Globalization, capitalism and the market: beyond a historical and flat-earth arguments.

James, Paul ; Gills, Barry K.

Capitalist production, trade, and market relations are driving forces of contemporary globalization. (1) While globalization cannot be reduced to its economic dimension as some economists have been prone to do, there is no doubt about the central importance of capitalist exchange and production in the extension of social relations across world-space. (2) Ideas and practices as diverse as consumerism, entertainment, liberalism, cosmopolitanism, tourism and sport are now so bound up with processes of globalizing production and exchange that it is difficult to extricate broader social relations from their grip. It seems that everything can now be conceived of in terms of goods and services that can be sold (commodification) or processes that are organized to offer a return on investment (capital accumulation). (3) Each of these processes has spread across the globe.

It should also be said that globalizing exchange goes back long before the emergence of modern capitalism. Long-distance market relations drew connections between peoples along lines of trade such as the Silk Route between Europe and China; lines that stretched for thousands of miles. In the contemporary period, layers of modern and postmodern capitalism have taken these interconnections to new levels of integration and intensity. The process remains uneven, but notwithstanding the continuing importance of national and regional economies today, globalizing capitalism is undoubtedly the dominant framework of economics in the world. Debates abound in relation to what this means economically, socially and politically. Across the political spectrum 'capitalism' has become the taken-for-granted way of naming the economic pattern that weaves together the current dominant modes of production and exchange. Yet there is still not much in the way of clarifying discussion that addresses the relationship between globalization and capitalism, and its history in long-term processes. This is the task of the present article. It begins by discussing the emergence of a globalizing market before the consolidation of capitalism and the subsequent consolidation of what some writers have called the modern capitalist 'world system'. It examines the relationship between global trade, commodity relations, and economic development across the course of traditional and modern history, and into the present, and argues that this is linked to a broader process of the abstraction and spatial extension of social relations. (4)

The Market, Capitalism and Globalization: Some Conceptual Issues

The concepts of 'the market' and 'capitalism' are caught up in deep controversies and vexed by historical disturbances and long-term social change. Nevertheless, it is important to re-engage with these two very central ideas in the history of thought, and to attempt to shed some further light on their changing relationship with processes of globalization. The market-capital relationship is a perennial issue in the tradition of modern political economy. Two central questions concern us here. How far back into history can we find extended markets organized around traded commodities and the accumulation of capital? Has it been since the end of the 19th century, a few centuries ago, or several millennia? And to what extent has such trade and value accumulation been associated with processes of globalization? It is to these lines of inquiry that this first section is dedicated.

Globalization is defined here as the extension of social relations across world-space. In other words, globalization is not just border-crossing activities or transnational extension. In setting up this definition it should be unnecessary to say that economic globalization is a subcategory of the broader category of globalization(s), but it needs to be emphasized here because, all too often, economists forget the adjective 'economic' and reduce globalization to such processes. The problems go deeper. Martin Wolf's definition, for example, is very careful to recognize that economic globalization is only one kind of globalization, but his definition succumbs to other problems. To treat economic globalization as 'the integration of economic activities, across borders, through markets', (5) is both too narrow (economic globalization does not only occur through markets) and too vague (economic globalization requires much more than an integrating economic transaction across a political border). An adequate definition of globalization needs to rest upon some sense of 'the global'; otherwise the reference point could be a related kind of spatial extension such as internationalization or regionalization. On the other hand, globalization is neither total nor even totalizing, except perhaps in the projections of its ideologues. It is not an end-state, even if the world is sometimes projected as moving towards globality as such. Neither does naming a process as globalizing depend upon there being an already existent and comprehensive economic 'world system', or indeed any kind of totalizing globality. Globalizing capitalism is undoubtedly the dominant and increasingly pervasive economic structure in the world today. However, even the concept of 'global capitalism' is not sufficient a term to describe the complexity, unevenness and contradictory nature of the dominant transformations that are sweeping the world and, at one level, reframing the human condition, including our relationship to nature. Contemporary globalization is only one part of that matrix of transformations.

In summary, the concept of 'globalization' simply names the various projections of relations of connection as they reach across a socially constituted world-space. 'World-space' is understood in the variable ways that it was lived during different periods of history. Two millennia ago in the period of imperial Rome, the city (urbis) reached out to the world (orbis). The known world was not understood in the same way as planet earth of the 21st century, where global cities so-called, such as New York, Paris, London, Tokyo, have interconnected stock exchanges linked almost simultaneously in electronically mediated world-standard time. Nevertheless, the Romans did project their power into their world-space and that space was conceived in global terms. Hence, at the risk of sounding simplistic, because most definitions of globalization miss out on this basic point, we are insisting that globalization involves some sense of the global, either subjective or objective, and this takes fundamentally different forms across world history.

There are further basic issues to work through. Firstly, it should also be noted at the outset that the terms 'the market', 'capitalism' and 'globalization' are conceptual categories which are used to generalize about a very large set of cases. The terms convey some sense of comparative commonality across completely different world-times and social settings. There is thus nothing wrong with using these terms as analytically generalizing concepts. However, problems quickly mount up when their application is associated with conflating the three different things called 'globalization', 'capitalism' and/or 'the market' into a single phenomenon. Likewise, when they are used to present one-dimensional claims about their essential or transhistorically given characteristics--that is, as opposed to their minimal definitional characteristics. We say this to distinguish the present approach from a tendency of both some neo-liberal and some orthodox marxist writers to reduce globalization to a stage of capitalism. For example, arguing from a lineage consistent with Lenin's classic work on imperialism as 'the highest stage of capitalism', Berch Berberoglu concludes that manifestations of contemporary capitalism such as the increased prominence of transnational corporations 'do not change the fundamental nature of capitalism ... They cannot change the nature of capitalism in any qualitative sense to warrant globalization a distinct status'. (6) This has important political implications--in our argument, there can be alternative forms of globalization. Another world is possible.

The approach that we are taking thus treats globalization as a multivariate and historically uneven process that has come to be increasingly pushed along by modern capitalism but cannot be reduced to it. One way of express the complexity of this ever-changing matrix of economic and other social relations is by strategically using the terms 'globalizations', 'markets' and 'capitalisms' in the plural. A second way is to take very seriously the qualifying and cross-cutting adjectives that seem to silently sit in front of the nouns 'globalization', 'market' and 'capitalism'--adjectives such as 'economic', 'cultural', or 'political', to take one interrelating set; or 'traditional', 'modern' or 'postmodern', to take another ontologically defined set. This means taking seriously the specification of the dominant forms of each of these phenomena in a given period or region, and specifying the ways in which they relate to each other under different conditions. There have been myriad historical instances of markets and capitalisms, comprising an immense variety of actual practices, ideologies, institutions and technologies. According to the present argument, there can be globalization without capitalism, market relations which are not capitalistic, and globalizations which counter the neo-liberal market. Nevertheless, our argument is that at least since the 16th century, and intensifying across the later part of the 20th century into the present, capitalism and globalization have developed in a mutually constitutive relationship. This can be expressed in two opening propositions.

Proposition 1: Although the relationship between capitalism, the market and globalization is uneven and changing, it is historically the case that capitalism tends to be globalizing, and that modern capitalism, in particular, is built on certain kinds of globalizing market relations.

Proposition 2: There have been long-term, patterned and constitutive relations between the changing forms of globalization, different kinds of market relations, and different forms of capitalism.

A third area of controversy is over the relationship between the more general concept of 'exchange' and that of 'the market'. In the field of anthropology it has long been recognized that 'exchange' is not only common in historically documented social relations but indeed, in one form or another, possibly endemic to all human cultures. So if this be the case, how do we then usefully differentiate 'the market' and the broader concept of 'exchange'? Karl Polanyi famously offered a simple typology including such categories as reciprocal exchange and redistribution as well as market exchange as alternative economic modes. (7) These are descriptively helpful as long as they are not treated as mutually exclusive or proceeding in 'stages' in some linear progression. An alternative and preferable conception would be to posit such categories and 'modes' as coexisting in often very complex combinations or 'articulations'. In these terms a further proposition can be expressed as follows:

Proposition 3: Market exchange involves an abstraction beyond particularistic, reciprocal or face-to-face relations of exchange to the instituting of relatively stable patterns of extended interchange.

In other words, it is a set of processes that marks a movement from relations of interpersonal reciprocity or barter to the systematic use of symbols of value-commensurability (money) and onto commodity exchange. These two processes--monetization and commodification--have historically been associated with globalization, and this association goes back much further than the connection to capitalism as generative system of production and exchange.

This proposition has the utility of examining the economic forms in question (that is, commodity and monetary forms) as central aspects of the globalizing market. It also allows us to sharpen the analytical connections and distinctions between the following kinds of exchange relations, and to make some tentative connections to the nature of globalization:

* Reciprocal-exchange relations constitute the dominant form of exchange in customary tribal formations. Even when extended over large regions, as is the case for the Kula Ring of Melanesia, this form of exchange is particularistic and drawn back into embodied relations. Such relations can be carried globally on the back of other processes of embodied globalization, but are not globalizing in themselves.

* Barter-exchange relations are usually associated with tribal and traditional social formations and contained within relatively localized settings. Such relations often continue to operate alongside the emergence of money-based markets. However, characteristically, as money-based markets become dominant and spatially extended, barter-exchange tends to become more and more localized.

* Money-based markets are associated with commodity exchange, where money contributes to allowing increasing geographical extensions. This allows long-distance trade, in the first instance in high-value goods.

* Capital-based markets are those markets which include but are abstracted beyond markets that simply use money in the transaction of goods. These are a form of market relations that take for granted the entity of accumulated abstract value (capital), and at a certain point begin trading in capital itself.

* Capitalism is a sustained system, producing and exchanging commodities and capital. It is impossible to conceptualize capitalism without the development of an extensive institutionalization of interconnected and extended market relations through which commodities are traded and 'profit' is achieved. It is also necessary to understand capitalism as grounded in labour relations with workers employed for the accumulation of capital. Given the overriding dominance of capitalism today, it is difficult to conceive of contemporary globalization without the centrality of a generalizing system of capitalism.

It is the last three forms that are associated with networks and circuits of globalization. Money-based markets extend relations over time and space, though this may range from being relatively restricted in geographical terms to being global in reach; capital-based markets intensify the process of economic extension, and tend to break with any residual localizing restrictions even as they often rely on states or other institutions to make that break; and capitalism, in its modern form, reaches across 'a world without end' as a generalizing system of production and exchange.

Historical Developments: The Emergence of Globalizing Markets

Extended exchange relations, may be found far back in human history, thousands of years ago, and some of these exchange relations were (remarkably perhaps) conducted over very long distances, even by modern standards. Archaic tool-making--for example, from flint and other soft and workable stone--seems to have traversed long distances even in the remote human past. More recently, some seven or eight millennia ago, the town of Catal Huyuk in Anatolia conducted a thriving long-distance exchange involving the trade of obsidian artefacts, a volcanic black stone that makes some of the sharpest blades known and is useful for decorative and other purposes. Ancient Jericho in the Levant at a comparably ancient, even pre-Neolithic time, conducted long-distance exchange with bitumen, an important item useful for sealing objects from intrusion by water, acting as an adhesive, and for decorative and building purposes. In Oceania, there were extraordinarily long-distance networks of maritime exchange of a variety of goods from the various islands and land-masses involved, which constituted a kind of regular circuit of exchange. We now realize that even in Neolithic times--that is, several thousand years BCE--maritime exchange, including over long distances, was conducted in the Mediterranean and conjoining seas in small coast-hugging craft.

Without more evidence, the use of these examples of tribal and traditional exchange networks cannot be taken to suggest that these systems were global in their reach or even globalizing in their projection. However, it cannot be ruled out either. The discussion is intended to destabilize the sense that the bases of economic globalization began in the 19th or even the 16th century. Janet Abu-Lughod's classic article pushes the integrative process back as far as the 13th century when she says 'the Occident (Western Europe) and the Orient (as far as China) were linked together through a system of trade and, to a much lesser extent, production that had begun to form into what might be called a "world system" rather than a set of "imperial systems"'. (8) Barry Gills (one of the present authors) and Andre Gunder Frank suggest that the process of development of world systems goes back even further to the Bronze Age period of 3000 to 1000 BCE. (9) These arguments are strong. However, what we need to keep in mind here is that the concept of a 'world system' is not in the first instance a claim to globality or even globalization, even if sometimes World Systems theorists retrospectively claim it to be so. (10) The concept of a 'world system' was developed as a unit of analysis by Immanuel Wallerstein and others because the usual political entities such as empire, city-state, nation-state were inadequate to encompass the kind of economic entity brought about by sustained surplus appropriation without a unified political structure. In Wallerstein's words: 'It is a "world" system, not because it encompasses the whole world, but because it is larger than any juridically-defined political unit'. (11) In other words, it is a system of the world, not necessarily a worldwide system. For a sustainable argument to be made about such systems being globalizing, it would be necessary to show either that the processes involved objectively drew lines of connection across such a world-space, or that the people involved subjectively projected their exchange relations outwards to what they understood to be a global arena. In this respect, for example, we find 'global' world maps going back to the Babylonians circa 600 BCE. This includes a clay tablet showing a round world and its encircling earthly ocean, suggesting a particular kind of traditional cosmological, as opposed to a modern rationalized understanding, of the global. (12)

The spatiality of market exchange has been studied extensively, including such theoretical constructs as 'central place theory', 'location theory' in economics, and 'uneven development theory' in marxism. (13) Such studies often intersect with urban studies and the empirical study of settlement distribution and settlement size. In modern terms, this also involves the examination of the economic and functional hierarchy of urban centres, including, most recently, the literature devoted to analysis of 'global cities' as central nodes of contemporary global economic processes, especially in relation to their commercial and financial functions. (14)

A further point can be added to the issue of the unevenness of global history. It is not fruitful to impose a strict linear conception of the assumed historical 'progression' of these forms of exchange, moving from the more communal or reciprocal, through the more 'redistributive', and eventually (or inevitably) on to the more commodified and market-rational forms of exchange. Economic history, whether conceived as national, world or global, is not linear, and contains instances of what would be conventionally understood as historic 'retrogression' as much as 'progression'. Such complexity of forms may be better understood not merely as a mixture of modes, but also as a dialectic or layering of forms. (15) It is quite possible to examine how the extension of the role of 'capital' in history progressed or developed without having to ascribe the concept of 'capitalism' to the entire social formation. Indeed the concept of 'capitalism' was not deployed by Marx, but was a rather later sociological invention. Marx was actually most interested in 'capital' itself, 'capital accumulation', and the 'capitalist mode of production', as analytical categories.

Deciding on what basis market relations constitute the dominant mode of exchange in any given social formation or historical society has always been a very difficult problem. Ultimately, it is a matter of judgement by the historian or theorist and rests upon what criteria they set for any such threshold in the overall ensemble of social relations. The Weberian tradition handled this issue by invoking the categories of 'ancient capitalism', 'mediaeval capitalism' and 'modern capitalism'. While problematically describing the form of capitalism by associating it with a particular epoch--in contrast to our preference to distinguish between traditional, modern and postmodern formations of capitalism, as categorical descriptions rather than successive epochal designations--the Weberian designation has the utility of recognizing how extensive commodification and market exchange existed prior to the dominance of modernism. It recognizes how practices of capital accumulation occurred in some pre-modern historical societies. It also has a role in correcting or revising inherited Eurocentric biases concerning the role of capital in global history. For example, 'mediaeval capitalism'--or more usefully, traditional capitalism--was most prominent not in Western Europe, which was for many centuries a fairly poor and 'backward' economic zone, but rather in the 'East', in virtually all of the vast Islamic lands. This included 'Moorish' Spain (which played a still under-appreciated role in the 'revival' of European civilization), India, South-East Asia, and China, particularly during the highly commercialized Song dynasty. (16) Traditional capitalism used in this sense suggests a profoundly different social formation than modern capitalism, particularly as it is classically defined in relation to a system of profit-framed labour markets.

An additional dimension of the unevenness of global history can be found in the following proposition:

Proposition 4: From antiquity to the present there has been a structural mismatch or 'contradiction' between the spatial and organizational boundaries of the dominant market economy and those of the dominant polities. (17)

Such a mismatch or non-correspondence may be a pivotal causal factor in the drive towards imperial expansion by those polities seeking to secure lines of supply and sources of profit or wealth. It thus has consequences for questions of globalization. This mismatch between the space of markets and the space of states has deep historical precedents, but it also bears upon the present era. The relevance here to questions of globalization is that if imperialism has been a concurrent driving force of globalization, then the link to the globalizing market economy becomes redoubled as polities increasingly find it 'necessary' or advantageous to expand outwards. Across history, polities have tended to be dependent on an economic exchange nexus that is far larger or more territorially extensive than that which it directly controls or administers. This structural feature may therefore give rise to constant insecurity and also competition or rivalry with other polities or entities upon which the material prosperity and the security of any single polity actually depends.

Globalization and the Modern Capitalist Market

While it is impossible to pinpoint exactly when modern capitalism began, we can certainly say it was an emergent formation in the 16th century, and by the beginning of the 19th century a series of loosely connected market systems had come together as a relatively integrated global system. Many writers have argued that since the Napoleonic Wars there have been two major waves of economic globalization, associated in the first with the consolidation of the British Empire, and in the second with hegemonic consolidation of the United States after World War II. Christopher Chase-Dunne, Yukio Kawano and Benjamin D. Brewer have argued alternatively that there was in fact another wave of openness to trade globalization in the early part of the 20th century during a time of great power rivalry, overlapping with World War I. This challenges one of the most common orthodoxies in economics literature--namely, that globalization (or at least internationalization) burgeoned in the later part of the 19th century and then collapsed until the postwar period, when it thereafter grew exponentially. For example, Shale Horowitz follows the 'two-waves' orthodoxy in concluding that, 'Following two world wars and the Depression, international trade and finance had been in retreat for decades, and protectionist forces seemed dominant in all major economies'. (18)

Some orthodox texts put the two waves in more absolute terms--and therefore more problematically--proclaiming that globalization simply collapsed during World War I. (19) Jeffry Frieden's detailed but flawed tome, Global Capitalism, for example, makes a common mistake of reducing economic globalization to the machinery of trade and investment negotiation in a particular period:

 [I]t took only a few months for the entire edifice of globalization
 to collapse. World War One broke out on August 1914 and swept away
 the foundations of the preexisting global economic order. For years
 world economic and political leaders attempted without success, to
 restore the pre-1914 international economy. The international order
 disintegrated and imploded brutally into the Great Depression of
 the 1930s and World War Two ... An international order whose
 economic, political, social and cultural components had defined the
 world for decades before 1914 disappeared completely. For eighty
 years after 1914 global economic integration existed only in the
 imagination of theorists and historians. (20)

This is an entertaining passage, full of bold hyperbole, but it does not fit the broader evidence. There is no doubt that the period from 1920 to 1950 was a period of turmoil, violence and economic downturn: E. H. Carr, writing in the mid-1930s, classically called one part of that period the Twenty Year Crisis. (21) However, processes of globalization continued on in many forms. Similarly, we reject the suggestion that World Wars I and II caused globalization per se to go into reverse. This rejection is in part based on an obvious but most often overlooked point: a world war is by definition a globalizing event--it names the drawing of a significant proportion of the world into a global conflagration. (22) World War I drew extensive military relations across an expanding world-space; the interwar period, with the exception of the depression years of 1929 and 1930, saw an expanding global arms trade (as well as increasing foreign production licensing); and World War II was arguably the first global war in human history, with a ragged but intense impact on parts of the world that were geographically a long way from the zones of slaughter. A parallel counter-argument can be made against those who claim that economic globalization collapsed in a few months. What collapsed was the Gold Standard system, but even this took more than a decade, and the Depression that developed in the 1930s was not just marked by a crash on 29 October 1929 on Wall Street in New York City. Other cities and regions were affected. The Great Depression had global consequences with major impacts as far afield as Latin America, Australia, South Africa and the commodity-exporting countries in Asia. It is an apparently obvious point once it is made, but it is one almost always glossed over in the economics literature.

The other 'obvious' thing that can be said, taking into account both lines of interpretation discussed earlier in relation to either two or three waves of modern economic 'openness', is that while the relative global flow of trade and finance fell during the great depressions of the 1890s and 1930s, other dimensions of economic globalization were unevenly consolidating. Foreign Direct Investment (FDI), one of the usual indicators of economic globalization, expanded in real terms during that same period, even if it was highly concentrated in a few countries. The phenomenon of globalizing corporations continued to consolidate, even if business remained concentrated in the primary products sector. This was the period during which processed food and drink products, for example, emerged as global brands. (23) Even if up until the 1980s the vast bulk of food was still consumed in the country of processing, World War I marked the globalization of some key commodities. Carried by the war economy, W. K. Kellogg began to expand globally in 1914, as did Coca Cola, Nestle and Kraft Foods. The interwar years were difficult, with some globalizing companies such as Pepsi going bankrupt and/or being restructured, but by the end of World War II many other companies had consolidated their global reach. Coca Cola was being bottled in forty countries, and Nestle's Nescafe had reached one million cases per annum sold across the world.

It was the period before the development of shipping containerization (the mid-1950s), which meant that processed food was treated as 'break-bulk cargo' (by contrast with bulk cargo like grain or ore) and had to be handled item by item by longshoremen lugging them onto wooden pallets that were then winched ashore. (24) Nevertheless, break-bulk cargo was on the move globally. In general, then, responses to the difficulties of the first half of the 20th century can be said to have contributed to setting the conditions for what became known as the Long Boom in the second half of the 20th century. The state was important in this process, and the dominant form of economic orthodoxy was Keynesianism. More basically, changes across the first half of the 20th century in the techniques and technologies (the means) of production and exchange, including in transportation, factory mechanization (often described as 'Fordism' after the particular form of Henry T. Ford's mechanization of the automobile industry), and a particular form of workplace organization (namely, Taylorism), meant that in the postwar period globalizing exchange and production burgeoned. This was despite the slow collapse of colonial imperialism as a major carrier of 19th-century global interchange. The burgeoning was associated with a qualitative shift in the nature of the economic system. It is a shift that can be described in empirical terms and depicted in graphs that show lines jagging ever-upwards, but more than that, it amounts to a change in the dominant condition of capitalism and an overlaying of prior forms.

Proposition 5: Expressed narrowly in terms of the mode of production, across the late 20th century we saw a shift from the dominance of industrial capitalism to what might be called techno-capitalism.

The concept of 'techno-capitalism' is intended to evoke the importance of techno-science, computerization, automation, and the emergence of a new class of intellectually trained technicians as central to the process of production and exchange. (25) If we, in addition, link this to the changing mode of exchange, dominated as it is now by electronic communications and codification systems, we might want to talk more broadly about techno-electronic capitalism. This is not intended to suggest that the process is simply technologically driven. Nor is it intended to suggest that the concept of 'techno-electronic capitalism' encompasses the comprehensiveness of the transformations faced in the contemporary world. What it recognizes is that, even taking into account the levels of continuity, we do face a qualitative transformation in the nature of capitalism.

This question of techno-scientific change is one of a number of issues that needs to be handled very carefully in making the claim about the changing dominant nature of capitalism. Here the metaphor of overlaying levels of formation helps us to get beyond the usual epochal-change or no-change arguments. The concept of 'techno-capitalism' does not mean that the volume of agricultural production has diminished, (26) nor should it be taken to suggest that industrial production has collapsed or faded away to be replaced by the so-called knowledge industries. If we go through some of the indicators, the difference should become apparent. Over the period since the 1980s, old-style industrialism has been overlaid and reframed by changing forms of organization, regulation and control, by new immediacies of extensive communication, by an increasingly global dispersal of production sites, and by the imperatives of finance capital. Until the 1950s the predominant global trade was in raw materials, and across the late 20th century this was gradually overlaid by trade in manufactured items and services. However, this does not get close to describing the comprehensiveness of the remaking of the dominant processes of production and exchange. Much more importantly, the movement of those raw materials, once intended to feed the manufacturing plants of the industrial West, has been reorganized into different production cycles, including through a subcontracting of production by globalizing corporations to manufacturing zones outside their main place of headquartering, usually into the Global South. There have been increasing intra-firm trade and cross-border intra-firm agreements; global dispersal of components manufacturing, drawn together into assembly plants in just-in-time production; sub-licensing of technologies and techniques, as well as trade in technology and intellectual property rights to 'offshore' companies; and the globalization of new forms of regulation (paradoxically) to enhance global flows. (27)

Globalization and the Coming of a 'Borderless World'?

Another major controversy that any broad survey of economic globalization needs to deal with is the question as to whether globalization has ushered in a borderless world. Without an approach that can talk about different levels of social formation we tend to get one-dimensional arguments. The borderless world thesis is related to one of the more dramatic claims in a field already beset by hyperbole--namely, that we are witnessing the end of geography. (28) Another particularly unhelpful and analogous claim is expressed by New York Times journalist Thomas Friedman when he argues that the world is flat: 'around the year 2000 we entered a whole new era,' he says. 'Globalization 3.0 is shrinking the world from a size small to a size tiny and flattening the playing field at the same time.' (29) The 'borderless world' position as an overall generalization about the globalizing economy no longer gets significant active support in the academic globalization literature. However, it has to be taken seriously because it remains a mainstream journalistic misconception and has a small but active group of proponents in the global economics literature (called 'hyper-globalists'). The most prominent of these writers is Kenichi Ohmae, a neo-liberal management strategist. It also has to be taken seriously because implicit conceptions of a borderless world have crept into many definitions of globalization. For example, the ex-World Bank economist and critic of unfettered flows of capital Joseph Stiglitz, defines globalization as 'the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders' (emphasis added). (30) Here, in a small slip of the pen, borders as opposed to global flows are implicitly seen as artificial. This is not inconsistent with Ohmae's definition of globalization as 'nothing but liberalization of the individual, consumers, corporations and regions from the legacy of the nation-state in which they belong'. (31)

The major proponents of the borderless world thesis qualify their own grand claims, either without saying as much, or in no more than behind-the-hand whispers. In the case of Ohmae, when he first wrote The Borderless World, the notion of borderless globalization was treated as an exciting and present imperative for most of the book; that is, until the epilogue when he wrote, 'Can all this be true? ... Are national borders really disappearing? ... We're not there yet. Many companies are still dominated by a headquarters mentality, myopically focussed on the markets close to them and dominated by one nationality. Borders do matter and markets are still protected'. (32) Thomas Friedman's The World is Flat, in parallel to Ohmae's Borderless World, extols the Globalization 3.0 that he believes has epochally supplanted what has gone before--then on page 375 he says, 'this is the point in the book where I have to make a confession. I know that the world is not flat. Yes, you read me right: I know that the world is not flat. Don't worry. I know'. This kind of journalistic writing is both misleading and ethically dubious, giving the impression that we all now live in an even world of boundless opportunity and freedom, and that the oppressions and injustices in that world are an untidy anachronism.

Ohmae, in his next book, returned to his central thesis that we indeed live in a borderless world, as no doubt will Friedman in relation to 'flatness'. Ohmae posited four developments as characterizing the change: that investment is no longer spatially constrained; corporations are increasingly globally oriented; information technology has dissolved distances; and consumers are driving demand beyond national borders. However, this time he qualified the overall thesis by the proposal that trading and production zones such as the Kansai region, Wales, Silicon Valley, or southern China have become the natural units of global capitalism (that is, they have become bordered zones in a borderless world). The consistent thread was that Ohmae remained adamant that nation-states have become irrelevant 'bit players'. (33)

Arguably, the one economic process by which nation-state borders are actually being crossed in a relatively unregulated way is in the area of finance capital. This is the only area, apart from the movement of electronic culture, that might lead one to posit the emergence of a 'borderless world' in order to dramatize the changes from the past. However, even this has to be handled carefully. This may in a very real sense be part of a 'new economy', but it is only one level of a complex intersection of formations. (34) One of the key flows of financial capital, for example, involves currency speculation, and (in an apparent paradox) this cross-order flow depends upon there being continuing national borders and therefore bordered currencies with which to trade. If currencies were not related to different national markets unevenly integrated into the global market, there would be not the same profit to be made on currency speculation. The same could be said for the process of financial arbitrage, viz., the process of moving capital around to take advantage of different values for different objects in different markets. Unless there were continuing frictions between unevenly integrated national markets, global arbitrage would not be as profitable as it currently can be. As the economist Dani Rodik writes, the relationship between global and national markets still involves negotiating boundaries:

 Institutional and jurisdictional discontinuities serve to segment
 markets just as transport costs or import taxes do. * In effect,
 national borders and the institutional boundaries that they define,
 impose a wide array of transaction costs.

 These transaction costs arise from various sources. Most obviously,
 contract reinforcement is more problematic across national
 boundaries that it is domestically. Domestic courts may be
 unwilling--and international courts may be unable--to enforce a
 contract signed between the residences of two different countries.
 This problem is particularly severe in the case of capital flows,
 as financial contracts inevitably involve a promise to pay. (35)

In responding to the borderless world thesis, at least two important issues arise. Firstly, the nature of the flow of different kinds of objects and processes globally needs to be distinguished. Just as we can distinguish between different trade patterns in relation to bulk goods, low-value goods and high-value goods, and so on, further distinctions can be made between more or less abstracted goods. More abstracted goods--for example, objects produced in the 'tertiary sector', non-tangible objects that can be digitalized such as finance capital, intellectual capital, and electronic commodities--move across the globe way in ways that are less constrained by borders than 'solid objects', if we can use that term (things produced by primary and secondary industries). All that is solid has not melted into air (to rewrite Karl Marx). Secondly, in responding to the borderless world thesis there is no need to go in the opposite direction to say that nothing has changed about borders under conditions of intensifying globalization. This is a point made by Henry Wai-chung Yeung in suggesting that some of the critiques of the hyper-globalists have overly concentrated on providing evidence that the world is not yet fully globalized, rather than analyzing the changing nature of borders and the uneven effects of globalization. (36) As argued earlier, we should be able to take for granted the point that globalization is not an end state and that it is meaningless to talk about a 'fully' globalized world.

When one gets beneath the hyperbole about a borderless world, the key point of contention that the hyper-globalists tend to hold onto is their suggestion that the nation-state as a container of a (partially) differentiated economy and market has become irrelevant. Not even the purest neo-liberal economist would claim that all borders and all sources of economic friction have dropped away in the contemporary period. Even Kenichi Ohmae's claim for a borderless world rests on an argument about a new kind of zoned (that is, bordered) regionalization. However, he like many other writers, continues to argue that the nation-state is an economic anachronism. In her essay, Saskia Sassen sums up a more nuanced response that we use as a way of concluding this section:

 [T]he global economy to a large extent materializes in national
 territories. Its topography is one that moves in and out of digit
 space and national territories. This requires a particular set of
 negotiations that have the effect of leaving the geographical
 boundaries of the national state's territory unaltered, but do
 transform the institutional encasements of that geographical fact,
 that is, the state's territorial jurisdiction or, more abstractly,
 exclusive territory ... This would mean that the global economy and
 the national state do not relate to each other in a zero-sum
 situation. (37)

Debating Capitalist Globalization, Development and Inequality

Another major set of controversies concerns the long-term or systemic structural effects of globalizing market relations on a society or civilization as a whole and on its historical experience. While the liberal economist tends to regard the market form as nearly perfect or perfectible, (38) another tradition and perspective (partly but not exclusively derived from Marx's analysis in Capital) views the market as inherently non-perfectible and indeed unstable and prone to historically severe failures. (39) In the one tradition, there is nothing inherently troubling, from any systemic perspective, about the endless extension of market social relations and the commodification processes that underlie this extension. On the contrary, many liberal theorists seem to regard such linear processes as fairly unproblematic and as a 'good' in themselves, historically speaking. The other perspective, however, tends to see recurrent and sometimes catastrophic economic, social and political failure and breakdown as being a direct consequence of previous market extensions and commodification processes that produced systemic crisis in the first place. Certainly, the existence of serious recurrent systemic crisis in the history of capitalism and of market relations is a subject worthy of the closest investigation and consideration, and one which continues to be central to contemporary argument in International Political Economy. One study identified seventy-six currency crises and twenty-six banking crises in the period of 1975 to 1995, the twenty years associated with the transformation to the dominance of techno-electronic capitalism. This controversy has obvious relevance for the present generation of scholars and students of the global economy and its social formations, and for the ongoing debate over the role of 'free market' forces and globalization in relation to global stability, security, social justice and environmental sustainability.

Indeed, the issue of how to understand inequality, hierarchy, and asymmetry in relation to the role of the market and capitalism remains of the greatest importance and relevance, both academically and in everyday practice and experience. Is the market to be understood as merely a socially neutral institution, with intrinsically egalitarian or levelling characteristics and consequences? Or alternatively, is the market to be understood as a form of highly asymmetrical social power, anything but socially neutral in regard to inequality, hierarchy and asymmetries in wealth and power? Pierre Bourdieu views the capitalist market as a type of social relation whereby those who already possess advantages tend to become even more advantaged, and those who lack prior advantages tend to become even less advantaged, or one might say 'exploited' or perhaps 'marginalized' from the processes of wealth creation and capital accumulation and the considerable social and political power that is concomitant with these. (40)

Many decades ago, the first attempts at a systematic critique of the reigning economic and development theories of the West argued that, far from being non-problematic, the extension of market relations and globalizing capitalism itself was predicated upon a deeply entrenched historical set of asymmetries and inequality. Their origins could be found in centuries of western colonialism and imperial expansion, as well as the activities of extremely powerful private corporations and financial institutions. The centre-periphery relations of the past, which had altered the global economy profoundly in order to privilege the wealth creation and power of the western states and societies in command of the system, were not merely 'historical'. Rather, they were the continuing structure in which 'development' was to supposedly take place in 'newly emerging' or 'developing' countries. Although formal independence had arrived for most former colonies, this did not necessarily mean that genuine or successful 'national capitalism' and 'national development' would automatically take place. Or even that nation-state formation would be easy or sustainable. All of these old controversies remain unresolved today, both theoretically and in actual practice. Let us say for now that it is surely the case that economics (whether conceived of as nationally bound or, more accurately in our view, as globally framed) cannot be properly understood without systematic reference to issues of power, politics, unequal knowledge and coercive as well as contractual or voluntary relations. The so-called 'free market', so extolled by some today, is neither free nor based on a 'level playing field', as one of the key phrases in neo-liberal economics would have it.

Even in the 19th century, and long into the 20th century, European and western powers, and globalizing capital, continued to practise highly 'unfree' economics, relying on elaborate imperial systems of international economic management and regulation, and on very sophisticated systems of subsidy, industrial policy and hidden or neo-protectionist devices, that again were designed to maintain the advantages of the already privileged, wealthy and powerful of the world system. This legacy, although reinterpreted for a new world-time, still largely defines the current asymmetrical global economic and political architecture of both global capitalism today and the world market system. In the present era, the richest and most powerful states and companies, the inheritors of the former imperial and colonial world order, continue to impose unilateral restructuring, especially 'liberalization', 'marketization' and 'privatization', on the weakest and poorest societies and peoples on this planet. All the while the IMF and other global agencies continue to impose extremely stringent criteria of 'reform' that effectively undermine the state's capacity to provide support to the poorest and most vulnerable people in their societies. In a world where the richest one per cent of people earn as much as the poorest 57 per cent, and where over one billion people live on less than seventy pence per day (expressed in Pound Sterling), there appears to be an inherent contradiction between the promises of the reigning or hegemonic economic doctrines of global capitalism and market ideology and persistent and deepening global poverty and despair. A recent study conducted by UNCTAD on the consequences of greater trade liberalization among the thirty-six poorest countries in the world during the 1990s has in fact concluded that, 'The incidence of poverty increased unambiguously in those economies that adopted the most open trade regimes'. (41) Even despite reforms to the IMF in relation to structural adjustment policies, there is unfortunately a continuing tendency among the very rich and powerful to 'blame the victim' and insist on an ever-expanding list of preconditions for vitally needed economic assistance. What the rich and powerful continue to refuse to do is seriously acknowledge their own historical and contemporary responsibility for the structural causes of such global poverty, underdevelopment and reproduction of poverty, rather than true 'development'.

Conclusion

We are living in a vastly different world from that of 19th-century extended mercantile and imperial trade. Even more from the globalizing trade regimes of the Silk Road a millennium ago. However, there are continuities between these worlds and our own that are worth exploring. Analyzing both the continuities and discontinuities of globalization, the market and capitalism is intended to highlight questions of different social formations and their consequences. The shift from industrial capitalism to the emergent dominance of techno-electronic capitalism has been associated with an intensification of the processes of spatial extension, including globalization. Ironically, at the same time it has been accompanied by ideologies of globalism that present all of the problems of the contemporary world as stemming from the limits to be placed on an otherwise borderless world. Today, we seem to be beset by phalanxes of free-market ideologues and advocates of neo-liberal solutions to every economic and social problem or issue, while at the same time we witness continued and tragic global poverty on a scale never before imaginable in the whole of human history. It is indeed a very strange contradiction. Such a consideration brings in the even more problematic matter of how moral issues and ethical concerns relate to the market and to capitalism. In a world that is supposedly ever more secular and 'rational' in orientation, we oddly enough see around us a very visible resurgence of religious mentalities and movements, and many if not most of these are increasingly political in nature. What is this possibly telling us in the context of the current discussion? Perhaps that many people, whatever their cultural or religious traditions or context, are deeply troubled by the instability and the gross injustices they experience or witness in this new global capitalism under the dominance of free-market ideology and continued western global power. They are repelled by what they see as sheer greed on the part of those who are already the most wealthy and powerful. They are critical of their unwillingness to relinquish these privileges and attempt to ceaselessly increase them, at the direct expense of the peoples and the environment of the world. Religious teachings may offer some a sense of security, identity and moral compass for making sense of a bewildering world and to find a place to stand in it. It also may offer a moral critique of the contemporary excesses of both the market and capitalism rooted in a deep sense that there are alternatives to such practices.

When the late John Kenneth Galbraith analyzed the greatest 'market failure' of the 20th century, what he called 'The Great Crash' of 1929, his conclusion was that the essential cause of this great failure could be summarized most directly in a single word: greed. (42) In many traditions, both secular and non-secular, there have been important injunctions in relation to how the market should be regulated (most prominently in the Chinese, Islamic and mediaeval Christian traditions) and what limitations should be placed upon capitalist pursuit of profit and expansion. We need not now view these sentiments as being merely primitive or historically naive, but rather as expressions of a deeply human concern for the equilibrium of life as a whole--a desire to maintain things in a sense of balance and proportion, between the common and individual good, as the ultimate objective. We would do well to continue to place this concern at the centre of analysis even as we learn to more adequately map and analyze the dominant forms taken by different kinds of globalizations.

(1.) This article was written in conjunction with work done for an anthology that we have just finished editing together called Globalization and Economy, Vol. 1. Globalizing Markets and Capitalism, London, Sage Publications, forthcoming, 2007. Most of the articles referenced in the present essay are reproduced in that anthology.

(2.) Among the vast range of writings see, for example, B. Amoroso, On Globalization: Capitalism in the 21st Century, Basingstoke, Palgrave, 1998; J. Stiglitz, Globalization and its Discontents, New York, W. W. Norton, 2002; J. A. Freiden, Global Capitalism: Its Fall and Rise in the Twentieth Century, New York, W. W. Norton, 2006; and Mark Rupert and M. Scott Solomon, Globalization and the International Political Economy, Lanham, Rowman and Littlefield, 2006.

(3.) It is now commonplace to argue that contemporary globalizing capitalism is associated with the potential commodification of everything. This point has to be put very carefully. We would suggest that while almost all avenues of social life have been opened to processes of commodification, this is not to say that everything has been commodified. See C. C. Williams, A Commodified World, Mapping the Limits of Capitalism, London, Zed Books, 2005.

(4.) To be completely clear, when we say traditional and modern history, we are talking about dominant formations of history and not suggesting that all of post-16th century history can be characterized as modern per se. Interleaved with modern formations are continuing traditional and tribal formations, as well as emergent formations, such the development of postmodern forms of financial exchange--exchange that instrumentalizes the relativization of time and space for the purpose of capital accumulation--that became institutionalized in the late-20th century.

(5.) M. Wolf, Why Globalization Works, Yale University Press, Newhaven, 2004, p. 14.

(6.) B. Berberoglu, Globalization of Capital and the Nation-State, Lanham, Rowman and Littlefield, 2003, p. 3

(7.) K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Boston, Beacon Press, 1944, chs 4-5.

(8.) J. Abu-Lughod, 'The Shape of the World System in the Thirteenth Century', Studies in Comparative International Developments, Winter 1987-88, p. 3.

(9.) B. K. Gills and A. G. Frank, '"World System Cycles", Crises, and Hegemonial Shifts, 1700 BC to 1700 AD', Review, vol. 15, no. 4, 1992, pp. 621-87.

(10.) I. Wallerstein, 'Globalization or the Age of Transition? A Long-Term View of the Trajectory of the World System', International Sociology, vol. 15, no. 2, 2000, pp. 249-65.

(11.) I. Wallerstein, The Modern World-System: Capitalist Agriculture and the Origins of European World-Economy in the Sixteenth Century, New York, Academic Press, 1976, 15; see also, C. Chase- Dunn, Global Formation: Structures of the World Economy, Oxford, Blackwell, 1989.

(12.) J. Harwood, To the Ends of the World, Sydney, ABC Books, 2007, pp. 10-12.

(13.) For a recent example of the latter approach, see for D. Harvey, Spaces of Global Development: Towards a Theory of Uneven Geographical Development, London, Verso, 2006.

(14.) See, for example, S. Sassen, The Global City, 2nd edn, Princeton, Princeton University Press, 2001; M. Abrahamson, Global Cities, Oxford, Oxford University Press, 2004.

(15.) B. Gills, 'World System Analysis, Historical Sociology and International Relations: The Difference a Hyphen Makes', in S. Hobden and J. M. Hobson (eds), Historical Sociology of International Relations, Cambridge, Cambridge University Press, 2002, pp. 14161; and 'Globalization as Global History: Introducing a Dialectical Analysis', in M. A. Tetreault, R. A. Denemark, K. P. Thomas and K. Burch (eds), Rethinking Global Political Economy: Emerging Issues, Unfolding Odysseys, London, Routledge, 2003, pp. 89-108.

(16.) We say this with an awareness that using the term 'mediaeval' in this context is, ironically, residually Eurocentric. See A. Gunder Frank, Reorient: Global Economy in the Asian Age, Berkeley, University of California Press, 1998.

(17.) B. K. Gills and A. Gunder Frank, 'The Cumulation of Accumulation', in Frank and Gills (eds), The World System: Five Hundred Years or Five Thousand?, London, Routledge, 1996.

(18.) S. Horowitz, 'Restarting Globalization after World War II: Structure, Coalitions and the Cold War', Comparative Political Studies, vol. 37, no. 2, 2004, p. 127.

(19.) See, for example, M. M. Weinstein's introduction to his edited volume, Globalization: What's New?, New York, Columbia University Press, 2005: 'globalization collapsed between the world wars and recovered only slowly thereafter' (p. 2).

(20.) Freiden, Global Capitalism, p. xvi.

(21.) E. H. Carr, The Twenty Year's Crisis: 1919-1939, London, Macmillan, 1939.

(22.) P. James and J. Friedman (eds), Globalization and Violence: Vol. 3, Globalizing War and Intervention, London, Sage Publications, 2006.

(23.) D. Held, A. McGrew, D. Goldblatt and J. Perraton, Global Transformations: Politics, Economics and Culture, Cambridge, Polity Press, 1999, pp. 239-42.

(24.) M. Levison, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton, Princeton University Press, 2006.

(25.) The term 'the intellectually trained' comes from Geoff Sharp. See his 'The Idea of the Intellectual and After', Arena Journal, New Series, nos. 17-18, 2002, pp. 269-316.

(26.) It does, however, mean that agriculture, even in the Global South, is increasingly framed by such abstract processes as the movement of finance capital. See, for example, U. Patnaik, 'Global Capitalism, Deflation and Agrarian Crisis in Developing Countries', Journal of Agrarian Change, vol. 3, nos. 1- 2, 2003, pp. 33-66.

(27.) See, variously, Held, McGrew, Goldblatt, and Perraton, Global Transformations; P. Dicken, Global Shift: Reshaping the Global Economic Map in the 21st Century, 4th edn, London, Sage Publications, 2003; J. H. Jackson, The World Trading System: Law and Policy of International Relations, 2nd edn, Cambridge, MIT Press, 1997; and J. Braithwaite and P. Drahos, Global Business Regulation, Cambridge, Cambridge University Press, 2000; Weinstein (ed.), Globalization: What's New?

(28.) R. O'Brien, Global Financial Integration: The End of Geography, New York, Council on Foreign Relations Press, 1992.

(29.) T. L. Friedman, The World is Flat: A Brief History of the Twenty-First Century, New York, Farrar, Straus and Giroux, 2005, p. 10.

(30.) Stiglitz, Globalization and its Discontents, p. 9.

(31.) K. Ohmae, The Next Global Stage: Challenges and Opportunities in the Borderless World, Singapore, Pearson Education, 2005, p. 122.

(32.) K. Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy, New York, HarperCollins, 1990, p. 211.

(33.) K. Ohmae, 'Where Borders Fall in a Borderless World', Introduction and Chapter 1, The End of the Nation-State: The Rise of Regional Economics, New York, Free Press, 1995.

(34.) J. Hinkson, 'Global Crisis: Political Economy and Beyond', Arena Journal, New Series, no. 12, 1998, pp. 67-81.

(35.) D. Rodik, 'Feasible Globalizations', in Weinstein, Globalization: What's New?, p. 202.

(36.) H. Wai-chung Yeung, 'Capital, State and Space: Contesting the Borderless World', Transactions of the Institute of British Geographers, New Series, no 23, 1998, pp. 291-309

(37.) S. Sassen, 'Territory and Territoriality in the Global Economy', International Sociology, vol. 15, no. 2, 2000, p. 374.

(38.) See, for example, the approach of Eric Weede, in 'The Diffusion of Prosperity and Peace by Globalization', The Independent Review, vol. 9, no. 2, 2004, pp. 165-86.

(39.) See, for example, Wallerstein, 'Globalization or the Age of Transition?'

(40.) P. Bourdieu, 'New Liberal Speak: Notes on the New Planetary Vulgate', Radical Philosophy, vol. 105, January-February 2001, pp. 2-5.

(41.) UNCTAD, The Least Developed Countries Report, New York and Geneva, UNCTAD, 2004.

(42.) J. K. Galbraith, The Great Crash of 1929, (1954), Harmondsworth, Penguin Books, 1980.

* Author's note: this applies more to traded goods and services than it does to financial flows.