Module Four: Globalisation

Introduction to Module 4

Why consider globalisation as public sector managers?

One of the elements increasingly contributing to the complexity of public sector management is the impact of globalisation, whether it be demonstrated by ethical issues regarding regulations around surrogacy laws; the loss of a Malaysian airliner in our waters, or shot down over a foreign country; the influx of ‘boat people’ seeking asylum; the issues of biological threats from ‘foreign’ diseases and pests such as Ebola, COVID-19 and Fire Ants; the economic disaster stimulating the Global Financial Crisis (GFC); the need for troops to stump up in Iraq or the impost of embargos from the Russian invasion of Ukraine. Whilst Australia has never been exempt from global forces, increasingly, we are conscious of its impact in nearly every feature of our life.

In Module 4, we explain some of the effects of globalisation on Australia through the transmission channels of trade, financial markets, international legal frameworks, multinational companies (MNCs); explore the role of foreign affairs; and investigate possible domestic policy responses to global events.

It was no accident that the NY World Trade Centre was chosen as a target for the 9/11 terrorist attack. Not only were the buildings towering above the skyline of arguably the worlds’ iconic modern city, and perhaps therefore, easy to target, but they also were a symbol of prosperity, trade, power and economic, social and cultural dominance in an international context. To prosper is to enter the global currents of trade and diplomacy to build mutual interdependence. And while trade, competition and ideology have often been at the heart of conflict, there also are benefits for peace and improved quality of life, as we realise our growing interdependence and learn more about international partners and how to negotiate ethically around competitive interests.

Understanding the focus of globalisation and its historical roots is important to place the current discussion of globalisation into focus.

A very short history of the last 600 years of globalisation

Humans have most probably been on the move across their bits of the globe since the species has existed with evidence for the arrival of the First Nations peoples to the Australian continent from the Asian continent 50,000 to 75,000 year ago (See Cooper, 2011 and Veth et al., 2017)^[1][2] and international trade occurring from at least the 1700s between Indigenous Australians and fisherman from Sulawesi in Indonesia (Hutchens, 2021).^[3]

The Renaissance in Europe (14th to 17th centuries) sees the rise of science, arts, reason and the ‘age of exploration’ with Mercantilism – state promotion and regulation of trade for political and commercial objectives – the dominant economic system in Europe (See Bevir, 2010)^[4]. A new era of truly global economic, social and cultural change and disruption amongst nations was occurring, driven by the desire for new sources of materials to exploit and trade and underpinned by the growing naval capacities of France, Great Britain, Portugal and Spain.

Mercantilism had its critics, amongst them the famous Scottish philosophers David Hume (1711–1776) and James Mill (1773–1836), father of the even more famous philosopher John Stuart Mill (1806-1873).

The beginning of the laissez-faire period in the 19th century, based on ideas of political economists Adam Smith (1723-1790) from Scotland and David Ricardo (1772-1823) from England, and in the modern era protectionism (1918–1945) to the Neoliberal Economics of the 1980s and 1990s, are explained in the recommended reading by Goldstein and Moss (2011).^[5]

Some authors, such as three-time Pulitzer Prize winning US author Thomas Freidman (not to be confused with the famous US economist Milton Freidman), propose that the modern era of globalisation can be better perceived as the Cold War period and then what he calls the Globalisation period. Freidman’s definition of the Cold War period (1918 till the fall of the Berlin Wall in 1989) was characterised by lower transport costs from better rail and sea logistics and underpinned, notably till the end of WWII, by the British pound and British navy. However, it was characterised by deep geopolitical divisions and trading blocks.

The demise of the Soviet Union and the rise of the Information Revolution of the 1990’s heralded this new Globalisation period. This period is characterised by the democratisation of technology, finance and information with more extensive and freer trade and logistical integration amongst the nations of the world and is underpinned by the US dollar and the US navy.

Is globalisation the ultimate new world order?

US political scientist Francis Fukuyama argues, somewhat controversially, in his 1992 book The End of History and the Last Man, that the ascendancy of the Western liberal democracies since the Cold War period might be the ‘end point of mankind’s ideological evolution’ and has therefore established ‘the final form of human government’ (Fukuyama, 2020, p. xi)^[6]. Humanity having reached its ideologically evolutionary summit would establish liberal democracy has the final form of government and thus ‘the end of history’ (Fukuyama, 2020, p. xi). This phrase was not meant to imply the end of modern civilisations or the stagnation of human development. Nor that there would be no new major world events occurring (wars, famines, social unrest, scientific discoveries, human endeavour). It was to denote that two factors, economic and political – sometimes working together – now underpinned liberal democratic systems and institutions across the world. The political element is perhaps the most powerful as it will be an individual’s ‘struggle for recognition’ (Fukuyama, 2020, p. xvi) that will continue to push social and political systems to fully recognise each individual’s ‘own worth’ (Fukuyama, 2020, p. xvii).

Regardless of the ultimate fate of Fukuyama’s proposition of the assent and permanency of liberal democracy, it is clear that there have been and will continue to be many struggles for recognition by the various groups affected by globalisation. In Australia, the influence of foreign ideas, cultures and products have historically, and are still, treated suspiciously or with caution by the various home cultures that reside here.

Freidman (2020, p. xxii)^[7] is not fully convinced of Fukuyama’s prediction for the ultimate victory of a world-wide liberal democratic system, and sums up his assessment of the most recent period of globalisation as follows: ‘That is why under the globalization system you will find both clashes of civilization and the homogenization of civilizations, both environmental disasters and amazing environmental rescues, both the triumph of liberal, free market capitalism and a backlash against it, both the durability of nation-states and the rise of enormously powerful nonstate actors’.

Freidman contends that the ‘best way for us to deal with the brutalities of globalization is first understanding the logic of the system and its moving parts, and then figuring out how this system can benefit the most people while inflicting the least amount of pain’.

Governing for Globalisation

The romantic idea of Australia as a continent insulated from the vagaries of the world is just that: a romantic idea. Globalisation is not a new phenomenon. One might be tempted to analyse how Britain dealt with its ‘criminals’ and might argue that Australia has its roots as an offshore processing centre for Britain’s undesirable excess population.

If we think about it, since white settlement, Australia’s domestic politics and foreign policies were influenced by other nations, initially Great Britain and Europe in general.  After the Second World War, our trade and political relationships increasingly turned towards the US.  A new era in foreign policy and trade commenced with the visit of Prime Minister Gough Whitlam to China in 1971, ushered in the signing of a free trade agreement with the Chinese in 2014.

Our political system is a derivative of systems from other nations (US, UK, France) so globalisation has always been with us, and government has lubricated the process of its impact and assisted in our national adaptation to it. This module operates on the assumption that there are four areas impacted by globalisation – economic, social, cultural and policy making.

Because your second assignment is heavily linked to this topic the module attempts to provide a range of avenues for you to explore.

Globalisation has many definitions depending upon whether you look at it as a process, an outcome or as an ideology. For the purposes of this unit, focussing upon the public sector, we consider globalisation as the study of international forces upon economic, social, and cultural affairs, and policy-making.

Apart from the economic implications of trade and investment, the challenge of globalisation lies also in our ability to provide governance. This is complicated because public sector governance requires authorisation from legislation and frameworks, and some of these are not in government control. Modern governance is emotional and multilayered and requires relationship management skills as well as decisiveness to implement (e.g. surrogacy issues). Global interaction is now personal, intimate and regular, so no one is immune from international events (e.g. identity theft). The speed and high impact of events can necessitate dramatic action and response that can alter priorities, requiring flexible systems (e.g. MH 370); and, routine procedures can no longer be relied upon to protect the community interest, so risk management (not avoidance) approaches need to be at the fore of the approach (e.g. terrorism, regional and global pandemics). This requires public sector leadership and for the public servant to be strategically current and aware.

In its 2019 review of public sector governance capability amongst member countries, the OECD (2019)^[8] outlined how countries ‘can ensure that their public services are fit for purpose for today’s policy challenges, and capable of taking the public sector into the future’. It highlighted that:

In other words, to compete globally as a country, we must have a competitive and effective public sector.