Globalization and Beyond

The enormous turnout in Washington, DC, for Barack Obama’s presidential inauguration and the worldwide rejoicing at this signal of change offered a tangible demonstration of people’s desire for a new world order. In the waning months of the Bush administration, crushing global recession dealt a critical blow to the neoliberal project. The hegemony of the United States and of the international institutions it has used to maintain its economic dominance has been in decline for some years now, suggesting the need to explore alternative ways to carry out globalization’s imperatives. In Globalization and Beyond, leading scholars take up the challenge of examining the current state of economic crisis and the variety of ways in which different countries (as well as different groups) are responding to it.

“In this book, a distinguished array of scholars assess recent changes in the structures and processes of capitalist globalization, and their effects on the states and peoples in Latin America and Asia. Their focus is on the diminishing power of the United States, and the rising power of others. The overwhelming conclusion of the theory and research presented here is that the best solutions for the present crisis of neoliberalism will lie in the search for alternative, post-neoliberal strategies and that these will probably take different forms in different places. The volume will provide plenty of food for thought for those in corporate boardrooms, seats of political power, and academe alike.”—Leslie Sklair, London School of Economics

“Many books deal with the state of contemporary globalization. Most present globalization—for good or ill—as an inevitably determined condition. As the contributors to Globalization and Beyond demonstrate, however, there are alternatives—and agency is not dead. There are indeed many ways to be ‘globalized.’”—Miguel Angel Centeno, Princeton University

Jon Shefner is Professor and Head of the Sociology Department at the University of Tennessee, Knoxville. He is the author of The Illusion of Civil Society: Democratization and Community Mobilization in Low-Income Mexico (Penn State, 2008).

Patricia Fernández-Kelly is in the Sociology Department and the Office of Population Research at Princeton University. She is the author of For We Are Sold, I and My People: Women and Industry in Mexico’s Frontier, and with Jon Shefner she edited Out of the Shadows: Political Action and the Informal Economy in Latin America (Penn State, 2006).

Contents

List of Illustrations

Acknowledgments

List of Abbreviations

Introduction: Hegemons, States, and Alternatives

Jon Shefner and Patricia Fernández-Kelly

Part I: Declining and Emerging Hegemons?

1 Beyond the Washington Consensus: A New Bandung?

Giovanni Arrighi and Lu Zhang

2 Regionalism as an Alternative to Globalization: The East Asian Case

Walden Bello

3 China and Mexico in the Global Economy: Comparative Development Models in an Era of Neoliberalism

Gary Gereffi

4 Restructuring Mexico, Realigning Dependency: Harnessing Mexican Labor Power in the NAFTA Era

James M. Cypher and Raúl Delgado Wise

Part II: Alternative Expressions of Global Power

5 Globalization, Trade, and Development: From Territorial to Social Cartographies, from Nation-State/Interstate to Transnational Explanations

William I. Robinson

6 Popular Power in a Neoliberal World: How Global Interdependence Can Foster Democratic Empowerment

Frances Fox Piven

7 Immigrant Transnational Organizations and Development: A Comparative Study

Alejandro Portes, Cristina Escobar, and Alexandria Walton Radford

8 Breaking with Market Fundamentalism: Toward Domestic and Global Reform

Fred Block

9 The (De)Coloniality of Knowledge, Life, and Nature: The North American–Andean Free Trade Agreement, Indigenous Movements, and Regional Alternatives

Catherine Walsh

10 From Crisis to Opportunity: Globalization’s Beyond

Jon Shefner and Patricia Fernández-Kelly

Contributors

Index

Introduction:

Hegemons, States, and Alternatives

Jon Shefner and Patricia Fernández-Kelly

This book is about recent global changes and how they have affected states and citizens in Latin America and Asia. Early in the millennium, scholars began to examine the shift in power that emerged with the decline of the Washington Consensus, the diminishing political and economic power of the United States, and the rising power of other nations and regions. The current global economic crisis has accelerated some of those trends while introducing new complexities in ways that few foresaw.

The authors included in this book came together at a conference held at Princeton University with the purpose of discussing questions regarding the current moment in globalization. The conference took place just as understandings of worldwide economic integration had begun to shift dramatically. Increasingly, the expectation that globalization would continue to be defined by the hegemonic presence of the United States—and U.S.-linked multinational corporations backed by international financial institutions (IFIs)—was being shaken. For some time, scholars and activists had argued about the potential for alternative globalizations (Cavanagh and Mander 2004; McLaren and Jaramillo 2005; Sklair 2002; Stiglitz 2003) and about the factors necessary for them to emerge and be nurtured. The events that occurred around the time of the Princeton conference, and those that have occurred since then, further emphasize the importance of these discussions.

The economic recession spurred by the plunge in housing values and the stock market in the United States has leveled severe damage on people and nations across the globe. Unemployment has risen and production decreased; welfare state provision has been strained and savings devastated. Prior to the crisis, the authors of this book examined how state policy trajectories differed during a period of uneven application of neoliberal orthodoxy, and how this process posed obstacles and opportunities for different states. Equally important to the discussion was how globalization posed obstacles and opportunities for citizens to act collectively in pursuit of their interests, participating in social movements and playing active roles in states and regions, and what implications this activity holds for the further evolution of globalization.

The stunning economic ascent of China and India, the decreasing ability of the U.S. military to resolve political crises, the growing impotence of IFIs and the Washington Consensus to determine economic schemes, and political challenges from Latin America offered an opportunity to rethink the direction of trends that seemed unstoppable less than a decade earlier. The current crisis makes the questions of state and citizen action and interaction all the more pertinent. The authors of this volume examine those issues.

A Declining Hegemon?

Reasons to investigate a possible reconfiguration in the distribution of power at the world level fall into two categories: First, economic developments in the United States raise doubts about whether that country will be able to maintain its preeminence in the international scene. Second, political activity, including foreign policies enacted by the George W. Bush administration, has increasingly isolated the United States and reduced its capacity to establish alliances with other countries. Below, we discuss the two phenomena further.

The U.S. economy is still the largest and most technologically vibrant in the world, with a per capita GDP of $46,000 and a purchasing power parity of $13.78 trillion (Central Intelligence Agency 2007). Yet one indication of the country’s declining power is its ballooning national debt. In December 2008, the total outstanding public debt of the United States exceeded $10.6 trillion. This was a substantial increase from the $5.6 trillion reported in December 2000 (U.S. Department of the Treasury 2009). The size of either number is difficult to comprehend, but the rise is clear. So too is the fact that foreign governments own an increasing share of the debt.

A mainstay of Keynesian economics is the principle that incurring national debt is a legitimate government tool when used in pursuit of employment or the production of social goods; government spending can (a) mitigate the market’s tendency to concentrate wealth in the hands of a few and (b) lessen the adverse effects of economic recessions, depressions, and booms (Keynes 1936). Keynes, of course, wrote before the age of globalization, and it seems that the recent expansion of government debt has not had the impact he foresaw. Increases in employment following the economic downturn precipitated by the September 11, 2001, attacks on New York and Washington have been significantly smaller than those linked to previous recessions; employment growth in the March 2001–April 2006 period was one-fifth of that in similar periods of economic downturn and recovery. Similarly, unemployment in the aftermath of the 2001 downturn has remained higher than in previous cycles (Mishel, Bernstein, and Allegretto 2007, 214, 222). Judging from the evidence, incurring government debt in the early years of the twenty-first century had more to do with changing tax structures and the cost of military ventures than with securing higher rates of employment or addressing social needs.

Trade data offer further evidence of the weakening U.S. economy. America’s international deficit in goods and services increased to $63.1 billion in November 2007. By early 2009, months of global economic paralysis had helped the deficit shrink to $40.4 billion, still a significant rise from $33 billion seven years earlier. This reflects not only debt without employment growth but also increasing imports by comparison to exports. The decline in manufacturing output reported in the 1980s by those who recognized “the deindustrialization of America” (Bluestone and Harrison 1982) has continued to the present day. Services and information have proven no more resilient than smokestack industries; following in the footsteps of older factory production, they too have become vulnerable to outsourcing (Mishel, Bernstein, and Allegretto 2007).

Indications of economic decline are also confirmed by data on U.S. wages, which have been largely stagnant over the past thirty years. After an annual growth rate of 2.8 percent from 1947 to 1973, median family income fell within a range of -0.5 to 1 percent between 1973 and 2005, interrupted only by a short stretch of higher growth (2.2 percent) in the period 1995–2000 (Lawrence 2008). In addition, the period 1973–2005 was defined by increasing inequality in wage earnings. After 1973, the proportion of income going to 80 percent of families declined while the income share of the highest-earning 20 percent of families increased. During the past thirty years, income disparities have grown, and the United States now ranks as the country with the highest levels of inequality among the nations of the Organisation for Economic Co-operation and Development (OECD) (Dicken 2007; Sassen 2001; OECD 2008).

Income decline in the United States is partially related to the shifts in occupational sectors resulting from deindustrialization. Services are characterized by great variation in wages, from lower-paying retail to the much-vaunted and remunerative FIRE (finance, insurance, and real estate) sector. Yet America generates five times more jobs for janitors and cleaners than for computer software engineers (Dohm and Shniper 2007, table 3). The thirty occupations with the largest job growth in 2006 employed roughly 46.5 million people, of whom nearly 27 million—58 percent of the total—received low or very low wages. Thus, despite expansion of the FIRE sector, the erosion of the industrial backbone has resulted in lower wages for many Americans. Occupations that have contracted in the past three decades paid between $5,000 and $15,000 more than occupations that expanded during the same period (Mishel, Bernstein, and Allegretto 2007, 169–70). Of course, the current crisis demonstrates that a crucial segment of the FIRE sector, although extremely rewarding for individuals, has had a devastating impact on the U.S. economy.

Other short-term trends provide additional evidence of economic weakening in America. The subprime housing scandal of 2007 led to the precipitous drop in housing prices and stock market values. Home sales that year declined more than in the previous four decades (Grynbaum 2007). Given the extended period of this decline, there are reasons to be wary. First, with declining savings in the United States, the top family investment has been home ownership and many homes are rapidly losing value. Second, every recovery from succeeding recessions since the 1960s has been more modest (Mishel, Bernstein, and Allegretto 2007). Thus, while home buying and housing prices may go up again at the end of the current downturn, those increases are unlikely to recover lost wealth while debt will remain in place. Both phenomena have long-term implications for economic well-being.

In addition to economic indicators, political factors must be considered in any assessment of diminishing U.S. hegemony. Over the last decade, the country has retrenched into greater isolation and unilateral decision making on issues ranging from military intervention to environmental policy. Alliances formed by the United States during the Cold War—aided by coercive interventions and economic rewards—have largely faded in the wake of one-sided military undertakings, the latest of which was the war in Iraq. America’s few allies left the field as that disaster unfolded. Decisions to flaunt international bans on torture and illegal detentions exacerbated U.S. isolation. Intransigence toward multilateral efforts to address environmental concerns, including the unwillingness of the Bush administration to join the Kyoto Protocol on greenhouse gas emissions, provided allies with an additional reason to criticize the United States (McGuirk 2007).

There are still countervailing trends, however, that demand care in the assessment of hegemonic change. That the United States can pursue military action independently reflects its strength as the sole superpower in the world, as measured by expenditures and technological capacity. As Harvey (2003) and Piven (2004) point out, the United States increasingly uses its military capability to address aspects of its economic and political decline. Moreover, a focus on war has proven to be an effective tool to galvanize the patriotic fervor of the American public, at least in the short term, effectively shifting attention away from troubling domestic issues.

At one point, another manifestation of ongoing American power was the surging profits of U.S.-linked corporations. As of March 2006, these profits had increased by 21.3 percent over the preceding year, thus accounting for the largest share of national income in four decades (Nutting 2006). Prior to the current economic meltdown, corporate profits appeared to be solid, with evidence coming from a variety of governmental, academic, and journalistic sources. Initially, of course, with the stock market plunge, corporate fortunes similarly declined—with the notable exception of the oil industry. Even during times of corporate profit increases, however, they proved an imperfect measure of economic strength and viability. Favorable governmental policies diminish corporate contributions to the national troth, while outsourcing further limits employment and wages in certain sectors of the U.S. economy. The gains of corporations nominally based in the United States add to the wealth and income of the U.S. public in ever decreasing and polarized amounts. Record corporate profits in 2010, concurrent with high unemployment, demonstrate the increasingly tenuous link between corporate and societal well-being.

Examinations of the potential decline of U.S. hegemony are incomplete without reference to the Bretton Woods IFIs. The Washington Consensus is fastened not only to the overwhelming power of the U.S. Treasury and U.S.-linked corporations but also to American control of the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO). The early moments of the crisis provided indications that the influence of these entities may be weakening.

IMF influence during the neoliberal era was based on its ability to impose conditions on nations that were taking out new loans or restructuring old ones. Beginning in the mid-1970s, the IMF’s structural adjustment policies were among the most potent tools available to neoliberal reformers. Nation after nation was subjected to external policy designs that reduced the ability of governments to regulate their own economies. Privatization took away much governmental regulatory power and imposed limits on spending in areas like education, housing, and medical care. Signature policies of structural adjustment also included increased interest rates, currency devaluations, and wage freezes, which devastated much of the developing world (Abouharb and Cingranelli 2008; Jones 2004; Morley 1995; Schydlowsky 1995).

IMF loan programs contracted in the early 2000s, indicating the organization’s waning influence. According to Naomi Klein, from 2004 to 2007, “the IMF’s worldwide lending portfolio shrunk from $81 billion to $11.8 billion” (2007, 30). Part of that decline is explained by the movement of several nations from the Heavily Indebted Poor Countries (HIPC) program into the Multilateral Debt Relief Initiative. Participants able to survive six years under the harsh HIPC regime found their debts cancelled under the new initiative (Ambrose 2007).

In addition, since the 1997 East Asian financial crisis, the IMF has been subjected to increasing condemnation and decreasing participation (Helleiner and Momani 2007). Astoundingly, the wave of criticism included a 2005 speech by U.S. Under Secretary of the Treasury for International Affairs Tim Adams, who attacked the organization for its undemocratic governance and destructive policies. High officials in the United Kingdom and South Africa, among others, echoed his displeasure after years of denunciation from social movements such as Jubilee and the European Network on Debt and Development (Eurodad).

Perhaps the most significant pressure on the IMF came from middle-income debtors. Argentina, Brazil, and Bolivia paid back all of their IMF loans; Georgia, Uzbekistan, Indonesia, Thailand, South Korea, Serbia, Russia, Uruguay, Bulgaria, Algeria, Zimbabwe, and Armenia began to pay off their loans ahead of schedule (Eurodad 2006). Although loan repayments impose hardships on former debtors, those nations’ governments concluded that being rid of IMF policy prescriptions was worth the pain. Another national strategy has been to increase monetary reserves in order to avoid relying on the IMF. By August 2006, early repayments had escalated and, for the first time, the IMF faced the possibility of monetary losses. In an ironic turnaround, top officials of the organization considered internal austerity measures, including layoffs (Ambrose 2007).

Later moments in the economic crisis have reinvigorated the IMF, however. The institution has begun lending to nations hard hit by the drying up of global capital markets, such as Iceland, Ukraine, Belarus, Hungary, and Pakistan. Additionally, various developing nations are turning to the IMF for short-term credit in order to cover high fuel costs. The “resurgence” of the IMF has resulted in some policy changes. First, some recent loans appear to come with fewer of the conditions that were so damaging to recipient nations. The IMF has not given up on conditionality, as reports have suggested that “Pakistan’s recent interest rate hikes were a result of IMF pressure. Ukraine is expected to balance its budget in 2009 and tighten monetary policy as part of an IMF agreement, as well as float its currency” (Center for Economic and Policy Research [CEPR] 2008; see also Eurodad 2008a, 2008b). The widely applied structural adjustment conditions do not now appear to be as consistent a part of the negotiations for loans as they were previously. Second, recent IMF actions came about during a period when rich and poor nations alike were calling for a conference that would redefine the roles and activities of the IFIs. This conference, held in November 2008, changed little as the world awaited the transition in U.S. administrations. Currently, a recapitalized IMF is regaining prominence, with some ambivalence in its policy-making ranks toward policies of conditionality. The resurgence of the IMF is even more apparent in its partnering with the European Union (EU) in the 2010 bailout of Greece and Ireland; notably, these bailouts show some increased flexibility in IMF adjustment policies.

The WTO’s declining influence is clearer, as illustrated by the ongoing failure of the Doha negotiations round. The Doha Round, begun in 2001 and currently suspended, was intended to address the competitiveness and growth needs of developing nations. After several free trade successes, developing nations argued that the time had come to increase access to Northern markets by reducing import tariffs and diminishing domestic and export subsidies. The 2001 meetings were shut down amid the “Battle in Seattle,” one of the most incendiary demonstrations against globalization of the last decade. In 2003, the Fifth WTO Ministerial Conference was held in Cancún, Mexico. During its proceedings, the Group of 22 forcefully opposed WTO policy dominated by the United States, Western Europe, and Japan regarding intellectual property rights, agricultural subsidies, and capital movement. Despite earlier promises, the United States, Japan, and the EU refused to remove protection and support from key farming sectors. As negotiations went on, other problems emerged. New analyses assessing potential agreements found that advanced nations would benefit much more than those that the round had allegedly targeted, and that much of the limited benefits to the developing world would go to only eight nations: Brazil, Argentina, China, India, Thailand, Vietnam, Mexico, and Turkey (Wise and Gallagher 2005). Developing nations responded by attempting to maintain protection for agricultural production (Gallagher and Wise 2006). Unable to address the concerns of the Group of 22, the conference ended in frustration.

In 2006, the Doha Round reconvened in Geneva but collapsed when countries could not agree on key issues about the reciprocal opening of markets. Talks were suspended largely as a result of the refusal of the United States and other industrialized nations to eliminate farm subsidies (Wise and Gallagher 2005; Cho 2007; Furtan, Güzel, and Karantininis 2007). The current suspension entails the cancellation of various agreements regarding substantial cuts in tariffs and subsidies, the elimination of export funding programs, and tariff- and quota-free market access of exports by the least-developed countries. The most recent efforts to revive the Doha Round focused on “mini-ministerial talks” in Geneva, where the WTO has tried to work through the diverging demands of rich and poor nations. As the economic crisis pointed out the failure of global financial deregulation and as ongoing disadvantages of trade among rich and poor nations continued, positions hardened on market access and agricultural subsidies. Efforts to revive the talks in December 2008 failed (CEPR 2008).

The diminishing power of IFIs is important in its own right, as is the capacity of nations from the Global South to play a decisive role in the changing world hierarchy. If developing nations coalesced, their unity would present a significant potential for resistance to the rules currently framing the world economy. Assuming that institutions that have defined decades of global power are declining, what kinds of expressions appear to be poised to supplant them? One of the potential sources of opposition may lie in Latin America, where electoral shifts popularly labeled the “pink tide” are challenging neoliberal authority (Birns 2006; Rouaux 2006; Carlsen 2006; Campbell 2006). Neoliberalism began to dominate Latin American policy as early as the mid-1970s and accelerated during the “lost decade” of the 1980s (Portes 1997; Stiglitz 2002; George 2000). Across the hemisphere, nations acceded to IMF austerity regimes and were forced to endure structural adjustment programs that increased the cost of living while decreasing wages, eliminating consumer subsidies and industrial protection regulations, and gutting social services. Similar measures imposed by national governments in response to international pressure for debt renegotiations continued into the 1990s under the guise of debt recovery, or increasingly defined as the cost of playing on the world market (Portes and Hoffman 2003; Harvey 2007).

Across Latin America, protestors contested the savage effects of neoliberal policies (Walton 1989; Walton and Ragin 1990; Shefner 2004; Shefner, Pasdirtz, and Blad 2006). Such protests ushered in the election of leftist governments. New leaders in Argentina, Brazil, Bolivia, Chile, Ecuador, Nicaragua, Paraguay, Uruguay, and Venezuela have relied on rhetoric that characterizes national problems as the result of neoliberal reform. The number and scale of changes advocated by those leaders vary significantly. So too does the support for leftist governance, as demonstrated by the recent presidential election of a rightist candidate in Chile. Nevertheless, political shifts throughout Latin America suggest the potential for a unified regional response to neoliberalism. Earlier efforts to resist IMF-imposed policies came from nations like Jamaica and Peru, whose political resources were few. By contrast, countries currently opposing the IMF, like Brazil, Argentina, Venezuela, and Ecuador, have significant economic power, including large oil reserves. Finally, although slow, the emergence of the Bank of the South and the Bolivarian Alternative for the Americas (ALBA) provides both rhetorical means for opposition and an institutionalized asset reserve that imposes fewer conditions than weakening IFIs of the past (Strautman 2008). It is important to recognize the popular roots of the new leftist governments. The authors of this volume help us understand not only the emergence of new constituencies but also the different levels at which they resist and pursue expressions of power.

State Power and the Incomplete and Uneven Application of Neoliberalism

We attribute a great portion of the decline in the U.S. economy to this nation’s version of neoliberal policy, carried through by both the state and its corporate allies. Deregulation of various financial instruments facilitated profit accumulation in industries that employed relatively few workers compared to the industrial base that was left to decay. Loosening capital restrictions further eased the way for U.S. investment dollars to seek higher returns elsewhere. National trade policy weakened U.S. labor’s efforts to maintain wages and pensions, while the threat of exit further strengthened corporate power. Finally, decades of union-busting policy weakened labor to the point that its resistance to the flight of U.S.-based industry proved ineffective. In effect, the U.S. neoliberal state offered more opportunities for short-term corporate profits, even as capital broke the post–World War II accord with labor. However, the economic decline of the United States is but one manifestation of state changes under neoliberalism.

For the past thirty-five years, Keynesianism has been under assault by neoliberal economists and IFIs. Neoliberal theory sees state intervention in the “free market” as the predominant obstacle to economic growth. Neoliberals argued that government interventions slow economic growth in wealthy and poor nations alike and perpetuate poverty by eliminating incentives to competition. The neoliberal critique extended beyond its earlier attack on Keynesian use of debt, attacking government provision of public services, state-owned enterprises (SOEs), and state regulation of all kinds. Ignoring state contributions to economic growth during the years of import substitution industrialization, and the growth of Asian developmental states, not to mention the social welfare provision that forestalls the savagery of capitalism (Polanyi [1944] 2001), neoliberals effectively captured the ideological and policy high ground and demonized the state (Harvey 2005). The power of the ideological argument, added to the pressure exerted by IFIs, resulted in the activities of what many called the “neoliberal state.” Scholars increasingly employed the notion of the neoliberal state, whether their research centered on development, resistance, trade union activity, gender, surveillance, disaster management, or numerous other topics.

Despite the overall condemnation of state interventions in the economy—Keynesian, socialist, or otherwise—the application of neoliberal policy in an effort to shrink the state and its influence in economies has been uneven. Nations made vulnerable by debt were forced to substantially redesign their national economies. IFIs used the tools of structural adjustment to shrink welfare state provisions, privatize government-owned industries, and change trade policies in ways that benefited external and internal elites at the expense of working people in indebted nations. Much of Latin America has fallen prey to these influences from the 1980s to the current day (Portes and Hoffman 2003; Portes 1997). Elsewhere, the application of neoliberal orthodoxy was less severe, and states thus continued to push development and regulate some economic excesses. Some nations won more flexibility because they were frontline states during the Cold War, while other national economies were either too large or too vibrant to be forced to replicate neoliberal orthodoxy. Many Asian states, especially before the 1997 financial crisis, forestalled the wider attacks on the state suffered in Latin America.

In short, despite the efforts of neoliberal policy makers, there has been no single neoliberal state. There has instead been a range of state interventions and policies, which are uneven in their allegiance to neoliberalism. The variation in how neoliberalism has been applied by states may be explained by different histories, economic dynamism, indebtedness and subsequent vulnerability, national investment and disinvestment choices, and citizen response. State responses within a wide rubric of neoliberalism help us understand both how hegemony is shifting and how different nations and organized citizens are prepared to manage those changes.

Within the context of shifting hegemonies, the authors of this volume address a series of questions regarding state policies under neoliberalism: How have different states responded to global economic pressures on state policy? What state strategies have proven effective in coping with economic shifts? How evenly have neoliberal policies been applied, and what have been the results of those different policy formulations? In what ways has other nations’ power risen, and how has the United States kept from sinking even further?

In chapter 1, Giovanni Arrighi and Lu Zhang find reason for optimism in their analysis of China’s ascent, especially in that nation’s tailoring of neoliberal orthodoxy. After showing how U.S.-driven neoliberal reform generated the most pressure on labor in recent decades, they ask why China has been able to take such great advantage of global economic change. The answer is that in China the state remained a crucial force in shaping the economy despite hewing to some elements of neoliberalism, like spurring competition among SOEs and between domestic and foreign corporations. On the whole, however, the Chinese state played a decisive role in planning, regulating, and directing industrialization and infrastructural modernization, all actions that deviate from neoliberal prescriptions. Gradual reforms were implemented at the same time that state-driven diversification polices expanded high-tech and labor-intensive manufacturing.

Other elements that differentiated China’s path from the neoliberal dictum included the expansion of domestic markets (partly because of the size of the economy), the will to improve rural living conditions, and the transfer of large numbers of rural workers from agriculture to the manufacturing sector through state-sponsored programs such as the Township and Village Enterprise (TVE) program. Key to the success of these reforms were the maintenance of a large peasantry only partially separated from the means to produce its own subsistence, and a blend of industrious and socialist revolutions.

According to Arrighi and Zhang, China’s industrious revolution offered an alternative to Western development strategies by increasing the utility of labor-intensive production and strengthening workers’ roots in the household and village rather than in the factory. In turn, the improved standards of living that resulted from China’s socialist revolution heightened workers’ loyalty and diligence. Industrialization in that country continues to successfully rely more on labor productivity than capital investment. Revolutionary ideology gave priority to Chinese peasants and workers as the engine of industrial growth and legitimized their claims for expanded rights. Recent unrest—by government count, up to 87,000 public demonstrations in 2006—has occurred in response to violations of the social contract implicit in the “iron rice bowl.” An emergent labor movement is now contesting exploitive labor policies in China. In Arrighi and Zhang’s view, despite its flaws, the Chinese example may provide an alternative path to Western-defined globalization and the neoliberal state. Whether this new example will lead to regional solidarity based on higher levels of general welfare, or to abuses of Southern nations, is yet to be determined.

If China’s policy defies neoliberal state theory regarding internal production, its international economic relations suggest that the nation has taken greater cues from neoliberal trade policy. In chapter 2, Walden Bello examines how China’s emerging hegemony may not be accompanied by progressive political alternatives to globalization. China has looked to the Association of Southeast Asian Nations (ASEAN) to broaden its consumer exports and to increase imports as its food and raw materials production prove insufficient. Such efforts do not require the re-creation of unequal exchanges like those marking North-South trade relations of the past. Yet recently negotiated trade agreements, Bello finds, follow historical trends by benefiting China at the expense of its trading partners. One example is the harm inflicted on Thai farmers who have not received agreed-upon tariff reductions in China. China may be poised to merge its advantage as an emerging hegemon with its developing nation status; it might thus combine its massive consumer market with its cheap labor to gain access to foreign markets and simultaneously limit imports. Such an approach bears similarity to that followed by the United States and other developed nations that control domestic market access while retaining the capacity to transfer cheap products abroad.

China’s new hegemony wavers between the repetition of past trajectories of power and new regional possibilities. Bello points out that the country’s ability to profit above the average levels of ASEAN trading partners has much to do with the limited regional integration of that economic bloc. Greater ASEAN amalgamation might provide more negotiating capacity vis-à-vis China, an important difference from past trade relations. Bello also finds that China is much less likely to use military might in the way that nations of the North have done to maintain dominance. Powerful nations of the future may try to imitate their predecessors, but the changed global environment may provide greater resources for weaker regions to resist intrusions.

In chapter 3, Gary Gereffi similarly examines China as an emerging dominant power whose state policy has challenged neoliberal orthodoxy. China’s impressive ascent is all the more dramatic when compared to the developmental trajectory of Mexico, a nation whose economic vulnerability has led it to structure state policy along neoliberal lines for close to three decades. Between 1940 and 1975, Mexico pursued an import substitution industrialization model of development that entailed a salient role for the state in economic regulation and production. The government invested in and protected industry, attempting to attract foreign capital to pay for enterprise creation and infrastructure building. This focus on foreign investment in large part resulted in Mexico’s high accumulation of debt and its subsequent vulnerability to the imposition of neoliberal measures (Fernández-Kelly and Massey 2007).

In Mexico, neoliberal policy led to periods of stagnation interspersed with stretches of moderate growth, always accompanied by increased inequality. China, by contrast, has enjoyed much greater success with its economic reforms, as also noted by Arrighi and Zhang (chapter 1). Attracting capital investment, opening domestic markets, and using low-wage labor were the hallmarks of China’s developmental approach. The application of those strategies led to economic growth, although they contradicted the socialist ideology promoted by the Chinese state. Gereffi cites current concerns that opening China to foreign investments will choke domestic firms, as has been the case in other countries implementing similar policies. For Gereffi, the most important question is how to understand the efficacy levels of different economic interventions. Will one developmental strategy or another have more or less success at moving a country from low-value to high-value production?

International trade data demonstrate that Mexico moved more quickly and intensively to high-value exports, with China following close behind and then surpassing Mexico by 2000. Both nations experienced significant success in the diversification of their economies, but China won a greater market share for exports to the United States. Lower labor costs, huge economies of scale, and a coherent industrial plan—the product of heightened state intervention—help explain China’s advantage. The combined effect of those factors has been yet another benefit: “supply chain cities” that build on low labor and other input costs, and favorable governmental policies, to increase production. Gereffi shows that, amid China’s success, questions remain, especially with respect to a resulting context of increasing inequality and environmental degradation. In Mexico and China, the costs of growth strategies may have to be addressed by increasing state welfare expenditures. In both cases, national economic policy demonstrates the failure of the neoliberal model, and the implications for the near future suggest a further retreat from “thinning” the state.

China’s trade relations are instructive not only in the implications they hold for its neighbors but also in how global power is pursued and maintained through dependent trade and production. In chapter 4, James Cypher and Raúl Delgado Wise demonstrate how the United States has similarly benefited from such relations with Mexico, showing that the United States’ ongoing strength is a product of that relationship. Far from laying the basis for free trade, the negotiations preceding and instituting the North American Free Trade Agreement (NAFTA) established new arrangements to maintain America’s economic viability in ways that suggest that China’s ASEAN trading partners have reason to be wary. NAFTA and the subsequent restructuring of the Mexican economy owe much to the increasing autonomy of Mexican capitalists who made strategic choices to ally themselves with U.S.-based multinationals, thereby greatly benefiting comparatively few sectors in each nation.

The pre-NAFTA era was marked by increasing coordination between Mexican government officials and investors, in contrast to the previous phase of import substitution industrialization, during which the Mexican state actively intervened in economic matters (Fernández-Kelly and Massey 2007). One of the main goals of increasingly autonomous Mexican capital was the capture of new foreign direct investment (FDI). The heightened involvement of Mexican elites helped keep the plan focused on long-term investment at the expense of national control over foreign capital. Contrary to other analyses on the subject (Cuevas, Messmacher, and Werner 2005; Monge-Naranjo 2002), Cypher and Delgado Wise present evidence to support the claim that NAFTA did not lead to increased foreign investment in Mexico. Instead, its most significant results were the restructuring of the Mexican economy and its increasing dependency on the United States.

Cypher and Delgado Wise argue that in the post-NAFTA period, Mexico’s development strategy has increasingly entailed the sale of cheap labor for the manufacture of exportable goods. The consequence of this maquiladora model is that few jobs in the formal sector have been created, wages for assembly workers continue to sink, and more and more people emigrate to the United States in search of opportunity. Mexico’s comparative advantage as a provider of low-cost labor does little to build its economy. Instead, U.S. interests have won control of Mexican markets, allowed firms to avoid legal obligations toward the protection of labor and the environment, and increased profits along the way. The unequal relationship between the United States and Mexico has been reinforced and may be understood as an outcome of a wide application of neoliberal policy.

New Expressions of Global Power

We argue that current shifts in the distribution of global power indicate that the neoliberal project may be wearing out, thus opening space for alternative models. Harvey (2007), Centeno (1998), Babb (2001), and George (2000), among others, document how neoliberalism evolved from a theoretical critique of Keynesianism to an economic policy with practical ramifications. Think tanks, universities, IFIs, and national governments worked to turn neoliberalism from an academic exercise into a development strategy that was subsequently discredited by the widespread damage it caused. Alternative development models, however, have not been coherently articulated yet, partly because many scholars have been forced into defensive postures as they attack neoliberalism. National and local governments, as well as actors included in what some authors call “civil society”—small businesses, class-based groups, professional associations, indigenous peoples, social movements, and nongovernmental organizations—have all fought neoliberal policies. In other words, neoliberalism has been notable in its capacity to create solidarity compacts against harm.

Oppositional coalitions have brought together agents previously segregated by state actions such as corporatism and clientelism, on the one hand, and vicious repression on the other. But strong resistance to the neoliberal scheme may become an obstacle for the creation of alternative approaches. Northern unions and anarchists who spoke out in 2001 in Seattle share outrage with indigenous groups in the Andes, but they are unlikely to advance common solutions. They may share a commitment to social justice but have a different definition of it. Certain strands of new design have come into view, from new ways of life and politics proposed by World Social Forums, to critiques inherent in the Fair Trade movement, to the rationale behind the creation of institutions such as ALBA and the Bank of the South (Barnett 2007; Strautman 2008). Forging alternatives to neoliberalism is a work in progress.

The authors in the second part of this book recognize that new configurations of power require an intellectual project analogous to the one that activated neoliberalism and brought it to its pinnacle. If new nations or regions are to exercise power with greater attention to social justice, they must have clear options at their disposal. Resistance to neoliberalism has led emerging actors to support new definitions of property, class, and environment, but declining hegemons are also reexamining priorities in response to the changing global environment.

What political opportunities are generated by globalization? How can citizens work in and through their national states to increase the scope of their influence? In chapter 5, William I. Robinson addresses these questions by focusing on the transnational character of global processes. He directs us to look beyond the nation-state to fully understand class and social relations. The emergence of globalization, Robinson argues, generates a transnational capitalist class (TCC) that organizes production and accumulation on a global scale. Analysts who focus exclusively on the nation-state are likely to ignore the political relevance of transnational actors. National states are not disappearing, but they continue to be transformed and absorbed by transnational entities. It is through the transnational state (TNS) that the ideology and practice of market liberalization work to integrate national economies, freeing capital to move rapidly. The current moment of globalization is increasingly being defined by a crisis of legitimacy and authority, which has elicited global collective action.

Robinson does not discuss regional possibilities of resistance. But the emergence of new transnational solidarities, and new transnational institutions, logically follows from his argument. On the one hand, political decentralization gives some power to smaller actors. At the same time, the capacity of Latin American states, among others, to contest transnational power has weakened the IMF and the World Bank. This allows us to consider the emergence of a multipolar globalization (Ellner 2005). The movement from resistance to creation of alternatives requires mobilization at multiple levels. Robinson’s research reminds us that a new understanding of capitalist expansion is as crucial to those opposing the prevailing system as to those benefiting from it.

In chapter 6, Frances Fox Piven refuses to cede all power to those whom Robinson labels the TCC. Global production may limit the actions of working people, and electoral choices may be the prerogative of those with greater access to resources, but globalization requires the cooperation and participation of ordinary people. Class interdependence remains an important feature of worldwide capitalism: just as workers have withdrawn cooperation and disrupted national stages in the past, so too can popular power operate on a global terrain. According to Piven, increased world integration implies the potential for coordinated action among those targeting oppressive states and enterprises. National bonds among firms may break, but new ties among workers in production chains can be forged. Whether it is in labor struggles, contested claims over farmland, or efforts to protect natural resources, Piven finds examples of popular power across the globe.

Piven also recognizes that states and corporations still have the means to stifle resistance. Furthermore, global interdependence does not necessarily breed capable disruptors. On the other hand, opposition to neoliberal reforms has engendered new strategies for collective action. Fragmented production can complicate the expression of popular power, but Piven looks to nascent cross-border efforts, new union structures, and the energy of street mobs for clues about the character of new mobilizing efforts. Even the social bonds that deter individuals from participating in protest may offer resources for disruption when their allegiance is contested or justice is violated.

In chapter 7, Alejandro Portes, Cristina Escobar, and Alexandria Walton Radford turn our attention to immigrant transnational organizations as an example of new forms of globalization put in place from the bottom up. They examine ninety Colombian, Dominican, and Mexican organizations pursuing philanthropic projects across borders, noting that organizational efforts on the part of transnational immigrants differ in terms of the immigrants’ mode of exit from sending countries and type of reception in areas of destination. All the evidence indicates that economic, political, and sociocultural activities linking immigrants with their communities of origin emerge as an initiative of the immigrants themselves, with governments joining in after the importance and

economic potential of those activities become evident. Across the hemisphere, immigrants in the developed world have come to rely on bonds of solidarity and a shared sense of obligation to those left behind, not only for the survival of families but also for the implementation of civic initiatives in sending nations and localities. The bulk of remittances sent by immigrants to their home countries easily surpasses foreign aid to those nations and even matches their hard currency earnings from exports. In 2004, the worth of remittances was assessed at $2–3 billion for both Guatemala and El Salvador, $5 billion for Colombia, and a staggering $16 billion for Mexico. Remittances reached $23 billion for the whole continent (Cortina and de la Garza 2004).

The interconnections forged by transnational immigrant organizations reach beyond the economic realm, producing unexpected but increasingly visible effects in the politics of hometowns and home countries. In the case of Mexico, this has taken the form of matching programs for immigrant contributions and the creation of a government agency, the Institute of Mexicans Abroad (IME), which is housed in the Federal Secretariat of Foreign Relations. Although the capacity of immigrants to influence large political apparatuses is not new, it signals innovative forms of political mobilization that stand in clear contrast to previous policies imposed from the top down. Yielding to pressure from their expatriate populations, national states now seek to demonstrate their interest in immigrant welfare with concrete actions, while trying to attract the loyalty and contributions of immigrants.

Focusing on the fissures of market fundamentalism, Fred Block suggests in chapter 8 that the new global environment provides a variety of new possibilities for the United States, not the least of which is the formation of a new post-imperial foreign policy. The failures of economic orthodoxy and the fracture of traditional bases of authority in the United States offer opportunities to design new relationships between state and market. In addition, growing concerns among U.S. citizens about global climate change, the high cost of health care, and declining prosperity provide an opening to consider new solutions to political problems. Block proposes innovative arrangements rooted in a moral economy that upholds social justice while at the same time promoting efficient social and economic practices. He suggests five specific criteria to guide the creation of the new economy: (a) ethical corporations with limits to executive compensation, and substantial employee representation; (b) social inclusion through redistributive policies; (c) democratic development to reinvest and engage in public dialogue about basic research; (d) design and production adhering to environmentally friendly standards; and (e) the prioritization of human services.

A moral economy would have momentous implications for foreign policy. According to Block, it would provide opportunities for the United States to help repair failed states that pose hazards ranging from terrorism to health emergencies. It would also send a very different message than the one associated with the Washington Consensus—making human rights the center of foreign policy is diametrically opposed to the neoliberal position of economic efficiency as the central social good.

New standards of operation in the global economy are consistent with many of the objections voiced by the representatives of developing nations at the failed Doha negotiations. A global regulatory regime must articulate labor, environmental, and human rights standards and design mechanisms for enforcement. Furthermore, a crucial element of any new regulatory regime must be the recognition that consumption does not constitute a route out of environmental degradation. Block argues that global sustainability requires measures that focus not just on production but on conservation as well.

Above all, a new U.S. foreign policy must have as a foundation the respect of human rights, an objective that will require the replacement or drastic reform of IFIs. Entities with the material resources and political clout to enforce human rights and standards will be needed, whether goals are set by the Universal Declaration of Human Rights, the Millennium Development Goals, or the Convention on the Prevention and Punishment of the Crime of Genocide. From Block’s point of view, pursuing ethical globalization will require that the United States abandon claims to hegemony, pursuing instead the kind of foreign policy that may restore its leadership role in the world scene. Such state policy would provide deep challenges to the global inequalities that neoliberalism has exacerbated and maintained.

Finally, in chapter 9, Catherine Walsh offers a pointed analysis of colonialism and knowledge, concluding that one of the most important sectors articulating alternatives to corporate-driven globalization comprises those who have endured conquest, subjugation, imperialism, and, finally, globalization. Indigenous peoples and nations have responded to free trade negotiations with a critique that links recent abuses to older forms of oppression, while simultaneously proposing alternatives. It is not a coincidence that resistance has emerged in the Andean region, a critical U.S. outpost in protecting national security and exploiting scarce natural resources. Resistance to such intrusions has been embraced by labor unions, indigenous social movements, and national governments.

Walsh finds the United States advancing policies to reshape Latin America along political lines congruent with the analysis of Cypher and Delgado Wise (chapter 4). It is not just to the economic and political project of neoliberalism that indigenous peoples are responding, but also to cultural definitions of progress, development, and knowledge. In the region studied by Walsh, the most recent attempt to pursue colonial advantage has been the North American–Andean Free Trade Agreement. Despite the agreement’s regional focus, U.S. negotiators have sought to forge accords nation by nation, thus diminishing the possibility of a multilateral coalition that would oppose American interests. Such efforts seek to perpetuate the “coloniality of power” that has persisted in the region for over five hundred years.

According to Walsh, indigenous resistance to free trade agreements articulates economic options. For example, ancestral forms of knowledge advocate a less extractive relationship to nature; denying the centrality of profit leads to more equitable norms of reciprocity and complementarity; and refusing the institution of Western political structures advances autonomy and self-determination at the local level. Indigenous movements succeeded in halting Ecuadorian entrance into the North American–Andean Free Trade Agreement, not only as a result of their objection to economic subordination but also because such agreements show insufficient respect for nature and humanity. Another example pointing to innovative socioeconomic arrangements is ALBA, which moves beyond critiques of economic and political imperialism to build cooperation, regional integration, and the possibility of multipolar power. The Bank of the South follows a similar path, promoting cooperation, development, and integration instead of the kind of competition characteristic in older financial institutions.

The scholars included in this book agree that the present moment is fraught with opportunities for a movement away from corporate-driven globalization. U.S. hegemony seems to be waning despite fervid military ventures and the pursuit of free trade. China’s ascent has ambiguous potential: a new hegemon may recreate policies similar to its predecessor, or it may forge a new stance marked by greater levels of collaboration, egalitarianism, and reciprocity among nations. Under the proper circumstances, the rise of perspectives opposing neoliberalism might eventuate in multipolar power centers.

None of these changes is understandable or possible without examining collective mobilization at multiple levels. Popular power, state resources, and regional coalitions have all been at work in the recent transition. All of these strands of analysis force us to rethink how states and citizens have applied neoliberal theory, and how differing results of this uneven application have implications for the next stage of theories and action on states, development, and citizen action. This book brings together these multiple strands.

Latin American Studies

           Sociology

Political Science

           International Relations

Sociology