How Globalization Has Transformed International Politics

Introduction

Globalization is defined as "an intensification of cross-border interactions and interdependence between countries" (Oldemeinen, 2011). In other words, it is a process by which the social, political, and economic world order depends upon the integration of states around the world. It is not, however, viewed as a positive development by all. As Rodrik (1998) points out, "the process that has come to be called 'globalization' is exposing a deep fault line between groups who have the skills and mobility to flourish in global markets and those who either don't have these advantages or perceive the expansion of unregulated markets as inimical to social stability and deeply held norms" (p. 2). Globalization, therefore, is not necessarily viewed as a win-win by all. Indeed, the Brexit vote in the UK to leave the EU has been described as a referendum against globalization (Colantone & Stanig, 2016).

Yet, in spite of the integrated nature of globalization, international politics is defined as something quite opposite in essence. The concept of international politics has been described as "a process of mutual influence in which each party seeks to protect and promote its own interests by shaping the behavior of the other party" (Science Direct, 2004). Broadly speaking, international politics focuses on the relations among nations, foreign affairs, and foreign policy. But if in international politics each actor is focused on self-interest, it stands to reason that the collective interest of the whole—necessary for globalization to function effectively—will conflict with the self-interest of any one state that opposes the goals of the collective. In fact, Larry Fink of BlackRock recently stated that due to Russia's invasion of Ukraine and the subsequent Western sanctions, globalization is effectively dead (Sorkin et al., 2022). Globalization relies upon all states working together toward a common aim. War threatens that aim, as does, arguably, hegemony by any one state.

Globalization has empowered non-state actors and had a two-sided impact on the global economy. Non-state actors now play a significant role in the global world order as a result of their empowerment. They provide funds for developing nations, issue health warnings and guidance, oversee trade disputes and provide forums for resolution, supply liquidity to markets, and influence regional policy. All of these actions have a two-sided impact on the economy, however. On the one hand, they help multinational companies grow into new markets; on the other hand, they push out smaller business owners and entrepreneurs who cannot compete with larger corporations entering the local marketplace as a result of globalization (Baars, 2019; Mukwarami et al., 2020; Vietor et al., 2008). The outcome is that globalization benefits those who can afford to leverage its opportunities, but it hurts those who see their jobs offshored or their market share greatly diminished by new international competition. As a result, international politics is at a crossroads in terms of how the future world order will be arranged (Colantone & Stanig, 2016).

Empowerment of Non-State Actors

The current world order is essentially unipolar, with the US in the West acting as the main hegemonic power whose influence is demonstrated through a united front of multinational corporations (Baars, 2019). These multinational corporations work with other organizations in the private and public sectors, including non-state actors and state actors, to establish their influence (Baars, 2019). However, the unipolar order is now at risk of shifting to a multipolar one, as Russia and China offer the Global South a new alternative to Western hegemony. This shift may pose problems for multinational corporations based in the West. Already there has been an enormous exodus from Russia by multinational corporations seeking to avoid Western sanctions (Sorkin et al., 2022). How this will play out in the coming years remains to be seen.

The main point to be understood from globalization is that while individual voters—like those in the UK—may feel they have been hurt by it, others have certainly been empowered by it, especially various non-state actors such as the International Monetary Fund (IMF), the World Economic Forum (WEF), the World Health Organization (WHO), the World Trade Organization (WTO), central banks like the Federal Reserve, the Assembly of European Regions, and major multinational corporations (Colantone & Stanig, 2016; Oldemeinen, 2011). Each of these non-state actors has played a tremendous role in globalization in different ways, but without the globalized world order, none of them would have grown or succeeded to the extent that they have. Their success has depended upon the integration of nations, cultures, politics, economies, finances, and trade. Yet as Baars (2019) explains, it is really the corporation that has benefitted the most from globalization.

The empowerment of the corporation could not have happened without globalization, nor could the empowerment of other non-state actors. For instance, Bakan (2003) states that globalization "has substantially enhanced corporations' abilities to evade the authority of governments" (p. 25). Multinational corporations can put pressure on governments without worrying about the position of any single government or feeling any sense of loyalty to any one state. As a non-state actor with considerable economic and financial clout, a multinational corporation essentially acts as the dictator of policy in the global arena in many cases: "corporations now govern society, perhaps more than governments themselves do; yet ironically, it is their very power, much of which they have gained through economic globalization, that makes them vulnerable" (Bakan, 2003, p. 25).

Mistrust, fear, and anxiety are all social effects spawned by the corporate takeover of global society, and this is why the Brexit vote occurred, according to Colantone and Stanig (2016): it was a reflection of the anxiety of UK voters over seeing their livelihoods, jobs, and sovereignty offshored or usurped by other actors. There was a pushback against globalization by everyday citizens. It could be argued that the election of Trump in 2016 in the US occurred for much the same reason. But now that de-globalization is underway as a result of the war between Russia and the West, the world will see new effects: "De-globalization will push inflation even higher, forcing central banks to choose between higher prices or lower economic activity" (Sorkin et al., 2022). Central banks, being another group of non-state actors empowered by globalization, must now adopt a defensive position. Additionally, states that "benefited from outsourcing will be hurt from any reversal" unless they can return production to their own shores (Sorkin et al., 2022). Thus, there will be much discussion among corporations, central banks, and states over what to do next.

Today, multinational corporations serve as chieftains among various actors around the world. State governments, banks, financial institutions, and more all work with corporations to assess social, political, and economic situations in a global context (Baars, 2019). At the same time, Bakan (2003) argues that the corporation is always theoretically under the control of the government, since it relies upon the government for its existence. This argument is largely theoretical, however, as the corporation through its various lobbies can hold great sway over government, thus minimizing the control that the state holds over it. It is quite likely that the corporation has more control over the state due to globalization. It is only in the wake of de-globalization, as pointed out by Sorkin et al. (2022), that states may soon demonstrate more power over once-dominant multinational corporations.

Impact of Globalization on the Economy

Globalization has not introduced a new era of peace into the world; rather, it has exposed the fragility of international cooperation within a unipolar world order. As Huntington (1993) pointed out, "conflict between civilizations will be the latest phase in the evolution of conflict in the modern world" (p. 22). That conflict is now present in a significant way. Not since the Cold War—or World War II before it—has the world been on such a knife-edge as it is now, with Russia and the West escalating toward what could easily become a broader global confrontation. The conflict of civilizations could not come at a worse time for globalization. The COVID-19 lockdowns around the world served as a stark reminder of the perils of globalization with respect to supply chains. Globalization giveth, and globalization taketh away. Globalization has enabled China to rise as the greatest manufacturing nation on the planet; it has enabled the US to export mountains of debt so that its citizens can maintain a comfortable lifestyle; and it has enabled developing markets to receive economic aid and support. Globalization has created a wealth effect for a certain segment of society.

For another segment, it has been a nightmare. Small business owners in some parts of the world have been pushed out of their markets as globalization has ushered in new competition that domestic companies cannot match (Mukwarami et al., 2020). So while economies have grown in one sense—thanks to corporations entering new markets and driving sales—small business owners have had a harder time succeeding. Moreover, in other states, globalization has been driven by the offshoring of labor to other parts of the world. People have seen the labor market constrict and have been forced into new job markets they are unhappy with (Colantone & Stanig, 2016). The challenge for them is that globalization has also made labor markets more competitive, and wages have not kept up with inflation.

Inflation is another factor affected by globalization, which really relies upon large amounts of credit. Without credit, developing nations would not be able to enter the global marketplace; without credit, large corporations would not be able to scale to the extent that they do; without credit, states would not be able to provide the social programs that people have come to expect in liberal economies. Yet all of that credit comes at a price, and when disruptions occur—like the 2008 global financial crisis or the lockdowns of 2020—markets can crash rapidly. That is when central banks react by bailing out states, corporations, and markets with trillions of dollars in new liquidity. That liquidity injection then causes inflation rates to rise, which triggers increased consumer demand, as people recognize that the purchasing power of their currency will decline. With excess demand, supply is further constrained and prices surge. This effect can be seen in the housing market, the auto market, the food market, and in nearly every sector from commodities to services. Globalization causes initial booms for some years, but booms are inevitably followed by busts, and the cycle continues.

Only now that cycle is being disrupted in a major way by countries that no longer want to accept the unipolar world order that has been driving globalization in prior decades. China has become too strong; Russia does not wish to be marginalized by the West. The US seeks to control trade and use its reserve currency status as a weapon to bring other states to heel. The conflict of civilizations is now at the doorstep. Globalization helped economies grow, but this growth has not necessarily been healthy for all stakeholders. Shareholders and corporations have done well in many cases, but the benefits have not been evenly distributed.

Conclusion

The interconnectedness of nations around the world is what we call globalization. However, this does not necessarily mean it is a good thing. The effects of globalization include the exploitation of weaker societies, high-risk investment costs, the loss of local identities and social systems, poor regulation, immigration pressures, and lost jobs in the local economy as global competition intensifies. The history of globalization shows that as it increases, poorer nations end up performing the jobs once held by workers in richer nations. The richer nations then experience a widening wealth gap between the haves and have-nots—much like what is seen in the US today—while underdeveloped nations are exploited by corporations. In fact, one could argue that the history of globalization is the history of colonization, and that today's non-state actors are the new colonizers, serving as the masters of the global order (Bakan, 2003).

Globalization has changed international politics because no country exists outside the global constellation of nations and states. But only the strongest countries have gained, while weaker ones have been dominated. Market share gains resulting from globalization are typically realized only by multinational corporations. Small business owners are pushed out of their markets and cannot afford to compete. Laborers in the domestic market in the West see their jobs offshored to the East or to the Global South. Essentially, a handful of nations and their corporate sponsors have benefitted at the expense of all the rest.

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