Globalization and American Power

National Interest, The, Spring, 2000 by Kenneth N. Waltz

National politics, not international markets, account for many international economic developments. Many students of politics and economics believe that economic blocs are becoming more common. But economic interests and market forces do not create blocs; governments do. Without governmental decisions the Coal and Steel Community, the European Economic Community, and the European Union would not have emerged. American governments forged NAFTA, and it was Japan that fashioned an East and Southeast Asian producing and trading area. Governments intervene much more in international economic matters today than they did in the earlier era of interdependence. Before World War I, foreign ministry officials were famed for their lack of knowledge of, or interest in, economic affairs. Because governments have become much more active in economic affairs at home and abroad, interdependence has become less of an autonomous force in international politics.

The many commentators who exaggerate the closeness of interdependence, and even more so the extent of globalization, think of individual states rather than of the international political system as a whole. Many small states import and export large shares of their gross national products. But states with large GNPs do not. When most of the great powers were smaller, they depended heavily on one another both economically and militarily. Great Britain and Germany before World War I were each other's second-best customers for both exports and imports, and their trade accounted for a huge proportion of their GNPs--52 and 38 percent, respectively. After World War II, the world's two great powers were barely dependent on others, while a number of other states depended heavily on them. The terms of political, economic and military competition are set by the larger units of the international political system. Through centuries of multipolarity, with five or so great powers of comparable size competing with one anothe r, the international system was highly interdependent. Under bipolarity and unipolarity the degree of interdependence has declined markedly.

States are differentiated from one another not by function but primarily by capability. For two reasons inequalities across states have greater political impact than inequalities across income groups within states. First, the inequalities of states are larger and have been growing more rapidly. Rich countries have become richer while poor countries have remained poor. Second, in a system without central governance, the influence of the units of greater capability is disproportionately large because there are no effective laws and institutions to direct and constrain them. They are able to work the system to their advantage, as the petrodollar example cited above shows.

In the international system as it exists today, the United States is truly blessed. Precisely because the United States depends relatively little on others, it has a wide range of policy choices and the ability both to bring pressure on others and to assist them. The "herd" with its capital may flee from countries when it collectively decides that they are politically and economically unworthy, but some countries abroad, like some firms at home, are so important that they cannot be allowed to fail. National governments and international agencies then come to the rescue. The United States is the country that most often has the ability and the will to step in. The agency that most often acts is the IMF, and most countries think of the IMF as the enforcement arm of the U.S. Treasury. Thomas Friedman believes that when the "herd" makes its decisions, there is no appeal, but often there is one, and it is for a bailout organized by the United States.