CENTRAL CURRENTS IN GLOBALIZATION Globalization and Economy VOLUME 3 Globalizing Economic Regims and Institutions EDITED BY Paul James and Ronen Palan Introduction and editorial arrangement © Paul James and Ronen Palen 2006 First published 2006 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, this publication may be reproduced, stored or transmitted in any form, or by any means, only with the prior permission in writing of the publishers, or in the case of reprographic reproduction, in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers. Every effort has been made to trace and acknowledge all the copyright owners of the material reprinted herein. However, if any copyright owners have not been located and contacted at the time of publication, the publishers will be pleased to make the necessary arrangements at the first opportunity. SAGE Publications Ltd 1 Oliver’s Yard 55 City Road London EC1Y 1SP SAGE Publications Inc. 2455 Teller Road Thousand Oaks, California 91320 SAGE Publications India Pvt Ltd B-42, Panchsheel Enclave Post Box 4109 New Delhi 110 017 British Library Cataloguing in Publication data A catalogue record for this book is available from the British Library ISBN: 10 1-4129-1952-5 ISBN: 13 978-1-4129-1952-4 (set of four volumes) Library of Congress Control Number: 2006901469 Typeset by Star Compugraphics Private Limited, Delhi Printed on paper from sustainable resources Printed and bound in Great Britain by TJ International Ltd, Padstow, Cornwall Contents VOLUME 3 GLOBALIZING ECONOMIC REGIMES AND INSTITUTIONS SECTION 1 Historical Developments: The Rise of Global Agreements and Corporate Bodies 38. Reconstituting the Global Public Domain: Issues, Actors and Practices John Gerard Ruggie 39. New Constitutionalism, Democratisation and Global Political Economy Stephen Gill 40. The Global Diffusion of Regulatory Capitalism Daniel Levi-Faur 00 00 00 SECTION 2 Corporations, Markets and Globalization 41. Alliances and Networks R. Gulati 42. Flexible Specialization versus Post-Fordism: Theory, Evidence, and Policy Implications P. Hirst and J. Zeitlin 43. Corporate Governance and Globalization Mary O’Sullivan 00 00 00 SECTION 3 State, Law and Global Economic Governance 44. Governing Globalization: The State, Law and Structural Change in Corporate Governance John W. Cioffi 45. Towards a Schumpeterian Workfare State? Preliminary Remarks on Post-Fordist Political Economy Bob Jessop 46. Tax Havens and the Commercialization of State Sovereignty Ronen Palan 47. Breaking Frames. Economic Globalization and the Emergence of Lex Mercatoria Gunther Teubner 48. Globalization, Tax Competition and the Fiscal Crisis of the Welfare State R.S. Avi-Yonah 00 00 00 00 00 vi Contents SECTION 4 Debating Global Economic Governance 49. Economic Globalization and Institutions of Global Governance Keith Griffin 50. Why Economic Globalization is not Enough Graham Harrison 51. Globalization and Global Economic Governance Martin Wolf 00 00 00 SECTION 5 Critical Projections: Transnational Economic Institutions and Globalization 52. The Institutional Requirements of the WTO in an Era of Globalisation: Imperfections in the Global Economic Polity Jens Ladegfoged Mortensen 53. Capital-Market Liberalization, Globalization, and the IMF Joseph E. Stigliz 54. How Powerful are Transnational Elite Clubs? The Social Myth of the World Economic Forum Jean-Christophe Graz 55. From the Top-Down: The New Financial Architecture and the Re-Embedding of Global Finance Jacqueline Best 00 00 00 00 Globalizing Economic Regimes and Institutions: A Critical Introduction ix Globalizing Economic Regimes and Institutions Paul James and Ronen Palan G lobalizing economic institutions such as transnational corporations and forums of economic governance are a central part of the world today. The World Trade Organization, the World Bank, the International Monetary Fund (IMF) and the World Economic Forum (WEF), for example, are crucial institutions mediating, administering, or providing forums for discussing economic processes of globalization. They bear the brunt of the critique of the anti-corporate globalization movement discussed in a later volume in the present series: Globalizing Movements and Global Civil Society.1 However, they are only the most prominent face of the changing institutions and regimes of global economics. The present volume documents the practices of these globalizing institutions, but more importantly it broadens out the discussion to cover questions of power and institutionalization. The volume examines the patterns of change across the globe from the end of the nineteenth century to the present. It includes material which debates the place of these economic institutions and regimes, but the emphasis is on understanding the modalities of economic regulation and institutionalization, and how they relate to state sovereignty, market law, and economic power. Whereas the previous volume in the ‘Central Currents in Globalization’ series focused on the way in which processes of globalization are extended by capitalism as a mode of production and exchange,2 the present volume focuses on the dominant mode of organization, including the instituting of patterns of power. The volume takes a special interest in the state as part of the globalization process. Expressed in a different way, this volume focuses on global economic integration, regulation and governance, while a complementary volume later in the ‘Central Currents in Globalization’ series, Global Legal and Political Governance,3 takes up the theme of political governance, including examining the new multilateral political regimes. x Globalizing Economic Regimes and Institutions: A Critical Introduction The Rise of Globalizing Economic Agreements and Institutions Capitalism, now one of the most powerful enframing systems of the modern world, has a long history going back hundreds of years.4 It has come to be an overbracing framework of practices and ideas, but the origins of the institutions associated with modern globalizing market-economy are quite humble. They can be traced to local and long-distance traders, to the rabble of city-dwellers, and to the development of guilds and companies in the medieval period – people and institutions that managed to escape the hold of feudalism, at least in relation to monetary exchange. As we discussed in the previous volume, the issue of when we might source the origins of capitalism is highly contested. In Janet Abu-Lughod’s argument, for example, the tipping point came in the thirteenth century when Bruges had become a globalizing port-city and Venice and Genoa linked the Orient and the West.5 It was in these cities and others such as London and Amsterdam that many of the norms and conventions of the globalizing market, which today we take for granted, were developed incrementally by traders, merchants, bookkeepers, weights-and-measures administrators, and legal practitioners. These organizational practices consist of a plethora of conventions of exchange, norms of reciprocity, of contractual relations and so on. Slowly these conventions amounted to a body of rules administered by the law merchant, or the lex mercatoria,6 which were adopted and gradually globalized – even as concurrently they were gradually nationalized by states. The institution of the economic contract, for instance, the mainstay of capitalist economy, had varied and complex origins. It was established in its modern form by lawyers during the sixteenth century. It took a while, for instance, for the principle of assignability, which today we take for granted, to be accepted. The principle of assignability specifies that the transfer of ownership rights from one person to another can amount only to the exact equivalent of the original property title. One person cannot sell, therefore, ‘more’ rights than they already own. Another convention, introduced by merchants and codified by lawyers, was the principle of negotiability. Negotiability is the convention, enshrined now in laws, that bills of exchange between two parties can be traded and accepted by a third party. With the principle of negotiability lay, in fact, the foundations of the modern institution of credit. In each of these examples we see the institutionalization of the modern ‘market’ that allowed relations to be extended across time and space, including unevenly but increasingly across the globe. Economic globalization depended upon these processes, while the processes themselves were globalized to the extent that they have become the dominant layer of organization. The modern capitalist market consists, therefore, of a great many such innovations and conventions, without which it cannot function, and it is Globalizing Economic Regimes and Institutions: A Critical Introduction xi those very abstracting functions (and we mean ‘abstracting’ in both the material and discursive sense), which also serve to extend its global reach. This interrelationship helps to explain why capitalism as an economic formation has been a central dimension of the development of modern globalization. The expansion of market relations, both geographically into other areas of the world, and into new spheres of social life (such as arts and culture), implies a concurrent expansion of an entire institutional edifice. Even in the period sometimes called ‘laissez faire capitalism’ (1800–1930s),7 a period characterized by mercantile imperialism with relatively limited state intervention in the market, a ‘hidden hand’ of institutionalized norms and practices developed. Here the term ‘hidden hand’ is used quite differently from the way in which Adam Smith used it to refer to the mechanisms of free trade. It is used to refer to the way in which apparently simple developments as double-entry book-keeping, agreed standards for weighing and measuring goods, as well as the organization of time as a measure of value, were gradually globalized as taken-for-granted techniques of organizing relations of economic exchange. The metre as a code of measurement, for example, was generalized across much of the globe and confirmed at the international Convention of the Metre in 1875, paralleling the 1884 Prime Meridian Conference which for the first time regularized a global system for comparing time zones across the world. Global time zones quickly became crucial to the financial trading systems and to the relationships between different stock markets. Along these lines, one of the most important processes of economic institutionalization was the development of regularized regimes for exchanging money.8 As Fernand Braudel documents in relation to the rise of the imperial city of Amsterdam, secured and unsecured trade bills, commissions-to-trade and other papers of commerce, crossed Europe in the eighteenth century in ways that went beyond prior relations of family or corporate trust. The conditions were in place for the development of a deluge of exchange without the direct necessity of embodied points of reference – that is, trust in the personal standing of individuals. The notes were given a semi-secure standing increasingly based on the trade and credit machinery of the networked polis – that is, the ‘society-as-market’. ‘Amsterdam’ itself and then ‘London’, both as financial entrepots, became the basis of the security.9 In other words, credit value began to be secured less by trust in persons or in their agents, and more by the (fragile) prosperity of things that in time would come to be called ‘national economies’ interchanging in a ‘global market’. Moreover, it should be noted that the movement from local to national/global exchange systems was not based on the object of exchange itself – gold and silver to paper, signed, inscribed or printed – but on how that object was enabled in the context of relations of exchange.10 Paper money could be as restricted as any other means of exchange. In Shanghai in the late-nineteenth century, for example, the colloquial name ‘street notes’ suggests the very restricted xii Globalizing Economic Regimes and Institutions: A Critical Introduction localizing of some notes of exchange. This was, however, the world-time of the rise of the banking industry in association with the printing industry and the uneven spread of state regulation. The new institutions of monetary exchange tended to issue notes while retaining deposited bullion as reserve in the context of a largely new institutionalization, rationalization and codification modalities of exchange. Together with the intensification of commodity trading, the development of extended monetary exchange makes up what can be called ‘the capitalist mode of exchange’. One of the most significant institutional carriers of this emergent process of rationalizing, codifying and extending of relations of economic organization was the corporation – including the banks that we have just been talking about. Much later these came to be called ‘multinational corporations’. Here there are a number of important points to consider. Firstly, as Ranjay Gulanti observes later in this volume, corporations need to be understood as embedded within social networks;11 and this network of relations goes back to the early formation of such corporations. Secondly, the development of corporations, including most famously the East India Company, was linked in the period prior to the 1870s to a certain kind of globalization – namely mercantile imperialism. Thirdly, the globalizing reach of some companies in the late-nineteenth century, and after, coincided with firms extending across their own nation-states, most dramatically in the United States. To summarize the main thrust of this opening section we propose the following underlying argument of the essay: Proposition 1. In order to understand the nature of globalizing institutions and regimes it is crucial to locate them in their social-relational context, rather than just concentrating on the organizational mechanics and policy-making content of a few peak institutions. Understanding the process, historical context, and contemporary relations of institutionalization is fundamental for making sense of the more empirical task of documenting the activities of this or that institution. The Institutions of Contemporary Globalization What are the main economic institutions of the era of contemporary globalization? To address this question, we need to clarify in the first place what are social institutions. In the colloquial use of the term, institutions are commonly thought of as administrative bodies such as the WTO, the IMF, the World Bank, and so on. We would include those among a list of Globalizing Economic Regimes and Institutions: A Critical Introduction xiii the primary institutions of globalization, but would add a whole array of other social institutions as well, including the state and the corporation. This might sound a little strange. Suggesting that the state, and in particular the nation-state, is an institution of globalization is not conventional, particularly given a significant literature that suggests that processes of globalization are undermining the sovereignty of the state.12 For example, Keith Griffin writes that ‘state boundaries are becoming less important as large and rapidly growing flows of trade, investment, technology, finance capital, labour and ideas create an integrated world economy.’13 Our counterargument, developed below, is quite simple. In the first instance, the argument is sustained as a twofold proposition: Proposition 2. The system of nation-states instituted across the course of the nineteenth century and into the twentieth was itself a globalizing system. That is, by the end of World War I, the system of nation-states had globally supplanted all prior polities as a predominant form of political organization. The institutionalization of a system of nationstates was directly bound up with the extensions of the globalizing market.14 In other words, states directly contributed to institutionalizing relations of globalization and continue to do so. There are, of course, great debates and controversies as to the definition of the concept of ‘institution’. Some adopt methodologically individualistic theories of institutions; others adopt collectivist theories of institutions. John R. Commons, one of the earliest and most influential members of the American school of institutional economics, says quite simply that institutions are ‘collective action in control of individual action’.15 Collective action, he writes, ranges ‘all the way from unorganised custom to the many organised going concerns, such as the family, the corporations, the trade association … the state’.16 Institutions according to this definition are not necessarily only ‘going concerns’ or legally-constituted entities such as states or international organizations, but also, as we would define them, abiding, legally-sanctioned, and publicly-defended conventions that shape individual practices. For example, the contemporary regime of liberal trade negotiation is formally institutionalized in the WTO, but it has been more broadly institutionalized as the liberal trade regime, stabilized over the last decade and more as a set of relatively enduring practices and norms. This institution brings together taken-for-granted, codified, and normatively-charged practices and procedures.17 It is built around classical liberal assumptions such as ‘protection is a bad thing’ and ‘competition brings freedom’, as well as a layer of neoliberal practices that have hardened those assumptions. In other words, despite the xiv Globalizing Economic Regimes and Institutions: A Critical Introduction language of ‘deregulation’, the liberal trade regime is nevertheless based on institutionalized patterns of practice. There are good reasons for using such broad and encompassing definition of institutions. Formal institutions may have precise legally-defined boundaries, but the process of institutionalization does not. This is not to suggest that there is something approximating a comprehensive and totalizing organization of social life, or, what some sociologists call, ‘the social structure’. Sociality is certainly heavily structured, and behaviour is highly patterned, but this is the result of layers upon layers of social institutions constituted by enduring conventions and practices, transactions, dealings, rules, habits of thought, norms, and principles. Some of these institutions are inherited from the deep past, others are more recent, but all are actively changed and transforming over time. The approach that we present here builds upon strands of institutional theory, as well as insights from regime theory, without necessarily taking up the normative assumptions of the various complex lineages of each of those sets of approaches. Institutions as we describe them are publiclyenacted, relatively-enduring bodies of practice, procedures and norms, ranging from formalized legal entities such as the WTO to more informal but legally-buttressed and abiding sets of practices and regimes such as the liberal capitalist market. The key phrases here are ‘publicly enacted’ and ‘relatively enduring’. The phrase ‘publicly enacted’ in this sense implies active projection, legal sanction, and often as not, some kind of opposition. This is even the case when an institution is ‘private’ or club-like such as the WEF, a group of economically powerful individuals who choose to meet together annually in Davos.18 An institution is constituted in relation to a res publica, a public domain beyond the individual. It requires some form of authorization whether it is God, Nature, or the Sovereign in the case of societies formed in the dominance of traditionalism. With the overlaying of relations of modernism, it requires more abstract processes of sanctioning and legitimation such as those offered by the modern state. The phrase ‘relatively enduring’ does not preclude changes, or even basic transformations, in the form of an institution, but it does point to a central defining dimension that is continuous despite the changes. It should be noted that we have also introduced the narrower concept of ‘regime’ into the discussion, conventionally defined in international relations literature as ‘principles, norms, rules, and decision-making procedures around which actor expectations converge on a given issue-area’.19 In using such terms as ‘institution’ or ‘regime’, however, we do not intend our approach to carry forward baggage from the debates over method that seems to beset international relations theory, for example between realism, liberal institutionalism and regime theory.20 Debates over regime theory have bourgeoned since the 1970s, with, for example, an early indication of the debates marked Globalizing Economic Regimes and Institutions: A Critical Introduction xv by a special issue of the journal International Organization in 1982, but our task here is not to narrate the complex history of those debates. In order to bypass a number of vexatious issues in the literature, we need to clarify the terms of our approach. Firstly, the form of an institution tends to be framed by the dominant modes of practice of the day – organization, communication, enquiry, production, and exchange – for example, modern globalizing institutions tend to be rationalized and juridically recognized, electronically interconnected, based around a codified analytical mode of enquiry, and associated with commodifying or corporatizing practices and subjectivities. In Michel Foucault’s phrase, we are talking here the dominant episteme of its time.21 This is said with the proviso that our use of the term ‘modes of practice’ (both objective and subjective) includes and goes beyond an emphasis on the framing discourses of the period. This first methodological premise does not mean assuming that a particular institution is the inevitable outcome of a certain dominant mode of organization, and it certainly says nothing about its content or the extent to which it is globalized. Robert Cox, for instance, presents a theory of ‘hegemony as a fit between power, ideas, and institutions’.22 Institutions, which are conceived by Cox and many others in the field of International Relations in a narrow sense as formal institutions, are understood by him and the neo-Gramscian theorists more generally, largely in functional terms as serving the interests of hegemony. However, considering that institutions evolve over long period of time, and consist of layers upon layers of historical significations, any claim about certain institutions being ‘necessary’ or ‘good’ because they are best suited to handling contemporary dominant conditions of intensifying globalization needs to be opened to critical analysis. Furthermore, rather than being simply thrown up naturally by the social context or guided by Adam Smith’s ‘hidden hand’, institutions are enacted. They are constructed, defended, debated and reproduced by people who often have a vested interest in certain outcomes. For example, one of the preeminent institutions of global governance, the United Nations, was instituted by the leaders of the dominant and/or victorious nation-states in the aftermath of World War II. It is no accident that the permanent membership of the Security Council comprises the United States, Great Britain, France, Russia and China. At the same time, to the chagrin of the United States, its principal architect, it did not take long for the UN to begin to chart its own path, crossing the US on numerous occasions. The current US administration vacillates between demanding profound ‘reform’ of the institution and voicing disgust while leaving it relatively unencumbered. It is inappropriate, therefore, to reduce the UN to a mere arm of hegemony. Neither is the UN a simply functional institution of modern capitalism. The depth of the criticism of the UN’s ability to achieve anything efficiently, suggests that the institution of the UN stands in contradistinction to some of the xvi Globalizing Economic Regimes and Institutions: A Critical Introduction ruling notions of the day about economically rational behaviour. Notwithstanding, the UN remains a critically important, and perhaps one of the defining institutions of the modern globalizing world. Secondly, globalizing institutions, whether formally constituted or informally accepted as convention, whether they continue or are adapted in light of changes in society, have the capacity to shape larger patterns of social change quite directly. The General Agreement on Tariffs and Trade (GATT) was initially opposed by the United States and lacked formal recognition in international law. Nevertheless, as an ongoing state-sanctioned institution it had an increasing effect on negotiations over trade quotas and tariffs from its formation in 1947 till it was succeeded by the WTO in 1995. Similarly, as we began to argue earlier, another of the key institutions of the modern world, the institution of state-based territorial sovereignty, proved far more resilient and adaptable than many commentators projected. While some continue to suggest the ‘withering away of the state’ and decline of sovereignty under pressure of globalization, there is growing evidence that the institution of sovereignty is evolving under conditions of a highly integrated global market into a commercial asset in the hands of states. Some of the smallest states in the world, ‘the washed up’ communities as Kenneth Waltz so inaccurately describes them,23 including Luxembourg, the Cayman Islands, the Virgin Islands, Bermuda and the like, have emerged recently among the richest countries in the world in terms of GDP per capita. What is the main competitive advantage of these states; the secret of their success? These states have learned to employ the tools of their economic sovereignty – the right to write the law, to enact extremely liberal financial rules and to issue low tax rates that attract mobile globalizing capital into their territories.24 In the context of globalizing electronic capitalism these tools have been used as a means to make money. In doing so, not only these otherwise marginal states managed to accrue considerable wealth into their territories, but they have also advanced the process of economic globalization by providing alternative, ‘deregulated’ sovereign spaces supporting global capital. In this way, the institution of sovereignty is not only changing, but also generating wider social change. It is true that anachronistic institutions can limp on long after they cease to have formal power, but the process of institutionalization tends to be associated with the extended projection of power at a distance, hence their importance to globalization. Thirdly, globalizing institutions can be formed from ‘above’ and ‘below’, with both potentially drawn equally in the globalizing process. On the one hand, the phenomenon of the globalizing non-governmental organization (NGO) emerged as political entities were formed by locally-based political activists and were institutionalized in relation to a particular state legal structure, whereas at the other end of the spectrum the WEF, for example, was instituted from above as a ‘transnational elite club’, to use Globalizing Economic Regimes and Institutions: A Critical Introduction xvii Jean-Christophe Graz’s phrase.25 Suggesting that an institution is formed from ‘above’ or ‘below’ is to assume nothing about the extensions of the power of an institution. The nature of its power depends on how it structures authority across time and space. This proposition means, for example, we can critically question the claims of the neoliberal writer Johan Norberg about globalization only occurring because of ‘our’ banal transactions of consumption, and the institutionalization of global economics only happening as a quaint afterthought. ‘Globalization’, he writes, ‘consists of everyday actions’: We eat bananas from Ecuador, drink wine from France … Capital may be channelled by finance corporations, and goods may be carried across borders by business entrepreneurs, but they only do these things because we want them to. Globalization takes place from beneath, even though politicians coming running after it with all sorts of abbreviations and acronyms (EU, IMF, UN, WTO, UNCTAD, OECD) in a bid to structure the process.26 In this case, for a right-wing libertarian version of neoliberalism, globalizing capitalism is the natural and unstructured outcome of micro-practices. Institutions in particular states are, in this argument, badly constraining of economic ‘freedom’. Therefore in a conflation of an empirical argument and a normative assumption, Johan Norberg cannot allow that globalizing institutions have power in their own right. A more sustainable approach entails recognizing that globalization occurs both from ‘below’ and ‘above’. Fourthly, globalizing institutions are formed in the context of long-term historical processes, without necessarily being continuous with those older institutions. Institutions of governance, for instance, go back to kinship-based and traditional societies such as tribes, clans and kingdoms founded, on implicit principles ranging from reciprocity and care to patrimony and sacred authority. These ‘survive’, for example, in substantially changed and materially more abstract form in contemporary times in the rather unreflective habit of thought that treats the monarch, the president or the prime minister as the ‘father’ or ‘mother’ of the nation, taking care of ‘his’ or ‘her’ flock. Like the institutions of governance, all our modern institutions – including those institutions intensely involved in processes of globalization – overlay ancient practices with modern developments. This layering is materially deep, but it also becomes a way of ideologically legitimating practices that bear little resemblance to earlier forms. For example, Mike Moore writing shortly after his period as Director General of the WTO, defends free trade as the ‘basis of civilised behaviour’: The philosophical basis for the merits of free trade – a concept that goes to the roots of the WTO’s charter – is the premise of reciprocity, which has a deeply moral basis that dates back thousands of years … This fundamental xviii Globalizing Economic Regimes and Institutions: A Critical Introduction reciprocity has underpinned the development of free trade and democracy. The more open and democratic the economy, the better results for ordinary people, the more space for freedoms to keep growing.27 Reciprocity indeed does have a long-run expressions across human history, but to describe contemporary capitalist trading-regimes, where partnerships tend to be contingent on economically-rational decisions about returns on investment, as continuous with earlier forms of reciprocity such as gift exchange is like saying that a ‘company’ is a body of persons joined for common purpose in the Latin meaning of the word, and therefore a medieval company of minstrels is formed on the same basis as a global entertainment company such as Fox Media. Treating reciprocity in this way, as simply continuous across history, reduces the layered possibilities of public reciprocity to regional balance-of-trade agreements and global aid programmes. There is nothing intrinsically wrong with these kinds of abstract reciprocity. Nevertheless, we do need to keep in mind the proviso that the way in which abstracted reciprocity of the globalizing market is handled is often instrumental, self-serving and oriented to the extension of institutional power. To summarize the discussion thus far, an adequate approach to globalizing institutions needs to allow for a more nuanced sense of dominant processes and their changing historical forms. Proposition 3. Complex and multifaceted processes of change that extend across world-space – processes named by the generalizing concept of ‘globalization’ – do not take place in some pure or natural realm called, ‘the market’ or ‘capitalism’, at least not in the sense that those ‘realms’ are given as blanketing ways of organizing social life. Treated carefully, terms such as ‘market relations’, ‘global capital’ or globalizing capitalism’ remain useful and refer to interconnected but unevenly changing processes. However, they need to be seen as provisional ways of describing the dominant modes of production and exchange in a given social setting where the patterning of these dominant modes of practice – and others including communication and enquiry, as well as the dominant mode of organization itself – is embedded in social institutions. These layers of institutionalization are party to procedures which involve legalizing certain conventions that ‘make sense’, particularly if one accepts the terms of modern/postmodern economies. What then, are the main institutions of contemporary global capitalism? They are transformations of institutions that have governed the life of modern industrial societies: the institutions of the state, sovereignty, market, private property, economic Globalizing Economic Regimes and Institutions: A Critical Introduction xix incorporations or ‘business concerns’. Some of these institutions, such as the state, precede the period conventionally called ‘classical modernity’ and have accompanied all the great phases and transformations in the economy that gave rise to the intensified globalization of the present. The institution of the state has changed and adapted over centuries. For example, in European history from the eleventh-century feudal state to the Standestaat, the Renaissance city-states, and the emergence of territorial absolutist states – of which an early specimen was the kingdom of the two Sicilies in the twelve century – to the traditional-modern absolutist states replacing the dynastic states, and, most recently, to the modern nation-state. The institution of sovereignty, an ancient institution dating back to the classical Roman period, has also undergone great changes. Some of the principal institutions of globalization are more recent. The modern corporation, a legal entity whose routes can be traced back through the medieval city-states to Roman times, is in its current form, for all intent and purposes, a late-nineteenth-century development. The State and Globalization: Surprising Allies The key institutional development in the era of globalization, and arguably the most surprising, relates to the changing relationship between the two principal institutions of the modern world, states and markets. As it is well known, the globalization debate began in earnest in the 1980s with a certain dramatic proposition about the likely fate of the state. The argument was that as markets are integrating economic relations across the world they generate cultural assimilation in their wake. They are thus likely to render states as hollow and unviable entities, emptying out the national dimension of the nation-state. The proposition was that under conditions of heightened market integration, states would find it increasingly difficult to discharge vital functions. Politicians may continue to promise the world to their constituencies, but their room for manoeuvre would be increasingly limited. The public would sense the draining of power from the state to markets, so the argument goes, and would shift allegiance to other collective entities. Some states appear to have taken this potential direction on board and responded to it. The European states, for instance, have understood the drift towards globalization long ago and have joined in a process that is leading to the creation of a hybrid form of ‘super state’, the European Union. Other states are in discussion to join in other regional integration, the North American Free Trade Association (NAFTA), the Association of Southeast Asian Nations (ASEAN), the Maghreb Union and so on. The fate of these new associations notwithstanding, the assumption was that the institutions of the state, and in particular, the nation-state, have had its glory days. xx Globalizing Economic Regimes and Institutions: A Critical Introduction Across the early years of the twenty-first century it has become clear that the state, however, is not retreating – to counter a title of an important book by Susan Strange.28 On the contrary, much of the evidence suggests that modern states are as powerful and interventionist in their national societies as ever. Why, then, does the state remain an important pillar of globalizing capitalism? To understand why, we need to examine more carefully the relationship between state, sovereignty and the markets. To begin with, there is an issue of the lack of alternatives to the state. Every collective organization must generate, first, a sense of its collective identity to ensure that individuals abide by its conventions and norms. Social identities are inevitably forged, as Regis Debray suggests, around what he calls ‘absent-present’ concepts.29 Historically, such absent-present concepts ranged from God to the Nation or the Working Class. Collectives were united around these absent-present concepts. They are ‘absent’ in a sense that they are relationally-based or abstracted projections that cannot be pointed to in the flesh except by manifestation or example. They are nonetheless very ‘present’ in the daily politics of these societies. ‘God’, for instance, is a typical absentpresent social category, unobservable but in some traditional settings a constant presence legitimating certain order, norms, custom and rules. The typical form of the state in the past two centuries has been the secular, modern, national state. The ideology of the nation-state placed the nation, a cultural entity as the organizing principle of the state. The state is considered in nationalist ideology as the servant of the nation, the political arm and the executor of the nation’s will. Hence in foreign policy we speak of the ‘national interest’ and less of the older concept, ‘reason of state’, a concept that emerged in a period preceding the rise of the modern concept of ‘the nation’.30 The theory of ‘the national interest’ is predicated on the idea that states advance the vital interests of the nation, both domestically and internationally. The nation-state is not a stand-alone unit. Rather it is the political arm of what is taken subjectively to be a primordial unity: the nation-and-the-state is responsible for the education, well-being and survival of the national spirit. Of course, many critics have pointed out, correctly, that the objective state of affairs is much more ambiguous. For many writers it is not the state that serves the nation, but if anything the modern state system that has contributed to creating the modern nation. The state, by introducing policies of homogenization of their territories, by introducing national education, national economies, national language and national media, forged a sense of identity among an ‘imagined community’ (to use Benedict Anderson’s term),31 an absent-present formation instantiated in the nation. The conventional globalization thesis is encountering the problem, therefore, of where precisely the next absent-present concept that plays a vital role in social order is going to come from. Market integration is all good Globalizing Economic Regimes and Institutions: A Critical Introduction xxi and well, but people need a sense of identity, a transcendence, that explains to them very clearly why they should relate to the existing order, why should they attach themselves to a collectivity, pay heavy taxation or fight for it when needed and sustain it with their loyalty and passion, if not love. It is difficult, after all, to envisage a world consisting only of the famous (or infamous) ‘PTs’ of the offshore world – the ‘permanent tourists’ or ‘permanently not there’. These are individuals and companies who for tax purposes adopt a nomadic life, are never long enough in one place to be considered taxable residents.32 Globalization in its present form as a manifold of uneven processes is unlikely to provide the vital institutional framework of collective identity and can only be parasitical on other social institutions – with the nation-state still presents itself providing one possible answer, and religion, including the powerful globalizing religions of Islam and Christianity, presenting another. The institution of the state persists in part, therefore, because it provides some vital functions. However, even in purely economic terms, the thesis of the impending decline of the state is profoundly mistaken. The problem, in fact, lies less in the misunderstanding of the nature of the state, and more, with the misunderstanding of the nature of the other great social institution, the market. It was Karl Polanyi who made the important observation that the ‘free market’ imagined by neoclassical economists is not a natural and spontaneous product of the removal of state intervention, but a product of state intervention.33 We need the state, he said, to create the political and institutional environment that ensures the continuing functioning of the ‘free market’. The same rationale goes for a global market. We need the state to create and sustain a global ‘free market’. Why is that? The concept of ‘the market’ is in fact a metaphor, a metaphor founded on the image of the traditional village markets that have grown socially all over the world and in all known civilizations. These are embodied markets, where producers of agrarian or household items bring their products to the market in exchange for other goods. The market is most often associated, therefore, with the consumption and exchange of tangible products. Today’s globalizing markets, however, are mostly organized as highly abstracted exchange systems, where at one level products may change hands in a continuing market of commodity exchange, but where the primary modality of exchange is the electronic transfer of value, including the exchange of currency, property titles, options to purchase and derivatives of those options. Whether or not an exchange leads to eventual consumption of the goods exchanged is immaterial to the more abstract level of interchange – that is, at least for the purposes of the exchange relation itself, including its relentless drive to capital accumulation. The dominant economic unit of contemporary exchange, therefore, is the transaction over value itself, for example, an exchange of property title. xxii Globalizing Economic Regimes and Institutions: A Critical Introduction This means that an economic transaction is a contract, a legal act that exists within a legal realm which validates it. A contract is meaningful provided that there is a clear legal definition of the parties to the exchange, a definition of their rights and duties, and a legal definition of the contract itself. These functions are provided by the state through the vehicle of the institution of sovereignty. In the modern world, all parties to exchange – whether they be individuals or corporate entities – must be solvent citizens or instituted bodies of an actual state. They cannot be living perilous lives at the margins of civilizations. This is as true for asylum-seekers without citizenship, whose movement is highly restricted, as it is for ocean-ploughing vessels without national identity, which are considered pirate vehicles. In fact, every contract in the world stipulates, explicitly or implicitly, the location of the contract and the location of the contract for the purpose of dispute resolution – and the two do not have to be necessarily the same sovereign authority, although normally they are. The implications are clear. The contemporary global economy should be seen as a thick web of contractual relationships, all reliant on the modern system of sovereign states. Without the state the entire web of contractual relationships is unstable. Companies such as General Motors or Nike find it extremely difficult to invest in countries where the principles of private property, contract law and citizenship (individual and corporate) as a locus of rights and duties are not institutionalized in some way. Wherever any aspect of contractual relationship is unstable in any part of the world, either the cost of transaction rises accordingly to reflect a heightened sense of risk, or transactions do not take place at all. Not surprisingly, where there is no state system there is no sustained neo-liberal globalization of the economy; and where the state system is weakened or collapses, only the most necessary and rudimentary type of economic activities persist. Ideology notwithstanding, it is clear that a global market is not a natural or spontaneous occurrence, a product of the natural human tendency to barter and track. To flourish, a global market, or more accurately, the series of markets that are spanning nearly the entire planet, such as finance, credit, bond and trading markets, requires the support of a strong institutional environment. A globalized economy generates therefore not only a powerful incentive to maintain the state system, but, also perhaps surprisingly, incentive to strengthen the institutions of the state. In the relative absence of an established regime of interconnected global economic governance, only a strong state system can sustain an international web of contractual relationships, by allocating responsibilities over contracts and transactions among states on the simple principle of territoriality. We are witnessing, therefore, important developments that are aimed at creating precisely such a global institutional environment that sustains a ‘free market’. John Gerard Ruggie Globalizing Economic Regimes and Institutions: A Critical Introduction xxiii in his contribution to the present volume talks about the ‘global public domain’,34 while Stephen Gill in his contribution calls it ‘global constitutionalism’.35 These authors refer to a whole set of politically motivated projects which are aimed at creating global standards of rules, norms and principles that sustain the market. Some of the most important debates in the area of international economic institutions are aimed, as the articles in this volume show, to strengthen, largely through cooperative efforts, the institution of the contract; to standardize the system of rules, laws, norms and principles that underpin contractual relationships worldwide. The process is not aimed at undermining sovereignty. On the contrary, the process takes place within the context of the institution of sovereignty and sovereign equality. While the state is not disappearing or retreating – still, like all institutions, it must adapt as it shapes the new environment. Over the past three decades powerful forces associated primarily with the functional requirements of globalizing markets have contributed to standardizing state responses to global capitalism. Standardization does not mean, however, that all states are the same in the details of their practice. On the contrary, diversity and variety provides a much more stable and sustainable institutional environment.36 Under the pressures of intensifying globalization what we have witnessed is the standardization of states’ attitudes to business, but within this broad project, astounding variation of practices has developed. At one end of the spectrum, states have responded by joining large regional organizations such as the European Union, and at the other end by turning themselves into singular tax havens. In other words, the form of statehood is standardized in the sense that all operate in a changed relation between sovereignty and the globalizing market. All are encouraged to develop business-friendly policies and to create environments that sustain business confidence and profitability. However, how they chose to do so is a matter for each individual government to resolve. The generality that connects these processes can be expressed as follows: Proposition 4. In the context of an intensifying global capitalism, the contemporary state, while maintaining a cultural relationship to a community called a ‘nation’ has been undergoing an important economic transformation towards what might be called the ‘competition state’. This is the name given to the new dominant formation of statehood with its new emphasis on a whole array of policies aimed at attracting and ensuring business investment within the state territory while competing with other states in the global market. xxiv Globalizing Economic Regimes and Institutions: A Critical Introduction Markets and Corporations: The Dominance of Business In conditions of heightened market integration, sustained by intense changes in communication, information and transportation technologies, the large corporations, and increasingly middle-sized and even small companies, are making crucial decisions not only about the locations of manufacturing, assembling, design and marketing jobs, but also about the pecuniary value attached to financial and managerial tasks. This has contributed to a changing balance and growing asymmetry between mobile capital and territoriallybounded states. It appears, as some argue, that power has shifted from states to markets. But if the ‘markets’ are so powerful, why, then, does not business seem to share in the general perception that power has shifted in the era of globalization? Why is business complaining about the conditions of heightened market competition, instability and uncertainty? Modern globalizing markets, as we saw, are sustained by state regulation and setting of conditions for production and exchange. There is no necessary conflict as such between state and market formation. However, that does not mean that there are no conflicts or tensions from time to time between some states and certain businesses. The commonly-held view tends to conflate business interests with markets: business, it appears, is keen on the ‘free market’ and wishes, wherever possible, to limit the powers of the state. However, businesses and markets are not one and the same thing, nor is business necessarily hostile to the state, which is after all the largest and most secure provider of business activity. While markets are places of exchange, still largely maintained and sustained by institutions of the state or delegated multilateral institutions depending upon state sovereignty, law and custom, business is a method of acquiring and accumulation of wealth. Again, old habits die hard and hence we tend to conflate business with provision of goods and services. The modern business enterprise grew out of the craft industries in Europe in which capitalists are assumed to be the master craftspersons in their field. Companies and corporations are assumed, therefore, to specialize in the manufacturing of specific goods and/or provisions of specific services. This is not really the case any more. The modern business person no longer has any particular advantage or speciality in running factories, assembling or manufacturing and so on. The businessmen, or the ‘absentee owner’ as Veblen once described him or her, is not particularly knowledgeable about any of these tasks and is not a specialist craftsmen in disguise. Rather he or she is a specialist in making business. They are specialists in bargaining and deal-making, discovering and releasing ‘value’ wherever it may be. ‘The most comprehensive principle involved in this class of business management is that of raising prices, and so increasing the net gains of business, by limiting the supply, or “charging Globalizing Economic Regimes and Institutions: A Critical Introduction xxv what the traffic will bear”. Of similar effect … are the obstructive tactics designed to hinder the full efficiency of a business rival.’37 Businesses employ managers, engineers, accountants and other white-collar employees to discharge managerial tasks. We are witnessing, therefore, important institutional developments in the business firm in the era of globalization on two fronts: on the business front and on the management and engineering front – the two tend to be confused. On the business front we are witnessing an unambiguous process of extending and strengthening the power of business principles all over the world. Modern multilateral negotiations are geared primarily to create a veritable global market suitable for the investor or business manager. In general investors, absentee owners, have done well out of it. Although overexuberance in the stock market leads inevitably to crashes, downturns or at least financial uncertainty, business practices tied to globalizing stock markets are expanding rapidly throughout the world. On the management front, we are witnessing far-reaching developments in the organization of global business. The opening up of markets on a global scale is perceived by managers as presenting both great opportunities and acute threats. Clearly, the opening up of markets has generated potential opportunities for great profits, and companies are seeking to take advantage of these opportunities. However, the opening up of markets is also proving to be a great threat as competition is heightened. If not so long ago, innovative companies could have hoped to enjoy a few years of advantages in marketing new technologies (such as the singularly successful Sony Walkman), today technology diffuses much faster. Equally, competition over manufacturing and assembling costs is hotting up as the tremendous lowering costs in communication and transportations are placing manufacturers world-wide at a competitive. The results have been far-reaching. Modern business has gone through sets of radical transformation which are described in the literature as the rise of ‘alliance capitalism’.38 The corporate entity was emptied of its traditional connotation, as an entity evolving out of the craft industry; it became a mere financial and entrepreneurial node, specializing not necessarily in any particular aspect of production or manufacturing, but specializing, more than anything, in the organization of business itself, whereby the actual work, including manufacturing, design, marketing, finance and even management is ‘farmed out’ to second-tier smaller companies. Large corporations such as in the car industry have introduced market relations into their organization, so that, for instance, a Volkswagen engine plant would be invited by, say, Ford, to bid for the contract for a new engine to a planned vehicle against a Ford plant and vice versa. Other companies have divested themselves of all manufacturing and are specialists in organization of production chains on planetary scale. Businesses are joined in competitive alliances worldwide, farming the best and cheapest manufacturing services, technologies xxvi Globalizing Economic Regimes and Institutions: A Critical Introduction and know-how. As the process has been accelerating in the past two decades, it became clear that traditional private law, including international private law, is insufficiently sensitive to the changes. As a result, the old form of the ‘law merchant’, the Lex Mercatoria of the medieval ages, has seen the rise an unexpected revival, generating in effect a privatized international private law centred on profit-oriented arbitration courts. The Institutions of Global Governance: Efficiency, Dominance, Transgression How, then, should we conceptualize the economic organizations of globalization? Traditionally, two sets of explanations have tended to dominate the thinking in International Relations and International Political Economy about the nature of institutions such as the IMF, the World Bank, the WTO and so on. The first may be described as a variant of ‘transaction cost’ theory. The theory maintains that by rendering much of international affairs habitual, international institutions considerably reduce the costs of international transactions. According to this view, states, including the most powerful states, establish international institutions and tend to obey their rules because they recognize the functional necessity of an international governance structure. They tend to transfer a certain degree of sovereignty to these institutions on the principle of the club – that is, just as individuals must accept the rules of a club before joining, so states agree in advance a degree of sovereign transfer to an international organization and agree to abide by its rules. The reason that states join such global economic organizations is that these organizations provide a number of services that help reduce the cost of trans-border transactions. International economic organizations help to standardize and harmonize rules of conduct, rules of contractual relationships, rules of ownership and rules regarding treatment of foreigners throughout the world. By doing so, these organizations help establish a standardized infrastructure of rules and norms throughout the world that reduce the cost of making business across borders. They encourage, therefore, the efficiency-gain accruing through free-market relationship. The advantages of being members of such organizations are numerous. First, they help states avoid being bogged down in trying to ‘reinvent the wheel’ of international conduct for each and every single crossborder economic transaction. In addition, economic actors are reassured that those countries that are members of an organization, say, the WTO, are bound by the same set of rules of engagement regarding the treatment of foreign investment. As a result, the costly business of maintaining detailed specialist knowledge of local conditions of countries in which economic actors wish to invest or trade with is reduced. Business needs to invest in Globalizing Economic Regimes and Institutions: A Critical Introduction xxvii (or buy from specialist businesses such as international law and accounting firms) knowledge of the rules of the organization itself, assuming their rules apply to all countries, rather than in each and every country which is a member of ‘the club’. Furthermore, business can then invest and trade with confidence in any of those countries that are members of the club. In doing so, the ‘invisible hand’ of the market is triggered and there are efficiencies to be had to the entire system. Membership of such clubs offers other advantages as well. Charles Kindleberger argues that modern capitalist economy requires an international ‘stabilizer’ in order to provide at minimum the following tasks: The responsibilities of a stabilizer, as I originally detailed them, were to furnish an outlet for distress goods (or in periods of acute shortage, to share its supplies with highly dependent countries); to maintain the flow of capital to would-be borrowers; and to serve as a lender of last in financial crisis. (Since that book appeared in 1973, I have added two other responsibilities to the role of a would-be stabilizer of the world economy: to maintain a structure of exchange rates and to coordinate macroeconomic policies.39 Kindleberger’s ‘stabilizer’ serves, in effect, a role not unlike the one performed by government in domestic politics. The stabilizer can, according to Kindleberger, be the hegemonic state. However, the United States, as well as its allies, has discovered that sharing in the cost of maintaining the functions of the stabilizer is worth the price of compromising with allies. International economic institutions such as the IMF, the World Bank, the Bank of International Settlement (BIS) and the WTO have taken some aspect of a stabilizer role. Another variation on this argument is provided by the right-leaning Financial Times journalist Martin Wolf who strongly defends the IMF and World Bank and argues in his contribution to the present volume that they provide a positive way of deregulating the global economy and multiplying the gains of the free-market capitalism.40 Altogether, the functional services provided by international economic organizations are a strong incentive for compliance, even when some of these organizations’ international norms and conventions appear from time to time to limit the freedom of action of powerful states. This theory goes some way also in explaining the longevity of a ‘fictional’ governing institution in international affairs such as the concept of sovereignty. However unrealistic the principles of sovereign equality may be in a world consisting of states of such incredible variety of size, prosperity and power, the principles are adhered to because they provide a simple and apparently straightforward way of organizing the world. Sovereignty has emerged as the core institution in global politics, framing interaction among sovereign governments which, as they understand, are given sole responsibilities within their territorial boundaries and possess the sole right to write the laws within these domains. xxviii Globalizing Economic Regimes and Institutions: A Critical Introduction The other main theory of institutions and norms may be described as neo-Marxist. Nicos Poulantzas famously argued that social classes seek to normalize their political gains into the very institutional fabric of society.41 In time, social institutions, including the state but also international organizations, evolve into mildly sclerotic structures consisting of layers upon layers of past struggles and compromises, and appear, therefore, at any given moment as alienated structures, separated from their constituencies. These alienated governing structures may appear to be restraining and prescribing institutions of power – restraining even those individuals and groups that are considered to be the ‘ruling classes’. In reality, Poulantzas argues, these institutions have no independence of power; nor are they an alienated social force independent of society. They merely represent sedimented historical power structures, which through careful historical analysis can be peeled off, layer by layer, to reveal the sheer violence that ensures the dominance of one class by another. The longer-serving economic organizations, such as those associated with the UN, display Poulantzasian tendencies. They appear increasingly as independent organizations separated from the dominant power, but in reality they serve to further the broader interests, according to this theory, of the transnational capitalist class.42 It is not surprising, therefore, that the transnational ruling classes that are dominating the world nowadays are reluctant to transgress the very institutions that maintain their power however frustrating these institutions may be. Compliance with the institutions and norms of international affairs is driven therefore by self-interest and rational calculations. These two perspectives, or different combinations and rewritings of the two, have dominated theories of International Relations for a long time. There is, however, a third perspective which is rapidly gaining ground in sociology and anthropology, but which has made little impact thus far in International Relations and Global Studies. This perspective can be detected in the work of institutionalists such as Veblen and Commons, and more overtly in Deleuze and Guattari’s theory of desire. In their critique of Freudian psychoanalysis for its ‘idealistic’ leanings, Deleuze and Guattari erected a theory of the structure of desire which is indicative of the way they, as well as others (such as Michel Foucault), interpret the normalizing forces in society. The mistake of Freud and Lacan, argue Deleuze and Guattari, lies in the assumption that desire stems from some primordial ‘real’ lack or ‘human need’, imprinted into the biology and psychology of the subject.43 Such theory is idealist in the sense that it suggests that human beings are motivated by some quest for transcendence. For Deleuze and Guattari, the structure of desire of the human psyche operates at two levels simultaneously, a socially constructed prohibition serves simultaneously to prohibit but also generate a desire (now felt as lack) for transgress. There Globalizing Economic Regimes and Institutions: A Critical Introduction xxix is nothing inherent in the human psyche, they believe, that inclined us to wish for ownership of bigger cars, bigger houses or accumulation of symbolic exchange, rather the structure of prohibition of modern capitalism generates this very desire. By analogy we can employ the same idea for the role of institutions and norms in human society. They serve simultaneously as limits, boundaries and restraints, but also generate a psychology of transgression, as the very thing that is not allowed is desired. The same can be said by analogy for the institutions and organizations of international affairs; they serve simultaneously to restrict and prohibit, but also as pointers for transgression, stimulating ‘desire’ for the forbidden. The rules of international economic organizations are used, therefore, not only to smooth the conduct of trans-border transactions; they are also used, or abused, by economic actors as ways of transgressing and evading the rules, norms, regulations of the very states that are members of these ‘clubs’. Just as the institution of sovereign equality has been abused by tax havens and ‘commercialized’, so the governance structure of the world can be used in surprising manners to further parochial interests in unforeseen ways. They emerge, in fact, as nodes of change adding to the complexity of the world. Conclusion We have argued that in order to understand the economics of globalization – or in fact, to understand globalization in general – recognizing the importance of institutions, and the institutionalization of norms and practices, is vital. There is a lot more that could be said about the nature of globalizing institutions, but one of the key issues is that we need to break out of is the dominant assumption that the only institutions to be considered in this arena are those concerned with regulating or deregulating the global economy – particularly the big four: the World Bank, the WTO, the IMF, and the WEF. The net can be broadened considerably, firstly by considering two forms of globalizing institutions that formalize relations of economic power: transnational corporations, or what we have been calling ‘globalizing corporations’, and states. Secondly, moving broader still, analysis needs to take into account a whole range of formal and informal institutions that regularize the operations of the global economy, from the institution of state-based territorial sovereignty to the institution of stock exchanges. These institutions have not only become an integral part of the globalizing economy, but more comprehensively the practices, conventions and norms that they are based upon have been so globalized that they are now part of the common sense of the world’s extended operating economies. xxx Globalizing Economic Regimes and Institutions: A Critical Introduction Notes 1. Paul James and Paul van Seters, eds, Globalizing Social Movements and Global Civil Society, Sage Publications, London, forthcoming. 2. Paul James and Barry K. Gills, eds, Globalization and Economy: Vol. 1, Globalizing Markets and Capitalism, Sage Publications, London, 2007. 3. Paul James and Robyn Eckersley, eds, Globalization and Politics: Vol. 1, Global Political and Legal Governance, Sage Publications, London, forthcoming. 4. In the present series of volumes, we have suggested that the other main enframing systems of the modern world, include mediatism (characterized by mediating communications, information and technology systems) and technoscientism (characterized by the rise of applied science in intersection with the dominance of the market). 5. Janet Abu-Lughod, ‘The Shape of the World System in the Thirteenth Century’, Studies in Comparative International Developments, Winter 1987–88, pp. 3–25, reproduced in the previous volume to the present volume: Paul James and Barry Gills, eds, Globalization and Economy: Vol. 1, Globalizing Markets and Capitalism, Sage Publications, London, 2007. 6. See Gunther Teubner, ‘Breaking Frames: Economic Globalization and the Emergence of Lex Mercatoria’, European Journal of Social Theory, vol. 5, no. 2, 2002, pp. 199–217, reproduced in the present volume. 7. See Daniel Levi-Faur, ‘The Global Diffusion of Regulatory Capitalism’, The Annals of the American Academy, no. 598, 2005, pp. 12–32, reproduced in the present volume. 8. See the complementary discussion of this in the previous volume in this series: Paul James and Heikki Patomäki, eds, Globalization and Economy: Vol. 2, Globalizing Finance and the New Global Economy, Sage Publications, London, 2007. 9. Fernand Braudel, Civilization and Capitalism 15th–18th Century: Vol. III, The Perspective of the World, Collins, London, 1984, ch. 3. 10. For a more thorough tracking of this process, or what he calls a history of ‘general conjunctures’, see Pierre Vilar, A History of Gold and Money: 1450–1920, Verso, London (1960), 1976. 11. Ranjay Gulati, ‘Alliances and Networks’, Strategic Management Journal, vol. 19, 1998, pp. 293–317, reproduced in the present volume. 12. For an elaboration of a counter-argument to this literature see John W. Cioffi’s article, ‘Governing Globalization: The State, Law and Structural Change in Corporate Governance’, Journal of Law and Society, vol. 27, no. 4, 2000, pp. 572-–600, reproduced in the present volume. 13. Keith Griffin, ‘Economic Globalization and Institutions of Global Governance’, Development and Change, vol. 34, no. 5, 2003, p. 790, reproduced below. 14. For an elaboration of this argument see, for example, the early classic statement by Bob Jessop, ‘Towards a Schumpeterian Workfare State? Preliminary Remarks on Post-Fordist Political Economy’, Studies in Political Economy, vol. 40, Spring, 1993, pp. 7–39, reproduced in the present volume. 15. John R. Commons, Institutional Economics: Its Place in Political Economy, Transaction Publisher, New Brunswick, 1990 (1934), p. 69. 16. Ibid., p. 70. 17. See Levi-Faur, ‘The Global Diffusion of Regulatory Capitalism’, in the present volume. 18. Jean-Christophe Graz, ‘How Powerful are Transnational Elite Clubs? The Social Myth of the World Economic Forum’, New Political Economy, vol. 8, no. 3, 2003, pp. 321–40, reproduced in the present volume. 19. Stephen D. Krasner, ‘Structural Causes and Regime Consequences: Regimes as Intervening Variables’, International Organization, vol. 36, no. 2, 1982, p. 185. See also Volker Rittberger, ed., Regime Theory and International Relations, Clarendon Press, Oxford, 1993. 20. See for example, Susan Strange, ‘Cave! Hic Dragones: A Critique of Regime Analysis’, International Organization, vol. 36, no. 2, 1982, pp. 479–96; and Robert O. Keohane Globalizing Economic Regimes and Institutions: A Critical Introduction 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40 41 42 43 xxxi and Lisa L. Martin, ‘The Promise of Institutionalist Theory’, International Security, vol. 20, no. 1, 1995, pp. 39–51. Michel Foucault, The Order of Things, Tavistock, London, 1970. Robert W. Cox, with Timothy Sinclair, Approaches to World Order, Cambridge: Cambridge University Press, 1996, p. 104. Kenneth Waltz, Theory of International Politics, Reading, Mass., Addison-Wesley, 1979, p. 94. Ronen Palan, ‘Tax Havens and the Commercialisation of State Sovereignty’, International Organization, vol. 56, no. 1, 2002, pp. 153–78, reproduced in the present volume. See also Ronen Palan, The Offshore World: Sovereign Markets, Virtual Places, and Nomad Millionaires, Cornell University Press, Ithaca, 2003. Graz, ‘How Powerful are Transnational Elite Clubs?’, reproduced in the present volume. Johan Norberg, In Defence of Global Capitalism, Cato Institute, Washington, D.C., 2003, p. 12. Mike Moore, A World Without Walls: Freedom, Development, Free Trade and Global Governance, Cambridge University Press, Cambridge, 2003, p. 30. Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy, Cambridge University Press, Cambridge, 1996. Regis Debray, Critique of Political Reason, Verso, London, 1981. A very different way of conceiving of the process that Debray describes in terms of the ‘absent-present’ concept can be found in the writings of one of the present authors. See Paul James, Nation Formation: Towards a Theory of Abstract Community, Sage Publications, London, 1996. Botero, Giovanni, The Reason of State, Routledge, London (1598), 1956. Benedict Anderson, Imagined Communities: Reflections on the Origins and Spread of Nationalism, Verso, London (1983), 2nd Edn 1991. Bill Maurer, ‘Cyberspatial Sovereignties: Offshore Finance, Digital Cash, and the Limits of Liberalism’, Indiana Journal of Global Legal Studies, vol. 5, no. 2, 1998, pp. 493–519. See Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Beacon Press, Boston, 1944. (Pages 3–30 are reproduced in the sixth volume of the present series ‘Central Currents in Globalization’: James and Patomäki, eds, Globalization and Economy: Vol. 2, Globalizing Finance and the New Global Economy. John Gerard Ruggie, ‘Reconstituting the Global Public Domain: Issues, Actors and Practices’, European Journal of International Relations, vol. 10, no. 4, 2004, pp. 499–531, reproduced below. Stephen Gill, ‘New Constitutionalism, Democratisation and Global Political Economy’, Pacific Review, vol. 1, 1998, pp. 23–38, reproduced below. Ronen Palan, Jason P. Abbott and Phil Deans, State Strategies in the Global Political Economy, Pinter, London, 1996. Thorstein Veblen, The Place of Science in Modern Civilization, Russell & Russell, New York, 1961, p. 355. John Dunning, Alliance Capitalism and Global Business, Routledge, London, 1997. Charles P. Kindleberger, The International Economic Order: Essays on Financial Crisis and International Public Goods, Harvester-Wheatsheaf, London, 1988, p. 153. Martin Wolf, ‘Globalization and Global Economic Governance’, Oxford Review of Economic Policy, vol. 20, no. 1, 2004, pp. 72–84, reproduced below. Nicos Poulantzas, State, Power, Socialism, Verso, London, 1980. See Leslie Sklair, ‘The Transnational Capitalist Class and Global Politics’, International Political Science Review, vol. 23, no. 2, 2002, pp. 159–74, reproduced in a later volume in the present series: Paul James and Robert O’Brien, eds, Globalization and Economy: Vol. 4, Globalizing Labour, Sage Publications, London, 2007. Gilles Deleuze and Félix Guattari, A Thousand Plateaus: Capitalism and Schizophrenia, University of Minnesota Press, Minneapolis, 1987.