The market and the global public goods

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"Steam and Ice": Positive and Negative Impacts of Global Markets

The global market is but one of the fundamental dimensions of globalisation. Increasingly free flows of goods, services, investment, and capital on the one hand, and the continuing strict regulation of human flows, however, bear ambiguous fruit. German sociologist Claus Offe captures this paradox of modern societies in his ‘steam and ice’ theory. Each increment in individual freedom such as increased mobility, speed or choice – that is, more ‘steam’ – is accompanied by more ‘ice’, i.e. negative systemic phenomena such as motorway traffic jams, global pollution, or the need to choose from many brands of each article in a supermarket, in turn limiting one’s freedom.

Whilst global markets are attracted by the dream of the continuing rise in ‘steam’, the increments in ‘ice’ – global problems in particular – are given much less attention generally, especially among the market players. There are many general causes of the increasingly globalised civilisation’s inadequate response to the globalisation problems, spanning from the economic to the political, cultural, gender, and social-psychological. The entire course, admittedly, is devoted to these. Let us therefore limit this introduction to a basic listing of the problems so that we can then focus on the market players.

The Private Good, Public Service, and Political Choice Public goods and services

In most cases, public goods are provided by state administration or local self-government; often by international co-operation (such as development aid) at global level. Looking into public budgets, nonetheless, one finds that many of the goods that the municipal, national or development policies commonly provide the citizens with do not meet the criteria of public goods.

For instance, beneficiaries of social allowances, healthcare, or education can be discriminated among and/or rivalry can be maintained among them. Without a computer and a telecommunications operator, you have no access to the internet, yet its services are available to all, free of charge in an overwhelming majority of cases. Entrance examinations at secondary schools and colleges constitute competition amongst students. Even such natural goods as drinking water may be controlled and only granted on payment (see the background for the Near Eastern conflicts). Entire segments of populations – internationally, or within nations as such – can therefore be, and actually are in poor countries, excluded from access to such services, taken absolutely for granted by most Western taxpayers.

A distinction is therefore necessary between a public good and the public provision of a good or service (public service). Private persons may be provided with public goods, and vice versa.

Private goods

Such positive externalities where a public good is provided by a private person entirely free of charge are rare – such as a privately built lighthouse or the Linux operating system. More commonly, a private good is made available to the public by a private entity free of charge as part of PR or secondary commercial activity (such as a private funicular or the Yellow Pages). In most cases, however, private persons provide public services on payment – by approval of some public administration – such as the possibility to make use of any mobile telephone operator to call an emergency number.

So-called natural monopolies are a separate category, represented in the Czech Republic to various degrees by operations such as ČEZ (electricity provider), Czech Railways Co., or Czech Telecom. These are typically infrastructure-type networks (power grid, railway network, or telecommunications cable), which are of a private goods character but competition in their provision is virtually ruled out due to high initial investment cost. It is the public interest that such networks exist but do not show the typical maladies of monopoly, including high prices and limited access. That is why most states regulate or subsidise such monopolies.

Political choice in relation to public goods

Strictly speaking, a great many goods and services that the State, local self-governments, or UN-type organisations offer for the taxpayers’ money fall under the category of publicly provided private goods. They are commonly called public goods although they are not strictly that (according to the economist’s definition). The main reason is that the public provision of goods is decided upon by means of public voting. What is or is not a public good (in the broader sense of the word) is thus decided by political choice.

Purely private and purely public goods are, in fact, very few. Political choice – be it democratic or authoritarian by nature – is capable of turning private goods into a public one very quickly (many types of personal data for the sake of national security), and public ones into private (privatising public services). Unlike economic theory, the political practice does not work with purely private goods or purely public services in most cases. It mostly deals with hybrid goods and the interactions among them.

Global Public Goods and Global Management

As outlined above, there are many specific aspects to public goods at the global level. Globalisation is accompanied by a growth in some kind of global awareness (see, for instance, the project at Princeton University); we speak of the global village (Marshall MacLuhan) or a McWorld (Benjamin R. Barber).

Yet there is no clear common authority that could, at the global level, take over the functions performed at the national and municipal levels by the state or local self-government (a kind of global state). Instead, we have lately seen a discussion on such notions as global management or global governance. In spite of often being confused, each of these notions evokes a slightly different idea and suggests different solutions.

The Nature of Global Management and Governance

Global management, above all, has a more constructivist, or managerial, touch, and a wider focus. Whereas the term global governance gives the impression of rather passive care of a given sphere of global commons such as the world’s oceans, polar regions, or the hydrosphere, the term global management evokes the need for a proactive, flexible, comprehensive and dynamic approach to dealing with the set of global problems using a set of different tools and mechanisms.

Václav Bělohradský defines the crucial problem of globalisation as a dramatic expansion of the gap between the decision-makers and those who have to live with the decisions. This democratic deficit at the global level, threatening the very legitimacy of globalisation, is at the core of the debate over global management.

The Players

Global collective action, or provision of global public goods and global public services, is dispersed among numerous and various entities. Only some of the players, however, are of a truly global character. It is a sad anachronism (and a problem difficult to grasp in international relations) that the least global character is found among those players that have the greatest mandates or greatest capacities to deal with global problems – the national states, and the powers above all; while those whose characters are the most global and who are in the best condition – multinational corporations and global civil society – have the least mandate or motivation to deal with global problems, or very limited powers as is the case of intergovernmental organisations such as the UN.

In this respect, the difference among the meanings of the terms global, multilateral, and international, or even supranational and multinational, is the key differentiation:

International

relates to all activity that transcends the borders of national states. This is the eldest among the terms, and is mostly used in connection with politics among states. But the non-governmental Oxfam and Greenpeace, for example, also fit the definition of international organisations.

Intergovernmental

has been picked up, above all, for treaties and organisations composed of official delegates of national states (diplomats). Sometimes a distinction is made e.g. between bilateral aid (between two states), multilateral organisations (having many parties), and plurilateral treaties (only binding to the subset of member states who have ratified them).

Multinational

the term multinational is used in economics, synonymous to transnational, especially for large corporations operating in multiple countries. This underlines the ability of multinational (MNCs) or transnational (TNCs) corporations to operate without being bound to one specific country and, more or less, with no international regulation.

Supranational

The European Union is an exception from the rule of legal superiority of the national state over international law. It constitutes a hybrid integration, combining elements of subordination (directly applicable European law, European court of human rights, European Commission’s sphere of activity covering e.g. common trade or agricultural policies) with elements of the member states’ autonomy (such as the unanimous voting in the Council of Europe in issues such as taxation, security, or social benefits). Similar tendencies are beginning to be felt at the intergovernmental level e.g. in the perception of the powers of the International Criminal Court and the role of the UN in cases of specially serious mass violations of human rights or genocide, where the superiority of the international community is enforced over the sovereignty of a (guilty) national state.

Global

is the broadest of the terms, used in natural, economic, technical, and social sciences. It refers to processes or phenomena that transcend national states, intergovernmental organisations and multinational corporations entirely, such as global warming, global recession, the global village, or global civil society.

The Problem of Legitimacy

Legitimate mechanisms of representation, delegation, power execution, and law enforcement only exist at the local and national levels – within states. However, the completely anarchic status, as described by the realistic concepts of international relations, is no longer present among states: the role of non-state entities has increased (see Jan Karlas 2004in , in Czech only) and there is a broad area of co-operation and awareness of mutual dependence. There is, however, no international parliament, government or court of justice charged with powers comparable to those of their national-level counterparts.

It follows from the above that global management encompasses all the aspects (inter-, trans-, and supranational) and concerns the roles of the national states, their alliances (such as the G-8), and intergovernmental organisations (the UN system), as well as the activities of the private sector (especially multinational corporations) and the global civil society. The following chapter shall focus on the role of the private sector and market-based approaches to global management.

Solutions

Sources

Recommendend Books

  • Kaul, I. et al: How To Improve Provision of the Public Goods?
  • Kaul, I. et al: Why Do Global Public Goods Matter Today
  • Klein, N. No Logo. Taking Aim at the Brand Bullies. New York: Picador USA, 1999. 490 pages. URL: www.nologo.org Český překlad - Kleinová, N. (2005) Bez loga (No Logo). Přeložil Pavel Kaas. Praha : Nakladatelství Argo.
  • Rischard, J.-F. (2002). High Noon: Twenty Global Problems, Twenty Years to Solve Them. New York : Basic Books.
  • Stiglitz, J. (2002). Globalization and Its Discontents. W.W. Norton & Co., May, 282pp.

Other (used books)

  • Benjamin R. Barber (1992). Jihad Vs. McWorld. The Atlantic Monthly; March 1992; Volume 269, No. 3; pages 53-65. URL:
  • Bauman, Z. (1998). Globalization: The Human Consequences. Cambridge: Polity Press
  • Deckwirth, Ch. (2005). The EU Corporate Trade Agenda: The role and interests of corporations and their lobby groups in Trade Policy-Making in the European Union. Brussels, Berlin : Seattle to Brussels Network.
  • Fukuyama, F. (1992). The End of History and the Last Man Free Press; Maxwell Macmillan Canada; Maxwell Macmillan
  • Giddens, A. (1999). Runaway World: how globalisation is reshaping our lives. Profile Books Limited
  • Gore, A. (1992). Earth in the Balance: Ecology and the Human Spirit. Houghton Mifflin Books
  • Henderson, H. (1999). Beyond Globalization – Shaping Sustainable Global Economy Kumarian Press, 90 pp, ISBN 1-56549-107-6
  • Hoogvelt, A. Globalization and the Postcolonial World. Johns Hopkins Univ Pr., ISBN: 0801866928
  • Schmidt, H.(2006). Globalisierung. Politische, ökonomische und kulturelle Herausforderungen. Goldmann, 2006 ISBN: 3442153794
  • Schumacher, E.F. (1973). Small Is Beautiful: Economics As If People Mattered. New York : Harper and Row.

Books in Czech

  • Fukuyama, F. (2002). Konec historie a poslední člověk. Praha : Rybka Publishers.
  • Giddens, A. (2000). Unikající svět. Jak globalizace mění náš život. Praha : Sociologické nakladatelství (SLON)
  • Gore, A. (1994). Země na misce vah: Ekologie a lidský duch. Přeložil J. Jařab. Praha : Argo.
  • Karlas, J. (2004). Liberalismus a velké teorie mezinárodních vztahů. Mezinárodní vztahy 2/2004, Ústav mezinárodních vztahů Praha. str. 5 – 19.
  • Hertzová, N. (2003). Plíživý převrat: Globální kapitalismus a smrt demokracie. Přeložil Robert Bartoš. Praha : Nakladatelství Dokořán (256 str.)
  • Reich, R. (1996). Dílo národů Příprava pro kapitalismus 21.století. Praha : Prostor.
  • Zakaria, F. (2004). Budoucnost svobody. Přeložil Jaroslav Veis. Praha : Academia.
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