lapse,to Eastern Europe.Francis Fukuyama (1992)fore- ness to investment and trade,and a stable currency.The saw a time when all states would be liberal democracies herd decides which countries to reward and which to and.more recently.Michael Dovle (1997)projected the punish,and nothing can be done about its decisions.In year for it to happen as lying between 2050 and 2100. September 1997.at a World Bank meeting,Malaysia's John Mueller (1989),heralding the disappearance of war prime minister.Dr.Mahathir Mohammad,complained among the world's advanced countries.argued that Nor- bitterly that great powers and international speculators man Angell's premises were right all along,but that he had forced Asian countries to open their markets and had published his book prematurely. had manipulated their currencies in order to destroy Robert Keohane and Joseph Nyc in their 1977 book, them.Friedman (1999,93)wonders what Robert Rubin. Power and Interdependence,strengthened the notion that then-U.S.treasury secretary.might have said in response. interdependence promotes peace and limits the use of He imagines it would have been something like this: force by arguing that simple interdependence had be- "What planet are you living on?...Globalization isn't a come complex interdependence,binding the economic choice,it's a reality....and the only way you can grow and hence the political interests of states ever more at the speed that your people want to grow is by tapping tightly together.Now.we hear from many sides that in- into the global stock and bond markets.by seeking out terdependence has reached yet another height,tran- multinationals to invest in your country,and by selling scending states and making The Borderless World,which into the global trading system what your factories pro- is the title and theme of Kenichi Ohmae's 1990 book. duce.And the most basic truth about globalization is People.firms,markets matter more;states matter less. this:No one is in charge.' Each tightening of the economic screw raises the benefits The herd has no telephone number.When the herd of economic exchange and makes war among the more decides to withdraw capital from a country,there is no advanced states increasingly costly.The simple and plau- one to complain to or to petition for relief.Decisions of sible propositions are that as the benefits of peace rise. the herd are collective ones.They are not made;they so do the costs of war.When states perceive wars to be happen.and they happen because many investors indi- immensely costly,they will be disinclined to fight them. vidually make decisions simultaneously and on similar War becomes rare,but is not abolished because even the grounds to invest or to withdraw their funds.Do what strongest economic forces cannot conquer fear or elimi- displeases the herd,and it will trample you into the nate concern for national honor (Friedman 1999,196- ground.Globalization is shaped by markets,not by gov- 97). ernments Economic interests become so strong that markets be- Globalization means homogenization.Prices,products gin to replace politics at home and abroad.That eco- wages.wealth.and rates of interest and profit tend to nomics depresses politics and limits its significance is become the same all over the world.Like any powerful taken to be a happy thought.The first section of this movement for change,globalization encounters resis- paper examines its application domestically;the second, tance-in America,from religious fundamentalists; internationallv. abroad,from anti-Americanists;everywhere from cul- tural traditionalists.And the resisters become bitter be- The State of the State cause consciously or not they know they are doomed. Driven by technology,international finance sweeps all Globalization is the fad of the 1990s,and globalization before it.Under the protection of American military is made in America.Thomas Friedman's The Lexus and power,globalization proceeds relentlessly.As Friedman the Olive Tree is a celebration of the American way,of proclaims:"America truly is the ultimate benign hege- market capitalism and liberal democracy.Free markets, mony”375) transparency,and flexibility are the watchwords.The The "end of the Cold War and the collapse of com- "electronic herd"moves vast amounts of capital in and munism have discredited all models other than liberal out of countries according to their political and eco- democracy."The statement is by Larry Diamond,and nomic merits.Capital moves almost instantaneously into Friedman repeats it with approval.There is one best countries with stable governments,progressive econo- way,and America has found it."It's a post-industrial mies,open accounting,and honest dealing,and out of world,and America today is good at everything that is countries lacking those qualities.States can defy the post-industrial"(145,303).The herd does not care about "herd,"but they will pay a price,usually a steep one,as forms of government as such,but it values and rewards did Thailand.Malaysia,Indonesia,and South Korea in "stability,predictability,transparency.and the ability to the 1990s.Some countries may defy the herd inadver- transfer and protect its private property."Liberal democ- tently (the countries just mentioned);others,out of ideo- racies represent the one best way.The message to all logical conviction (Cuba and North Korea);some,be- governments is clear:Conform or suffer. cause they can afford to (oil-rich countries);others, There is much in what Friedman says,and he says it because history has passed them by (many African coun- very well.But how much?And,specifically,what is the tries). effect of closer interdependence on the conduct of the Countries wishing to attract capital and to gain the internal and external affairs of nations? benefits of today's and tomorrow's technology have to First,we should ask how far globalization has pro- don the "golden straitjacket,"a package of policies in- ceeded?As everyone knows,much of the world has been cluding balanced budgets,economic deregulation,open- left aside:most of Africa and Latin America,Russia,all 694 PS December 1999 Reproduced with permission of the copyright owner.Further reproduction prohibited without permission.Reproduced with permission of the copyright owner. Further reproduction prohibited without permission