New directions in the evolution of a trans-Atlantic economic community.
By Stephen Amberg
July 4, 2010
The relationships between the U.S., Latin America, Europe and Africa have been transformed by the processes of global economic integration, but there are several different ways that these evolving relationships have been conceived and directions taken in research. Transatlantic economic relations have been conceived as broadening leadership, a new hegemonic order, formation of regional blocs, model development and standard-setting, and dynamic regionalism. New directions in research are illustrated by the focus on multinational corporations as the lead agents of integration in which the literature on MNCs has evolved away from foreign direct investment and exploitation to a variety of linkages through which local agents can regionalize development. Another literature focuses on states and in particular on the ways that globalization is an historical project of U.S. leaders which answers specific concerns of the U.S. Yet here, too, the literature has taken a more polyvalent perspective and points out how globalization is unfolding in diverse national settings that shape its specific meaning. Research investigates the national foundations of comparative advantage, transnational elites, transformed linkages with indigenous economic communities, trade blocs (e.g. NAFTA, Mercosur), new national leadership in international economic regimes (e.g. the G20), and social learning across societies. A major trend of the last decade has been the increasing independence of South America vis-à-vis the United States, but the interrelation of trade, economic and political objectives and agendas in the broader transatlantic context adds complexity to the study of the role and importance of Latin America.
There are recurrent themes in studies of the evolution of trans-Atlantic economic community.
One is convergence among nations through the liberalization of economic arrangements in each country and among them, a process led either by multi-national corporations and-or by multilateral institutions – a convergence perhaps made cooperative through transnational communities of leaders and by focusing agreement on market rules while limiting conflict over social goals. This theme is the most consistent with the received standard story of Western modernization, in which societies are oriented to market-based decision-making, individuals act rationally on their own account, firms are conceived as market actors who allocate capital optimally, and governments are rule-providers and adjudicators.
A second theme in studies of developing economic relationships is stable divergence among groups of countries (such as regional trade blocs in the global economy) and national types of economic arrangements (national economic cultures) based on mechanisms of path dependency. A third is hierarchy through a re-newed or transformed hegemonic order exercised through new global economic and military strategies and internal coercion.
A fourth theme is polycentric competition among multiple nations as certain rapidly developing countries (for example Brazil) organize institutions and alliances around themselves which enable them to enhance their autonomy in development. And a fifth is dynamic regionalism, which is associated with the disaggregation and dispersal of production from the highly developed nations to the periphery, which creates local opportunities to solve general problems of economic sustainability which are based, in turn, on historical practices and contemporary judgments as well as forms of political mobilization and authority.
There are many research projects that support or draw on these themes. Methodologies vary and researchers come from multiple disciplines. For instance, there are geographies of production chains, the sociology of transnational elites, anthropologies of transformed linkages with indigenous communities, economic studies of the formation of trade blocs, political science studies of new national leadership in international economic regimes (e.g. Brazil in trade and finance fora), and Area Studies of new forms of hierarchy between the highly developed countries and the developing countries, and more.
One framework for analyses of the contemporary era in economic governance is to contrast the evolving forms of economic activity with the pattern of the past; namely, a contrast with the past defined as a world of mass production and commercial Keynesianism in the leading or core national economies until the 1980’s. Since the early 1980’s, a new global economy has emerged which is far more open to trade, investment, and labor flows across national boundaries and in which production may be organized in flexible ways.
A powerful narrative of these historical developments tells us about the spread of neo-liberal approaches to managing national economies, marked by a steady if conflictual convergence on common rules of fair competition, finance, corporate governance, and public welfare. But this narrative competes with different narratives of regionalization and the political possibilities for alternative paths.
The narratives of liberalization and regionalization are often linked by common images of the breakdown of the old order. The old order was shaped by a rivalry between liberal-democratic capitalism and Communism, which was superseded by rivalries among varieties of capitalism among the advanced economies and, increasingly, encompassing the developing world. The chief varieties of capitalism were identified as “coordinated market economies” and “liberal market economies”. The former are associated with western European societies whose governing institutions created efficient complementarities among high-skill, quality-based manufacturing, social-democratic welfare states that invested in skills, and corporatist industrial relations that sustained production problem-solving. The “liberal market economies”, in contrast, were associated with Anglo-American mass production, social pluralism and interest group politics, and entrepreneurialism. The old order was cemented by Cold War alliances and by international monetary and trade regimes. Countries in Latin America and in Africa were peripheral then (and perhaps still).
The varieties of capitalism categories are ideal types; for instance, Denmark did not exactly fit and it differed in very interesting ways. At the logical margin, theories of “national business recipes” emerged.
But, then, according to the dominant narrative, the stable markets and electoral politics that were the background conditions for the most successful political economies broke down, for a variety of reasons.
Since the early 1980’s, the organization of core productive activities has been dis-aggregated and dispersed geographically. This process is still going on; the old order is not coming back. The new background condition is no longer stability, but instability, and the new tasks of political economies are to enhance the capacities of states, firms, and individuals to respond flexibly to that instability.
The disaggregation and dispersal of economic organizations from the historical core toward the developing countries dramatically changes political and social relationships within the developed countries, and it transforms the linkages among groups in all of the countries that are becoming connected to global production chains. For instance:
· The era has seen multiple re-writes of international rules for trade, finance, and human rights. The current financial and fiscal crises redouble the image of a chronic crisis for international cooperation and stability.
· Multi-national corporations – as the lead organizations of the global economy – have become organizers of dispersed production districts. Production is still concentrated in specific locations but there are many more of them. Also, the links among the firms in these production chains is less about geographical proximity than about forms of digital coordination and transnational social mobility. Research on the new relationships vigorously debates whether this is a new form of bureaucratic hierarchy – a geo-centrism – or whether local players in global games have new opportunities to enhance their skills and to gain new resources to pursue autonomous projects – that is, a new polycentrism.
· Governments have increasingly switched from providing “collective consumption goods” (in the past, varieties of income support for citizens) to providing “collective competition services” (such as providing problem-solving technologies to build up industry clusters, language training, and global market information) all to raise the capacity of people in sub-national regions to compete in an emerging global organizational ecology.
So, instead of the old stable world of national production and national cultures in which groups had pretty clear interests and they negotiated bargains to protect all of the players, this is a “shake up” world in which the old bargains are being re-negotiated but the interests of individuals are being created in the process of acting and reacting to instability.
There is a new premium now on studying two kinds of social learning – new forms of politics to help individuals in societies learn more effectively about how to solve their problems – and learning across societies as a consequence of a greater perception that local players in a variety of places are competitors and that some of them have experienced successes. There also are plenty of failures as well as reproductions of hierarchy and domination, but now the scope of comparisons about what’s going on is arguably wider and the judgments about useful lessons are sharper.
The last comment on this research program is an example from the changing relationship between Mexico and the U.S., which may be seen in a triangular relationship with Europe. One motive for the negotiation of the North American Free Trade Agreement (NAFTA) in 1994 was a defensive one to protect against the European Community. Since NAFTA, U.S. investment in Mexico has increased dramatically as have Mexican exports to the U.S. A lot of the production in Mexico was created precisely to serve American markets and not Mexican ones. So, a research question has been how and whether Mexican producers are transferring their new organizational capabilities – which they’ve acquired from their relationships with American-based companies – to the development of Mexico’s internal markets.
Some of the difficulties that Mexican textile managers have encountered are local ones, namely poorly developed government-provided “collective competition services” – such as loan guarantees, consumer market information, and product standard-setting. A further question, then, is what capacities does Mexico need to develop; what are the possibilities for social learning from other countries? The Americans, too, are challenged by their relationships with Mexicans. Among the many challenges, two huge problems are low-skill labor migration and the illegal drug trade, but part of the solution to those problems is to help Mexico develop Mexican markets. The corporate headquarters of the investors may not be very interested in this, but the two governments have a strong incentive to cooperate to create new political-economic relationships.
More broadly, perhaps the NAFTA experience of tying two very different economies together could be compared to the Euro Zone experience that combines Germany and Greece.
The last point in this commentary is about the second research program about “alternatives”. Rather than start with a political science-inspired image of an order that breaks down into chronic instability and a search for order, the alternatives approach draws more heavily on history, sociology and anthropology to change the frame. It argues that the boundary between the stable and rule-based era and the chronic crisis era is not very clear. The stability was exaggerated; in crises the players make judgments informed by their historical commitments. The actual relationships among states and within societies always require individuals to work to maintain, adjust, and renew them; new generations emerge and take hold of the institutions of their societies to make them their own for their current needs. They judge their usefulness for their purposes and the opportunities they help make possible.
These two research programs appear in two strategies of research. One looks for regularities and constraints on action (and the research often uses aggregate and institutional data) and the other is situational and cultural (and the research often is historical and uses case studies). The “alternatives” program examines how situations are interpreted by the players as they act and constitute their relationships. There are always more possibilities than the ones that get institutionalized, which scholars should pay attention to, in order to alert societies about the significance of public debate and informed choice.
