knowledge and experiences to all corners of the earth
§ Ex. globalization of McWorld
§ Deterritorialization: loss of overriding influence of geography, borders, etc.
§ E.g., globalization of organizations, ecology, weaponry, norms, everyday thinking
ECONOMIC GLOBALIZATION
§ Defined by international institutions
§ The IMF
§ Charged with maintaining global economic stability
§ The World Bank
§ For reconstruction and development
§ Originally charged with rebuilding Europe
§ The WTO
§ Governs international trade relations
§ Produces massive global wealth, especially for people in the global
north, and global wealth that increases as long as cooperation continues
• Governments in developing countries
• Businesses forced into competition with
global firms
• Workers, labor unions
GLOBALIZATION’S
DISCONTENTS
• Agricultural producers in developing
countries
• Nationalists
• Human rights NGOs
• Environmental NGOs
• Globalization produces winners and
losers
§ Winners:
§ Many multi-national corporations
(MNCs)
§ Those who will gain from being able
to trade across jobs
WINNERS
AND
LOSERS
§ Those who benefit from lower prices
and lower costs
§ Losers:
§ Those who will lose jobs or
livelihoods when an industry
becomes globalized
• In the short term, globalization
heightens inequality and
environmental damage (Frankel)
• How to help developing countries
manage the process?
§ The market
§ Market optimism/classical liberal
models
§ The state
§ Market pessimism/welfare state
models
• Economic development raises all boats
• Fast growth = fast poverty reduction
• Overall economic contraction goes with
increased poverty
• Washington Consensus
• Fiscal austerity, privatization, and market
MARKET
OPTIMISM
liberalization
• Structural adjustment loans from the World
Bank
§ Conditioned on approval from the IMF
§ “Conditionality”
• Same policy prescriptions regardless of
context
§ Policies developed for Latin America, then
exported around the world
• Collapse of USSR makes the model
dominant
• The market causes dislocation
• Economic liberalization causes economic
shock
• The state’s job is to correct for the market’s
MARKET
PESSIMISM
dislocation
• Only some sectors of the population
benefit from economic growth
• Growth does not reach systematically
disadvantaged populations in the absence
of improvement in public services
• Focus on helping states build
infrastructure and capacity
• Globalization as an impediment. . .
§ Openness does not necessarily foster
GLOBALIZATION
AND
DEVELOPMENT
development
§ Successful development has not always
been in open economies
• Globalization as an aid. . .
§ Increase in global wealth
§ Promise of future trade negotiations
10
§ Against the legacy of Adam
Smith
§ Individually rational decisions
can produce collectively bad
outcomes
THE TRAGEDY OF THE
COMMONS
§ Logic of the argument:
§ Individual utility of adding a sheep > individual cost for overgrazing
§ Applies to a whole class of problems
§ Agriculture
§ Pollution
§ Overfishing
§ National parks
§ Natural resources
§ How do we remove ourselves from the
tragedy of the commons?
§ Mutual coercion, mutually agreed
upon
§ Centralized government
§ Private property
§ Elinor Ostrom
§ Complex, layered, redundant
institutions
§ International Organizations
§ Institutionalize cooperation at
the global level
§ Allow states to make credible
commitments towards cooperation
§ Ostrom:
§ Successful commons governance easier to
achieve when:
§ Resources and use of resources can be
monitored, verified, and understood at
relatively low cost
§ Rates of change in resources, resource-user
populations, technology, and economic and
social conditions are moderate
§ Communities maintain frequent face-to-face
communication and dense social networks—
social capital
§ Outsiders can be excluded at relatively low
cost from using the resource
§ Users support effective monitoring and rule
enforcement
§ Hard to achieve
§ Solutions will have to be complex
redundant, and nested in many layers
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