The State vs. Globalisation: Adapting to survive

Jamus Lim and the Council on Business & Society, the role of the state in globalizationProf. Jamus Lim of ESSEC Business School, Asia-Pacific explores the role of states in a future transformed by globalisation and argues that, in order to avoid becoming obsolete, they must adapt and find a new purpose that serves business and society.

By CoBS Editor Nicolas Desarnauts. Related research: “On the Role of the State in an Increasingly Borderless World, Jamus Jerome Lim.

Only a year ago, President Trump stood in front of the United Nations General Assembly and proclaimed his rejection of globalism. However, in spite of the president’s harrowing words, the forces of globalisation have not yielded—in the long run, the economic, social, and political integration of the world seems inevitable. In this hyper-globalized future, some have predicted the inevitable demise of the state, while others maintain that the state will continue to be the preeminent actor on the world stage – albeit with some international pressure. Prof. Jamus Lim of ESSEC Business School, Asia-Pacific offers a more moderate view. He argues that, although the forces of globalisation are currently redefining the role of the state, it can still adapt to avoid becoming obsolete—and, in doing so, perhaps even save globalisation from itself.

Back to the future of globalisation

CSR, leadership, social enterprise, management, philanthropy, diversity, gender equity, healthcare, sustainability, ethics, industrial relations, healthcare, responsible innovation, CSR reporting, employee wellbeing, Council on Business & Society, Global Voice magazine, ESSEC Business School, ESSEC Asia-Pacific, FGV-EAESP, Trinity College Dublin Business School, IE Business School, Keio Business School, Warwick Business School, School of Management Fudan University, Tom Gamble, Global Voice magazine, Jamus Lim, the state and globalization Contrary to common belief, globalisation is not new to this generation. In 1919, the famed British economist John Maynard Keynes wrote of “the inhabitant of London [who] could order by the telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep.” In addition, Keynes describes the ease by which this same Londonian could do business abroad, travel, roam “foreign quarters, without knowledge of their religion, language, or customs” and regard “this state of affairs as normal, certain, and permanent, except in the direction of future improvement.” Globalisation today, however, has taken on a further dimension—becoming far more pervasive and encompassing than it was in Keynes’ days.

Indeed, Prof. Lim identifies three novel and somewhat overlapping aspects that distinguish globalisation in its present form from its past.

  • First, the overwhelming real-time connectivity afforded by the advances made in information and communication technology that have made it impossible to be completely isolated from the rest of the world.
  • Second, and as a consequence of the first, the unprecedented social and cultural globalisation best illustrated by the emergence of terms such as the “global village” which is inhabited by “citizens of the world.”
  • Third, the breakup of the Soviet Union and global retreat of Marxism worldwide which has broken down the main ideological barriers that divided the world in the past.

Together, these three developments have added fuel to globalisation’s fire, helping it spread more quickly and intensely than ever before.

CSR, leadership, social enterprise, management, philanthropy, diversity, gender equity, healthcare, sustainability, ethics, industrial relations, healthcare, responsible innovation, CSR reporting, employee wellbeing, Council on Business & Society, Global Voice magazine, ESSEC Business School, ESSEC Asia-Pacific, FGV-EAESP, Trinity College Dublin Business School, IE Business School, Keio Business School, Warwick Business School, School of Management Fudan University, Tom Gamble, Global Voice magazine, Jamus Lim, the state and globalization In spite of the recent rise of nationalist movements around the world, in this increasingly globalized context states find themselves, more often than not, secondary players. Non-state actors ranging from multilateral organizations such as the United Nations and multinational corporations like Coca-Cola to terrorist groups like Boko Haram are gradually replacing states on the international stage. Nevertheless, Prof. Lim argues that, on certain issues – competition, security, and welfare, for example – the state still exerts sovereignty. But this remains subject to changes wrought by globalisation. As such, Lim underscores the need for states to adapt to these new circumstances and proposes policy options they can pursue to remain 21st-century relevant.

The state’s policy guide to survival

The famous line “improvise, adapt, overcome” that is often repeated by Bear Grylls – star of the hit show Man vs Wild – may very well apply to states in the 21st century. Indeed, in the current episode of the imaginary States vs Globalisation, states have to improvise and adapt their role on the world stage if they wish to make it to the end of the season. Fortunately for them, their domination in certain areas gives them a window of time to implement this shift and overcome the current challenge of staying relevant.

When it comes to setting economic policy, the sovereignty of states is relatively secure. The right to print money and manage monetary policy, for instance, has long been a defining feature of statehood – although this too is now being challenged by the advent of cryptocurrencies like Bitcoin and Facebook’s Libra. Nevertheless, Prof. Lim argues that states can use their power to design economic policy that helps people to thrive in a globalized context. One example of this is maintaining a stable and competitive exchange rate that fosters trust in the currency while enabling competitiveness in global markets.

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In addition to macro policy, states can also use their resources to dictate industrial policy. However, this industrial policy should both aim to provide strong infrastructure that enables entrepreneurial talent to thrive and avoid attempts to pick winning companies or industries. Prof. Lim highlights that this infrastructure includes – but is not limited to – bridges, ports, and other physical amenities that businesses can use. Indeed, non-physical infrastructure – such as strong institutions that ensure property rights and an education system that produces a talented workforce – are equally, if not more, important for the success of business and society at large.

A strong education system, of course, does much more than just benefit the economy. It also helps ensure social harmony and contributes more largely to the general welfare of society. Although non-state actors like UNICEF may provide welfare internationally through humanitarian missions, their reach is still limited. The vast majority of welfare services such as health insurance, poverty alleviation, and community welfare are still provided by states. As globalisation continues to dig the crevice of inequality dividing the rich and poor, redistribution of wealth through welfare programs is necessary to compensate those who have been hurt by the forces of globalisation. For all that, Prof. Lim cautions that this redistribution should be implemented in such a manner as to avoid perverting people’s incentives or becoming too large a burden on a state’s limited resources.

Obviously, the role of states need not be limited to actions that only directly benefit the inhabitants of their own territory. Left to their own devices, multinational corporations would jump at the opportunity to ignore environmental concerns and prioritize their bottom line on a global scale. While organizations like the WWF and the United Nations strive to protect the environment through their own initiatives, states are the only actors currently capable of enforcing a sustainable development policy. Prof. Lim notes that it is “all too easy to discount a sole state’s impact on the larger global ecosystem.” However, collectively, by implementing compatible incentive mechanisms that encourage sustainability, states can make all the difference – and perhaps find a new purpose for themselves in doing so.

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An antidote to the excesses of globalisation?

According to Professor Lim, while today’s phenomenon of hyper-globalisation – fuelled by technological advances – may be inevitable, it is also currently unbalanced, unjust, and untenable. Indeed, globalisation is more than just a powerful engine of wealth creation – it also has negative side effects such as rising inequality and environmental degradation. By adapting economic, welfare, and environmental policies – among others – to support people in this more globalised context, states can avoid becoming what Lim coins artefacts of institutional history and remain relevant in the 21st century.

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