Oil Dependency - Mexico and Nigeria

Although both states have a supporting cast of additional problems from corruption to centralized government ownership of large portions of the oil industry and the ever present foreign exploitation of globalization, the oil-rich states of Mexico and Nigeria have made the mistake over the past five decades of falling into excessive dependency on oil.

Mexico is “rich in oil, silver, and other natural resources” (Kesselman, Krieger, and Joseph, 436) and like any state that is rich or deficient with natural resources, management or a lack of management, corruption and foreign investment/exploitation are usually closely related to the directions of the state. The Mexican state is categorized by the “World Bank as an upper-middle-income developing country” (Kesselman, Krieger, and Joseph, 445) and its “industrial and petroleum-based economy gives it a per capita income ($13,200) comparable to that of countries such as Brazil, Russia, and South Africa, and higher than those of most other developing nations” (Kesselman, Krieger, and Joseph, 445). In the oil rich state of Mexico “the government-owned petroleum industry is a ready source of revenue and foreign exchange, but this commodity also makes the economy extremely vulnerable to changes in international oil prices” (Kesselman, Krieger, and Joseph, 446). A prime example of how oil dependent states are dictated by the ebb and flow of international oil prices was when the Mexican “state-owned petroleum company, PEMEX, grew to enormous proportions in the 1970s and 1980s under the impact of the oil boom” (Kesselman, Krieger, and Joseph, 457) and later when “international petroleum prices plunged in the early 1980s, and Mexico plunged into a deep economic crisis” (Kesselman, Krieger, and Joseph, 442). The correlation between dependence on natural resources and migration becomes evident in the case of Mexico because “the inability of the Mexican economy to create enough jobs pushes additional Mexicans to seek work in the United States, and the cash remittances that migrants abroad send home to their families and communities are now almost as important a source of income for Mexico as PEMEX’s oil sales” (Kesselman, Krieger, and Joseph, 474).

Oil dependency has also had serious consequences on Nigeria as “authoritarian rule has given way to competitive oligarchy, in which an increasingly greedy, oil-rich political elite fight to expand their power, while more than 90 percent of Nigerians struggle to survive on less than two U.S. dollars per day” (Kesselman, Krieger, and Joseph, 525). The Nigerian economy has also been “subject to the fluctuations of the international oil market” (Kesselman, Krieger, and Joseph, 536) as the government has enjoyed “high oil prices and increasing U.S. consumption of Nigerian oil and gas” (Kesselman, Krieger, and Joseph, 536) over the past decades while today “suffering the consequences of not addressing its oil dependence, as its projected oil revenues have dropped more than half as oil prices fell in late 2008 under global recession pressures” (Kesselman, Krieger, and Joseph, 536). Similar to Mexico during the oil boom of the 1970s, “Nigeria greatly increased its expenditures on education, defense, and infrastructure” (Kesselman, Krieger, and Joseph, 538) which spurred “increasing corruption, as some officials set up joint ventures with foreign oil companies and others stole public funds” (Kesselman, Krieger, and Joseph, 538). The largest error Nigeria made was abandoning the Agricultural sector in the face of the booming “petroleum industry” (Kesselman, Krieger, and Joseph, 538) instead of attempting to reinvest into both sectors and expanding exportation. Instead, “Agricultural export production plummeted from 80 percent of exports in 1960 to just 2 percent by 1980” (Kesselman, Krieger, and Joseph, 538). Nigeria’s oil dependency since the 1970s has “relied on oil for more than 90 percent of its export earnings and about three-quarters of government revenues” (Kesselman, Krieger, and Joseph, 539). In the area of migration, interesting enough, Nigeria experienced an inward flow of immigration as “at the height of the 1970s oil boom, many West African laborers, most of them Ghanaians, migrated to Nigeria in search of employment” (Kesselman, Krieger, and Joseph, 546), but today “many Nigerians now flock to the hot Ghanaian economy for work and to countries across the continent, including far-off South Africa” (Kesselman, Krieger, and Joseph, 546).

The following news report link from May 2013 reports a warning from the Organisation for Economic Co-Operation and Development to Mexico on its oil dependency. The reports points out that Mexican president Enrique Pena Nieto’s dedication for overhauling the nation’s energy sector and the opening of the Gulf of Mexico for private sector oil exploration:

http://www.upi.com/Business_News/Energy-Resources/2013/05/17/OECD-warns-Mexico-on-oil-dependence/UPI-49691368786702/

The following news report link from January 2013 on Nigeria’s oil dependency, the exploitation of shale gas in Nigeria and the emergence of fracking in Nigeria:

http://www.businessdayonline.com/NG/index.php/analysis/editorial/50699-fracking-and-future-of-nigerias-oil-dependency

Resources:

Kesselman, Krieger, and Joseph. 2013. Introduction to Comparative Politics, 6th edition. Boston, MA: Wadsworth

Commodification, Finance Capital, and Consumerism

Considering that globalization is basically the expansion of capitalism from a state constrained capital accumulation process to an intricate global network of consolidating international capitalist accumulation and consolidation, globalization does not impact capital trade, commodification, and consumerism.  It is the expansion of capitalism that creates and expands commodification, including the commodification of technologies accredited to globalization, and the expansion of capital trade made fluent by IMF international currency exchange rates that actually define the character of globalization.  Therefore, globalization does not have implications on trade, because it is capitalist trade that has implications on globalization as the most basic pillar of the international system of globalization.

Capitalism is not a new system of accumulation and has been evolved multiple times throughout history due to the development and commodification of technological advancements and trade.  Capital generation once was mainly acquired “through trade in agricultural and mining output as well as in certain luxury goods like furs and spices” (Scholte, 112) during the early era of colonial imperialism and evolved after the Industrial Revolution as “commodities expanded to include manufactures from large-scale factory production” (Scholte, 113) and tactics of enhanced labor division in mass manufacturing.  The system of Capitalism continued to expand with each technological wave, not only in scope of supraterritoriality….but in methods of capital accumulation as “from the late nineteenth century onwards, commercial and industrial capital were supplemented with finance capital” (Scholte, 113).  Finance capital is especially noteworthy of attention because of the commodification of capital itself, as “global banking, global securities and global derivatives business have hugely increased both the volume and the variety of financial instruments that serve not so much as facilitators of other kinds of production, but as channels of accumulation in their own right” (Scholte, 113).  When capital becomes a commodity, it is “not only to further capitalist production in other sectors (agriculture, manufacture, etc.), but also as a means of accumulation in their own right (Scholte, 116).

While there is no question that capitalism, especially in its current international format and the various history affiliated with the accumulation and consolidation of capital still in existence, is exploitive in nature, the trend of consumerism and the mass produced promotion to glamorize such a culture of consumerism by capitalists utilizing technological commodities such as television, satellite, internet, and smart phones, technically falls on the shoulders of the people in consumer states.  Advertising is a major component in the development of a consumer state, such as the U.S., as “advertising has over the past century, and especially during recent decades, become a crucial adjunct to much capitalist enterprise” (Scholte, 114). An example of the recent advertising increase can be seen in the following statement: “World expenditure on product promotion burgeoned from $7.4 billion in 1950 to $312.3 billion in 1993” (Scholte, 114).  Consumerism is an unhealthy state trend “where people frenetically acquire (and usually fairly quickly discard) a variety of goods that provide the user with some kind of instant but ephemeral gratification” (Scholte, 113) and “transient desires, especially cravings for novelty, entertainment, fantasy, fashion and pleasure” (Scholte, 113).

Everything that capitalism touches becomes commoditized, and yet private sector capital actors still strive to extend maximized capital profiting by manufacturing in so-called lesser developed countries in order to avoid tariffs or taxation (depending on different variables such as regional trade agreements, etc.) in selling to the citizens of consumer states, like the United States.  Two areas of note, if not concern, are off shore manufacturing zones for private sector corporations and private sector multi-national corporations.  These off shore “sites also entice capital with low costs, limited regulation, and statutory guarantees of confidentiality” that “provide `tax efficiency' and `discretion'” (Sholte, 124).  Multi-Nationals Corporations (MNCs) also maximize profits to consumer states by “establishing affiliates in two or more countries or by forging strategic alliances with enterprises based in other countries” (Scholte, 125).  In the case of the most economically heavy private sector conglomerate entities, international manufacturing is spread throughout many various states depending on wage requirements, taxation, and tariffs.  The example provided in the Scholte text is: “as of the mid-1990s the Unilever corporation encompassed more than 500 subsidiaries in over 90 countries, and the mass media conglomerate Bertelsmann covered more than 600 affiliates in 53 countries. In the realm of strategic alliances, the WorldPartners Association, formed in 1993, has linked 19 telecommunications carriers in operations across over 35 countries. The advertising firms FCB and Publicis have since 1988 developed collaboration between their several hundred offices in over 70 countries” Scholte, 125).  Many MNCs within globalization are products of “mergers and acquisitions” caused by the capital consolidation process…..the recirculating capital still wet with blood from the transatlantic slave trade and colonialism.

Generating capital from the trade of commodities is the basis of capitalism, and capitalism is an expanding and consolidating organism that “has brought substantially increased concentration to many areas of production” (Scholte, 129) and trade.

Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan.

 

 

Globalization and Identity Theft Democracy

It is not viable to argue that capitalist globalization is an anti-democratic force because true democracy, “understood to prevail when the members of a polity determine collectively, equally and without arbitrarily imposed constraints”, is a rare element around the globe, while what is portrayed and accepted as democracy is actually parliamentary, or representative, democracy and is a mechanical component of capitalism because it is the most easily manipulated form of government in existence (Scholte, 262).  While true democracy is “participatory, consultative, transparent and publicly accountable”, representative democracy is a form of governance in which capital influence places voting representatives and influences policy votes (Scholte. 262).  Since the most industrialized, capital heavy states are not true democracies, the international organizations which weave the structure of capitalist globalization in “agencies such as the EU, MERCOSUR, the IMF and the UN” are equivalently open to the manipulation of capital and political influence and bribery.  No other so-called democratic international organization is more notable for this type of elitist democracy than the United Nations, which allows the permanent members of the Security Council to cast vetoes above all other members.  How many times has the U.S. cast their veto to defend human rights violations committed by Israel against the Palestinians?  There is certainly little democracy in the capital-heavy “Bretton Woods institutions” where “quota-based weightings have given one quarter of the member-states control of three-quarters of the votes” (Scholte, 269).  The World Bank issues so-called developing states ‘conditional loans’ to encourage foreign private sector exploitation of natural resources while the “IMF has developed considerable links with business groups” (Scholte, 270).

As true democracy would be detrimental to internal state capitalism and the representative democracy steered by capital, “a future electronic democracy” where each citizen has a vote on legislation and policy within the most politically powerful states will never be voluntarily implemented unless the methods of that democracy are “in private hands and highly concentrated ownership” (Scholte, 276).  As true democracy has never existed within the most powerful of capitalist states, and these states hold the greatest economic, technological and military power within the international organizations that solidify globalization and embrace international representative democracy, the result will continue to be international inequality guised as smiley-faced democracy.

Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan.

 

 

Democracy and Islam: Can it Co-Exist? The Islamic Republic of Iran.

Iran has been an “Islamic Republic since the 1979 Islamic Revolution” and is a “mixture of theocracy and democracy” with political system emphasis based on “clerical authority and popular sovereignty, on the divine right of the clergy and the rights of the people, on concepts derived from early Islam and from modern democratic principles (Kesselman, Krieger, and Joseph, 579-580).  Before looking at the Iranian political structure and attempting to identify which portions are democratic and which are not, two points must be considered:

1.  The Iranian population consists of 89% Shia Muslims, 9% Sunni Muslim, with Christian, Jews and others comprising the remaining 2% (CIA, 2013).  These demographics actually support the argument that theocracy and democracy function together in the case of Iran’s constitution which “affirms faith in God, Divine Justice, the Qur’an, the Day of Judgment, the Prophet Muhammad, the Twelve Imams, the eventual return of the Hidden Imam (the Mahdi)” (Kesselman, Krieger, and Joseph, 599).  While the U.S. Supreme Court reviews legislation based on the U.S. Constitution, the Iranian constitution is aimed toward Islam and the teaching of the Quran.  It is irresponsible for a person from the West to criticize the political structure of Iran, especially those who have not studied Islam in order to understand Islam, by denouncing Iran’s political structure as undemocratic.  With 98% of the Iranian population being Muslim, theocracy and democracy co-exist and function as a system equivalent to any political system in the west.

2.  While most developing states are post-colonial possessions that inherited European style government structures after colonial withdrawal and so-called state independence in the first decades of capitalist globalization, “Iran was never formally colonized by the European imperial powers and has always been independent” (Kesselman, Krieger, and Joseph, 617).

So how democratic is the Islamic Republic?

The Iranian presidency, limited to two four year terms, is elected by the “general public” and “all citizens, both male and female, over the age of eighteen have the right to vote (Kesselman, Krieger, and Joseph, 599).  If a “candidate does not win a majority of the vote in the first round of the election, a run-off chooses between the two top vote getters” (Kesselman, Krieger, and Joseph, 601).  The “executive power for the president” is defined in the “constitution of the Islamic Republic” and once elected the Iranian president has the responsibilities to “conduct the country’s internal and external policies, including signing all international treaties, laws, and agreements; chair the National Security Council, which is responsible for defense matters; draw up the annual budget, supervise economic matters, and chair the state planning and budget organization”, as well as the responsibility to propose legislation to the Majles (Kesselman, Krieger, and Joseph, 601).

The legislative branch of Iran consists of a unicameral body, the Majles, that consists of 290 seats and is elected by direct national elections “every four years” (Kesselman, Krieger, and Joseph, 580).  The Majles “can remove cabinet members—with the exception of the president—through a parliamentary vote of no confidence” and “can withhold approval for government budgets, foreign loans, international treaties, and cabinet appointments” (Kesselman, Krieger, and Joseph, 609).

In addition to a president and a legislative body being elected by popular vote, the “Assembly of Experts is elected every eight years by the general public” (Kesselman, Krieger, and Joseph,601).  It is this eighty-six member Assembly of Experts that “appoints the Supreme Leader”, that is placed to “supervise the supreme leader’s capabilities to determine whether he is able to perform his duties”, and to “dismiss him if he is unable to perform his constitutional duties or it becomes known that he did not possess some of the initial qualifications such as “social and political wisdom, prudence, courage, administrative facilities and adequate capability for leadership” (Farhi).

Overall, the structure of the Iranian political system appears highly democratic and quite different from how it is usually portrayed on Fox News.

The Supreme Leader, appointed by the democratically elected eighty-six member Assembly of Experts, is often the center of democratic criticism from the capitalist western states, especially the United States.  The state constitution “gives wide-ranging powers to the Leader” which allows the elimination of “presidential candidates”, and “as commander-in-chief, he can mobilize the armed forces, declare war and peace, and convene the Supreme Military Council. He can appoint and dismiss the commanders of Revolutionary Guards as well as those of the regular army, navy, and air force. (Kesselman, Krieger, and Joseph,600).  One of the most interesting nongovernment posts held by the spiritual leader is “director of the national radio-television network”.  Again, the Supreme Leader is not some unchecked power and is held to his constitutional duties, a constitution which is aimed toward Islam, by the Assembly of Experts (Farhi).

The Guardian Council is the “most influential body in the Iranian system and is comprised of “six theologians appointed by the Supreme Leader and six jurists nominated by the judiciary and approved by parliament” (BBC).  While the Majles is the main legislative branch, “bills do not become law unless the Guardian Council deems them compatible with Islam and the Islamic constitution.” (Kesselman, Krieger, and Joseph, 580).  The review process ensures that passed bills “conform to the shari’a” (Kesselman, Krieger, and Joseph, 603).  The Guardian Council is also the body that approves election candidates based on compatibility to the Islamic Republic and Islam.

 

The following news report link from WMTV in Madison, Wisconsin is a democratic example of elections in Iran and is entitled “Iran Citizens vote for president at Wisconsin Hotel”.

http://www.nbc15.com/home/headlines/Iran-citizens-vote-for-president-at-Wis-hotel-211571441.html

RESOURCES:

BBC News.  2013.  Iran: Who Holds the Power?  Accessed on December 4, 2013.  http://news.bbc.co.uk/2/shared/spl/hi/middle_east/03/iran_power/html/guardian_council.stm

CIA.  2013.  CIA World Factbook.  Accessed on December 4, 2013.  https://www.cia.gov/library/publications/the-world-factbook/geos/ir.html

Farideh Farhi.  2013.  The Assembly of Experts.  United States Institute of Peace.  Accessed on December 4, 2013.  http://iranprimer.usip.org/resource/assembly-experts

Mark Kesselman, Joel Krieger, and William Joseph. 2013. Introduction to Comparative Politics, 6th edition. Boston, MA: Wadsworth

 

Economic Stratification - State and International

“Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth -- the soil and the labourer.” – Karl Marx (Capital, 1867)

“The core dynamic of the capitalist system is the accumulation process, a process in which a portion of the profits reaped through the sale of goods and services is reinvested, swelling the capital stock, incorporating new technologies in the process, and permitting larger sales and profits in the future.” –Victor D. Lippit (Capitalism,  2006)

Global economic stratification is not a random phenomenon as “stratification by class, country, gender, race and other social categories predates the contemporary rise of supraterritoriality by several generations or even many centuries” (Scholte, 235).  When considering that the basic premise of capitalism is that an entity must have capital to generate capital through reinvestment to generate further capital, it is important to recognize that “the modern history of capital dates from the creation in the 16th century of a world-embracing commerce and a world-embracing market” (Marx, Das Capital).  The origins of global economic stratification originated from the 16^th century and accelerated with industrialization, first within the state and later with developed global stratification beginning with colonialism and the transatlantic slave trade.  From a historical perspective, it can be argued that the capital generated from colonial exploitation and the transatlantic slave trade was eventually consolidated through cyclic reinvestment of generated capital from those forms of colonial exploitation and reinvested in new technologies to magnify capital accumulation through exploitation and production.  As industrialization and new technologies evolved, economic stratification within the state and across the international stage was elevated because the exploited domestic capital-less working masses and exploited states had only their labor and natural resources to generate capital while the colonizing state and the private sector capitalist with means of production could continuously reinvest generated capital into new technological means of production, exploitation, and military weaponry.

As we look at domestic stratification within the United States, “By 1991 the richest 10 per cent of the US population owned 83.2 per cent of assets” (Scholte, 238).  This stratification phenomenon is not exclusive to the United States, but is a characteristic of most states with capitalist structure or tendencies.  In Russia the “richest fifth of the population saw its proportion of national income rise from 32.7 per cent in 1990 to 46.7 per cent in 1997, while the poorest fifth had its share decline over the same period from 9.8 to 6.2 per cent” and “in the early 1990s the wealthiest fifth of the population in Brazil earned 26 times as much as the poorest fifth” (Scholte, 238).

Looking at the international stage, it can also be identified that factors of capital imperialism “have since the nineteenth century highlighted a purported inequitable stratification of countries”, especially after the end of World War II and the establishment of organizations such as the World Trade Organization/GATT (WTO), the International Monetary Fund (IMF), and the World Bank  (Scholte, 242).  The Bretton Woods organizations, in correlation with the WTO/GATT, began a shift in international imperialism from state on state colonial exploitation of natural resources to the imperial private sector exploitation of so-called Lesser Developed Countries (LDCs) through private sector globalization structurally enforced and stimulated by IMF and World Bank conditional loans which open up poorer states to foreign private sector investment through extraction of domestic natural resources and exploitation of cheap labor, especially with Multinational Corporations (MNCs) profiting from lower wage requirements in poorer states in order to maximize profit by moving “manufacturing from the North to the South and the East” (Scholte, 238).

The most powerful international government organizations (IGOs) and the most capital heavy Non-Government Organizations (NGOs) also contribute to global stratification among states.  One example for this argument is “the G7 governments currently control more than 45 per cent of votes on the IMF Executive Board, while 43 governments in Africa between them control less than 5 per cent” (Scholte, 244).

What are possible solutions to economic stratification within the state and on the international stage within economic globalization?  The first thing that must be considered in the basic concept of capitalism and that is the generation, accumulation and reinvestment of capital for further capital regeneration and accumulation.  This is an exploitative concept and the system of capital generation itself goes against any true altruist relief of stratification whether on the state level or international level.  Solutions to economic stratification within individual states are much more difficult to propose and implement because it requires analysis of the history of that state.  For instance, there are racial economic divides in the modern United States due American slavery.  In order to rectify the historical economic ramifications of slavery in the U.S., some sort of redistribution of wealth would have to be implemented.  Sadly, the United States government has not even issued an apology for slavery.  As for international stratification, perhaps former imperial powers that generated capital from the exploitation of colonial possessions should be held responsible, to some extent, for the conditions of their post-colonial possessions (such as Britain to Jamaica or Italy and Britain in the case of Somalia).

With centuries of capitalism and centuries of capital regeneration through exploitation and accumulation, evolving from colonial imperialism to imperialist globalization, there really is no clear cut solution to economic inequality among the most powerful capitalist states and exploited states.  Globalization is based on capital exploitation.    

Resources:

Marx, Karl.  1867.  Das Kapital: Volume One.  Accessed on November 28, 2013 from  http://www.marxists.org/archive/marx/works/1867-c1/index.htm

Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan.

Soft Authoritarianism - Russia

Soft authoritarianism is defined as “political control in which a combination of formal and informal mechanisms ensure the dominance of a ruling group or dominant party, despite the existence of some forms of political competition” (Kesselman, Krieger, and Joseph, 340).   Some scholars have assessed that Russia has fallen under the category of “soft authoritarianism” since 2008, “when Putin became prime minister” while also being elected as chairperson of the United Russia political party (Kesselman, Krieger, and Joseph, 356) . 

The Russian government structure is not vastly different from the United States.   The legislative branch is comprised of an upper and lower house, better known as the State Duma and the Federation Council.  While the State Duma, or Lower House, is “chosen by direct election”, the Federation Council, or Upper House, have members “appointed by heads of regional executive and representative organs” and this is one factor contributing to the “soft authoritarianism” label applied to the United Russia party. 

Another factor can be found in the link between president and prime minister.   The president appoints the prime minister “with the approval of the lower house of the parliament (State Duma)” (Kesselman, Krieger, and Joseph, 334).  The presidential post is limited to two consecutive terms, which changed from four year terms to six year terms in 2012, but there is no restriction on overall terms served.   This means that a president who has served two consecutive presidential terms can be re-elected to presidency after a member of his affiliated political party serves a term.    A prime example of the United Russia party control can be seen with Putin, who “recorded consistently high levels of popular support throughout his tenure and successfully managed the transition to his handpicked successor as president, Dmitry Medvedev, who won the 2008 presidential elections handily”, which resulted in Medvedev appointing Putin as Prime Minster (Kesselman, Krieger, and Joseph, 340) .  Before Putin’s re-election to presidency in 2012, Medvedev “announced at a party convention in Moscow that he would step aside for Mr. Putin, who served as president from 2000 to 2008 but was limited by the Constitution to two consecutive terms” and that he would assume the position prime minister after Putin’s re-election (Barry, 2011).  Putin has recently suggested that he may run for a fourth presidential term in 2018.

Another area of interest with Russia and the “soft authoritarianism” label is the fact that “partial or complete state ownership has remained fairly intact or even been restored after earlier privatization was carried out. (Kesselman, Krieger, and Joseph, 357).   A prime example of this would be Gazprom, the natural gas monopoly, in which the federal government controls just over 50 percent of the shares” and the fact that “Indirect state influence is also realized through the dominant ownership share in many regional TV channels by Gazprom-Media, a subsidiary of the state-controlled natural gas company” (Kesselman, Krieger, and Joseph, 358).

The following link is for a Bloomberg news report from this month that illustrates state control over Gazprom.

http://www.bloomberg.com/news/2013-11-24/putin-bets-on-gazprom-purge-as-slowdown-threatens-legacy.html

The following link is for a November 2013 new report that illustrates possible trouble between Putin and Medvedev, the current economic issues in Russia, and possible signs of future political and economic hard lining by Putin.

http://www.hurriyetdailynews.com/russian-pm-under-pressure-after-putin-rebuke.aspx?pageID=238&nID=57971&NewsCatID=353

RESOURCES:

Barry, Ellen.  2011.  Putin Once More Moves to Assume Top Job in Russia.  New York Times, September 24, 2011.  Accessed on November 27, 2013.  http://www.nytimes.com/2011/09/25/world/europe/medvedev-says-putin-will-seek-russian-presidency-in-2012.html?ref=dmitriamedvedev&_r=0

Mark Kesselman, Joel Krieger, and William Joseph.  2013. Introduction to Comparative Politics, 6th edition.  Boston, MA: Wadsworth.

The Rise of IGOs and MNCs....and the Decline of the State

     As Samuel Huntington points out about democracy in his 1991 book entitled “The Third Wave: Democratization in the Late Twentieth Century”, the development of Globalization has also occurred through historical waves which have increased the influence of some actors on the international stage, and reduced the influence of other actors.  Those specified historical waves or transitions favoring global economic consolidation, have occurred in conjunction with technological evolutions and with wars such as World War I, World War II, The Cold War, and now the so-called Global War on Terror.  The result of globalization has been the rapid increase in influence for Intergovernmental Organizations (IGOs) and multi-national corporations (MNCs) and the global economic system, with a notable decline in influence for individual states.  Since the main emphasis of most non-government organizations (NGOs) is to provide information in support of IGOs, I view the majority of fluctuations in these spheres of influence in direct correlation with the main international IGOs and MNCs.

     IGOs such as the United Nations have gained considerable influence on the international stage during the decades following the conclusion of World War II because “`international organizations' have developed into `global governance agencies' with a certain autonomy from states” (Scholte, 22).  The treaty organization of the United Nations, establishing international democracy aimed to correct the true equality flaws of the League of Nations, was the second attempt at international democracy and a regulated global economy.  The United Nations made improvements on the prior League of Nations by providing the five permanent member-states of the UN Security Council with a veto power that succeeded in basically establishing a collective international hegemony among the most powerful allied states after World War II.  The structure of the UN Security Council allows it to implement action against non-compliant or accused aggressor states through collective actions ranging from unified economic sanctions to collective military intervention. 

One of the most important factors concerning the increase of international influence among IGOs is the interconnectivity of globalization.  The World Trade Organization, which can economically isolate non-member or non-compliant states through consolidated trade restrictions and sanctions, is predominantly comprised of members of the United Nations.  Whether politically or militarily, international power under globalization rests on the accumulation of capital, and IGOs such as the United Nations and the WTO would not be able to wield such international influence if not for the International Monetary Fund (IMF), which establishes international currency exchange rates binding states to global trade and debt, and the World Bank, which issues conditional capital loans to so-called lesser developed countries (LCDs) in order to bring these LCDs into the global economy and to provide access for foreign private sector investment and exploitation of natural resources to include cheap labor.  In such an international web of binding capitalism, private sector multi-national corporations have also grown in international strength due to the fact that “states cannot tame the tyranny of global corporations” (Scholte, 32).  Due to international and regional trade agreements such as the North America Free Trade Agreement (NAFTA), private sector corporations are able to manufacture in lesser developed states with lower wage requirements and maximize profits by selling to consumer states with higher wage requirements, which in many cases is the origin point of the corporation itself. 

The international entrenchment of capitalist globalization, the Bretton Woods organizations, and the consolidated power of the United Nations have all contributed to the diminished amount of regulating power that the traditional territorial state has over the private sector corporations and the rise of IGOs and MNCs has caused many analysts to link “the growth of global relations to `the diminished nation-state', `the decline of the nation-state' and `the retreat of the state' (Scholte, 21).  It is this phenomenon of economic relations that has diminished the individual power of the state, and the main reason that this individual influence has been diminished is because a great majority of individual states are intertwined into the global economic system; meaning that they are unable to subsist economically if isolated from the global economy or are already enslaved under international debt through the World Bank or IMF.  The counter argument to this view is that “a state could, if it wished, extricate itself from global relations”, but this is not a realistic argument and at this juncture in international globalization, economic independence from the global economy would not be viable for a majority of states, especially post-colonial states, and certainly not a permanent option for any state (Scholte, 21).

Resources

Huntington, Samuel. 1991.  The Third Wave: Democratization in the Late Twentieth Century. Norman, OK: University of Oklahoma Press.

Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan, 21-33.