What term best describes the world we live in? “We live in the era of globalization,” scholars and politicians tell us. Other scholars and politicians object: “Not at all. Globalization is a myth. We actually live in the era of internationalization.” Russian liberal democrats keep wailing: “Russia must become integrated into the world economy.” That is, from their perspective, the world economy is integrated. “Nonsense, the world economy is localizing.”  Here you have one more term that came into prominence in the late 1990s.

All of these are not just words; they serve to build all kinds of theories and concepts of globalization, internationalization, integration, and localization that are called to explain and even forecast the development of international relations in the 21st century. Their emergence reflects objective processes in the world arena caused by increasingly close and intense interaction of all subjects and actors of world politics. In the language of systems experts, this means that different parts of the world (states, regions, sub-regions, etc.) enter in the kind of interaction that shapes the world as an integral entity functioning according to laws that differ from the laws of a non-integral, fragmented world, such as a multipolar or a bipolar world. The problem is the confusing choice of terms for describing all these phenomena.

Condillac used to say that languages are methods of analysis, and that the art of reasoning boils down to “a good design of language for each science.” Hegel clarified later that it isn’t just a matter of language; it is a matter of the conceptual content of terms and words. In his Science of Logic, that work of genius, he wrote: “Only in its Notion does something possess actuality and to the extent that it is distinct from its Notion it ceases to be actual and is a non-entity.”[1] In other words, we must define whether globalization, internationalization, integration, and localization are simply synonyms (it is precisely in this quality that most scholars use them), or are these concepts that reflect different aspects  of “actuality.” If the former is true, the topic can be safely left to journalists; if the latter is true, we must delve into the conceptual jungle in search of exact equivalents for realities.

The importance of appropriate terminology is shown by the fact that different analytical approaches are built depending on the definitions used; for example, within the framework of the globalization concept, Western authors usually identify five approaches (sometimes six). The first is built on the analysis of the common ecological risks; the second, on the analysis of world systems with an emphasis on economic processes; the third, the global culture approach, examines the emergence of a unified global culture; the fourth, the global society approach, concentrates on studying the planetary consciousness; and the fifth, the global capitalism approach, focuses on the activities of transnational corporations (TNCs), the international class (IC), and transnational organizations (TOs) in their relations with states or state institutions.

Internationalization and/or Globalization

Let me remind the reader once more that many researchers use the words globalization, internationalization, and integration as synonyms. This means that three different words are used to describe one and the same phenomenon. This is inaccurate, since each of these words corresponds to a phenomenon qualitatively different from the others. Therefore, these are not just words, but concepts.

This is how the British scholar Leslie Sklair understands the difference between “globalization “ and “internationalization”: “I argue that a clear distinction must be drawn between the inter-national and the global. The hyphen in inter-national is to distinguish (inadequate) conceptions of the ‘global’ founded on the existing even if changing system of nation-states, from (genuine) conceptions of the global based on the emergence of global processes and a global system of social relations not founded on national characteristics or nation-states.”[2] What this means is that internationalization encompasses the area of international or interstate relations, while globalization covers the entire area of world relations where not states are one among several types of actors.

Besides, the theory of globalization involves the analysis of phenomena born not only of that interaction of subjects and actors which creates the space of international relations, but also of the transformation of states themselves into national communities that shape the world community.

Two other British scholars, Paul Hirst and Grahame Thomson, give their own definitions to the phenomena under discussion, in the same key but with some nuances. They write: “An inter-national economy is one in which the principal entities are national economies. Trade and investment produce growing interconnection between these still national economies.”[3]

This is how it differs from the global economy: “A globalized economy is a distinct ideal type from that of the inter-national economy and can be developed by contrast with it. In such a global system distinct national economies are subsumed and rearticulated into the system by international processes and transactions. The inter-national economy, on the contrary, is one in which processes that are determined at the level of national economies still dominate and international phenomena are outcomes that emerge from the distinct and differential performance of the national economy. The inter-national economy is an aggregate of nationally located functions,” (That is, it proceeds from national or local interests—A.B.)

“The global economy raises these nationally based interactions to a new power. The international economic system becomes autonomized and socially disembedded, as markets and production become truly global. Domestic policies, whether of private corporations or public regulators, now have routinely to take account of the predominantly international determinants of their sphere of operations. As systemic interdependence grows, the national level is permeated by and transformed by the international. In such a globalized economy the problem this poses for public authorities of different countries is how to construct policies that coordinate and integrate their regulatory efforts in order to cope with the systemic interdependence between their economic actors.” (10)

Let us now rephrase this in plain English. In the authors’ opinion, internationalization is but mere interaction of national economies, albeit in a more condensed and closely tied fashion than in the periods when national economies functioned under a more autonomous regime. Globalization, on the other hand, is a new phenomenon in which national economic borders are erased for real, and the main actors of economic interaction are no longer the national economies (though they still don’t disappear altogether), but rather the TNCs or MNEs (multinational enterprises, in OECD terminology).

I want to draw your attention to Mr. Xu Mingqi, a Chinese scholar from Shanghai, who offers this definition of the term: “The so-called economic globalization is the interdependence of economic activities of nations, regions, and enterprises, and even of individuals, that has developed into a new historic stage, in which every single part becomes inseparable from the integrated world economy.”[4] He is the only author I have read so far who derives globalization from internationalization—a process started, in his opinion, in the mid-18th century. He believes that globalization started in the 1970s. (ibid.)

My approach differs from the approaches of all the authors quoted above—first of all in the methodology that leads me to a different type of thinking about the phenomena identified. It may be labeled Hegelian or Marxist-Leninist (the latter follows from the former); essentially, it is the dialectical approach. V. I. Lenin wrote: “The analysis of concepts, the study thereof, ‘the art of operating with them’ (Engels) always requires studying the movement of the notions, their connections, the transitions between them.”[5]

In the context of our topic, this means the following: The forming of the world market since the second half of the 19th century gave birth to the phenomenon of economic internationalization that goes through certain cycles and phases (we shall revisit this topic), and continues to develop today. As a phenomenon, economic internationalization is the objective process of intensive interaction between subjects and actors of the world economy in the sphere of commerce, capital, and finance.

In the process of its development, internationalization gave birth to two new phenomena: regional integration (since the second half of the 20th century), and globalization  (since the 1990s). These two phenomena negate internationalization (even though it caused them), and, at the same time, they are antagonistic to each other. This contradiction can be resolved through a new phenomenon—global integration, or, in other words, a unified world economy—that would negate both globalization and regional integration. At the preliminary stage, globalization is “assisted” by localization, which works against integration, as will be shown in the corresponding section.

All these phenomena (internationalization, integration, localization, and globalization) will coexist for some  time yet in a “mutual struggle” that will manifest itself in varying degrees.  Globalization and localization are new phenomena in the world economy that exist, at the moment,  only in an embryonic form. Manifested today are mainly internationalization and regional integration.

One should keep in mind that global integration, or a united world economy, implies a united world government, while internationalization, integration and globalization do not destroy the power of national governments, though the latter play different roles in each of the three phenomena. Governments are most important in integration processes and least important in globalization processes.

Note also that the main economic actors in the integration processes are national economies and regional TNCs, while in the economic spaces of internationalization, TNCs have more importance than national companies. In globalized spaces, the leading role is played by international companies, multinational enterprises, and international banks (INCs, MNEs, and INBs).

After a concrete analysis of realities, I shall return to these definitions in order to fine tune them, and I shall show currently prevailing trends.

If one takes economic internationalization to mean sharply increasing flows of goods, capital, and labor across national borders, one can’t help noticing right away that this is “yesterday’s news,” to use an American expression. This process was observed throughout the second half of the 19th century and up to World War I; the political thinkers who wrote about it include Marx, Engels,[6] and especially Lenin, in particular in his work, Imperialism As the Highest Stage of Capitalism. At the turn of the 20th century, internationalization was stimulated by the weakening of trade barriers and the decrease of transportation costs due to the development of railroads and the merchant marine. Between the start of World War I and the end of World War II, world trade shrank due to raised tariffs and limitations imposed on the movement of capital. Internationalization was re-launched soon after World War II, facilitated by the General Agreement on Tariffs and Trade (GATT) of 1947 that was transformed in 1995 into the World Trade Organization (WTO), and by the collapse of the Bretton Woods system in the early 1970s that was replaced by floating currency exchange rates. This was followed by Reaganomics, Thatcherism, and the administrative-financial reform in Japan—neoliberal policies  that affected, among other things, the sphere of foreign economic activities. It wasn’t only trade that benefited, but, more importantly, the movement of capital; controls over capital flows were removed in Great Britain in 1979, and in Japan in 1980. After a considerable delay, France and Italy followed suit in 1990.

Manifestations of Economic Internationalization

Apart from liberalization, the objective process of the emergence of new technologies was an enormously important factor, especially in the area of communications. Let me remind you that a three-minute phone call between New York and London cost about $300 in 1930 (at 1996 prices) and just $1 in 1996. The spreading of personal computers (PCs) together with their Internet connections had a revolutionary influence in accelerating the internationalization process, giving birth simultaneously to globalization.

As a result of technological innovation and the liberalization of terms of trade and capital movement, the growth rate of international trade in 1986-1996 exceeded the growth rate of GDP by a factor of two; the flow of direct investment grew faster than GDP by a factor of three; and trade in securities grew by a factor of ten. The physical volume of trade increased in that period from $2 trillion to $5.2 trillion. Taking a longer stretch of time, we see that since 1950, the volume of world trade has grown by a factor of 16, while GDP grew by a factor of 5.5. The proportion of world exports to world GDP grew from 7.7 percent in 1950 to 15 percent in 1995.[7]

The explosive growth of financial capital is illustrated by the following: In 1985, the combined transaction volume for  currency traders of New York, London, and Tokyo averaged $190 billion per day; in 1995, this volume reached $1.2 trillion. In 1990, a total of $50 billion of private capital of all kinds was invested in emerging markets (China, East Europe, and some other countries); in 1996, this figure reached $336 billion (including the republics of the former Soviet Union).[8]

Now let’s talk about the process of world migration. In Peter Stalker’s paper, The Work of Strangers, published by the WTO, it is said that about 80 million people currently reside outside their own countries. Another 20 million people are living abroad as refugees. Every year about 1.5 million people emigrate, and approximately one million seek temporary refuge abroad. The countries considered most attractive for immigration are the USA, Canada, Germany, Australia, and New Zealand. In 1995 alone, 720,000 people migrated to the USA (far short of the peak figure of 2,000,000 achieved in 1991), and 800,000 migrated to Germany. Over 200,000 people arrive annually in Canada. Most immigrants come from underdeveloped countries; for example, in 1995, 90,000 people migrated to the USA from Mexico; 55,000 from CIS countries; and 51,000 from the Philippines. [9]

Internationalization Cycles in the 20th Century

Despite the impressive figures,  many more of which could be quoted here, one shouldn’t exaggerate the process of internationalization. To clarify the reasons for this caution, let us look at the period just before World War I.

Usually the degree of involvement in the world market is determined through the proportion of foreign trade volume to GDP. Well, consider that between 1913 and 1996, this proportion hardly increased at all in the United Kingdom, Germany, and France—just by two percent to five percent, to reach 47 percent, 41 percent, and 38 percent respectively. In Japan, it actually dropped from 30 percent to 17 percent. Only in the USA did it rise substantially, from about 10 percent to 20 percent.[10]

Similar trends were observed in foreign direct investment (FDI). In 1914, its proportion to GDP in the Netherlands, the United Kingdom, France, and Germany was 85 percent, 60 percent, 18 percent, and 18 percent respectively (rounded figures); in 1996, the respective figures were 42 percent, 32 percent, 16 percent, and 15 percent. Only in the USA did this proportion grow from seven to eight percent to 13 to 14 percent. Today, FDI averages six percent of domestic investment, while in 1914, in the United Kingdom, its share was about 50 percent.

It’s the same story with workforce mobility. In the 19th century, population migration was much greater than today. It suffices to say that between 1850 and 1914, about 60 million people left Europe.[11] The reasons for this are many, but note that today, even in Europe, where judicial barriers to migration are formally practically absent, there are no workforce flows to be observed. Linguistic, cultural, professional, and other factors produce this outcome.

Let us specify once again the indices used for measurement. Trade internationalization is the whole world’s exports (the sum total of all countries’ exports) divided by the whole world’s production (the sum total of all countries’ GDP). Investment internationalization is the sum total of all FDI in the world divided by the world’s total GDP (less services).

When using this method, we discover that the degrees of trade internationalization and investment internationalization are different, and their phases are not simultaneous. Besides, it turns out that the degree of investment internationalization in 1913 was higher,  than in 1991, or at least as high as in 1991, while trade internationalization was lower in 1913 than it is now.

Proceeding with such comparisons, we find out that the first wave of trade internationalization took place in 1900-1929, followed by a decline until 1950.[12] The second wave started in the 1970s, and continued into the early 1990s. Currently, the third wave is starting in trade internationalization, as well as in investment internationalization; these two are becoming synchronized.

One more indicator of economic internationalization is the correlation between national GDPs and the internationalizing world economy. In other words, the higher the degree of the world economy’s internationalization, the more synchronization we expect between the growth and fall periods of national GDPs. This synchronization is not in evidence, however. According to Grimm’s data, between 1860 and 1988, consistency (or synchronization) of GDP growth and fall was observed only in two periods, in 1913-1927, and after the 1970s. Prior to 1913 and in the time between the two peaks, synchronization was practically non-existent. This indicates that the internationalizing world is still far from economic globalization, and internationalization itself is not a phenomenon of, say, the 1980s and 1990s (“the recent years,” as we say here); it has a long history that exhibits certain cycles or fluctuations. Trade internationalization, for example, dropped dramatically during the depression in the 1930s. Investment internationalization exhibits cycles with two “peaks,” one prior to World War I, and the other starting in the 1980s. The synchronization level of economic growth indicates cyclical fluctuations with one peak in the 1920s and another in the 1970s (according to analyses performed before the 1990s).

It should be stressed particularly that in the 1990s, the process of internationalization continued to develop not only quantitatively, as China, India, Mexico, and other states joined in, but also qualitatively. In this latter respect, two developments stand out. First, financial capital started playing a much larger role in the context of economic internationalization. For example, the daily volume of foreign currency transactions zoomed from $15 billion in 1973 to $1.2 trillion in 1995. Sales of stocks and bonds by American investors grew from nine percent of the US GDP in 1980 to 164 percent in 1996.[13] Second, economic internationalization is stimulated by falling communication costs, just as in the past it was stimulated by falling transportation costs. Moreover, modern information technologies enable people to transact business without physical communication (through the Internet, for example); this helps propel the internationalization process to the level of globalization.

Preliminary Results of Economic Internationalization

There is nothing surprising in the fact that assessments of internationalization effects depend on the ideological stances of particular authors or groups of scholars. In particular, two schools of economists tend to clash over issues of economic globalization. One is the so-called Manchester school of the liberal persuasion (it counts among its founders David Ricardo, Jeremy Bentham, and Richard Cobden); the other is the theorist-globalist school[14] (sometimes called adherents of the Theory of Dependency). Ideologically, the latter lean toward the social-democratic or plain socialist camps. Best known among them are Immanuel Wallerstein, Giovanni Arrighi, Christopher Chase-Dunn, Leslie Sklair, Ranveig Gissinger, Nils Petter Gleditsch, and Warren W. Wagar.

The liberal school maintains that the more dependent a country is on the global economy, the higher its economic growth, its level of well-being, its degree of democracy, and the stronger its domestic peace. The globalist theorists reach the opposite conclusion. A high degree of economic dependency on foreign markets (i.e., a high level of foreign trade and FDI) exacerbates inequality of incomes, leading to domestic conflicts.

The paradox is that both the former and the latter are correct and incorrect at the same time. It all depends on the object of analysis and the type of economic internationalization, and also on the time period chosen for examination.

When speaking of results of internationalization’s “second cycle” for the “core” countries, the liberals are almost 100 percent correct (I will explain this “almost” later). As for the “periphery,” the globalists’ assessments are correct. Statistical data indicate that between 1960 and 1990, the incomes of the richest one-fifth of the “core”  grew three times faster than those of the poorest one-fifth of the “periphery.” As a result, the latter’s share of the world economy dropped from 2.3 percent in 1960 to 1.4 percent in 1990. During that same period, civil wars became much more frequent in the “periphery” countries. As the globalist Joke Schrijvers wrote in this connection: “The gap between a small, wealthy elite and the impoverished masses has grown to such astronomic proportions due to so-called development that many former “Third World” countries are in a state of endemic civil war.”[15]

Here are more statements from the globalists:

J. Galtung (1971): “According to dependency theory, the penetration of foreign capital into peripheral economies leads to the exploitation of local human and natural resources, and to a transfer of profit back to the imperial centers. This process results in impoverishment, inequality, and injustice.”

H. Hveem (1996): “The production of raw materials in poor countries serves to prevent competence-building, and the economy remains export-oriented.”

T. Boswell & W. Dixon (1990), E. Muller and M. Seligson (1989), and R. Rubinson (1976) all reach the same conclusion: “Ties are created between the local power elite and foreign interests, in turn increasing income inequality in the poor countries.”

Finally, F. Bourgignon and Ch. Morrison (1989), and A. Wood (1994) state bluntly: “The production of raw materials will keep inequality high and the level of welfare low.” (ibid.)

To verify the trends indicated above, the globalists undertook in late 1998 and early 1999 one more wide-scale analysis of internationalization effects on 96 countries over the years 1965 to 1997. Their analysis confirmed the trend noticed long ago of Third World enclaves being recreated within the “core” itself (this is precisely the meaning of “almost” applied to the liberals’ assessments of the “core”). They write of the emergence of a new group called “working poor” in their own countries due to the weakening of the labor movement and companies’ attempts to compete with countries having lower labor costs. The TNCs constantly threaten their workers, demanding that they  “understand” why their wages are being lowered, since otherwise they would have to move production abroad, which they often do. For example, between 1990 and 1994, the Swiss-Swedish company Asea Brown Boveri (ABB) terminated 40,000 jobs in Europe and North America while creating 21,150 jobs in Eastern Europe, mostly in Poland. Keep in mind that the average hourly wage in Western countries is about 12 times higher than in Poland, and Polish workers toil 400 hours more per year than, say, German workers.[16]

Observing these trends, even such liberal-minded scholars as Luttwak (1994), started writing about Third World standards that are invading the life of Americans, pointing out that 15 million of them, or six percent of the U.S. population, live in conditions close to those in the world’s poorest countries. Gerd Junne of Amsterdam University shares the same opinion: “With about 30 per cent of the U.S. population living below the poverty line, and about as many being illiterate, the North-South divide does not so much separate Mexico and the United States; rather, it goes right through the United States itself.”[17]

Writing about the “periphery” countries, most authors point out the increasing inequality of incomes there, based on their own research and the Report on Human Development of 1997. They note that the share of the poorest 20 percent of the population in total incomes is decreasing in Argentina, Chile, the Dominican Republic, Ecuador, Uruguay and Mexico. In 16 of the 18 countries of Eastern Europe and in the former USSR, the distribution of incomes has become more asymmetrical, with poverty growing alongside the process of liberalization. It is also worth noting that the average income in the 20 richest countries exceeds the average income in the 20 poorest countries by a factor of 37, and this gap has widened over the past 40 years.

For greater fullness of the picture, let us look at this table from the Report on World Development of 2000/2001.[18]

East Asia and the Pacific (except China)

* Preliminary estimates.

This figure (24 percent) represents 1.2 billion people. We may also add that another 2.8 billion people subsist on less than $2 per day. That is, four billion people out of the total of six billion in the world live in poverty. While East Asia clearly exhibits positive dynamics of incomes, in South Asia, Latin America, and Sub-Saharan Africa, the numbers of the poor keep growing. Especially striking is the fact that in Eastern Europe and Central Asia, the numbers of the poor grew more than 20 times. Such is the price paid for capitalist reforms.

The authors explain the high level of inequality in the poor countries through the penetration of their markets by large foreign companies that hire the best-educated part of the local population and effectively “separate” them from the rest of the population.

The authors’ conclusions contain several important observations. First, FDI has a bigger negative effect on distribution of incomes and political unrest than trade, though the effect of investment and trade depends to a large degree on the economy’s structure. Second, exports of agricultural products by developing countries lead to decreasing economic well-being, inequality of incomes and political unrest, while exports of manufactured goods lead to higher levels of economic development, equality, and political stability. Third, countries that export raw materials tend to reproduce (with rare exceptions) poverty and weak government. The general conclusion is this: The globalization process affects rich countries positively, while poor agrarian societies can be affected negatively.

These conclusions are no revelations to Russian scholars. However, it is important that experts on globalization in the United States and the United Kingdom are now arriving at the same conclusions made by Russian Marxists  during the first wave of internationalization.

How Can Internationalization Be Made Fair?

These same globalist theorists ask this question, and they give different answers. Certain sociologists, for example, those in the American Sociological Association, recognize only one “correct” answer. In Warren Wagar’s interpretation, their solution lies in choosing “the third path of partnership, of mutual multiculturalism, a future in which radical feminism, fundamentalist Islam, populist libertarianism, militant Hinduism, Marxian socialism, born-again Christianity, megacorporate capitalism, Bosnian nationalism, Serbian nationalism, and all the other colliding forces at work in our whirling world somehow lie down together like lions and lambs in the New Jerusalem and agree to eat grass, or better yet, develop the capacity to feed themselves by photosynthesis.”[19] A truly “beautiful” prospect, notes Wagar ironically, but a fundamentally wrong answer.

The answer he offers sounds quite Marxist. He proposes replacing “predatory global capitalism” with a “socialist world commonwealth.” (ibid) He is also not alone in suggesting this solution. Chase-Dunn appeals for “socialist relations on the level of the entire world system.” Wallerstein champions “a socialist world government.” Amin speaks of forcing out the reactionary utopia of “globalization through the marketplace” and proposes a humanist globalization project “compatible with the socialist perspective.”[20] They justify the socialist solution by arguing that otherwise, “the regressive and criminal scenario will most likely determine the future.” Wagar himself believes that: “The next fifty years—and more—are likely to produce a reasonable facsimile of hell on earth, a time compared to which the last fifty years may survive in memory as a veritable golden age.” (3) He goes on to describe in detail the mechanism of creating a “world party” (in 2035) and having it function to the year 2050.[21]

In the end, all of them propose to establish a world state  through global communications. In Chase-Dunn’s opinion, the core of this world-state can be constituted by a system of “semi-peripheral democratic socialism” that includes Russia, China, India, South Africa, Brazil, and Mexico. Proponents of this idea (surprisingly many among globalist theorists) are convinced that all types of “globalization” give the opportunity to organize not only world capitalism, but also those who are exploited by this capitalism. In other words, global capitalism can be counteracted at the same global level by an equally global socialism, naturally of the democratic type.[22] It is remarkable that their goals and methods are almost identical word-for-word to those proposed by the academician N. N. Moiseyev in a number of his recent works.[23]

It is no less amazing that similar proposals originate from scholars far from left-wing ideologies and movements. For example, the German scholar, Dirk Messner, wrote a big article in which he mentions the names of Yehezkel Dror (Israel), Ralf Darendorf (German), Richard Haas (USA) and Peter D. Sutherland (USA), former Director General of GATT in 1993-1995. All of these authors propose setting up institutional foundations for governing the world economy.[24] This solution is forced by “the wild and merciless globalization that follows only the laws of competition and therefore is capable of removing substantial numbers of people from society in many countries.” (Darendorf) Therefore, it is time to assert “the primacy of politics over the self-contained dynamics of marketplace regularities, and institutions for shaping globalization so that national societies and institutional systems in the North, South, and East are prepared for new demands.” (Sutherland)

In this regard, Messner himself addresses the issue of creating a Global Governance Architecture that is, in his opinion, one of the most urgent demands of the 21st century. He goes on to describe the laws and objectives of global governance in the spirit of the American globalists mentioned above. Instead of hegemony politics, he writes, it is necessary to create a world order of cooperation; solve the problems of poverty; give assistance to China, India, Brazil, and South Africa; solve population problems; implement the ideas of rule-of-law; and assist the development of different cultures, etc. The accomplishment of these objectives will require reorganizing national politics to connect it to global politics. Messner also describes in detail the hierarchy of tasks that global governance must address. Thus it turns out that utopian dreamers are just as abundant in the West as in Russia.

In actual fact, all concepts and proposals by the globalist theorists are utopian, at least for two reasons. The first is that “globalization” (as they understand it) has not only failed to reduce the role of the state within countries or in the international arena, but, on the contrary, has increased that role. The second reason has to do with the process of integration that they simply omit from their analysis, possibly because they see it as identical to “globalization.” Let us examine in this connection first the role of TNCs and then their relationship to the state.

Transnational and Multinational Corporations (TNCs and MNCs)

In the mind of the general public, MNCs, TNCs, and globalization are closely interconnected. They are called, with good reason, the main actors in the process of globalization. Many weighty arguments are offered to confirm the importance of TNCs, including statistical data.

So, what is their might? According to UN data, by the mid-1990s, there were 45,000 parent TNCs in the world, controlling some 280,000 subsidiaries. Of that number, 37,000 (about 82 percent) were based in the 14 developed countries of OECD. Ninety percent of  all TNC headquarters were located in the developed world.

According to UN data (1997 World Investment Report), in 1996, TNCs sold through their subsidiaries goods and services worth $7 trillion in total (i.e., more than all the exports in the world, worth a total of $5.2 trillion). The total amount of FDI in production facilities, equipment, and private property equaled $3 trillion. Seventy percent of international technology royalties were paid out within related firms and their foreign subsidiaries. This is evidence of the key role played by the TNC in spreading technologies across the globe. [25]

About 80 percent of U.S. trade was carried out by TNCs, a proportion typical of developed countries as a whole. Approximately 40 percent of total trade took place between TNCs themselves. They are also the main accumulators of FDI. The one hundred biggest TNCs controlled about 20 percent of all foreign assets, accounting for $2 trillion of foreign sales and employed six million workers (in 1995).

In actual fact, there aren’t all that many companies that are truly global. Some of the best known are Royal Dutch/Shell, Ford, General Electric, Exxon, GM, Volkswagen, IBM, Toyota, Nestle (food), Bayer (chemistry), ABB, Nissan, Mobil, Daimler-Benz, Coca Cola, and Kodak. Their capacities are truly impressive. According to World Bank data, in 1995, only 70 countries out of a total of 200 had GDPs in excess of $10 billion. Meanwhile, Fortune reported that of 500 biggest TNCs, 440 had sales of over $10 billion.[26]

The share of TNCs in the national products of developed countries (except Japan) is quite high and tends to grow higher still. According to OECD data for 1996 (the latest year for which comparative statistics were given) quoted in The Economist of January 8, 2000, foreign firms accounted for 15.8 percent of all production in the U.S., while in 1989 that figure was 13.2 percent, and in 1985, 8.8 percent. In Canada, foreign firms’ share was over 50 percent in 1996, and about 46 percent in 1989; in the United Kingdom, 33 percent and 24 percent, respectively; in France, 29 percent and 28 percent; and in Germany, about 13 percent. The one exception is Japan, where the share of foreign firms in the national product is negligible; in 1996, it was one percent, less than in 1989 (two percent).

The share of the domestic workforce employed by foreign firms is also somewhat high; in the United States, it was 10.8 percent in 1989 and 11.4 percent in 1996. Statistical data indicate that, on the whole, foreign firms create more jobs than local ones. This is certainly true of the United States and the United Kingdom. Besides, foreign firms pay higher wages than domestic ones. In 1996, the gap was six percent in the U.S., 36 percent in Japan, 30 percent in the Netherlands, 29 percent in the U.K., and 12 percent in France.[27]

It is also noteworthy that foreign firms spend huge sums on research and development. In 1996, they accounted for 12 percent of all R&D outlays in the U.S., 19 percent in France, and 40 percent in the U.K. Also, their R&D outlays are proportionally higher than those of local companies. Thus, in the U.K., foreign firms spent two percent of their revenue on R&D, while local firms spent 1.5 percent.

Finally, foreign firms export proportionally more than domestic ones. The gap is impressive in some instances. In 1996, TNCs exported 89 percent of their output in Ireland, while national companies exported only 34 percent of theirs; in the Netherlands, the figures were 64 percent and 37 percent, respectively; in France,  35.2 percent and 33.6 percent; in Japan, 13.1 percent and 10.6 percent. The exception is the United States, where domestic companies exported 15.3 percent of their output in 1996, while foreign companies exported 10.7 percent.[28]

Similar trends are observed in foreign firms’ actions in the developing world. For example, in Turkey, wages paid by TNCs are 124 percent higher than the national average and the number of TNC jobs grows by 11.5 percent annually, while in local companies, the growth rate of jobs is only 0.6 percent. The picture is similar with respect to  R&D expenditures. It is another matter that the Turkish worker’s wages are lower by an order of magnitude (at least) than those of an American or European worker. That is a separate topic.

No one disputes these figures, but they beg one serious question: Is the influence of TNCs really so huge that it exceeds the influence of the state, which starts losing its importance in the era of globalization? Important conclusions depend on the answer. If the answer is yes, conjectures are in order about the disappearance of state sovereignty, a world without borders, and even about the disappearance of the state from the world arena.

TNCs and the State

Though the theme “the state is dying away” is not new (the pillars of Marxism-Leninism wrote volumes about it), it is being reborn today in connection with globalization issues.[29] Those who believe unreservedly that globalization is the dominant phenomenon in the world economy claim that the state (or state sovereignty) has lost (or is losing) its importance, ceasing to be “a meaningful political unit.” For example, the English scholar Evan Luard believes that: “More than in any earlier time, the state within which political activity has traditionally been concentrated, is not a self-sufficient political or economic unit, but only a fragment of a much wider entity: the world-wide political system, the international economy, world society.”[30] He notes that this development is due not only to economic globalization, but also to the globalization of politics.

The Portuguese scholar Jaime Nogueira Pinto writes directly of a crisis of state sovereignty. The cause, he thinks, is that “markets have tended toward integration, economic 'globalization', the creation of a 'one-world' market.”[31] He notes with some surprise that integration of markets does not lead directly to political integration, and thus “a united, economic world-market can co-exist with a still more fragmented political world.” (3) The sole exception, he believes, is the European Union. It is clear from this passage that the Portuguese scholar doesn’t understand that Western Europe is actually integrated both “from the bottom” (economically) and “from the top” (politically). The rest of the world’s economic space is not integrated, but internationalized; that is a major difference. This is precisely why “the rest of the world” cannot be integrated politically.

Nonetheless, Pinto justifiably points out the narrowing of state sovereignty in a number of Third World countries (Sierra Leone, Liberia, Angola, Congo, Lebanon, Afghanistan, Peru, Colombia, Indochina, and the Balkans). Some of these countries are torn apart by civil war or guerrilla activities, while others are partially controlled by drug lords’ private armies. In all of them, the state-run police and armed forces are unable to provide security to the citizens. That is why large corporations are forced to create their own “private security armies.” (5) This results in the shrinkage of state power, i.e., loss of these states’ sovereignty. But all this is not directly related to globalization as such, unless we take that word to mean the spreading of the phenomena described above over wider geographical spaces. (I can’t help noticing the constant confusion of causes and effects and the ungrounded generalizations of local phenomena. Evidently, it is not only Russian scholars who are plagued by this disease.)

One example of radical globalization orthodoxy is in the presentation made by professor Kimon Valaskakis of the University of Montreal at the OECD Conference in Hamburg, Germany, in March 2000. He argued that the international system had ceased to be controlled by governments, that the Westphalian system was crumbling (Russian scholars, too, love to expound on this topic), and pointed out the European Union as an example of this trend, claiming a loss of state sovereignty in that organization.[32]

Similar ideas are presented and argued in more detail in the lectures by Anthony Giddens (1999).[33] These lectures drew a response from English scholars Colin Hay and Matthew Watson, who cast doubt on all his “arguments” in their article. They note, in particular: “The quantitative evidence makes clear that the corrosive impact of capital flight on European social models, labor market institutions, and social democratic possibilities is frequently exaggerated.”[34]

While these two authors refute the globalization radicals’ claims in a tactful manner, the well-known American journalist William Pfaff of The International Herald Tribune casts away scholarly diplomacy. He reminds the readers, in particular, that the USA, just as Albania, China, Russia, the U.K., France, Austria, or Denmark, pursues its own national interests rather than global ones. He writes: “We see the illusion rather than the reality of dissolving national power and sovereignty. The modern forces of the market and the Internet challenge established forms of national authority, but do not alter the political reality that each is ultimately subject to state power, even if the mechanisms of that power have to be changed.”[35] Moreover, Pfaff assesses the role of international organizations perfectly correctly: “The international institutions, including the UN and the new war crimes courts, have no independent legitimacy. None are ‘democratic.’ They exist because nations signed treaties giving them existence. Serbia was not attacked by the ‘international community’, which has no political expression. It was attacked by a coalition of governments, each with its own motives.” (ibid.)

Pfaff reminds us with perfect reason that all this uncontrolled international business is immediately brought under control as soon as it starts to threaten national interests. Even the movement of money can be controlled, if need be, through classical politics or the politics of force. There you have it—a rare case of a journalist who has a deeper understanding of a phenomenon than many scholars with academic titles aplenty!

In actual fact, the answers to these questions depend on the criteria used to determine the state’s role and functions. For the time being, no one doubts the state’s role in politics and in the military-strategic sphere. Already we have perspectives from which all talk of the state’s disappearance is meaningless, but there might be some point in using this expression when speaking of the state’s economic role. The state’s huge economic role in socialist countries and authoritarian-type countries is obvious to all. The state of affairs is not so obvious in “democratic” countries, i.e., in “the golden core.”

One of the main criteria of the state’s involvement in the economy is public spending, as it is a measure of the state’s control over the economy. Here are some figures from the analysis of 17 countries done by The Economist with reference to IMF materials and a paper by Nicholas Crafts:

Government Expenditures as Percentage of GDP, 1870-1998 [36]

  *    The average does not include Germany, Japan and Spain, which were waging war at the time or preparing for war.

This table shows clearly the dramatic growth of public spending relative to GDP in the developed countries in the 20th century, primarily due to growing social spending, especially since the 1960s. This dynamic refutes claims about the state’s loss of sovereignty.

Naturally, the struggle to balance the budget requires bringing revenues in line with expenditures. In other words, the state exercises its huge power of collecting taxes, including taxes on corporations. Research shows that while theoretically TNCs are capable of avoiding taxes or “escaping” to countries with low-tax regimes (such as the “tax havens” of the Caribbean), in practice, tax revenues continue to climb even now, in the Internet era. According to OECD data, between 1965 and 1998, the proportion of taxes to GDP grew from about 26 percent to 37 percent in OECD countries (combined) and from 28 percent to 42 percent in the European Community (15 countries). Between 1975 and 1997, corporate income taxes grew in all developed countries (except the Netherlands); ranging from five percent to 15 percent of GDP and averaging nine percent of GDP in the OECD.[37] In other words, the state is capable of controlling TNCs through the fiscal system.

In the time of globalization, the state has more freedom in borrowing money, since it need not limit itself to domestic banks. It can borrow from foreign TNCs, TNBs, or international financial organizations (IMF, World Bank, etc.). The state’s power is in evidence  even in the fact that the relatively weak Russian state showed itself capable of “penalizing” dozens of foreign TNCs and TNBs to the tune of billions of dollars by defaulting on its debt (short-term bonds).

Let’s not forget that the state has an economy of its own, i.e., it owns a lot of property and effectively acts as a powerful corporation in its own right. It usually owns the strategic industries. We can cite the examples of France and the Scandinavian countries.

Nonetheless, though these proportions and forms of interdependency have a certain meaning, a more important type of interaction emerges on the political economy level. State-monopoly capitalism (SMC) has been established in all major countries of the West since the early 20th century. Its structure and functions have definitely undergone some changes over the past hundred years. Yet, its purpose has remained unchanged: to strengthen the position of the “core” in the world arena and preserve capitalism.  Therefore, for all the natural contradictions existing within each SMC and between national SMC (SMC differs in substance from country to country; compare the SMC of Japan and that of the USA or Germany), in the end they exhibit an enviable unity in their actions to strengthen the position of “the golden billion.” That is why the state not only preserves its old functions, but renews them in the area of helping their TNCs in the world arena.

By the way, the very process of internationalization, especially in its second phase, was initiated precisely by the state, exemplified by the Thatcher government in the U.K., the Reagan Administration in the U.S., and two Prime Ministers in Japan (Zenko Suzuki and Yasuhiro Nakasone). It was these governments that launched neoliberal policies in the late 1970s and early 1980s, removing a multitude of limitations in the spheres of trade and especially investment. This type of organized policy bears evidence of the important role played by the state in the process of internationalization and globalization, pointed out constantly by American scholars such as Giovanni Arrighi. (216)

John Borrego offers this explanation: “…Global capital will locate in a country only if the state can guarantee certain conditions of production of goods, the reproduction of labor of a certain quality and price, and effective management. Competition by states in the world economic field has shifted from geographically specific advantages (such as  raw material endowments or even labor costs) to less tangible elements (access to technology, flexible management techniques, marketing strategy, closeness to consumers, speed of response to changes in the marketplace, etc.).”[38]

A group of authors from Princeton University belligerently claims: “The global corporation, adrift from its national political moorings and roaming an increasingly borderless world market, is a myth.”[39] This is a myth created primarily by Americans, I would add. After analyzing the TNC structures of the USA, Germany, and Japan, they reach the conclusion that “compared to many American corporations, German and Japanese firms retain a much clearer sense of their distinct national identities, a clearer commitment to national and regional prosperity in a changing international environment, and a much more realistic sense of the capacity of the rest of the world to adapt to the internal behavioral norms of their homelands.” (10)

Using many examples, they demonstrate equally convincingly the well-coordinated actions of European countries to determine foreign producers’ prices in their markets. Moreover, they don’t rule out disintegration processes in already integrated regions. (16) This is an extremely important idea that I shall revisit: Globalization acts against integration.

Let us now draw some preliminary conclusions about internationalization and globalization:

First, the process of the internationalization of the world economy is nothing new. It started in the second half of the 19th century. Moreover, some authors believe that “in some respects, the current international economy is less open and integrated than the regime that prevailed from 1870 to 1914.”[40]

Second, MNCs truly deserving of the name are apparently not so many in number. Most of them are based on national soil, i.e., they are properly TNCs, and their trade and investment policies in the international arena depend on the strength of their national facilities.

Third, investment capital (FDI) concentrates mostly in developed industrial states, while “the Third World” (about 120 countries in all) remains peripheral in the areas of both trade and investment. The exception to this rule is constituted by certain countries of East Asia, including China.

Fourth, the world economy is far from being “global.” It is actually concentrated in the triad of Western Europe, Japan, and North America, and this triad will stay dominant for a substantially long period of history.

Fifth, the coordination of these developed countries’ actions (for example, through the mechanism of “the Big Seven”) enables them to exert powerful directed pressures on the financial markets and on other economic trends. Therefore, global markets in no way transcend the borders of regulation and controls, even if currently the scope and objectives of economic governance are limited.

Localization and Globalization

It is appropriate to touch here on one more interesting idea in connection with the erosion of state borders. Associates of the World Bank have published the 1999/2000 World Development Report under the title, Entering the 21st Century, in which they focus much attention on the concept of “localization.” To better explain what it is about, they first give the definition of globalization: “Globalization, which reflects the progressive integration of the world’s economies, requires national governments to reach out to international partners as the best way to manage changes affecting trade, financial flows, and the global environment. Localization, which reflects the growing desire of people for a greater say in their government, manifests itself in the assertion of regional identities. … Localization has generated political pluralism and self-determination around the world. One of its manifestations is the increase in the number of the world’s countries, which have climbed as regions to win their independence.”[41] Let me remind you again that as late as 1974, there were still only 140 sovereign states in the world, and by 1998 their number had climbed to almost 195.

The idea of localization served as the basis for the concept of “glocalization,” i.e., the process of interconnected globalization and localization. This is how its essence is defined by Thomas Straubhaar, President of the Hamburg Institute of Economic Research: “Glocalization means a world in which the natural contours of state borders are determined through the local economic area but not on the drawing-board of policy in Vienna, Versailles or Yalta.”[42]

The idea is that globalization cannot take place unless the economic infrastructure is first prepared in a particular locality. Therefore, globalization actors have need of the state that is in the business of clearing economic ground for the activities of  TNCs. It also follows from this that not only is the integration process  closely tied to state power (more about that later), but also that subjects of globalization cannot manage without it, either. This follows quite logically from the inseparable ties between economics and politics at every level. Joseph Stiglitz, Vice President of the World Bank, identified globalization and localization (glocalization) “as the two most important trends in the 21st century.”[43]

(Please note that the authors don’t use the term “internationalization.” Perhaps they see globalization and internationalization as synonyms, or maybe they really do perceive globalization as an emerging trend. Importantly, even in this latter case, they still accord big importance to political mechanisms, i.e., government or even the state.)

Again, I stress that localization is not identical to integration. As a phenomenon, it is more closely tied precisely to globalization, though occasionally it can also manifest itself in the integration space. In the latter case, it enters into a conflict with the integration character of that space, since it is oriented toward all kinds of economic subjects, no matter whether they are “our own” or “alien.” One example is the penetration of Japanese companies into the European Community with the help of “local powers,” which causes constant economic trade wars in Europe and within the USA-EC-Japan triad. Therefore, not only the integration process, but internationalization and globalization, as well, objectively lead to the strengthening of the state’s role, not to its weakening.

Granted, everything said above relates primarily to the states of “the golden billion.” But consider this statement by R. Barnet and J. Cavanagh: “The most disturbing aspect of this system (of globalization  – A.B.)  is that the formidable power and mobility of global corporations are undermining the effectiveness of national governments to carry out essential policies on behalf of their people. Leaders of nation-states are losing much of the control over their own territory they once had.”[44] Clearly  the authors are referring to Third World countries, which can now be said to include Russia. They go on to say: “In much of Asia, Africa, and Latin America, the state is collapsing under the weight of debt, bloated bureaucracy, and corruption.” (ibid.)

In other words, when talking of states collapsing under the pressure of globalization and internationalization  (the difference doesn’t matter in this case), we should clearly understand which states are being discussed. Globalization does not work inside “the golden billion” in the same way as it does in developing countries.

Integration

The second reason for the globalist-theorists’ utopianism is rooted in their underestimation or misunderstanding of the integration process. The problem is that most analysts not only confuse the concepts of integration, internationalization, and globalization, but they are unable to agree on the meaning of the very concept of integration. As an example, let me quote a passage from The Economist that arrives at a skeptical conclusion about globalization: “Nonetheless, the world economy is still far from real integration.” For convincing proof, the authors use these “killer” arguments directed at the USA and Canada: “Product markets are still nowhere near as integrated across borders as they are within nations. Consider the example of trade between the United States and Canada, one of the least restricted trading borders in the world. On average, trade between a Canadian province and an American state is 20 times smaller than domestic trade between two Canadian provinces, after adjusting for distance and income levels. For all the talk about a single market, the Canadian and American markets remain substantially segmented from one another. For other countries, this is truer still.”[45]

The authors of this passage write of globalization while actually using the criteria of integration. Some authors simply go ahead and “combine” globalization with integration in the term “global integration”—a phenomenon that at this moment in history is nothing more than a “global dream,” to borrow an expression from the title of the authors’ own book.[46] Of course, it isn’t all one and the same thing. Keep in mind there are no fewer problems with the concept of integration than with the concept of globalization. Polemics between Western economists give an idea of how complicated this topic is.

How do American scholars define integration? Patrick M. Morgan, for example, laments: “What is integration? Surprise! There is no generally accepted definition of integration. … Some consider integration to be a condition (as when we say a community is ‘integrated’), but it is equally plausible to think of it as a process (as when we say Western Europe is ‘integrating’ via its Common market).”[47] He then attempts to systematize different definitions of the term “integration.” For diversity, let us look at some other definitions, like this one given by Robert Grosse and Duane Kujawa: “Regional integration is expansion of commercial and financial ties among countries in a regional group, leaving the rest of the world outside of the group.”[48]

Grosse and Kujawa identify five types of regional integration: The first level of economic integration (the free trade area) involves the elimination of tariffs on trade among the countries in the regional group (EFTA, ALADI [Latin American Free Trade Area], U.S.-Canadian FTA). The second level (the customs union) involves the elimination of tariffs among member countries plus the establishment of a common external tariff structure toward nonmembers (the Andean Pact, CARICOM). The third level (the common market) is characterized by the same tariff policy as the customs union plus freedom of movement for factors of production (i.e., labor and capital) among member countries (ЕС). An economic union is characterized by harmonization of economic policy beyond that of a common market; specifically, an economic union seeks to unify monetary and fiscal policy among its member countries (Belgium-Luxemburg Economic Union). The highest level of economic integration is political union, under which all economic policies are unified. Countries that unite under a common government lose their national identities and become parts of a single state (United States, Soviet Union, and Canada).”[49]

Peter C.Y. Chow defines the concept of economic integration in almost the same key, with some minor nuances for the purpose of determining the integration zone in the “APR.” He identifies several levels of integration: “The lowest level of integration is a preferential trading arrangement, under which member countries reduce their trade barriers for one another yet determine their own separate trade policies toward nonmember countries. The next level is a free trade area (FTA), under which participating countries eliminate trade barriers within the area but maintain their own trade policies toward nonmember countries. A more cohesive trading group is a customs union, which, in addition to the functions of the FTA, also decides a common commercial policy toward non-members. A common market further integrates the economies among member states by extending the dimension of free trade policy to factor markets, allowing, for example, free capital and labor flows across national boundaries. The most comprehensive integration is an economic union, which maintains common economic policies as well as a common currency for all members.”[50]

Some proponents of the “Pacific era” idea understand that such definitions of integration, even of just its first level, don’t let them single out the “APR” as some kind of integration zone. To somehow resolve this conundrum, they started “reinventing” the concept of integration to save the “APR” concept.[51] The essence of their innovation is this:

To begin with, the concept of regional integration is divided into market integration and institutional integration. In the words of the Korean scholar, Ha Jong Yoon, “Market integration primarily involved trade movements of merchandise, while institutional integration entailed legal and institutional matters aimed at enhancing trade, with both functional and institutional integration.”[52] He only speaks of trade here, but the idea is clear: The governance mechanism “above” regulates the spontaneous market flows “below.” In this case, it was important to Yoon to convey the idea that integration must not result in an “egoistic bloc” that discriminates against outsiders while simultaneously isolating itself from “the global economic system.”

Though these considerations appear reasonable, they not only fail to rescue the “APR” idea, but push the whole concept into an even more hopeless dead end. This becomes obvious when we analyze the same considerations as expressed in a more complex form by Peter Drysdale, the father of the whole Pacific idea. Drysdale realized some time ago the “unwillingness” of the “APR” to shape itself into an integrating region. Apparently following the dictum that “regions are inevitably the construct of analysts and decision-makers,”[53] he decided, together with Ross Garnaut, a businessman and scholar who was his old “APR” companion-in-arms, and Richard Cooper, another scholar, to create a new theoretical construct for the “APR.” The key concepts here are the terms “institutional integration,” “market integration,” “open regionalism,” and “discriminatory regionalism.”

Their definitions of the first two terms are practically identical to those given by Ha Jong Yoon, so I will not reproduce them here. The nuance, according to R. Cooper, is this: “A region can be integrated in the first sense (i.e. institutional – A.B.), but not in the second (in the market sense – A.B.).”[54] Moreover, markets “of course cannot be fully integrated either, at least in the sense of equal product and factor prices.” (ibid.)

This twist really does enable one to do away with the problem of “APR” borders. In this subtext, an organization or group of organizations is created, e.g., the Asia-Pacific Economic Cooperation (APEC) that builds its policy on coordinated (integrated, so to say) principles and governs the marketplace process (the flows of goods, capital, and people between the member countries of this organization). It doesn’t matter, then, in which part of the globe the state is located. The important thing is, it should be a member of the organization, which amounts already to institutional integration. In this case, institutional integration can become so detached from market integration that the meaning of the economic integration concept can become lost. But even in this obviously difficult spot, there is a way out.

According to Drysdale and Garnaut (co-authors of the chapter), “institutional integration” functions within the framework of  “open regionalism,” which means, first, flows of “public goods,” i.e., goods from the public sector. Secondly, “institutional integration” precludes discrimination against external subjects (those located outside the region); and third, these flows are directed by the governments of the member countries of the “open regionalism.”[55] The authors specifically stress that “discriminational regionalism” is directed against outsiders, concentrating only on the members’ own benefits. They oppose in principle uncontrolled “market integration” that is based on flows of private-sector goods and recognizes no borders. To them, therefore, “the optimum region is the world.”[56] They continue: “There are the first two elements of Asia Pacific ‘open regionalism’: recognition of the power of market forces in promoting high intensity in ultra-regional trade; and acceptance in principle that there is a role for governments in provision in public goods to promote regional trade expansion.”[57]

To sum up the authors’ ideas, “open regionalism” primarily means a system of regulation through the mechanism of “institutional integration” of economic flows originating from the public sectors (state-owned property) of countries included in a certain region, combined with a policy of good will toward the functioning of “market forces” both inside the region and outside its borders. Drysdale personally is being “super-dialectician” here: On the one hand, he demonstrates his loyalty to the laws of free markets; on the other hand, it seems to him that he “rescues” his favorite concept of the “APR.” This is not entirely his personal position, though; it is the theoretical basis for the entire APEC policy that attempts to implement this theory in practice. This approach contains a number of theoretical incongruities.

First, market forces embodied by TNCs or MNCs are so powerful that they are not likely to embrace the interests of regionalism, be it even of the “open” kind. Their own interests are more important to them. Second, even members of an “open regionalism” will not always desist from “discriminational regionalism” if it is needed to protect their own economic benefits, as evidenced by the activities of almost every state in the APEC zone, whether Japan or South Korea, to say nothing of Malaysia. The essence of institutional integration would amount precisely to protection of self-interests against those of outsiders. Otherwise what would be the purpose of integration? Finally, how can an “open region” be integrated? If “all countries are welcome,” what regionalism are we talking about?

As a result, all formulations dissolve: “Open regionalism” in the “APR” extends to include the whole world, and “integration” transforms into elementary economic cooperation of everyone with everyone, i.e., internationalization. In short, we are confused, a natural result when attempts are made to construct reality out of theory instead of creating theory from reality.

Europeans are more consistent in their treatment of this issue, since they proceed from their own experience of the Common Market. Jacques Pelkmans, the author of a classical textbook on European integration, formulates it this way: “Economic integration is defined as the elimination of economic frontiers between two or more economies.” But this does not necessarily mean the elimination of borders (territorial and political ones) between states.[58] The textbook goes on to describe different stages of integration (similar to those described above) and the means European integration uses to set itself apart and defend itself from “newcomers,” though not always successfully.

By now, it should be clear from everything said above that integration is not only different from globalization, but it is also different from internationalization. It is obvious that the first concept stands for a certain entity, while the latter phenomena reflect diversification.

From this systemic perspective, the concept of integration means the following: Economic integration is the highest form of internationalization of economic life, reached in the process of joining different national economies together in a single economic complex having a specific institutional structure and functioning on the basis of coordinated economic policy on both the inter-state and the super-national basis. So far, such phenomena are only realized on the regional level.[59]

The definition is comprehensive, but it requires substance.

First, the “joining” goes through different development phases: The growing economic interdependency of states evolves into mutual penetration of their economies, and national reproduction processes become intertwined and eventually fused.

Second, of the three phases of the social capital circuit in the countries that participate in integration, it is not only the first and third phases (taking place in the circulation sphere) that get integrated; the central second stage—production itself, the technological process of creating goods—also gets integrated. What results is “the interweaving of the circuits of combined national capitals as a whole.”

We need to devote some attention to this phrase, for it marks precisely the divide between the integration and pre-integration processes in the course of internationalization of economic life. A. D. Borodayevsky writes: “Therefore, it is not so much the large-scale, intensive and stable trade exchange between two or several neighbor countries in the region that expresses in itself the essence of their economic rapprochement and growing interdependency within the framework of the forming integration complex, as the interweaving of national production processes that stands behind it…” (163)

Third, it is important to keep in mind that so-called “partial integration” in different links of the integration process does not in itself constitute integration. It is only in their synthesis (in the systemic sense) that these fragments are capable of giving birth to an essentially new state of the regional economy—an integration system in the form of an economic complex. This is not the same as a simple sum of national economies.

Fourth, the integration net of economic interconnections gives birth, as its density increases, to a specific “crystalline grid” (to use Mr. Borodayevsky’s fortunate expression) that serves as the inner construction of the integration “crystal.” In other words, the complex acquires its own institutional structure in the form of different mechanisms that have economic and political functions. As Jacques Pelkmans writes, “In the real world, economic integration is always to some extent political.” (3)

Mechanisms of the EC type give certain strength to this “grid” and help maintain and develop the integration process, setting it ever farther apart from the surrounding non-integrated milieu. The latter is especially important for understanding the essence of one complicated phenomenon. Thus, A. D. Borodayevsky makes a claim that first seems strange: “Regional integration constitutes the dialectic negation of the global, universally-capitalist nature of this process; it expresses the desire to confine it to the limits of a group of states.” (157)

This isolation from the rest of the world alarms champions of global integration, such as Bruce Russet.[60] But that is a separate topic. It is important to remember that regional integration isolates itself from the rest of the world. This thesis captures the dialectics of relations between integration and internationalization. Special attention must be paid to this aspect, since, for example, most of the “APR” experts don’t see the difference between integration and internationalization. Ci Yunji, professor of Economics at Jilin University in China, writes: “The so-called world economic integration is actually the internationalization of the process of production and reproduction of all countries in the world, and the alliance, integration and incorporation of economic movement of the world.”[61]

This is not an isolated opinion. Many “APR” experts share it. I don’t think it merits any logic-based refutations. Let’s just say that the economic interaction of the professor’s country (China) with, say, Japan or the USA, somehow doesn’t resemble the character of integration cooperation in Common Market countries. In any event, any analysis loses meaning if we fail to differentiate clearly between these two important notions. Internationalization (economic) is the objective process of global economic interaction in the spheres of trade, capital, and finance. Therefore, it is not governable and is not institutionalized.

Integration emerges on the basis of internationalization as its highest form. From the start, it doesn’t follow the principle of coexistence with the foundation that gave birth to it, but enters instead into a struggle with it. A direct analogy suggests itself here with the interrelations between monopolies and markets. While internationalization as an objective process expands its geographic boundaries, integration, on the contrary, narrows them while its intensity and depth grow substantially. Integration, therefore, is antagonistic not only to pre-integration economic forms, but also to internationalization itself. Internationalization and integration cannot exist without each other; yet their existence has the form of an objectively contradictory interaction. Integration actually separates economic spaces not only between economic systems of different types, as it did in the period of confrontation between socialism and capitalism (represented in Europe by the competition of the two blocs, the EC and the CMEA), but also between systems of the same type.

This manifestation of the integration process is due to the fact that while internationalization reflects the objective course of the world economy’s development, integration is an objective-subjective process in which the subjective side often plays a bigger role than the objective side. It is no accident that you often hear talk of integration politics and never any talk of internationalization politics. Politics means governance and choice of partners that take into consideration the objects’ parametric properties (their alliance affiliation, their interests, their might, power, etc.).

Given the definition above, the only economically integrated region in the world is the European Union. NAFTA is in the initial stages of integration, mainly because of its weak Canada-Mexico link. East Asia is showing a trend—only just a trend so far—toward integration, with unknown consequences due to a possible change of the structural configuration. In other words, the economy of China may become its center. At the same time, it is far too early yet to speak of integration processes between the three economic centers: USA–Western Europe–Japan, much less of any “integration processes” in the non-existent “APR.”

Globalization, or the Theory of Global Capitalism

Now is the time to examine the economic essence of globalization—a subject analyzed usually within the framework of the theory of global capitalism. This theory has been created by some of the most outstanding scholars in the West, such as  Giovanni Arrighi, Jacques Attali, B. Ballasa, Walden Bello, John Borrego, Bruce Cummings, Harriet Friedmann, Alain Lipietz, P. Tayler, Nigel Thrift, Robert Wade, and Immanuel Wallerstein. I will now use their reflections to describe the economic mechanism of the globalization process. The following text is to some degree a brief summary abstract of the works of several American scholars, primarily Cummings, Wallerstein, and especially Borrego.

*   *   *

The capitalist world economy of the 1990s and 2000s is a highly complex interweaving of production, capital, information, technologies, labor markets and all other links in the process of extracting maximum profits, controlled by the three centers of economic might and the trans- and international corporations and banks. On the whole the world economy has become more mobile, changeable, complicated and interconnected. In this new system any kind of economic activity has meaning only in the global context. This system gave birth to a new global division of labor. The prosperity or decline of this or that economy, this or that state, even this or that region depends on the sources and structure of capital accumulation, and it also matters who controls the capital within the world economy.

Global Accumulation of Capital: Its Structure and Dynamics

In the system of global capitalism, the organization of production and economic activity vary from standardized mass production to production oriented toward the individual consumer. Also, vertically integrated large-scale production organizations or enterprises are replaced by a vertically disintegrated or horizontal network of connections between production operations. The transitional state in the world economy from Fordism to post-Fordism began in the mid-1970s.

It is common knowledge that Fordism relied on a system of mass production and mass consumption. This system was based on a stable, well-paid workforce in First World countries and on the intensive exploitation of labor and resources in Third World countries. Production processes were concentrated in relatively large enterprises.

The distinctive trait of post-Fordism is lessening rigidity and increasing flexibility of production. Though this trend is accompanied by many other processes, the most important thing therein is minimization of limitations on free movement of capital and acceleration of its turnover. In the 1980s, interrelationships between business and capital led to the weakening and shrinking of the state’s ability to regulate the process of capital accumulation. New forms of interaction, reflected in Reaganomics, Thatcherism, and the administrative-financial reform in Japan, accelerated the processes of economic deregulation that led to many important victories for capitalism. To a large degree, these were accomplished at the expense of the lower classes of society. Most importantly, post-Fordism became established on a worldwide scale, becoming a nourishing environment for the process of capitalism’s globalization.

The development of global capitalism is closely tied to the strategy of maximizing process flexibility. Five major processes are usually mentioned in this context:

First: Production becomes decentralized and fragmented. Within the framework of global capitalism, the Ford-type company splits into many subdivisions and sub-processes, organized into small firms spread widely throughout the world across communities, regions, and states. The benefits of this splintering and dispersion are obvious. For example, in the process of dividing certain aspects of the production process, a firm can sever ties with the parent company and start cooperating with other producers, and exploit the cheap labor or resources of other firms located elsewhere, even in other parts of the globe. Capitalism is also comfortable dealing with the state. Small-decentralized operations are more flexible and free in their choice of location; they prefer places with lower overhead costs and lower costs of living for workers, as well as places where labor is poorly organized. The workers must “understand” that demands for higher wages and/or unwillingness to agree to lower wages “force” the enterprise to relocate. Local authorities are also compelled to show “understanding” for activities of such firms (on account of job creation), especially when making decisions about taxation. The reverse side of global decentralization of production is the increasing centralization of financial holding companies that are more profitable and secure.

Second: With production dispersed through many communities, regions, and states, the R&D and financial structures, as well as the institutions of control, clearly become concentrated inside the great cities of the world and First World countries. Global flexibility with wide branching on a world scale depends on establishing a rigid interconnected net of points of control that supplies the greatest financial and intellectual resources facilitating the accumulation of capital. These points of control (the great cities and the major states) “orchestrate” and control production and perform R&D work throughout the world. For example, certain global corporations, i.e., TNCs and TNBs, conducted mass surveys among professional workers from the research institutes of the former Soviet Union involved in the development of new technologies, as well as among college/university students. These surveys are links in the chain of activities having to do with global research and global information gathering for the purpose of maximizing capital accumulation. Though these types of activities are performed for the most part in more or less developed states, they are now being introduced in enclaves in so-called semi-peripheral states such as Hong Kong, Singapore, India, and Mexico. Global capitalism’s most urgent problem is that increasing flexibility requires rigid coordination within the framework of “the three economic centers,” i.e., the USA, Western Europe, and Japan, or within the system of “the Group of Seven” of the leading First World countries.

Third: The space-time compression in the conditions of global capitalism facilitates maximal expansion and acceleration of the production process. Geographic dispersion and decentralization of production in combination with centralized ownership and control require new forms of communication, transportation, credit, as also innovative technologies that would connect production facilities and other “remote” operations to controlling institutions. The global system of interaction is becoming more complex and dependent on extremely complicated and flexible informational and financial ties. These new technologies are also accelerating the movement of material goods across the globe. In the words of one theorist, “we obtained a world economic order that sentenced itself to knife-edge existence. It is a world economic order tied to speed.” In addition, global corporations, armed with new technologies and organization forms, have benefited from low production costs and a more favorable legislative climate in Third World countries. The space-time compression is simultaneously reducing the importance of political borders, which helps accelerate the flows of goods and information. This aspect of global capitalism is supported theoretically by the neo-liberal concepts and is championed quite fanatically, for instance, by “the Chicago School” of economics. The proponents of neo-liberalism insist on the opening of markets and on corporative strategies; both of these measures are intended to overcome protectionist barriers. By the way, the policy of neo-liberalism is one of the main reasons for the impossibility of organizing an economically integrated bloc in the so-called “APR,” or even anywhere in East Asia.

Fourth: The space-time connection between the state and the economy characteristic of the early phase of capitalist development is currently in the process of disintegration. The state’s ability to mediate between the marketplace and the society is declining. Global capitalism has narrowed substantially the state’s local, regional, and national control over the economic and even non-economic spheres of society.

Post-Ford-type companies seek places with “a good climate for business.” These firms are capable of ensuring quality by using a well-trained workforce and a highly developed, well-organized infrastructure. At the same time, their activities lead to falling wages and decreasing organization of labor, ultimately resulting in a lower standard of living for the population. Despite this, the state uses tax breaks and other incentives to lure or simply to keep businesses. “Economic development” often means that the state stimulates competition between enterprises for the right to set up activities in a particular area, with communities turning into “war zones.”

Within the framework of global capitalism, the number of First World industrial workers is dropping dramatically, and the essence and quality of their work is changing. Full-time employment is replaced with part-time and temporary work; manufacturing and agriculture are crowded out by the services sphere. Part-time and temporary workers are hired and fired in accordance with market conditions, while maintaining needed production levels without additional labor costs. Simultaneously, benefits are cut and promotions slowed. Also, the workday schedule is becoming more flexible. On the whole, this new work regime reduces full-time workers’ bargaining power when negotiating with employers for better working conditions. Older workers realize they would be unable to find equivalent-level jobs if they lose their current ones. Accordingly, they are more inclined to make concessions in order to keep their jobs. The post-Ford system thus brings worse working conditions, lower wages and benefits, and removes security guarantees, i.e., guaranteed jobs for the vast majority of workers. In this connection, the economic theorist, A. Lipietz, makes the arch-curious “discovery” that the post-war concord between labor and capital is gone, and employers now view workers one-sidedly as goods to be “utilized or cast away at the employer’s discretion.” This definition of “the pliable worker” is at the heart of post-Ford-era flexibility.

Governance and Global Capitalism

New forms of governance have emerged under global capitalism that are qualitatively different from those of multi-national capitalism of the Fordist type. Intensifying economic activity now only has meaning in the global context, be it the car-making industry, electronics, textiles, or garment manufacturing. In global capitalism, maximum flexibility means approaching the limits of what is possible. It has the following characteristics:

First: Global capitalism demands a fundamental revision of the concept of state—a concept attached to this day to the functions of a national government. The emergence of global corporations has made it necessary to consider the idea of a global state. The establishment of global firms capable of avoiding the controls of national bureaucracies has historical importance. The rapacious pollution of the environment with industrial wastes  by uncontrolled international corporations is now moving to the foreground environmental problems that transcend national borders. The emergence of new kinds of problems creates a growing need for civilized solutions to them that can only be achieved through global institutions and organizations.

Second: The hegemony of global capitalism is reflected in the forming of international bureaucratic alliances that govern and regulate the movement of capital throughout the globe. The WTO, the IMF, and the World Bank are the watchdogs of global investment. They have the power to increase or reduce investment flows in accordance with the class interests of global capitalists, keeping a sharp watch over the whole process of global capital accumulation. The process of global regulation has given a new impulse to liberal ideology in support of global capitalism. (This ideology itself is now relying on so-called Modernization Theory.)

Third: Global Capitalism can only function and flourish under  weak states or open borders for free movement of capital and goods. Weak states are forcibly distracted from developing their national economies and are made to concentrate instead on open-door economic policies, luring super-mobile global capital at any cost. This leads to the creation of chaotically heaped production enclaves throughout the world, with the pattern of economic development being different inside a state’s national borders than outside them.

Fourth: Another integral part of Global Capitalism is the intense utilization of women in the world labor market. Young women in the Third World are a huge source of cheap labor for global corporations. In the 1990s, they became global capitalism’s strategic workforce. For example, in the 100 or so free trade zones around the world, 80 to 90 percent of light-assembly workers are women. Women are preferred by the global corporations because they are viewed as obedient, easily manipulable, and prepared to do dull work.

*   *   *

Thus, within the framework of global capitalism, investment and financial capital, production, management, markets, work processes, information, and technology are organized on a worldwide scale. Economic and organizational changes have occurred as a result of the greatest technological revolution in the history of mankind. Its core is information technology–computer science, microelectronics and telecommunications—surrounded and supported by scientific discoveries in other areas, such as biotechnology, new materials, lasers, and renewable energy sources. The information technology revolution has created  super-national organizations that function in the interests of the global capitalist system based on a global division of labor.

Based on everything said above, I would define economic globalization as the process of controlling and governing all kinds of economic activity on a worldwide scale in the interest of the countries of the West. In the geoeconomic space, this process manifests itself in the West’s economic might growing relative to the rest of the world (the West vs. the Rest). In the geostrategic space, economic globalization furnishes the material basis of the West’s dominance over the rest of the world.

I’ll reiterate the main distinctive characteristics of the economic processes analyzed to distinguish them better. Internationalization is a process that supposedly unfolds in the mutual interests of all countries. Integration works mostly in the interests of the group that is integrating. Globalization is implemented and managed in the interests of the West alone.

General Conclusions

Four trends are currently observed in the world economic space, at different degrees of intensity and advancement: internationalization, regional integration, globalization, and localization. Various authors interpret these trends differently. Some concentrate on localization and globalization, believing these trends will dominate in the new century, merging into “glocalization.” Others place the emphasis on globalization, while actually talking about internationalization. Still others, like Hirst and Thomson, indicate two types of economies that are “not inherently mutually exclusive.” They maintain that “rather in certain conditions the globalized economy would encompass and subsume the inter-national economy,” i.e., internationalization will become part of globalization. They qualify their claim: “It is our view that such a process of hybridization is not taking place, but it would be cavalier not to consider and raise the possibility.”[62]

My approach is different, as I stated at the beginning, and it amounts to the following:

The first phase of internationalization  (late 19th century to the start of World War I) encompassed the whole world, forming “the international community of capitalists.” Certain trends emerged at this stage that V. I. Lenin formulated in the shape of a universal law: “The development and increasing frequency of all kinds of contacts between nations, the breaking down of national borders, the creation of an international unity of capital, of economic life in general, of politics, science, etc. – this is all a universal law of capitalism, characteristic of the mature stage of this formation.”[63] Historically, the process went like this: Initially monopolies “merged” with the state, forming State-Monopolistic Capitalism (SMC); from this entity grow the TNCs that together with domestic SMCs form the world economic relations of the capitalist world. As a result, the development of capitalism “moves in the direction of just one universal trust that swallows all enterprises and all states without exception.”[64]

This phase was interrupted by World War I and resumed after World War II, reaching maximum development in the 1970s and 1980s. The socialist world (USSR, Eastern Europe, China, and several East Asian countries) broke away from this trend and started building rather successfully its own economic zone with an intensive integration pull (at least in Eastern Europe). At the same time, the capitalist world’s internationalization started producing integration enclaves within its zone; this integration is most advanced in Western Europe, medium-level and incomplete in North America (through the mechanism of NAFTA), and still only in embryonic form in East Asia (in the system USA–Japan–Asian NIC). Within the triad USA–Western Europe–Japan, internationalization started coming into conflict with the integration processes; this conflict was scaled down somewhat through switching the mechanisms of internationalization over to Third World countries. Please note: This second phase “gave birth” to regional integration; the latter’s relations with internationalization were described above.

The third phase of internationalization started in the 1990s. It produced two new phenomena: globalization and localization. The former was helped along by the collapse of the socialist system. The territories of the former USSR and the countries of Eastern Europe are now labeled “emerging markets.” Also usually classified together with this group of countries are China (on account of its policy of openness), India (for the same reason), and Mexico. I call this group of countries the Second World.

All four economic trends that I analyzed work differently in each of the Three Worlds. Internationalization encompasses all Three Worlds. Integration continues within the First World (“the golden core”). In East Asia, the integration enclave is being wound ever tighter around China. Localization is confined mostly to the First World, where it works against integration and aids globalization, since local authorities are interested in luring in capital regardless of  nationality.

Globalization, now in full swing, works mostly out of the First World and is spreading to the Second and Third Worlds. The latter two are objects of globalization, not its actors.

In the future, internationalization will yield to integration and globalization. The integration sphere encompasses certain regions, while the globalization sphere includes the whole world. Contradictions between these processes will grow more acute as globalization develops, when economic possibilities for regulating integration processes will become exhausted, and at the same time integration will start clashing with globalization in the same economic fields. While these two groups will still be able to arrange some kind of deal in the Third and Second World zones, it is nearly out of the question in integration zones, since states/governments will still play a huge role in the latter. Uncontrolled market forces embodied by MNCs and MNBs will come into conflict with the states/governments of the integration zones, which may result in the disintegration of these zones. (Some economic analysts agree that this cannot be ruled out.) On the economic level, the contradiction will be resolved through absorption of the weak by the strong, and the forming of global integration, i.e., the forming of a united world economy.

But this economic trend is counteracted by geostrategic factors, i.e., the system of relations on the level of states proper, where the law of power works inevitably in world politics. In other words, the merging of economic globalization with regional integration into global integration requires political globalization, i.e., liquidation of political borders—that is, eradication of states’ sovereignty. This is not likely to happen in the foreseeable future, though historically it is inevitable, as V. I. Lenin wrote back in the early 20th century. He believed that the universal historical trend of capitalism was leading “to the breakdown of national borders, erasure of national differences, assimilation of nations, manifesting itself more powerfully with each new decade, constituting one of the greatest engines that will transform capitalism into socialism.”[65]

“Socialism again” will likely be the irritated reaction of some liberal democrats. “Yes, socialism again!” will be the response of quite a few American scholars whose opinions I quoted above, even though I call their ideas utopian. They don’t comprehend the complexity of the geostrategic struggle on the global level, of the inter-civilizational and religious conflicts in the world that cannot be resolved by a capitalist world government and, under current historical conditions, a world government can only be capitalist. At the same time, I agree with their thesis that global integration is only possible under world socialism. This means that socialism must first triumph on the national level, starting in the First World and resurrecting in the Second. How soon will this come to pass? I don’t know. But I do know that it will happen inevitably, unless mankind loses its sense of self-preservation; this latter eventuality cannot be ruled out.

In conclusion, two perspective trends exist in the world today—globalization and regional integration. The merging of these trends in a single process would mean the formation of a world state with a world government. This is possible in principle, but not inevitable in the foreseeable future. There are too many uncertain variables woven into this process for us to forecast their effects.

[1]  Hegel, The Science of Logic. (Sankt-Peterburg: Nauka, 1997), 40.

[2] Leslie Sklair, “Competing Conceptions of Globalization,” Journal of World-System Research 5, No. 2 (Spring 1999), 142.

[3]    Paul Hirst and Grahame Thomson, Globalization in Question: The International Economy and the Possibilities of Governance (Cambridge: Polity Press, 1999), 8.

[4]    Xu Mingqi, “Economic Globalization, Defects in International Monetary System and Southeast Asian Financial Crisis.”  In SASS Papers [Shanghai Academy of Social Sciences], No. 8 (2000), 229.

[5]     V.I. Lenin. The Complete works of Lenin. Fifth edition in 55 volumes (Moskva: Politizdat, 1958--1965), 29: 227.

[6]     Already in the Communist Manifesto of 1848, Marx and Engels wrote: “The need for ever greater sales drives the bourgeoisie far and wide across the globe …Through exploitation of the world market the bourgeoisie made production and consumption cosmopolitan in all countries.” Karl Marx and Frederick Engels, Manifesto of the Communist Party, 1848.

7]     The Economist, November 8, 1997; Internet.

[8]     Ibid., October  25, 1997;  Internet.

[9]     Ibid., November 1, 1997; Internet.

[10]   Ibid., October 18, 1997;  Internet.

[11]   See details in Hirst and Thomson, 22-26.

[12]   There is a different approach to division into periods. For example, Giovanni Arrighi places the first stage of globalization in the period of “the global market under British hegemony” (second half of the 19th century to the early 1930s); he calls the second stage “the period of the global market reconstruction under U.S. hegemony” (after World War II). Giovanni Arrighi, “The Global Market,” Journal of World-Systems Research 5, No. 2 (Spring 1999).

[13]   The Economist, October 18, 1997; Internet.

[14]   I want to reiterate that though they call themselves “globalists,” they are actually analyzing and discussing the problems of internationalization. In this section, I am constrained to preserve their terminology when quoting.

[15]   Quoted from: Ranveig Gissinger, Nils Petter Gleditsch, “Globalization and Conflict: Welfare, Distribution, and Political Unrest,” Journal of World-Systems Research. 5, No. 2 (Spring 1999): 280.

[16]   Lester Thurow, The Future of Capitalism (London: Nicholas Brealey, 1996), 168.

[17] Gerd Junne, “Global Cooperation or Rival Trade Blocs?” Journal of World-Systems Research 1, No. 9 (1995): 17.

[18]   The World Bank, World Development Report 2000/2001: The Struggle Against Poverty: A Review (Washington, D.C. 2001), 13.

[19]   Warren W. Wagar, “Toward a Praxis of World Integration,” Journal of World-Systems Research 2, No. 2, (1996): 1.

[20]   Ibid., 2.

[21]    For details, see his work: A Short History of the Future. 2nd Ed. (Chicago: Chicago University Press, 1992).

[22]   I remind you about the mass protests by globalization opponents in Seattle during the WTO meeting in November 1999. The protesters’ favorite slogan was: “The WTO kills people. Kill the WTO”. See The Economist, December 4, 1999. It would seem that anti-globalism is turning into a mass worldwide anti-capitalist movement.

[23]   For example, see N.N. Moiseyev, The Fortunes of Civilization. The Way of Reason (M.: MNEPU, 1998).

[24]   Dirk Messner, “Globalisierung, Global Governance und Enwicklungspolitik,” International Politics and Society, No. 1 (1999); Internet.

[25]   Hirst and Thomson, 68.

[26]   Sklair, 143.

27]   The Economist, January 8, 2000, 85.

[28]   Ibid., 86.

[29]   For example, see Julie Kosterlitz, “Sovereignty's Struggle,” National Journal, November 20 (1999); Ali A. Mazrui, “Globalization and Cross-Cultural Values: The Politics Of Identity and  Judgment,” Arab Studies Quarterly (ASQ), 21, (Summer 1999).

[30]   Evan Luard, The Globalization of Politics: The Changed Focus of Political Action in the Modern World  (L.: Macmillan, 1990), 3.

[31]   Jaime Nogueira Pinto, “The Crisis Of The Sovereign State And The “Privatization” Of Defense And Foreign Affairs,” Heritage Foundation Heritage Lectures, No. 649, November 19, 1999, 2.

[32]   The International Herald Tribune, March 30, 2000, 6.

[33]   See the BBC Online Network website.

[34]   Colin Hay & Matthew Watson, “Globalization: 'Skeptical Notes on the 1999 Reith Lectures,” Political Quarterly 70 (October/December 1999).

[35]   William Pfaff, “Despite Global Changes, National Sovereignty Remains King,” the Herald International Tribune, March 30, 2000, 6.

[36]   Data for 1870-1990. See The Economist. September 20, 1997, 11. For 1998, see Nicholas Crafts, Globalization and Growth in the Twentieth Century. IMF Working Paper (March 2000), 41.

[37]   “The Mystery of the Vanishing Taxpayer,” Survey. The Economist, February 24, 2000; Internet.

[38]   John Borrego, “Models of Integration, Models of Development in the Pacific,” Journal of World-Systems Research  1, No. 11 (1995): 13.

[39]   Paul N. Doremus, William W. Keller, Louis W. Pauly, Simon Reich, “The Myth Of The Global Corporation,” Current History, July 14, 1997, 2.

[40]   Hirst and Thomson, 2.

[41]   World Development Report 1999/2000, Entering the 21st Century. (NY: Oxford University Press, 1999): 2, 8.

[42]   Neue Zűrcher Zeitung, December 31, 1999, 79.

[43]   Entering the 21st Century.

[44]   Richard J. Barnet and John Cavanagh, Global Dreams. Imperial Corporation and the New World Order (New York: Touchstone Books, 1995), 19.

[45]   The Economist, October 18, 1997; Internet.

[46]   Global Dreams, 15, 22.

[47]   Patrick M. Morgan, Theories and Approaches to International Politics. What are we to think? Second edition. (Palo Alto, CA: Page-Ficklin Publications, 1975):  211.

[48]   Robert Grosse and Duane Kujawa. International Business: Theory and Managerial Applications. 2nd ed. (Richard D. Irwin, Inc., 1992), 715.

[49]   Ibid.,  273-276.

[50]   Peter C.Y. Chow in: James C.Hsiung, ed., Asia Pacific in the new world politics (Boulder, Colo.: L. Rienner, 1993), 196-197.

[51]   By the way, it was precisely the “ARP” problem that provoked debates about the concept of “integration.”

[52]   Ha Jong Yoon. In: Il Yung Chung, ed., Asia-Pacific Community in the Year 2000: Challenges and Perspectives. (Seoul: Seijong Institute, Korea, 1992), 75.

[53]   Andrew Mack and John Ravenhill, Pacific Cooperation: Building Economic and Security Regimes in the Asia Pacific Region (Boulder, CO: Westview Press, 1995), 6.

[54]   Richard Cooper, “Worldwide Regional integration: Is There an Optimal Size of the Integrated Area?” in Ross Garnaut and Peter Drysdale, with John Kunkel, Asia Pacific Regionalism: Readings in International Economic Relations (Australia: Harper Education Publishers, 1994), 12.

[55]   Ross Garnaut and Peter Drysdale, “Asia Pacific Regionalism: The Issues” in Asia Pacific Regionalism, 2.

[56]   Cooper, 18.

[57]   Garnaut and Drysdale, 6.

[58]   Jacques Pelkmans, European Integration: Methods and Economic Analysis (London: Longman, 1998), 2.

[59]   My definition of economic integration owes much to the research performed by A. D. Borodayevsky. See Crisis of world capitalist economy in 80s (M.: Mezhd. otnosheniya, 1986).

[60]   Bruce M Russet, International Regions and International System (Chicago: Rand McNally, 1967), 227-233.

[61]   The Shaping of Economic Cooperation in Southeast Asia (Special Publication of the Southeast Asia Research Center of Jilin University), July 1993, 24.

[62]   Hirst and Thomson, 16.

63]   Lenin,  The Complete works of Lenin, 24: 124.

[64]   Ibid., 27: 98.

[65]   Ibid., 24: 125.

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