Political Consequences

Globalisation’s political impact is one of the most debated questions in contemporary politics. The central issue is whether globalisation weakens or strengthens the state. The textbook examines this through three aspects, though the core tension is between the erosion of state capacity and the continued — even enhanced — importance of the state.

Erosion of state capacity

At the simplest level, globalisation reduces the ability of governments to do what they do. The old ‘welfare state’ — which actively worked to ensure economic and social well-being — is giving way to a more minimalist state. This minimalist state focuses only on core functions: maintaining law and order, and securing its citizens. It withdraws from broader welfare functions.

In place of the welfare state, the market becomes the prime determinant of economic and social priorities. The entry and increased role of multinational companies (MNCs) across the world directly reduces the capacity of governments to take decisions on their own. When an MNC can shift production or investment across borders, a government’s ability to regulate, tax, or set policies is constrained.

The state remains important — and may even become stronger

Globalisation does not always reduce state capacity. The primacy of the state continues to be the unchallenged basis of political community. Old jealousies and rivalries between countries have not ceased to matter in world politics. The state continues to discharge its essential functions — law and order, national security — and consciously withdraws from certain domains from which it wishes to. This withdrawal is a choice, not a helpless loss of power.

In some respects, state capacity has actually received a boost from globalisation. Enhanced technologies are now at the disposal of the state to collect information about its citizens. With this information, the state is better able to rule, not less able. As an outcome of new technology, states can become more powerful than they were earlier.