Globalization: A Critical Introduction

Mark Rix (Department of Management, University of Wollongong, Wollongong, Australia)

Personnel Review

ISSN: 0048-3486

Article publication date: 1 April 2003

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Keywords

Citation

Rix, M. (2003), "Globalization: A Critical Introduction", Personnel Review, Vol. 32 No. 2, pp. 252-259. https://doi.org/10.1108/pr.2003.32.2.252.1

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Emerald Group Publishing Limited

Copyright © 2003, MCB UP Limited


The spectacular crashing of jet airliners into the twin World Trade Center towers in New York on September 11, 2001, was a destructive, shocking and highly symbolic act. That the planes were evidently piloted by anonymous members of Osama bin Laden's shadowy al‐Qa'ida network added a disturbing tone of mystery and menace to what was already a dramatic and headline‐grabbing incident.

The symbolism of the act of defiance or terror (depending on one's point of view) could not have been more stark and striking: using the jet airliner, one of the original but still ubiquitous vehicles of globalisation, as a battering ram to breach and destroy so familiar and imposing a citadel of globalisation, global capitalism and US economic might. The occupants of the towers – corporate CEOs and wage labourers, HR managers and human resources, core staff and peripheral workers – were all brought abruptly to earth in one fell swoop.

This then, from a tactical point of view and in spite of the distinctively modern character of the weapons and target, marked a return to mediaeval warfare. Towering and imposing the World Trade Center may have been, but it was effectively defenceless against such an unexpected, and hitherto inconceivable, bolt from the blue – and the premodern past. To stretch the metaphor of mediaeval warfare a bit further, globalisation had been violently hoisted on its own petard. But what is often overlooked is that this was merely a skirmish; globalisation, global capitalism, the West and the USA were not beaten into retreat. Their forward march continues, destination still largely unknown by most people subject and subjected to them.

Globalisation as supraterritoriality

Scholte's book, written not long before the events of September 11 2001 nevertheless has much to recommend it. Indeed, as an introduction to globalisation it has few peers. The book's many merits begin with the conceptualisation of globalisation adopted by him. Scholte distinguishes between five general conceptions: “globalization as internationalization; globalization as liberalization; globalization as universalization; globalization as westernization; and globalization as deterritorialization” (p. 3). He argues that all but the last of these conceptualisations are redundant, remarking in this regard:

… [o]nly the last notion gives “globalization” a new and distinctive meaning – and at the same time identifies an important contemporary historical development … globalization refers in the first place to the advent and spread of what are alternately called “global”, “supraterritorial”, “transworld” or “transborder” social spaces. That said … the contemporary rise of supraterritoriality has by no means brought an end to territorial geography: global and territorial spaces co‐exist and interrelate in complex fashions (p. 3).

The specification of the causes of globalisation is for Scholte a key issue, because the forces and factors that are distinguished as causes will logically determine what phenomena will be identified as consequences and also the nature of the policy responses regarded as being viable. According to Scholte, globalisation (or, supraterritoriality) has been generated by a combination of the following forces: “(a) the emergence of global consciousness, as a product of rationalist knowledge; (b) certain turns in the development of capitalism; (c) technological innovations, especially in communications and data processing; and (d) the construction of enabling regulatory frameworks, especially through states and suprastate institutions.” The “dynamics of globalization” are governed by these “core forces of modern social life” (p. 3).

Having specified these core forces in combination as the causes of globalisation, and to have identified globalisation with deterritorialisation or supraterritoriality, it remains to explain why the four other conceptualisations were rejected. The explanation, hinted at above, is at once straightforward and complex. The other four conceptualisations of globalisation are trapped in and by a territorialist logic that is becoming obsolete. As Scholte says, “in a territorialist world the length of territorial distances between places and the presence or absence of territorial (especially state) borders between places tends heavily to influence the general frequency and significance of contacts that people at different sites might have with each other” (p. 47). Only “globalisation as deterritorialisation” has escaped the logic of territorialism. But precisely what does “deterritorialisation” or “supraterritoriality” mean?

Identifying globalisation as “deterritorialisation” or “supraterritoriality” “entails a reconfiguration of geography, so that social space is no longer wholly mapped in terms of territorial places, territorial distances and territorial borders” (p. 16). “In the case of global transactions” – here, having a telephone conversation, using the e‐mail, and performing electronic funds transfers are exemplary – “‘place’ is not territorially fixed, territorial distance is covered in effectively no time, and territorial boundaries present no particular impediment” (p. 48). Distance is effectively irrelevant to the performance and accomplishment of so‐called “global transactions”, the rapidity of their execution is barely affected by whether they take place across minute or vast distances. Thus, as distance becomes irrelevant, so is time increasingly compressed, in the process itself becoming ever more irrelevant. Asserts Scholte:

The difference between globality and internationality needs in particular to be stressed. Whereas international relations are interterritorial relations, global relations are supraterritorial relations. International relations are cross‐border exchanges overdistance, while global relations are trans‐border exchanges without distance. Thus global economics is different from international economics, global politics is different from international politics, and so on. Internationality is embedded in territorial space; globality transcends that geography (p. 49).

The conceptualisation of globalisation as supraterritoriality, as the transcendence of territorialism and the escape from territorialist logic, has enormous implications for how, in turn, the national state, sovereignty and governance, capitalism and production, nationhood and community, and knowledge structures are conceptualised. Scholte reconceptualizes each in light of the spread of supraterritoriality, his theoretical and historical analysis consistently of a high order, challenging but compelling.

What is of most interest here is Scholte's analysis of capitalism and production against the background of the transcendence of territorialism and the rapidly expanding number of transworld spaces. As will be seen, his analysis extends to a consideration of the implications of the human resource management (HRM) policies and practices of global business enterprises. In outlining and discussing Scholte's analysis of global capitalism, the global corporation and what he calls the “flexibilization of work”, the views of a number of other authors who also seek to make sense of developments in global capitalism and the changing nature of the employment relationship and work will be considered. This will assist in the exposition of Scholte's analysis and demonstrates its value and incisiveness.

Globalisation and global capitalism

In Chapter 5, “Globalization and production”, Scholte argues that on the one hand capitalism has been a primary cause of globalisation, but on the other that global (that is, supraterritorial) capitalism has been one of its main consequences. Globalisation has greatly strengthened capitalism to the extent that it is the prevailing, and largely unchallenged, structure of production and exchange across the globe. Surplus accumulation has been extended to the consumer, finance, information and communications sectors. The extension of surplus accumulation into these sectors has been accompanied by “major shifts in the organization of capitalism, including the rise of offshore centres, transborder companies, corporate mergers and acquisitions, and oligopoly” (p. 111).

Knudsen (2001) observes that multinational enterprises (MNEs) are increasingly responsible for the initiation and organisation of global economic activities. This trend is reflected in employment figures, with approximately one in five employees in the developed countries directly employed by MNEs. When subcontracted and franchised operations of MNEs are factored in, the proportion rises to about two‐fifths. (Knudsen, 2001, p. 2) Cross‐border mergers and acquisitions in large part account for the spectacular growth in size and influence of MNCs over the last several years. Such acquisitions and mergers have direct and profound implications for an MNE's workforce in all the countries in which it operates. Knudsen (2001, p. 3) points out, “By becoming multinational and by acquiring additional plants, a company increases its ability to apply ‘divide and rule’ tactics and practices in its dealings with the workforce.” These tactics are particularly effective in situations where a company produces the same or very similar products at different sites. Using techniques such as bench‐marking, a company collects comparative information on productivity and performance at its several plants and on this basis makes decisions on levels and types of investments. Not surprisingly, investment decisions favour those sites where productivity and performance are best, while the poorer performers face disinvestment or even closure (Knudsen, 2001, p. 3).

Globalisation and the “flexibilisation” or “informalisation” of work

As Scholte observes, “Accelerated globalization in recent decades has affected not only the opportunities for waged employment, but also the conditions of work” (p. 222). What he calls the “flexibilization”, what other commentators on changing employment relations have termed the “informalisation”, of work has been a particularly insidious development. The “flexible” worker does not have a job for life but has to move and retrain in accordance with the changing demands of the labour market. As for “flexible” jobs, they “are often casual, part‐time and temporary, with few if any benefits beyond the (often low) wages offered” with the workers hired to perform them usually without union protection or recourse to collective bargaining (p. 223).

Flexible jobs have proliferated in leading sectors of the global economy, such as retail, hospitality, information and communications and banking and finance. Flexibilisation has also accompanied the deindustrialisation of the older industrial cities and regions of the North, and relocation of process, assembly and other labour‐intensive operations to the low‐wage countries of the South. The introduction or relocation of production facilities to greenfield sites in cities and regions with no prior history of labour activism and union militancy has been a parallel development in the North. Flexibilisation has also become more widespread as has the widely perceived need for enterprises, industries and national economies to remain globally competitive become more and more imperative. Managers and workers have generally both accepted that improved wages and working conditions and more stable employment arrangements would undermine the competitiveness of the firm and lead to production and other operations moving offshore (p. 224).

Globalisation, flexibilisation and human resource management

With increasing globalisation, the international competitiveness of enterprises has become a crucial factor in their survival and growth. De Silva (1998, p. 2) points out in this regard that “Enterprises driven by market pressures need to include in their goals improved quality and productivity, greater flexibility, continuous innovation, and the ability to change to respond rapidly to market needs and demands”. Directly in line with this trend, the quality of a firm's “human resources” (a.k.a. employees or workers) is now a crucial ingredient in its overall competitiveness in the global economy. As Tolentino (n.d., p. 3) notes:

Good human resource management (HRM) thus becomes an important cornerstone of an enterprise's competitiveness strategy. Being an integral part of the strategic management of an enterprise, the various HRM policies, functions and practices should contribute to the creation and sustenance of the enterprise's competitive advantage. Thus, the development of the culture of productivity and creativity, the building‐up of mutual trust and shared values, initiative and self‐management, and multi‐skilling and skills upgrading and continuous learning must always be priority goals of the various HRM functions of the human resources planning, staffing, and allocation; human resource utilization, human resource development and motivation and commitment‐building.

According to Tolentino, with the growing importance of the quality of an enterprise's human resources to its competitiveness – and, therefore, of the soundness of its HRM policies and functions – trust and shared control, and even “self‐management”, have grown in significance in the organisation of work and the coordination of the different sections and divisions of the enterprise. Workers are encouraged to identify with the enterprise, and its objectives, values and philosophies. In the modern enterprise, because “work is complex and constantly changing, ‘direct control’ based on supervision becomes too expensive and unwieldy, and ‘bureaucratic control’ based on work standardization, rigid systems and procedures and rules and regulations is not workable and is counter‐productive” (Tolentino, n.d., p. 3).

The growing significance of self‐management, and the corresponding decline in direct control, should not be allowed to obscure the fact that HRM is an important, often indispensable, means of achieving management objectives. While employees are encouraged, even rewarded, for identifying with the enterprise and for helping it to achieve its objectives, the vast majority have no effective role in management and play virtually no part in defining the enterprise's objectives (Rix, 2001, p. 4). As the quality of an enterprise's human resources becomes an increasingly important factor in its international competitiveness, so does HRM attain a more dominant position in the enterprise's overall management structure and decision making. This is a trend which clearly demonstrates a:

[…] change in power relations and highlights the supremacy of management. The management prerogative is rediscovered but in place of command and control the emphasis is on commitment and control as quality, flexibility and competence replaces (sic) quantity, task and dumb obedience. To put it another way: the managerial agenda is increasingly focused on innovation, quality and cost reduction. Human resource management makes more demands on employees, work is intensified…there is less room for managerial slack and for indulgency patterns (Purcell, 1992 cited in de Silva, 1998, p. 2).

Scholte points out that globalisation has had a decidedly corrosive effect on employment security, and that this has been felt in both the North and the South. He also argues that the “economic logic” of flexibilisation is highly questionable, leading to reduced rather than enhanced efficiency and competitiveness. Workers who are well‐trained, well‐paid and who have stable and secure jobs may well be more “motivated, reliable and productive” than “flexible” or “irregular” employees (p. 225). He notes that “To this extent the ‘race to the bottom’ in wages and other working conditions could operate not only against human security, but against efficiency as well” (p. 236).

According to Gallin (2000), the emergence and development of a global labour market is “the most important social consequence of globalization.” Capital mobility and the rapidity and reach of communications, at once important causes and consequences of globalisation, mean that workers in all countries, including the industrially advanced nations, are competitively underbidding each other in an unseemly, and from the point of view of efficiency and productivity counter‐productive, global race to the bottom. This underbidding:

[…] has set in motion a relentless downward spiral of deteriorating wages and conditions through competitive deregulation and informalization of work. But, as the traditional “core” labour force shrinks in industrialized countries, there is no quid pro quo in terms of balanced social and economic development for the industrially underdeveloped countries of the “South” or the transition economies of the “East”, where unemployment is a massive and growing problem and where wages remain below poverty level in most cases. One of the reasons has been the ability of transnational capital to impose conditions on states by the threat of relocation if its conditions are not met; another related and underrated reason is state repression, which keeps in place the near slave‐labour conditions that prevail at the bottom of the scale (for example in many of the Export Processing Zones (EPZs) or in countries such as China, Indonesia or Viet Nam) (Gallin, 2000, pp. 6‐7).

The changing structure of transnational enterprises largely accounts for the rise of “flexibilisation” or “informalisation”. As Gallin notes, the transnational enterprise organises work carried out for it by others. At the head of the corporation is the corporate headquarters, which “directs production and sales, controls subcontracting, decides at short notice what will be produced where, when, how and by whom, and where certain markets will be supplied from” (Gallin, 2000, p. 18). It is here that management and the core labour force of highly skilled technicians and others will generally be located. Production and all other labour‐intensive operations are outsourced and subcontracted, the company being essentially a coordinator of elaborate, cascading chains of outsourced production. These subcontracted operations are not part of the corporation's formal structure, “but will nevertheless be wholly dependent on it, with wages and conditions deteriorating when moving from the centre of operations to the periphery” (Gallin 2000, p. 18). The majority of workers in the developing countries, and a considerable and growing proportion of the labour force in the developed, industrialised countries, are employed in the informal sector.

Conclusion

The global phenomenon of the increasing flexibilisation of work cannot be understood or explained without first accounting for the development of global capitalism and the rise of the global corporation. Scholte's analysis provides such an account that is, moreover, thoroughly researched, historically anchored and conceptually and theoretically perceptive. He also links flexibilisation to other dimensions and consequences of globalisation such as the unstable identities and insecurity experienced by many communities and individuals around the world who confront but who feel powerless to control or even influence the economic, political and cultural forces that drive globalisation.

What makes Scholte's achievement even more impressive is that in an introduction to so vast, complex and difficult a field of study he is able to develop and weave the concept of supraterritoriality into his analysis. This concept provides the platform upon which he constructs his argument that globalisation marks an unprecedented turn in the organisation of capitalism and has given rise to the development of post‐sovereign governance arrangements and institutions. He extends his argument to include the decline of nationhood as the primary framework of shared identity and the corresponding appearance of hybrid identities. Despite this fragmentation of identity, rationality remains a strong influence on the social construction of knowledge, an enduring influence which as Scholte points out has not been entirely able to prevent the appearance or revival of non‐rationalist knowledge frameworks and epistemologies.

Throughout the book Scholte insists that the arrival of the prevailing version of globalisation, which owes a lot to the rise to dominance and continuing hold of neoliberal ideas and solutions on governments and policy makers throughout the world, has not been inevitable, nor is it immovable or irreversible. Understanding globalisation as supraterritoriality is a challenge to his readers to remove the blinkers of territorialism and to begin building governance arrangements, communities and knowledge structures that are commensurate with and able to resist and progressively redirect the forces and agents of globalisation that currently shape our world. This is definitely not a call for a return to the premodern, territorial past. That would be a defeatist and, in all senses, a reactionary response. As Scholte avows in conclusion:

[…] effective pursuit of far‐reaching reform of globalization requires: (a) sober recognition that substantial policy change faces powerful opposition; (b) major increases in the capacities of public governance agencies, especially suprastate institutions; and (c) large‐scale efforts to build active support for reform among veritable “global” citizens. I hope that this book will, while clarifying globalization intellectually, also be part of that process of building constituencies for more humane globalization.

The events of September 11 provided compelling evidence, if any were needed, that inhumanity, terror and indiscriminate violence are not synonymous with globalisation, global capitalism or the global dominance of the USA and the West. These destructive forces have other sources, often originating deep in the premodern past. However, for as long as globalisation continues along its current trajectory, and the world remains divided between the extremely rich nations and the desperately poor, the affluent West and the abject “rest”, privileged core workers and abused and mistreated peripheral workers, inhumanity, terror and indiscriminate violence will have a vast and growing constituency. Building constituencies for progressive globalisation should begin in the global workplace, with a more humane and inclusive approach to HRM.

References

de Silva, S.R. (1998), Human Resource Management, Industrial Relations and Achieving Management Objectives, Bureau for Employers’ Activities, International Labour Organisation, available at: www.ilo.org/public/english/dialogue/actemp/papers/1998..

Gallin, D. (2000), “Trade unions and NGOs: a necessary partnership for development”, Paper No. 1, Civil Society and Social Movements Programme, United Nations Research Institute for Social Development, June.

Knudsen, H. (2001), “Between the local and the global – representing employee interests in European works councils of multinational companies”, paper presented to the Department of Economics, University of Wollongong, Wollongong, April.

Rix, M. (2001), “Multinational enterprises, ILO core labour standards and low‐wage migrant workers in South East Asia”, paper presented at the Academy of International Business South East Asia Region (AIBSEAR) Annual Conference, Jakarta, July.

Tolentino, A.L. (n.d.), “Labour‐management cooperation for productivity and competitiveness”, ILO Management Development Programme, unpublished papers, available at: www.ilo.org/public/english/employment/ent/mandev/.

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