Deconstructing the arguments on globalisation

Một phần của tài liệu Adoption of International Financial Reporting Standards in Greece: A critical approach (Trang 31 - 35)

Chapter 2: Globalisation and the Internationalisation of Financial Reporting Standards

2.3 Economic globalisation: Myths and Realities

2.3.3 Deconstructing the arguments on globalisation

While globalisation is frequently regarded as having emerged over the last thirty years, the world and the economy is no more globalised, and possibly less so, than it was in the period before WWI (World War One) (Bairoch, 2000). Globalisation enthusiasts cite evidence such as the growth in the volume of foreign trade and investment and the rise of ‘multinationals’

and their operations (Gerlter, 1997; UNCTAD, 2008). However, there is nothing new about the international character of capitalism or the uneven trans-nationalisation of the capitalist accumulation process, which has been characteristic of capitalism since its origins in the Middle Ages (Ricardo, 1995 in Harman 1996, Burbach & Robinson, 1999; Burnham, 2001).

As Marx and Engels (1848, p. 12) observed in the Communist Manifesto:

‘The need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere’.

The increasing internationalisation of economies and the formation of multinational enterprises are characteristic of modern capitalist transformations that have taken place in the imperialist chain, a hierarchy of more or less powerful nations,15 especially after the fall of the Eastern Bloc. However, true ‘multinational’ companies are not common, nor is the

‘internationalised economy’ ‘open’ and ‘integrated’ (Parker, 1998). ‘Globalised’ and multinational corporations are typically, national companies that operate internationally.

While recognising the complexity of globalisation, Hu (1992: 113-115) argues that the actual number of ‘multinationals’ is smaller than assumed in research literature. Nevertheless, these

15 According to Sakellaropoulos (2009, p. 66): ‘The imperialist chain includes all the national capitalist formations and its form is affected by intra-imperialist conflicts taking place within it. Inside the national formations re-groupments may occur’. Developed states divide the world into spheres of influence creating an imperialist chain in which all nation states participate, regardless of their levels of capitalist development or whether they have moved to an imperialist stage.

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enterprises are forced to adapt to the condition and regulation of the national forms they are investing in (Sakellaropoulos, 2009). Although in many economic sectors there is an increase in the rate of internationalisation, the number of countries that participate in these procedures is limited. Empirical studies have highlighted that even the most internationalised firms concentrate the majority of their high value added and strategically important activities within their home states or regions, with the possible exception of transnational16 companies based in smaller advanced economies (Rugman & Verbeke, 2004). The most recent data from UNCTAD (United Nations Conference on Trade Development) shows that inward FDI (Foreign Direct Investment), as a percentage of gross fixed capital formation, between 2004 and 2010 averaged 10.6 per cent for developed countries and 11.4 per cent for the world as a whole (Budd, 2013). For the past five decades the world economy has remained a geographically divided class system, with the most significant changes in recent years being the decline of the North American economy and the growing importance of China. However, corporations based in Western countries still predominate in terms of capital exports and world trade (Fuchs, 2010). The world is undoubtedly becoming increasingly integrated at the production level; yet, claims of a single global economy appear to be far from real and the national organisation of capitalist economies has remained persistent (Wood, 2003).

2.3.3.2 The nation state and its relationship to the capitalist economic system

The most common argument expounded in globalisation literature is that globalisation entails the decline of the nation state and the emergence of a ‘borderless world’ (Cohen & Kennedy, 2000). The mobility and power of global finance, the proliferation of multinational companies, the emergence of powerful institutions of governance at supranational17 levels, and the growth of civil society, are seen as changes in interstate relations that will lead to the demise of the power and the efficacy of the modern nation state (Ohmae, 2000). Therefore, it

16 Transnational, in legal terms, refers to ‘the law which regulates actions that transcend national frontiers - national, international, or mixed- that applies to all persons, businesses, and governments that perform or have influence across state lines. Transnational law regulates actions or events that transcend national frontiers. It involves individuals, corporations, states, or other groups-not just the official relations between governments of states’ (West's Encyclopedia of American Law, 2010).

17 According to the Oxford Dictionary (2012), supranational refers to power or influence that overrides or transcends national boundaries, governments, or institutions, such as the EU and the WTO. ‘Supranationalism is a method of decision-making in political communities, wherein power is held by independently appointed officials, or by representatives elected by the legislatures or the populations of the member states. Member state governments still have power, but they must share this power with others. Moreover, because decisions are taken by majority votes, it is possible for a member-state to be forced by the other member-states to implement a decision’ (Definition available at: http://supranational.askdefine.com/).

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is considered acceptable that globalisation is dependent on processes that result in nation states being connected and diffused through international activities developed at an international level (Beck, 2002). The position taken by Castells (2000) and Held (2000) is similar but suggests the end of the nation state, observing that the trend is towards a reconfiguration of power and governance. Hardt and Negri (2000, 2004) attempt to ground the decline of state power in the emergence of a new logic of power and control in conjunction with globalisation, i.e. Empire. The notion of Empire led to the permeation of capitalism worldwide, but it is also seen as leading to social emancipation. Nevertheless, Hardt and Negri’s question whether the sovereignty and structure of rule within the global capitalist order is not that different from existing views of globalisation (for a discussion of Hardt and Negri’s theories see for example, Buchanan & Pahuja (2004) and Callinicos, (2007)).

On the other hand, there are a number of significant challenges to the arguments supporting a shift towards the pluralisation of governance and the sharing of power, as sceptics highlight that nation states still play a vital and active role in national and international affairs (Therborn, 2000; Huber & Stephens, 2001; Legrain, 2002). Sceptics maintain that states continue to determine economic or social policy and remain central to the exercise of power (Hirst & Thompson, 2002).

In the context of a Marxist analysis, the position taken in this study is that the role and functions of the modern state, as a relationship and a specific type of social formation within the capitalist mode of production have undoubtedly been influenced by globalisation.

However, there is no globalised economic, political and social structure; rather there is an imperialist chain, in which all capitalist nation states participate, regardless of the level of capitalist development within individual states. Nation states are a historical phenomenon wherein the capitalist mode of production is reproduced; from that perspective they preserve their role as a national social formation through repressive ideological, political and economic functions. The different facets of capitalism and contradictions inherent in the international of capital are the material outcomes of social class struggles and contradictions within countries (Ruigrok & Van Tulder, 1995). Nation states are not neutral, and setting them against a historical framework of the internationalisation of the economy states becomes a nodal point around which capitals cluster. The modern nation state safeguards and promotes

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the long-term reproduction of the status quo, the position of the ruling classes and more specifically the interests of hegemonic factions18 (Sakellaropoulos, 2007).

The mutual interdependence of nation states and large fractions of capital, nevertheless, seem to break-down the boundaries between the state and capital; as the latter may turn to a direct use of personal influence to determine the way states operate. On the other hand, state bureaucracy may attempt to interfere in the internal management of particular companies.

Meanwhile, since capitalist competition is increasingly regulated within national boundaries, capital spreads beyond state boundaries and at the same time depends as much as ever on the originating state (Harman, 1991).

Within the context of imperialism, uneven development between states is influenced by the competitive relationship of states with other capitals and states and the class struggle within each (Sakellaropoulos, 2004). Developmental level is responsible for differences in economic, political, cultural and military power and infrastructures, such as accounting regulations. More powerful nation-states are better positioned to impose their strategies and realise their objectives, and common features are shared by states at the same level of capitalist development. It is the transfer of pressure from one to the other that is the most important characteristic of imperialism, not globalisation (Sakellaropoulos, 2009). The diffusion of capital beyond national boundaries is increasing, but it takes place under the dominance of the most powerful imperialistic states and their bourgeoisies, with the American bourgeoisie leading in the aftermath of WWII (see Sakellaropoulos, 2007 for an analytical account of the theories of the state in the ‘globalised’ context).

2.3.3.3 Globalisation and supranational governance

Increased intergovernmental interactions and networks are assumed to create new centres of political and economic power, which regulate supranational activity and exert powerful forces on nation states. There is no doubt that with the emergence of globalisation the expansion of the role of supra-national organisations has become heightened. There have been upgrades to older organisations, and new ones were also founded following the end of WWII, such as the GATT and the WTO. However, it is remarkable that a very small number

18This does not imply that state structures and institutions are the direct outcome of the requirements of capital.

Instead, these structures are reshaped in order to function in new ways that agree with the logic of capitalist exploitation (Harman, 2006).

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of Western countries continue to control and influence decision-making; for instance, the procedures of the IMF and the World Bank. The choice of states, regarding which supranational institutions they will join depends on whether their vested interests will be promoted (Sakellaropoulos, 2004); this is particularly relevant to financial reporting, standard-setting and the case of the IASB.

Following on from the previous discussion, it is asserted that transnational organisations and corporations have dissociated themselves from their traditional relationships with nation states. This is considered the embryonic stage of a transnational governmental structure, and is at the service of multinational companies who impose control on the remaining nation states (Robinson & Harris, 2000). However, this is far from being accomplished, since corporations compete with each other in the same way that states do. At the same time, corporations remain dependent on national governments to a great degree, for the protection of their vested interests. The functionality of transnational organisations is characterised by this hermaphrodite situation (Kouroundis, 2007). Transnational organisations function as a terrain, where developed states and the economic interests connected with them discuss and regulate discrepancies under terms that favour the most powerful global economies (Callinicos, 2001).

Arguments about global governance, therefore, serve as an ideological veil cloaking the Western global dominance and imperialist deliberations that are driven by the economic elites and the developed world. According to Budd (2013), the current world order is far from trans-nationalised; it is rather an inter-imperialist order, modified by the relative supremacy - until now - of the US super-imperialism.

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