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Formative essay
2. “With the increase in global interconnectedness, the scope of strategic policy choices available to individual governments and the effectiveness of many traditional policy instruments tend to decline”. Discuss.

Throughout the last decades, the world has experienced a number of developments in for example the spatial, technological, economic, organizational and political areas (Scholte, 2005:91-101). These developments have given growth to an intense academic debate concerning whether or not contemporary society is being fundamentally restructured. The debate is dominated by different strands of scholars either believing in or rejecting this fundamental restructuring (Scholte, 2005:17-19). Central to the debate is states’ ability to decide for and implement policies independently. The object of this paper is to discuss if the scope and effectiveness of states’ strategic policy choices have declined due to the increase in global interconnectedness (Held and McGrew, 2003: 13). The discussion will focus on whether states different positions towards this issue. Also, the implications of economic interconnectedness on the welfare state will be considered. Bearing this in mind, the paper will begin by conceptualizing the term “state”. Also, an outline of the recent development leading to the so-called ‘globalization debate’ will be made in section II. This section will function as a preface to the discussion centered around the positions of sceptics and globalists that will then be carried out in section III. Section IIII will exemplify this debate by discussing the effects of the proposed growing global interconnectedness, concentrating on the social policy perspective. Finally, section IIIII will conclude with an evaluation of the scope and effectiveness of states’ strategic policy choices by proposing that the level to which states are affected by the new world order depends on specific national matters. Considering the limited length of the essay, it is not the goal to conceptualize important terms such as ‘globalization’ and ‘global governance’. Neither will the essay consider the differences within the clusters of sceptics’ and globalists even though the author is aware that these are remarkable.

II. Defining the state and global interconnectedness
According to Held and McGrew (2003: 9) the modern state is a relatively new phenomenon which can be traced back to the peace of Westphalia in 1648. Following this, the concept of the sovereign state has been the central way to study world issues. Traditionally, states have served multiple purposes, amongst them legal, military, economic, political and social (Held and McGrew, 2003:9-11). It is important to mention, however, that the concept originates in Europe, and that over half of the world’s states were created recently, following the decline of colonies after the Second World War (Mishra, 1999:14; Held and McGrew, 2003:10). It can therefore be argued that this ‘Euro-centric’ or ‘Western’ approach to studying the world system is simplified.

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Nonetheless, as described above, the previous 30-40 years have seen significant societal changes. These changes have been caused by a number of factors. Applying the words of Weiss (1987), they concern: ‘cross-border flows, of products, people, capital and, above all, of money…’ (Weiss, 1987: 6). Another outline of the development is given by Held & McGrew (2003) who stress the notion that the world is becoming increasingly interconnected by means of, amongst others, economic interdependence, transnational problems and international governance at regional and global level (Held & McGrew 2003:39). Yet another definition of the recent developments is made by Sassen (2007: 99) who emphasizes the spatial reconfiguration of the world, where, in some cases, national territory – is no longer the main base for power. Instead, she describes, the global is deeply embedded within the national territory.

III. Globalization vs. Internationalization – restructuring the role of states
Altogether, the developments described have been named “globalization”. However, even if there is general agreement that there has been some kind of movement towards a growing interconnectedness amongst states on the regional and global level, it is heavily debated how this development is to be understood. As noted before, scholars are put into categories including globalists and sceptics according to whether or not they see the recent changes as a genuine restructuring of the world order (Scholte, 2005:17-19). The discussion will illustrate the disagreements amongst the two clusters. Primarily, globalists argue that there has been a movement away from the state and towards the supranational level of governance (Stone, 2008; Weiss, 2013). This development has been caused by a growing interconnectedness between different countries whereby an array of supranational policy problems have arisen (Weiss, 2013:10-11). Therefore, some kind of supranational governance is necessary. As a result, this creates a multi-faceted pattern where states are no longer the only central actors in the global picture. By this, the importance of states in the global picture is not rejected. However, transnational agencies have emerged, including states, international organizations and non-state actors, all trying to solve complex global policy problems (Stone, 2008:35). This diffusion of power towards the supranational level can be said to affect the scope of policy choices available to states. Opposing to this, others argue that the concepts of ‘globalization’ and ‘global governance’ are overstating the international developments. Supporting the term ‘internationalization’ they argue that states are still the most important actors globally (Scholte, 2005: 16). An important argument in this debate comes from Weiss (1987) who believes that the state is in a process of restructuring its policy so as to adapt to the changing global environment. Also, she argues, it is important to note that no such thing as declining power of the state is taking place. Instead, states have always possessed differentiated power whereby some have been considered weak and others strong. The assumed notion of globalization has not changed this. This goes along with other scholars who assert that states cannot be perceived as homogeneous, but must be divided into a hierarchy of states in the global order (Held & McGrew, 2003:5). Altogether, there are several different strands in the globalization debate. It should be noted that states are not necessarily considered unimportant by globalists. Instead, scholars such as Stone (2008), Weiss (2013) and Scholte (2005) argue that states remain important in the sense of the global, but that these are supplemented by other actors. Similarly, the sceptics do not believe that there are no

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other actors than the state globally (Weiss, 1987:6). However, the difference between the two groups lies in the fact that whereas one considers states the main object of study, the other one does not.

IIII. Social Policy and the ‘Race to the Bottom’
The previous section showed that there are considerable theoretical disagreements amongst scholars of internationalization and globalization. This section will address the changes that scholars nonetheless agree on at another level, while at the same time coming closer to the main point of the discussion: whether the increased global interconnectedness has limited the scope and effectiveness of strategic policy choices of states. This will be done by considering the implications of globalization on the social policy area. Special attention will be paid to European welfare states. As noted before, states have traditionally been associated with a range of policy areas. Nevertheless, as suggested by Held and McGrew (2003: 13), as transnational problems arise, and the world economy becomes increasingly more integrated, states face challenges concerned with the scope of independent policy choices available to them. They argue that:

… The increased mobility of capital induced by the development of global financial markets shifts the balance of power between markets and states and generates powerful pressures on states to develop market-friendly policies, including low public deficits and expenditure, especially on social goods; internationally competitive (that is, low) levels of direct taxation; privatization and labour market deregulation. The decisions of private investors to move private capital across borders can threaten welfare budgets, taxation levels and other government policies (Held and McGrew, 2003: 13, emphasis added).

The argument quoted above relates to a common assumption within the globalization debate: that individual governments are threatened by global economic pressure, and thereby, in order to compete at global level must keep their welfare budgets low. This idea can be said to be associated with a key word in the globalization debate: neoliberalism. Neoliberalism refers to the idea of open, nonregulated markets and minimal states (Wade, 2009; Scholte, 2005:38-41). These ideas go against the extensive provision of welfare services as seen in several developed countries. Therefore, increasing concern as to whether the welfare state as it is now known will survive or if globalization and the infusion of neoliberal ideas will cause a so-called ‘race to the bottom’ (RTB) where social reforms will hollow out welfare states (Scholte, 2005: 195; Mishra, 1999: 1-17). Several arguments both in favor of and against the RTB in terms of social policy and the welfare state have been put forth. Against the argument of RTB it is suggested that no general tendency towards welfare retrenchment can be seen. This is the case for several reasons. Firstly, internal politics and democracy still matters. As such, the welfare state has proved to be popular with the public, thus making it difficult for government to impose retrenchment (Garrett, 1998:73; Nielsen and Kersting, 2003:8). Also, scholars against the RTB-approach argue that some social policy-initiatives are indeed favorable for businesses. This is for instance the case with education and training which result in an

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educated labor force, and with social grants which are seen to cause societal stability (Scholte, 2005:197; Garrett, 1998: 75-76). Against these arguments are scholars who believe that RTB may be an unavoidable effect of the penetration of globalization into welfare state institutions. Mishra (1999) argues that international institutions such as the OECD and IMF have increasingly put pressure on European states to impose neoliberal initiatives similar to those of the UK and the US, blaming them for maintaining labor market ‘rigities’ which are seen as a barrier to international competition (Mishra, 1999:9). As noted before, the publics of many European countries are generally in favor of the welfare state (Mishra, 1999:70; Garrett, 1998:73). Nevertheless, politicians have used globalization as a legitimate reason for budget cuts (Mishra, 1999:70). Summing up, there are both arguments in favor of and against welfare cuts and the RTB. However, some scholars note that even when neoliberal elements are incorporated to justify welfare cuts, the reasons for this may be internal rather than a manifestation of globalization. Such internal factors may for example stem from demographical changes, and budget deficits (Scholte, 2005: 197). Also, attention must be paid to Esping-Andersen’s (1990) theory of the three worlds of welfare capitalism. In this, it is explained how welfare states develop historically and remain partly path-dependent. This, I suggest, may explain partly why states’ adopt to globalization differently, partly why some, specifically Anglo-Saxon, states have been able to change in a more neo-liberal direction than others.

Conclusion
Academically, disagreement remains as to whether the global system has been restructured so that the old ‘government’ of states is now replaced by ‘governance’ whereby other actors contribute to governing. The disagreement can be seen in terms of interpretation of the developments. Relating these initial theoretical assumptions to the practical issue of welfare state policy, it has been demonstrated that individual states have indeed been affected by the globalization in terms of the idea of neoliberalism. However, the argument of a general RTB as such cannot be justified. This suggests that globalization affects countries differently because of their diverging internal and external relations. To end the conclusion, it shall be pointed out that the paper has put a strong focus on European welfare states. These are generally not seen as having been affected most by globalization matters. Had the focus been upon developing states, the RTB-mechanisms and affects by neoliberalism might have been much stronger. Also, having only looked at states’ ability to influence internal social policy, no general statement can be made as to whether states are witnessing a general decline in the scope and effectiveness of strategic policy choices.

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Bibliography

Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism. Cambridge: Polity Press. Held, Held,
D. and McGrew, A. (Eds.) (2007) Globalization Theory – Approaches and Controversies. Cambridge: Polity Press. D. and McGrew, A. (Eds.) (2003) The Global Transformations Reader. 2nd Edition. Cambridge: Polity Press

Garrett, G. (1998): ‘Shrinking states? Globalization and national autonomy in the OECD’, Oxford Agrarian Studies, Vol. 26, 1, 71-97

Mishra, R. (1999) Globalization and the Welfare State. Cheltenham: Edward Elgar Publishing Limited Nielsen, K and Kersting, S. (2003) ‘Small is Resilient - the Impact of Globalization on Denmark’. Review of Social Economy 365, Vol. 61, ISSN: 0034-6764, 3, 1-18.

Sassen, S. (2007) The Places and Spaces of the Global: An Expanded Analytic Terrain, in Held, D. and
McGrew, A. (Eds.) Globalization Theory – Approaches and Controversies. Cambridge: Polity Press.

Scholte, J.A (2005) Globalization – a critical introduction. New York: Palgrave MacMillan Stone, D. (2008) ‘Global Public Policy, Transnational Policy Communities, and Their Networks’. The
Policy Studies Journal, vol. 36, 1, 19-38.

Wade, R. (2009) ‘Is the Globalization Consensus Dead?’ Antipode, vol. 41, ISSN: 0066-4812, S1, 142165.

Weiss, L. (1987): ‘Globalization and the Myth of the Powerless State’, New Left Review, vol. 225, 3-25 Weiss, T.G (2013): Global Governance – Why? What? Wither? Cambridge: Polity Press

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