On Globalisation and Governance; Some Issues

The increasing mobility of capital and the integration of production and markets through the foreign operations of multinational corporations (MNEs), notably foreign direct investment (FDI), puts to task the validity of extant economic theory on a number of important issues, not least that of governance. Sixty years ago, Polanyi (1945) drew attention to the tensions created by the commodification of money, land and labour and the inevitable reaction of society against this process of the market order, to include the need by government to protect labour and land from this commodification process. The potential need for global governance of globalising capitalism was noted many years ago by, for example, Hymer (1970, 1972), who noted the contradiction of an increasingly mobile capital and/through the MNEs, alongside the relative immobility of labour; and the centralised corporate governance of MNEs, together with the rather locally-based governance of localities, regions and nations. Moreover, the schism between the development of democratic institutions within many nations, together with the rather limited accountability of organisations of global governance, such as the IMF and the World Bank, and the tensions between ‘democracy’ and effectiveness in the context, for example, of the UN versus US hegemony-based governance, have all exercised brilliant minds over the past many years in economics and social science; see for example, Stiglitz (2002) and the contributions in this issue for some discussions.