Wolf: Will the Nation-State Survive Globalizaiton

Wolf, Martin, 2001. Will the Nation-State Survive Globalization. Foreign Affairs, 80(1), 178-90.

“A specter is haunting the world’s governments—the specter of globalization” (178).

Wolf explores the concept of globalization historically. Comparing the same countries in 1910 and 1995 he notes that, “they seem more integrated for trade, at least in the high-income countries; no more integrated for capital—above all for long-term capital—despite important changes in the composition of capital flows; and much less integrated for labor” (181).

“So why do so many people believe that something unique is happening today? The answer lies with the two forces driving contemporary economic change: falling costs of transport and communications on the one hand and liberalizing economic policies on the other” (181).

“Ironically, the technology that is supposed to make globalization inevitable also makes increased surveillance by the state, particularly over people, easier than it would have been a century ago. Indeed, here is the world we not live in: one with fairly free movements of capital, continuing (though declining) restrictions on trade in goods and services, but quite tight control over the movement of people” (184).

Globalization does not decrease the state’s ability to increase taxes, as is seen most clearly in EU nations, though tax collection could become more problematic with the advent of certain technologies (ie., the Internet).

“Last but not least, some observers argue that globalization limits governments’ ability to run fiscal deficits and pursue inflationary monetary policy. But macroeconomic policy is always vulnerable to the reaction of the private sector, regardless of whether the capital market is internationally integrated” (188).

Increased economic interdependence does not mean t4hat governments lose their ability to act. Also, this increases governmental competition, thus holding governments more accountable.

“What…does globalization mean for states? First, policy ultimately determines the pace and depth of international economic integration…Second…the policy underpinnings of integration are less complete than they were a century ago. Third, countries choose integration because they see its benefits…Fourth, international economic integration magnifies the impact of the difference between good and bad states…Finally, as the world economy continues to integrate and cross-border flows become more important, global governance must be improved” (190).