Global Governance in Question: Empire, Class and the New Common Sense in Managing North-South Relations

by Susanne Soederberg

Overview

Like many buzzwords, 'global governance' is poorly understood. In contrast to most mainstream accounts, this book examines global economic governance as an integral moment of contemporary capitalism. Susanne Soederberg presents a critical insight into its real nature and the interests that it serves.

This book begins by asking what has not been discussed in the mainstream debates - and why. Soederberg explores neglected issues including transnational debt and the coercive nature of US aid to 'failed states'.

Soederberg argues that mainstream understandings fail to engage with the wider contradictions that characterize global capitalism. In consequence, there is no explanation of the changing nature of American empire and capitalist power.

Furthermore, Soederberg maintains that global governance acts to normalize increasingly austere forms of capitalist expansion.

Product Details

ISBN-13:	9780745320694
Publisher:	Pluto Press
Publication date:	02/27/2006
Series:	Critical Introductions to World Politics Series
Edition description:	ANN
Pages:	216
Product dimensions:	5.32(w) x 8.47(h) x 0.60(d)

About the Author

Susanne Soederberg is a Canada Research Chair in Global Political Economy and Associate Professor in International Development Studies at Queen's University, Kingston, Canada. She is author of The Politics of the New International Financial Architecture: Reimposing Neoliberal Domination in the Global South (Zed, 2005).

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CHAPTER 1

Global Governance in Question

The international system that the UN Charter put in place needs to be renewed. The flaws and inadequacies of existing institutions have to be overcome. There is a need to weave a tighter fabric of international norms, expanding the rule of law world-wide and enabling citizens to exert their democratic influence on global processes. We also believe the world's arrangements for the conduct of its affairs must be underpinned by certain common values. Ultimately, no organisation will work and no law be upheld unless they rest on a foundation made strong by shared values. These values must be informed by a sense of common responsibility for both present and future generations.

Commission on Global Governance, Our Global Neighbourhood, 1995: xiv.

Global governance is often used by international policy-makers and scholars to describe and explain the socio-political infrastructure of globalization. Despite its growing popularity, however, this term remains, with a few notable exceptions, notoriously ill defined and devoid of any critical theorization (Hewson and Sinclair, 1999; Murphy, 1994; 2000; Wilkinson and Hughes, 2002; Overbeek, 2004). Global governance has therefore come to serve as a catchall phrase, rather than a concise descriptor. To conduct a critical evaluation of this term, it is imperative that we establish a clear definition of global governance at the outset of our discussion. While there is no consensus over this term, we can identify a generally accepted usage found in the highly influential Report of the Commission on Global Governance (CGG). According to the CGG,

[g]overnance is the sum of the many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated and co-operative action may be taken. It includes formal institutions and regimes empowered to enforce compliance, as well as informal arrangements that people and institutions either have agreed to or perceive to be in their interests (CGG, 1995: 2).

The CGG goes on to suggest that governance occurs not only at the national and global, but also at the local level. At each of these levels of analysis, there exists a multiplicity of actors, ranging from local producers to transnational corporations, from local and international non-governmental organisations (NGOs) to the World Bank. According to the CGG, this understanding of global governance allows for more diversity and lateral forms of decision-making than the traditional state-centric, top-down perspective that dominated much of the post-war period: 'There is no single model or form of global governance, nor is there a single structure or set of structures. It is a broad, dynamic, complex process of interactive decision-making that is constantly evolving and responding to changing circumstances' (CGG, 1995: 4). We should underscore that this particular meaning of global governance precludes global or world government.

There is much to commend the CGG's account of global governance – above all its humanitarian concerns for world peace, human security, and democratic forms of international co-operation. At the same time, however, the Commission's portrayal of global governance must be criticised for its lack of historical insight into the unequal human relations that comprise its multi-level governance structure. The CGG has been so intent on describing the harmony of difference brought about by globalization that it has failed to acknowledge not only the inequality and exclusion inherent in the 'global neighbourhood', but also the increasingly unilateral policies of the United States government, particularly vis-à-vis the South. Examples of these charges are not difficult to find. The unwillingness of the majority of the world's population to continue to adhere to global rules governing trade, which have been written largely by a select number of wealthy states, was evident in the breakdown of the World Trade Organization's (WTO) Ministerial Meeting held in Cancún, Mexico in September 2003. In very broad terms, poorer member states (for example, the Group of 20+ and Group of 77), representing 65 per cent of the world population, 72 per cent of its farmers and 22 per cent of its agricultural output, refused to ratify the global trade pact, as they felt that key trade issues, such as agriculture, market access and drug patent rules – not to mention the four new issues introduced at Cancún (investment, competition policy, transparency in government procurement, and trade facilitation – i.e. customs procedures) were not in the interests of the developing world, but rather of large corporate profits. It should be emphasized here that, while coalitions of the Third World work together to strengthen their position in relation to the G-7 countries, this should not be construed as the developing world speaking with one voice. Indeed, there were, and remain, many fundamental differences and tensions between countries of the global South, such as trade and development issues.

With regard to the (ongoing) exclusionary practices in the global neighbourhood, large segments of civil society – particularly the more 'radical' elements that disagree with neoliberal-led globalization – have been consistently barred at significant international conferences such as the joint annual meetings of the IMF and the World Bank, and that of the WTO, or G-7/8 meetings (see Drainville, 2004). Other examples of exclusion at the global level are readily available. The majority of civil society members from both the developed and developing world were excluded from the Financing for Development Conference in Monterrey, Mexico in March 2002, which was initiated and conducted by the United Nations, while only a select handful of what the G-7 has termed 'systematically important' emerging markets were included in one of the key institutional features of the New International Financial Architecture, namely the G-20 (Soederberg, 2004).

The most spectacular example of the unilateral behaviour of the American government was its reaction, along with the 'coalition of the willing', to the bombings of the World Trade Center on September 11, 2001: a non-UN-sanctioned military invasion ('pre-emptive strike' to prevent the use of weapons of mass destruction) and subsequent illegal occupation of Iraq in 2002. Against this backdrop of 'go it alone' policies, conceptualizations of 'empire' have become, once again, popular on both the right and the left (Hardt and Negri, 2000; Panitch and Gindin, 2003; Harvey, 2003a, 2003b; Kagan, 2003; Eland, 2002; Newhouse, 2003; Slaughter, 2004). Influential Washington neoconservatives, for example, have been using the 'E-word' freely, insisting that the United States is the world's most benevolent nation and that it should use its imperial power forcefully to expand 'freedom' and 'democracy' across the globe (Kagan, 2003; see also the Project for a New American Century: www.newamericancentury.org).

The fact that these relations of inequality, exclusion and dominance have been ignored by the CGG and other global governance sympathizers prompts us to ask some tough questions. Who benefits from global governance and why? Who is excluded, and why? Why has neoliberalism been largely neglected in the debates about global governance? Why does the United Nations – and particularly its 'special institutions', such as the World Bank and the IMF – stand above reproach in the CGG's understanding of global governance? What roles have states, particularly the US state, played in global governance? And finally, what is the connection between global governance and global capitalism? The objective of this book is to provide answers to these questions.

In very broad terms, the central argument running through this book is that mainstream understandings of global economic governance, particularly as represented by the CGG, fail to engage with the wider social relations and contradictions that characterize global capitalism. The immediate consequences of this neglect are, first, that there is no explanation of the changing nature of American empire and capitalist power in the world; and second, that the CGG's notion of global governance acts to normalize, neutralize, and legitimate increasingly austere forms of capitalist restructuring and expansion, which may be regarded as a deepening, heightening, and broadening of neoliberal domination.

Before I continue with an outline of the chapter and an historical contextualization of global governance, three caveats are in order. First, I do not claim to provide an exhaustive survey of global governance, which, of course, would be impossible, given that by its very definition it includes a system of rule anywhere from the individual to international organizations. In other words, while global governance covers a multiplicity of significant issues, such as gender, health, migration, race and identity politics, culture, environment, new security concerns, and so forth, my focus will be limited to global economic governance. This should not be construed as an attempt at economic reductionism, but instead as an historically sensitive exploration of the social, political, and ideological dimensions of issues largely ignored in the global economic governance debates – namely, the increasingly coercive power of corporations, debt, and official development assistance. Thus, within the parameters of this book, the terms 'global governance' and 'global economic governance' should be taken as interchangeable. Second, our discussion focuses specifically on the Report of the CGG (Our Global Neighbourhood), not only because this helps us narrow the scope of our inquiry into global economic governance, but also because the Report represents the ideas and values of an elite group of scholars and policy-makers from both the advanced industrialized countries and the global South. Moreover, instead of merely focusing on yet another scholarly discussion of global governance, I thought it more interesting and relevant to explore the underlying premises of a document that has greatly influenced the understanding of the way those in power (the United Nations, national governments, multilateral lending organisations, and so on) think about global governance. Moreover, given the fact that Our Global Neighbourhood was written over a decade ago, we are able to evaluate the recent history surrounding the CGG's claims and observations. Finally, the third caveat relates to my attempts at balancing clarity with complexity. In this regard, the reader should be aware that, whenever possible, I have attempted to provide definitions of technical terms in the endnotes.

I have organized this introductory chapter into three sections. The first section provides a general account of the wider historical context from which global governance, and more specifically the CGG, emerged in the post-war era. Building on this discussion, the second section highlights some of the key premises underpinning global governance by drawing on James Rosenau's seminal work. A few words regarding the rationale behind the focus on Rosenau is necessary. On the one hand, despite the presence of other global governance theorists, Rosenau's work coincides with the publication of the CGG, and thus captures the main sentiments and concerns of the Report on Global Governance in the mid 1990s when global governance emerged as a key concern in policy-making circles. On the other hand, Rosenau's work is concerned with the economic features of global governance, which is the main focus of this book. I argue that a major contributing factor to the wooliness surrounding the debate on global governance is found in the frustratingly vague usage of the term. By narrowing the scope of our inquiry to the policy content of the CGG and its theoretical complement, represented by James Rosenau's work, we are able to fine-tune our critical discussion about global economic governance. A third section provides an overview of the structure of the book.

THE EMERGENCE OF GLOBAL GOVERNANCE

It must be kept in mind that the CGG's Report has not been the first attempt to promote a more humane, co-operative, and peaceful international order. In the late 1800s, for example, Cecil Rhodes and Alfred Milner constructed the Society of the Elect and the Association of Helpers (or Secret Society), while US President Woodrow Wilson sought to create the League of Nations (1919–20), albeit unsuccessfully due to the failure of the US Senate to ratify the charter (Secretariat of the League of Nations, 1935). Although global governance differs from its predecessors, it shares a similar characteristic, in that none of these attempts to embed a particular vision of international order appeared from thin air. Instead, they emerged from historically specific material and ideological circumstances (see Cox, 1987; Helleiner, 1994; Webber and Rigby, 1996; Pauly, 1996; 1997; Agnew and Corbridge, 1995). In what follows, I will provide an overview of the material and ideational context from which the CGG and its particular version of global governance emerged. In doing so I shall focus on the institutional framework designed to regulate international trade and monetary relations in the post-World War II era – namely, the Bretton Woods system (BWS). While this international monetary and financial system was not the only feature of this period, it was one of the most important for the shaping both the world and domestic economies. Moreover, a discussion of the BWS provides a solid platform from which we may explore the themes in the next four chapters.

The Bretton Woods system (1944–71)

The post-war era, also referred to as the 'golden age' (1944–71) was characterized by what the neo-Gramscian theorist Robert Cox refers to as a hegemonic period. This term describes the manner in which a dominant state and other social forces (such as powerful capitalists in the form of transnational corporations and financial institutions) sustain their position through the creation of and adherence to universalized principles that are accepted or acquiesced to by a sufficient proportion of subordinate states and social forces, through both consensual and coercive means. For Cox, hegemony implies both intellectual and moral leadership, which translates into stronger states making certain concessions to obtain the consent of the weaker (Cox, 1987; 1993b: 264). One way universal norms of a hegemonic state like the US are transmitted to other subordinate states is through international organizations, such as the United Nations, the IMF, and the World Bank.

The semblance of inclusion and co-operation encapsulated in the BWS provided vital scaffolding for global capital accumulation, which was marked by mass production and consumption, also known as Fordism (Gramsci, 1971; Lipietz, 1987; Webber and Rigby, 1996). When World War II came to an end in 1945, the US needed to undertake two tasks in order to avoid a post-war economic slump. First, it had to find export markets that would consume its excess surplus, such as Western Europe and Japan. And second, it needed to find raw materials with which to manufacture its goods, such as steel from Germany. It is within this context that the US and key allies, such as the UK, created an international economic regime that was based upon universal norms centred on trade liberalization, the rejection of communism, and the adherence to stable monetary regimes (Ruggie, 1982). In July 1944, representatives of 44 countries met at Bretton Woods, New Hampshire, to design a multilateral postwar system through which the trade and monetary relations of the non-communist world could be regulated in a stable manner. An overriding concern for the policy-makers who were present at Bretton Woods was to avoid a repeat of the Great Depression experienced in the 1930s (Kindleberger, 1986). The policy-makers believed that the length and severity of the Depression was exacerbated by rampant protectionism in the 1930s, and by a lack of commitment by individual states to the creation of a stable international monetary and trade regime to guide national policy (Agnew and Corbridge, 1995; Helleiner, 1994; Pauly, 1997).

(Continues…)

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Table of Contents

	Series Introduction	vii
	Acknowledgements	viii
	Acronyms	ix
1	Global Governance in Question	1
2	Transcending Common Sense: Towards an Historical-Materialist Critique of Global Governance	24
3	Global Governance and Corporate Social Responsibility	53
4	Managing Sovereign Default within the Transnational Debt Architecture	96
5	Global Governance and Development Assistance: The Case of America's Millennium Challenge Account	127
6	Conclusion: Beyond Global Governance?	157
	Notes	164
	Bibliography	179
	Index	199
	Tables
3.1	US Direct Investment Position Abroad on an Historical-Cost Basis, 1955-2003	58
3.2	Growth of the World's Largest Firms, 1962-82	58
3.3	Stock of FDI in the South by Major Countries, 1967 and 1983	71
3.4	FDI Outward Stock, by Home Region and Economy, 1980-2002	72
3.5	FDI Inward Stock, by Host Region and Economy, 1980-2002	73
3.6	Top 20 of the Financial Times Global 500 Rankings 2004	77
4.1	Global Current Account Balances, 1981-2001	102
4.2	Long-Term Debt	111
5.1	Net Capital Flows to Developing Countries, 1997-2003	141
5.2	Eligibility Criteria for the MCA	151
	Boxes
3.1	Principal Obligations of TNCs in the Draft United Nations Code of Conduct on Transnational Corporations	63
3.2	10 Principles of the Global Compact	90

Editorial Reviews

'Global governance is the latest buzzword. Now comes a study that brings clarity and critical analysis to this ill-defined topic.' --William I. Robinson, University of California-Santa Barbara

'[An] acute and revealing examination of the economic difficulties facing the American empire.' --Ronnie D. Lipschutz, Professor of Politics, University of California, Santa Cruz

'Indispensable for students of international political economy and a must for political activists.' --Professor Elmar Altvater, Department of Political Science, Free University, Berlin

'Soederberg breaks new ground in disclosing the cumulative processes by which empire is represented and managed.' --Philip McMichael, Professor and Chair of Development Sociology at Cornell University

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