At a time when many international relations scholars are qualifying their premature predictions of the withering of the state, Daniel Drezner's new book, All Politics Is Global, makes a compelling case for the continued centrality of the state in the process of globalization, and contributes fresh theoretical insights and empirical evidence on how states act when faced with global challenges.
Drezner's main argument is that when it comes to the regulation of the global economy, great powers still call the shots because they alone can mobilize sufficient incentives and disincentives to implement their preferences at a global level. His argument is a variation of neoliberal institutionalism rather than structural realism: Power is a function of internal market size and diversity—the larger and more varied the market for consumption, the greater the power. There are currently only two truly great powers by this definition: the United States and the European Union, the second of which he justifiably treats as a unitary actor in the global economy. When the United States and the EU (with an aggregate market size in excess of $10 trillion each and which together account for 41 percent of all world imports) agree on a regulatory issue, just about nothing can prevent them from implementing their preferences globally.
"The presence of a bargaining core among the great powers," Drezner writes, "is a necessary and sufficient condition for effective global governance" (p. 86). This does not mean everyone follows willingly, as Drezner shows with the example of largely successful U.S. and EU efforts to set intellectual property rights standards that conflict with developing countries' preferences. When great powers disagree, however, one can expect either a stalemate with competing standards in their respective spheres of economic influence, as with the regulation of genetically modified organisms (GMOs), or vague, unenforceable standards that might satisfy various political constituencies but are effectively meaningless when it comes to regulation—what Drezner calls "sham standards," such as the regulation of Internet content.
Of course, international governmental organizations (IGOs) and nongovernmental organizations (NGOs) play a role in global economic governance, but to give them pride of place, as many scholars and pundits do, contradicts Drezner's empirical analysis: No IGO or NGO coalition has ever successfully promoted or prevented a case of global regulation that did not also meet the condition of a bargaining core between the two great powers. This is not for want of trying by nonstate actors to set the agenda, which they have done with some success on such issues as land mines and HIV/AIDS. In response, however, states become increasingly creative in their successful efforts to control global governance. Through case studies of Internet governance, international finance, genetically modified organisms, and trade-related intellectual property rights and AIDS/HIV drugs, Drezner illustrates how the United States and the EU have become adept at delegating controversial roles to IGOs or NGOs when it is convenient and marginalizing them when it is not; shifting negotiations on hot topics to friendly settings through "forum shopping" to prevent hostile coalitions; and, when cornered, resorting to forming "clubs" with enough clout to convince or coerce the rest of the world to adopt their standards. Global civil society may have a long-term effect on norm formation, Drezner concedes, but he finds that their influence over state behavior has been exaggerated.
The preferences of great powers, however, are hardly either internally consistent or always convergent. Because preferences are not, contra realism, derived from the structure of the international system but rather from domestic interests, local politics has an undue influence on global regulation: Great powers impose their preferences for global regulation, but these preferences are formed domestically. Domestic industries might be expected to support global regulation that eases cross-border trade and service provision, but if it proves too costly to adjust to new standards, then firms tend to resist. Outsourcing grabs the headlines as the most visible form of resistance, but the real challenge to global regulation comes from firms with non-tradable (such as certain services) or fixed assets (such as agriculture) for whom outsourcing is not an option and compliance is not desirable.
The only remaining option for these domestic actors is to use their "voice"—the withdrawal of political support or backing of rival parties—which imposes more costs on a government than if they "exit" through outsourcing or reinvention. Thus emerges a tension: On the international level, the ability of great powers to act in concert is improving the chances for more and better regulation at a time when this is increasingly central to the functioning of the global economy. Yet on the state level, those domestic actors who perceive the costs as too high work against great power convergence. For global regulation, Drezner concludes, it is the best and the worst of times. The seductive rewards of cooperation actively entice the great powers to strengthen their interdependence, despite the fickleness of domestic politics. Since this concerns only the United States and the EU, this small number of great powers increases the likelihood of policy convergence, or, at worst, limited rival standards within the bipolar framework of the two great powers. With echoes of Kenneth Waltz writing in a very different context, Drezner contends that bipolarity appears as the most stable form for a global regulatory regime.
Yet the bipolar regulatory world Drezner describes is impermanent, and the inevitable approach of multipolarity means an increased likelihood of policy divergence. As the number of economic great powers (read China and India) increases, the chances for agreement on common preferences that enable effective regulation declines. Drezner foresees growing contention between the current great powers and the developing world set against the background of growth versus "quality of life" debates. While Drezner does not engage the accompanying ethical issues, one comes away with a sense of foreboding about the coming shift to multipolarity, accompanied by a sharpened sense of the trade-off between efficiency and equity and questions about the limits of tolerance, compassion, and collective action among populations under pressure.
The game theoretic model that Drezner develops is succinct and useful, though, by his own admission, it is constrained by some straightforward limitations. While it clearly shows that market power is determinative in forcing coordination based on the desires of great powers, and that great power conflict leads to stalemates, this is based both on a small sample and a small amount of evidence. Since, by his definition, the situation he analyzes has only existed for twenty or thirty years, large-scale correlations of regulatory outcomes and negotiations are difficult, and the introduction of more actors into the model would make it exponentially complex. Also, given that all the cases he looks at are still evolving, there will certainly be interpretive differences concerning outcomes and the ability to generalize at this stage. Nonetheless, for scholars and students analyzing contemporary regulatory debates it will be impossible to ignore Drezner's model of how states adapt creatively to globalization. Regulation is the grammar of the global economy, and Drezner's All Politics Is Global eloquently explores its formation and transformation at a crucial historical moment.
The New School