Globalization is now often dismissed as another over-hyped fad of the 1990s. Like Internet companies or market reforms in poor countries, globalization promised much and delivered little. After all, the argument goes, aren't terrorism, US unilateralism, and stalled global trade talks enough proof that the most powerful trends are those not that unite the world but that divide it? Moreover, globalization cannot be an important trend when some of the government policies needed to sustain it have become a recipe to lose elections or major threats to the stability of governments already in power. In most rich countries, politicians cannot hope to be elected if they are soft on policies toward immigrants. Similarly, in the majority of the less developed countries it has become politically suicidal to argue that lowering barriers to imports or privatizing state-owned enterprises to foreign investors is a good idea.
And it is not only governments. Airlines and telecommunications, globalization's backbone industries, are in desperate financial straits. Many companies in these sectors have either filed for bankruptcy or will soon do so unless they drastically change their ways. But despite these powerful counter-trends, the integration of world economies, politics, and cultures continues to define our time. Governments, businesses, families, or individuals that ignore it or misunderstand its virtues and vices will do so at their peril.
A crucial intellectual challenge of our time is to understand which changes in the 1990s were transient and which have permanently altered how the world works. The wave of democratization that swept the globe during that time has slowed; some countries, like Russia or Venezuela, are experiencing serious reversals. The seeming incapacity of democracies to deliver quick prosperity, equality and security has made some publics long for a more authoritarian past. Yet some of democracy's elements--the legitimacy endowed by free elections, free media, respect for human rights--are showing great endurance and have become standards and expectations that no government can disregard. Today's dictators, for example, cannot ignore the fates of Yugoslavia's Slobodan Milosevic and Chile's Augusto Pinochet. Thanks to international treaties and institutions put into place in the 1990s, both men are living legal nightmares previously unimaginable.
In fact, the convergence of political and technological changes in the 1990s did create rules, actors, institutions, and expectations that are new, permanent, and global. Sorting these enduring changes from the overblown ephemeral claims of academics, politicians, journalists, and businessmen, in turn, depends on the assumptions one makes about the nature of globalization.
Globalizations: Old and New
Globalization is not new. In an article published in Foreign Policy magazine in June 1999, historian Emma Rothschild quoted German philosopher Johann Gottfried von Herder marveling in 1774 about the tight interdependence wrought by globalization: "When was the entire earth ever been so closely joined together by so few threads? Who has ever had more power or more machines such that with a single impulse, with a single movement of a finger entire nations are shaken?" Rothschild also cites Adam Smith, who in 1776 warned countries not to tax investors too much because when capital can wander, investors would take their money elsewhere if taxes became too high. This volatility, he explained, is because "the proprietor of stock is properly a citizen of the world and is not necessarily attached to any particular country."
These 18th century observations on globalization were regularly repeated in ensuing centuries and more recently and stridently throughout the 1990s. New technologies that accelerate travel and facilitate communication have always stimulated predictions of an irreversibly united world where the influence of boundaries and nation-states is eroded. …