Thursday, 13 May 2010

The Three-Layered Chess Box

A central question of global economics concerns the architecture of policy institutions. If you regard the global socio-economic system as a single unit -- a not entirely unreasonable assumption, perhaps -- then it is strikingly obvious that the system's optimal management would call for much stronger global governance functions than existing today. Global economics calls for efficient global monetary and fiscal policy, global financial regulation, enforceable global solutions to the global climatic issues, the rapid loss of biodiversity, overfishing, and so on. This just does not happen. The 2007-2009 crisis of the global economy was perhaps the best chance so far to create on overarching economic policy umbrella for the world economy, an opportunity left unused despite the multitude of summits ending with the Great Leaders' press conferences, which in turn were followed by uniformly unilateral action. The failure of Copenhagen, with the outlook of 'perhaps' Cancun forming the basis of an agreement to be reached in South Africa in the third step, speaks of similar inaptitude when it comes to managing the climate.

Why is this? Why are sovereign states so reluctant to coordinate policy, let alone give up power for the protection of the shared economic and ecological commons?

Tuesday I got to meet an international relations thinker, Joseph Nye. He, as an extension of his earlier innovation smart power, suggests that the traditional two-dimensional chess board of the power game among states should be replaced by a three-dimensional, three-layered box, in which the traditional hard power layer is accompanied by one where the dynamics among economies take place, and another one where transnational sociopolitical processes dominate.

From a global economics point of view this model is strikingly state-centered. If the main focus of the analysis is military power, compared to which other forms of inter-state persuasion can be softer or alternative, then the natural unit of analysis is of where the military is: the sovereign state. Yet, there seems to be something wrong with this picture.

The economy layer of Joseph Nye’s analysis has changed tremendously in the past hundred years. While even a few decades ago each national economy more or less corresponded to a state, we are hard-pressed to find truly local economic processes today. Finance is global wherever you go. Manufacturing systems that used to be local, then became regional, are now predominantly global. The pharmaceutical market is global. Raw materials are global. The transportation system is global. Even the ultimate local product, that of farming, has gone global. Therefore, perhaps it can be argued that there is no layer that is formed by national economies. Although it’s tempting to talk about the Chinese economy, the Indian economy, the American economy, or even the European economy, these are increasingly useless categories. Their borders became fuzzy. Integration into one large economic system, the emergence of a truly global economy seems to be a more appealing model.

The trouble is that the rise of the new, global organisational level has not been accompanied by governance institutions with the same scope. We are trying to manage what is essentially a global process using national level economic policy institutions.

The transnationals, that is, the third layer that Joseph Nye suggests as a building block of the three-dimensional global power structure, has similar problems. For what a decade ago might have been somewhat negligible side phenomena, such as NGO efforts in international reaction of the Haitian earthquake, or the anti-malaria activities of the Gates foundation, or the PR exercises of Greenpeace, is now giving way to a global movement. The trigger, it seems to be increasingly obvious, is a major ecological catastrophe that is to dominate the coming decades. The rapidly changing climate, and the collapsing biodiversity is creating a strong demand for collective global action. Just as in the case of the global economy, we are trying to meet this demand using state-level governance tools, and hence are predictably falling short.

And thus one might turn the logic around, and ask if it is the location of the hard power, the fact that it is anchored to the bureaucracy of the sovereign state which stops the formation of the global governance institutions. In other words, is it possible that the failure of Copenhagen, the never-emergence of a global financial regulatory system, or the we-have-not-even-got-done-to-tackle-it overlogging and overfishing problems stay unresolved because of states that mistake their hard power for global omnipotence.

To pick an example, do you think that should the size of the US military spending be not the half of the world’s total, but just a quarter, the same as its economic share, would the US have signed up for Kyoto? Or for a global consumer protection standard? Or a global financial regulation? Or globally harmonised economic policy? Or the ICC? Is the fact that the US is a military superpower stopping it from taking part, or even a lead, in building the global policy architecture that would offer to deal with global problems unrelated to security issues? Or, perhaps, could there be a general link between the hard power of a state and its unwillingness to to hand over governance functions to transnational institutions?

If you were to find evidence supporting the relationship between hard power and attitudes towards global collective action, how would you go about doing it? I tried using SIPRI’s military spending data, but it seemed too messy due to countries being in active conflict. The world values survey offers questions like “willingness to fight for one’s country”, but these seem to reflect personal values rather than the values projected onto the state. Similarly, what would capture a country’s attitude towards global action? If you look at ecological footprint it is going to be dependent on the country’s economic development level. If you take measures of environmental sensitivities, then you might merely pick up a transition towards post-materialist values.

What we need is measure of attitude towards the military might of one’s country and some measure of the recognition that global environmental problems need different solutions than local ones.

Consider the following graph:

The x-axis of the above graph shows the level of anxiety about the environment from 'very serious' to 'not serious at all'. The y-axis shows the percentage of respondents who name the 'strong defence force' as first or second choice as 'the aim of state' of their country. The three red curves correspond to three local environment questions (water, air, sanitation); the three blue curves correspond to three global environment questions (global warming, biodiversity, pollution of oceans).

It seems that the trend is very clear: those who are worried about the global versus the local environment also tend to be less in favour of a strong national military. And vice versa: those who think the global environment is not that a serious issue tend to like the idea of their country's defence might.

The data thus seem to support the hypothesis that state level hard power stands in the way of common global action, yet arguably individual attitudes does not necessarily translate into state action.

However, it is impossible to tell the direction of causality, at least based this data. Unfortunately, these are questions asked only in the last, fifth round, of world values survey, and hence there is no time series to offer a causal direction. One can only speculate that if there really is a relationship between the two, the more recent global environment worry would follow from the historical preference for military power (in line with the hypothesis) rather than the other way around. This is, though, obviously just a speculative answer.



  1. "If you regard the global socio-economic system as a single unit -- a not entirely unreasonable assumption, perhaps -- then it is strikingly obvious that the system's optimal management would call for much stronger global governance functions than existing today."

    It is entirely unreasonable to regard the socio-economic system as a single unit.

    Look around you. Do you not see individuals? Are you not an individual yourself? Don't you feel autonomous, or at least want to feel autonomous?

    Jung: "We ought not to underestimate the psychological effect of the statistical world picture: it displaces the individual in favour of anonymous units that pile up into mass formations. Science supplies us with, instead of the concrete individual, the names of organizations and at the highest point, the abstract idea of the State as the principle of political reality. The moral responsibility of the individual is then inevitably replaced by the policy of the State".

    The fans of global governance march ever onwards. When they meet resistance, it's weak, and in any case easy to circumvent. "Don't be a paranoid silly. We're not talking about some huge world government. We're talking about *policy coordination* - and that's very different."

    Sure it is.

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