Global Neoliberalism, Policy Autonomy, and International Competitive Dynamics

By DeMartino, George | Journal of Economic Issues, June 1999 | Go to article overview

Global Neoliberalism, Policy Autonomy, and International Competitive Dynamics


DeMartino, George, Journal of Economic Issues


How has global economic integration affected the ability of national governments to sustain social democratic regimes in order to ensure economic security and some measure of equality? This question is particularly important today because of the apparent economic difficulties facing many European countries that have historically pursued social democratic policies. But it has become even more immediately relevant over the past year or so, as national elections have returned social democratic and/or labor parties to power in most Western European countries. What possibilities lie before social democrats in the new global economy?

To explore this matter, we first need to be clear about the nature of contemporary international economic integration. While many nations have had close economic ties for centuries, the present period is unique in the degree to which international economic relations are market-based. The linkages that bound the economies of Britain and India during Britain's colonial empire, or that bound Eastern Europe under the aegis of the Soviet Union, are very different from the linkages that increasingly bind nations today. In place of state-directed flows of goods, services, and capital, we find dramatic shifts toward what I will call global neoliberalism, or market-directed flows and outcomes. Today the decisions of private economic actors - particularly multinational corporations (MNCs) - increasingly determine the flow of goods and services and capital across national borders and thereby affect employment levels and income. As just one indicator of this trend, we should take note of capital flows from the North to the South: today, private flows between these regions in the form of foreign direct investment (FDI) and portfolio investment (PI) are many times larger than North-South public aid flows.(1)

The question before us, then, is how does the shift toward neoliberalism at the international level affect the state's ability to sustain social democratic institutions and policies at the domestic level? To answer this, we need to distinguish between three distinct concepts that tend to be conflated in the literature on the impact of globalization on the state. By "state capacity," I refer to the ability of a state to achieve some objective that it sets for itself, such as economic growth, equality, or security. By "policy autonomy," I refer to a state's ability to implement and sustain a policy of its own choosing, independent of the policy choices of other nations, in order to achieve its objectives. Finally, by "sovereignty" I refer to the state's formal right to pursue and sustain a certain policy, separate from its ability to do so.

Let me demonstrate the importance of this distinction by way of a simple example. Let us assume that a country intends to address the problem of high unemployment through expansionary monetary policy. If it has the formal right to pursue this policy, then we say that it has sovereignty in this policy area. If it also has the ability to sustain this policy, independent of the policy choices of other nations, then we also say that it has policy autonomy in this area. And if it can indeed improve its employment performance via this policy choice, then we also say that it has state capacity in this area.

But now consider the following cases. First, the state may very well have the right to pursue expansionary monetary policy but not be able to sustain it. In the absence of coordination with other countries, it may find its expansionary policy sabotaged by capital flight and a collapsing currency, which together induce a political crisis and force the government to reverse its policy. In this case, we say that the state enjoys sovereignty but lacks policy autonomy. Alternatively and less dramatically, the state may be able to sustain the policy but find that it generates a trade deficit and inflation, rather than improved employment. In this case, we can conclude that it enjoys sovereignty and policy autonomy but lacks state capacity in this policy domain. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Global Neoliberalism, Policy Autonomy, and International Competitive Dynamics
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.