A MODERN PHILOSOPHY OF GLOBALIZATION: MOTIVES, CONSEQUENCES, AND ETHICS OF WORLDWIDE COMMERCE

Sean D. Jasso, Ph.D.

International Journal of Business Research, Volume 8, Number 5, 2008, pp.84-95 (ISSN: 1555-1296)

ABSTRACT This paper takes the position that globalization both in terminology and theory is overly used and misunderstood. Much has been written and debated in recent years about the phenomenon called globalization, but still students and business practitioners alike, fall into polarized and ideological camps of what it is, why it is, and what all the fuss is about. The paper addresses three central questions. First, what are the motives of nations to reach beyond their borders? Second, what are the consequences of this outreach predominantly in the present time? Third, what are the ethics or the general guidelines of worldwide commerce? The ultimate objective and destination of the paper is to offer a collective starting point for the new decade ahead and, moreover, that an aggregate discussion among economists, political scientists, and the business community might ensue. Not all people care about or are aware of globalization, but most people are impacted by its reality. Yet, for those who live in the world of ideas and the practice of policy design, implementation, and business management, a new philosophy can help simplify the diversification of globalizations meaning for those who may have strayed or have been skewed from the confusion. Keywords: Globalization; Philosophy; Global Economy; Economic Development; Global Politics; Transnationalism; Global Governance; Global Reach; Ethics. 1. INTRODUCTION In a recent conversation with a philosopher colleague, I inquired about the ancient Greek philosophers some of our original thinkers on the nature of enigmatic phenomena as to their understanding of globalization. Before I obtained an answer, this eminent scholar and friend turned the question back to me and in classical Socratic fashion, retorted, why does globalization advance poverty to the benefit of corporate wealth? I knew from that moment that the idea of globalization, even among elite thinkers, had become ideologically polarized, firmly sensitive, and profoundly unclear as to what globalization actually means. My colleague wasnt wrong, nor was he correct in his response. Rather, he, like many, sees the economic world as an unrestrained machine yielding disparate opportunities among humanity, where others see this machine as the natural endeavor of contemporary civilization seeking knowledge, prosperity and growth. This paper takes the position that globalization both in terminology and theory is overly used and misunderstood. Much has been written and debated in recent years about the phenomenon called globalization, but still students, scholars, politicians, and business practitioners alike, fall into polarized and ideological camps as to what it is, why it is, and what all the fuss is about. The paper addresses three central questions. First, what are the motives of nations to reach beyond their borders? Second, what are the consequences of this outreach predominantly in the present time? Third, what are the ethics or the general guidelines of worldwide commerce? These questions, though seemingly simple, are in fact profoundly abstruse. The answers are often found by students to be unclearly defined by either the overwhelmingly simplistic or, conversely, the multifarious readings in the classroom or biased from teachers, the media, and politicians. What is needed is a new philosophy that is, a modern perspective or understanding so that the scholar, the student, and the business person can see globalization from the same lens. The ultimate objective and destination of the paper is to offer a collective starting point for the new decade ahead and, moreover, that an aggregate discussion among economists, political scientists, policy makers, and the business community might ensue. Not all people care about or are aware of globalization, but most people are impacted by its

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reality. Yet, for those who live in the world of ideas and the practice of policy design, implementation, and business management, a new philosophy can help simplify the diversification of globalizations meaning for those who may have strayed or have been skewed from the confusion. What are the results of a new philosophy? I do not anticipate paradigm shifts, but I do forecast a clearer dialogue among thinkers who connect with the world through commerce and ideas. This global connection is not going away, and, therefore, a new philosophy has the potential to strengthen the future for a worldwide community to remain positively engaged, productive, healthy, prosperous, and, most importantly, understood. In its simplest form, the new philosophy can be confined to the common theme of this paper where global reach is not simply characterized by the need to grow and gather wealth, but rather global reach is in fact part of the human aspiration to discover and use resources to move humanity forward. A sedentary population, like most animal behavior, never flourishes. A population that has a global reach through commerce can thrive, provide, and grow. This paper examines the motives, consequences, and ethics of this philosophical approach to globalization a concept that many characterize as an ensuing trend, but I will affirm as the reality of the worlds wellbeing. 2. PHILOSOPHY AND THEORY 2.1 The Method and Framework This essay pursues an explanation of the disparate perspectives regarding globalization. From the start, I argue that globalization with all of its costs yields a more favorable impact on worldwide productivity, development, and prosperity. To support this position, the organization is constructed around a philosophical endeavor in lieu of shaping a formal theory. As discussed below, formal theory on international relations has already been crafted and will serve as an important starting point and guideline toward articulating a new philosophy on our subject. Method is important in not only articulating any research question, but also in authenticating its credibility. Consequently, my methodological approach to the guiding questions yields a philosophical answer which, I contend, identifies with the social science tradition of the nonformal model exemplified by, a set of verbal statements about the real world. These statements involve idealization, identification, and approximation, but are given in terms of real observables rather than symbols or abstracts (Morton, 2002, p. 61). The results of my philosophical model can serve as a testable hypothesis for future inquiry on this broad and complex subject. Offering a new philosophy is both risky and controversial primarily because the idea can be outright wrong or, moreover, audacious as a challenge to philosophical precedent. However, ideas do not move forward without such a debate. First, it is important to clarify the terminology that frames this discussion. Why a philosophy and not a theory? A theory is generally defined as a scientific model that helps explain observable phenomena. The explanation requires data, observation, and testing of a hypothesis ultimately yielding a benchmark for scholars and practitioners of any discipline to build a body of knowledge and understanding. Where theories might use formal models to explain phenomena, a philosophy uses rational argument to obtain truths to some of lifes enigmatic questions such as meaning, behavior, and judgment in our case, those pertaining to globalization. Perhaps the most notable modern philosopher of the 20th century, Bertrand Russell defines philosophy as,
Something intermediate between theology and science. Like theology, it consists of speculations on matters as to which definite knowledge has, so far, been unascertainable; but like science, it appeals to human reason rather than to authority, whether that of tradition or that of revelation. All definite knowledge belongs to science; all dogma as to what surpasses definite knowledge belongs to theology. But between theology and science is a No Mans Land, exposed to attack on both sides; this No mans Land is philosophy (1945, p. xiii).

From method, we must then define our central theme globalization. Simply stated, globalization describes an open world (Legrain, 2004). More directly, Mott provides a poignant description of globalization from the political, economic, and social impact: in the train of the global economy and unfamiliar forms of global governance is a new global culture: a consumer society with a panorama of goods and services, transnational fashions and art, and cosmopolitan personal relationships (2004, p. 1). In essence, globalization is humanitys reach around the world and the consequences that ensue. Hence, the objective here is to help further clarify the understanding of why this reach persists and, more

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importantly, how this reach can build upon the good world society. Consequently, the benchmark for a new philosophy of globalization is rooted in the philosophy ascribed to ethics that is, conduct that is driven toward the good in our case, the good for all stakeholders in the global community. The philosophical lineage that mirrors elements of a proposed new philosophy whereby ethics, global reach, and, ultimately a universal good, or happiness, is evident in the following: Aristotlesii (384-322 BCE) virtue ethics: Zenosiii (334 262 BCE) Stoic right and universal reason; Adam Smithsiv (17231790) sympathy toward universal order; Kantsv (1724-1804) cosmopolitan or universal law; and Sens (1933- ) and Nussbaums (1947- )vi capability approach of universal development. Thematically, one world and universal are consistent throughout the ages as thinkers have pondered the reasons for pursuing and maintaining relations beyond oneself both as a single individual or a single nation. In summary, the philosophical framework from which my argument is grounded remains that a flourishing humanity exists when ethics (habitual conduct) guide society toward shared objectives, needs, and aspirations. In the case of globalization, these shared ideals are also common among the theoretical context of international relationsvii or global politics as discussed below. Humanity has socialized itself into the collection of nations represented for the last several hundred years as borders on a map. These borders are in fact political identifiers that distinguish the sovereign authority of a particular state over a territory. To understand the complexity and perhaps the audacity of an open world, we must first explain the hard reality of how politics or the struggle for power in fact shapes the world order. One of the most important questions within international relations is, what initiates conflict and cooperation among nations? Three traditional theoretical perspectives that help explain the political relations among statesviii include realism, liberalism, and idealism (2008, Ray and Kaarbo). The more dominant perspective of realismix emphasizes that the state itself is the most important actor in international relations and that the pursuit of the nations power and influence among other states is the policy priority. Often associated with realism is the notion that the use of force is inevitable to protect and maintain the states power and wellbeing. The second theoretical perspective is liberalism which emphasizes interdependence among states as the key to successful international relations. Where military is a centerpiece for realism, economics and transnational actors beyond the state characterize liberalism. Lastly, idealism is a theoretical perspective that underlines morality and values as the central motivating force among states. It is through cooperation among states that nations can attain peace and prosperity. Each of the above theories of international relations is important to our discussion of a philosophical understanding of globalization because each perspective is relevant from a positive and normative position. It is difficult to argue against an idealist who desires peace among nations and that the way forward to attain a peaceful coexistence should be cooperative. However, it is also hard to disagree with the realist who sees a dangerous and untrusting world where political, ethnic, or cultural ideologies not only bolster strained relations, but often collide in force. Indeed, it also hard to challenge the liberalist where much of the modern worlds international and domestic success is clearly attributed to economic interdependence. As we combine both the philosophical and political frameworks noted above, each will play a role in not only helping shape the argument that the costs attributed to globalization strengthen worldwide productivity, development, and prosperity, but also, that a new philosophy in the tradition of the good can serve as a new starting point for reflection, application, and evaluation of the open world in the new decade to come. 3. MOTIVES FOR GLOBALIZATION 3.1 The Politics of National Sovereignty Building upon Motts earlier description of a world where politics, economics, and culture transcend from nations throughout the world, globalization within the modern context is most identified with the expansion of the multinational corporation (MNC) and the political challenges of governing the MNCs reach and power around the world. It is often stated that globalization isnt new. Western European countries, including Portugal, Spain, and England are among the leading oceanic discoverers of trade routes and consequently new founded continents primarily during the 15th through 17th centuries. Hence, from these

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beginnings, the quest for capital in the form of gold, silver, and spices sets the precedent for political nations to seek resources from abroad. A date that is pertinent to our discussion is 1648 identified by the Peace of Westphalia the treaty that not only ends the Thirty Years War but also establishe[s] the important principle of sovereignty that remains the foundation of contemporary international politics the idea that political legitimacy could derive from secular legal authority rather than from divine sanction pave[s] the way for the development of constitutional government (Spiegel, et al., 2009). Through national sovereignty a nation-state designs and is accountable to its political and economic systems most closely identified with a head of state, as in a prime minister or a president, a legislative and judicial body, as well as an economic infrastructure from the collection of taxes to the system of banks and securities markets which often fall within the control or regulation of the state. The sovereignty of the state, as described by realism, is important in our journey toward a modern philosophy of globalization because it is the rise of the MNC within the last few decades that has challenged state power both in scale and scope. For example, according to recent United Nations reports of the 100 entities with the largest gross national product, about half [are] MNCs. This mean[s] that by this measure these big MNCs [are] larger and wealthier than about 120 to 130 nation-states (Chandler and Mazlish, 2005, p. 1). As noted above, nations have borders on a map, MNCs, however, do not. It is this modern phenomenon of the growth and power of the MNC that much focus among policy makers, academics, and citizens around the world contend with this enduring reality. Consequently, the motives for world trade are just as philosophical as they are political and economic. Philosophically, the inherent aspiration of the state is to flourish. It can be assumed that no country wants to meet its demise from starvation or to be conquered by another, or, in the case of a large MNC, have its national and sometimes foreign policies shaped by a corporate board of directors. On the other hand, for nations to develop, grow, and compete they require resources beyond their comparative and absolute advantages. Smith illustrates this concept early on in The Wealth of Nationsx describing how French silk manufacturers produce silk products better and cheaper than the English hence, England imports French silk. Similarly, Rivoli describes both the political and economic power of the American cotton industry evidenced by the centuries' long advantage of American cotton production from early continuous heavy investment in cotton production technology combined with industry supporting public policy that has enabled American cotton to remain dominant as a global export (2005). The politics and economics of globalization go hand in hand. Using Westphalia as a benchmark, the motives for the state to pursue the open world begin in 1648. Certainly as history reveals, kingdoms and nations had been reaching around the world for resources, capital, and power even before Westphalia. By politics we mean the struggle for power and, more generally, the authority that attains and allocates power. With the idea of the sovereign state comes the need for economic prowess for it is the economy of the nation that enables the state to compete in a tumultuous international community. By economics we mean the allocation of scarce resources and for nations to prosper both in the Middle Ages and today, the strength of nations political, economic, and social institutions are paramount (Havrylyshyn and Van Rooden, 2000). The motives for globalization can be as simple as survival and protecting ones comparative advantage. Farazmand articulates the causes of globalization to punctuate the importance of politics conjoined with economics:
The process and phenomenon of globalization are not treated solely in terms of [the] advance [of] capitalism, though that has been a major contributing factor. Indeed, several factors have contributed to the process of globalization, including surplus accumulation of corporate capital, the role of the dominant sates and their bureaucracies, domestic constraints, rising human expectations, international institutions, and technological innovations (1999, p. 512).

Understanding the political and economic motives of globalization initially through the eyes of the state enables us to examine the consequences of not only state behavior, but, moreover, that of the MNC and its lasting impact on government, business, and society. This is the focus of what follows.

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4. CONSEQUENCES OF A GLOBAL MARKET 4.1 The Reach of Economic Interdependence A raging debate exists whether globalization is good, bad, or indifferent. For example, a common theme among the anti-globalization critics describes a wide-ranging set of deleterious effects ranging from destruction of labor unions, diminished productivity, and decimated local industries, to declining terms of trade, pauperization of developing societies, and cultural hegemony (Ward and Gleditsch, 2004, p. 160). As discussed in Section Three above on the importance of national sovereignty, the idea of democracy is often characterized by anti-globalists as being at peril. They point to the advancement of the MNC and the World Trade Organization (WTO)xi for their abilities to influence and design trade policies that support the interests of the global market, but not necessarily the interests of independent governments (often poor and small) who historically owned the decision-making responsibility of trade policies for their nation. For example, Nasstrom contends,
by undermining the nation-state, globalization undermines the very idea of democracy. It marks the end of the modern democratic project. It follows that on this understanding cosmopolitans cannot conceive of democracy beyond the nationstate. If the nation-sate is to be seen as a necessary precondition for democracy, they have yet to explain how democracy can be accomplished at world level (2003, pp. 812-813).

The goal of articulating a new philosophy of globalization must empathize with the globalization debate both the pro and con. Providing balance here, globalization advocates contend that the integration of global markets over the last century and more robustly since the early 1980s with Chinas entrance into the world trade community, empirical evidence supports that developing countries (like China) who integrate with developed countries (like the US) not only improve economically, but also strengthen their political, financial, and social infrastructure with growing per capita income. For example, Dollar affirms that since the modern era of globalization (or global reach) poor country growth rates have improved, the number of poor people in the world has declined, global inequality has declined though modestly, and wages among countries that globalize are rising (2005). We must agree that it is the politics of nations that either open doors or keep them closed to world trade. Those nations whose doors are open for world business specifically means that they are open for foreign direct investment (FDI) which traditionally comes in the form of an MNC seeking capital investment opportunity. This reality of a free flow of capital often from rich to poor countries by way of corporate expansion is responsible for Dollars above evidence that integration strengthens economies through the movement of capital and, more directly, that capitalismxii as both a political and economic system is responsible for this apparent success. It is not clear if the globalization debate will be won only on an intellectual plane because globalization indeed clearly has changed worldwide political, economic, and social behavior primarily due to the free flow of ideas, capital, resources, products, services, technology, and culture. Opponents argue that the diminishment of state power to interdependent economic power among nations has lasting negative consequences on local industries, on national cultures, and on the environment. Advocates argue that the liberalization of trade has shaped a global market where competition yields innovation, enhanced productivity, improved standards of living, democratization movements, and global accountability. Theoretically, both positions have credibility, but perhaps a better way to understand the phenomenon of globalization and its consequences is to further examine the evidence of how the global marketplace behaves within the context of the MNC and the nations in which it operates. Following is a discussion on India and China with the goal of illustrating how liberal trade, both politically and economically, has changed the most populated countries in the world in record time. As a prelude to this discussion, the brief list below helps articulate the theme of interdependence and its vigorous momentum on economic growth around the world:
In 2006, trade in goods and services stood at 31% of world GDP, up from 23% in 1999 and under 10% in 1970 Annual flows of foreign direct investment grew from 1.0% of world GDP in 1990 to 2.2% of world GDP by 2005 Trends in cross-border transactions in bonds and equities as a ratio of GDP stood at less than 5% for the US, Germany and Japan in 1970. By 2005, they had grown to over 200% The total deal value of cross-border mergers and acquisitions grew from $22 billion in 1990 to $58 billion in 2000 and $135 billion in 2005 (Gupta, et al., 2008, p. 5).

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4.2 India and China An Overview 4.3 India The enduring theme encompassing globalization is not that the world is smaller because of vanishing political borders, but rather the world is more accessible because of liberal political trade policies. Why have liberal trade policies? The alternative, for example, is a post-independence India in 1947 with an isolationist democracy that believes its prosperity rests within its own domestic production capacity the result, a nation among the poorest in the world. With bold economic reforms and an open foreign trade agenda initiated in 1991, Indias economy has transitioned into a $ trillion economy, increased per capita income distribution, and, according to the Reserve Bank of India, foreign exchange reserves have risen from $5.8 billion in 1991 to $300 billion in 2008xiii. India, along with China, is among the worlds largest populations and, consequently, the fastest growing economies having previously suffered the consequences of political isolationism and economic starvation. For India, economic reform has infused the country with capital and borrowing opportunities from global MNCs who profit from Indias affordable talent which enables Indians to invest in their own national development even among the very poor. For example,
With economic activity in a once poor community, the results can be promising not only by creating a circular flow of money, but also the opportunity for small businesses to be created as tangential, support businesses. A licensed food vendor with his or her cart waiting outside of the corporate campus in Bangalore, India, is a small example of how small business enterprises respond to FDI. Like the large [MNC], these small businesses require access to capital to enter into the competitive market hence credit, [enabled by FDI] is part of the cure for eliminating poverty (Jasso, p. 4)

Noted above, Indias poor benefit from FDI not because capital trickles down stream, but rather entrepreneurship and capitalism within the Indian political economy is imbued into the national fabric such that foreign trade brings income and ideas that improve economic wellbeing for the large population faster than a distributive government policy. Highlighting Indias domestic improvements enabled by FDI, Kamdar writes,
India is using technology to drive down the cost of basic goods, making them more affordable to more and more people. India is producing $20 mobile phones and designing $2,000 cars. It is making low-cost computers that resist high temperatures and repeated power interruptions. It is setting up test models of small-scale power plants run on crop waste, where farmers can sell excess electricity back to the grid. Most people in the world cannot afford the prices charged for goods and services in the West. India has the potential to make those goods and services available at prices the whole world can afford (2007, p. 19).

India still has wide spread poverty, but the evidence indicates that international trade in a very short period of time has minimized its augmentation while simultaneously advancing Indias overall prosperity. International trade is not a zero-sum game, but rather a game in which there are mutual beneficiaries on both sides of the exchange. Sawyer and Sprinkle assert, all countries, like individuals, can benefit if each country specializes in producing those goods that it can produce best and satisfy their other wants and needs by trading for them. Specialization and trade makes total world output of goods and services larger than it would be without trade (2009, p. 22). Indias investment in itself through the open investment of others has positioned the country to be one of the most important components to global economic development. 4.4 China Like Indias economic reforms of the 1990s, Chinas reforms come earlier in 1978 initiated by Deng Xiaoping with the reversal of the centrally planned economy of Moa Zedong, to a mixed economy characterized by open-market capitalism under the government control of the Chinese Communist Party. As De Soto argues, capitalism stands alone as the only feasible way to rationally organize a modern economy. At this moment in history, no responsible nation has a choice. As a result, with varying degrees of enthusiasm, Third World and former communist nations have balanced their budgets, cut subsidies, welcomed foreign investment, and dropped their tariff barriers (2000, p. 1). The results of Chinas reorganization of its economic infrastructure rank it among the fastest growing economies in the world all from opening its doors to trade. The results include economic statists, much like India in

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momentum, such as six fold GDP growth in thirty years, an ownership society supported by a new middle class of consumers, a majority of its economy supported by the private sector, and a financial epicenter that recently positioned the Industrial and Commercial Bank of China as the worlds largest bank. Fishman provides a snapshot of how the infusion of capital into China, together with its economic and social reforms, looks from the city of Shanghai:
At times it can appear that everything that can happen is happening in China. In the space of one month in the fall of 2004, China held its first European-style Formula 1 car race on a new $320 million track, hosted an NBA exhibition game with its new global basketball star Yao Ming, and staged its first Spanish bullfight in a stadium converted into a full fledged bullring So too, comes the news that Hooters, the restaurant-and-bar chain, will offer its curvy American fantasy to Chinese diners in eight locales; that Starbucks will add hundreds of new outlets in the land of tea; and that an adultproduct expo attracted four thousand manufacturers of sex aids and huge crowds (2006, p. 271).

In addition to the cosmopolitan flavor of Shanghai enhanced by FDI and privatization, the city, among Chinas most prosperous, serves as one of the worlds primary factory outputs for anything needing assembly. For example, the textile industry, often stereotyped by sweatshop labor, in fact has brought millions from the subsistence farming life of Chinas rural countryside, to cities like Shanghai to obtain low skilled manufacturing jobs and, most importantly, to provide Chinese citizens with a chance at the good life. Rivoli illustrates the following:
Thanks to globalizationHe Yuan Zhi of Shanghai Brightness doesnt worry about being stuck on the farm anymore. She married when and whom she chose, she makes her own living and her own choices. If current trends are an indication, her income will grow at more than double the rate of that of her Western sisters. And thanks to generations of backlashers radical, unkempt, and uninformed she works 50 hours per week and not 80, she can read and write, and her children can, too. She has never heard of bysinosis, and has never met anyone who has been hurt by machinery or burned in a factory fire. She will likely live to a ripe old age. The bottom is rising (2005, p. 107).

Projections indicate that both China and India will become the worlds largest economies by 2035 followed by India in 2045 and the US, which currently holds the first position as worlds largest economy, will be third. What does this mean for business, government, and society? Clearly, the convergence of world powers is political and economic in scale and for this projection to hold, ceteris paribus, governments must maintain liberal trade policies that not only enhance productivity and prosperity, but indeed manage and protect the byproducts of growth. For society, it must embrace an open world by recognizing that survival means enduring innovation of talent, skills, and technology. And for business, to compete in the global market of the future, a global mindset is the way for strategy design and implementation. For example, Gupta, et al., contends that companies should design and pursue an integrated China and India strategy rather than waste time and energy debating whether to pursue China or India (2008, p. 255). 4.5 Toward Governance In essence, globalization, as ascribed to the positive elements of growth above, remains the aggregate economic interdependence among all nations that cannot be feared, nor stopped. Rather, it must be understood, respected, and, yes, regulated so that prosperity flows to all corners and participants of the open world. Governing for the good remains the great challenge for the 21st century for nation-states still remain sovereign and the MNCs that reach into international markets must maximize prosperity while harnessing its costs. Among the challenges exists the will to maintain liberal trade among nations the evidence is unshakeable that isolationism, protectionism, and high taxation impedes growth. As Adam Smith prescribes, as the Taxes imposed with a view to prevent, or even to diminish importation, are evidently as destructive of the revenue of the customs as of the freedom of tradexiv. In this section of the essay, our goal has been to discuss the consequences of a global market. In summary, the consequences are that growth is inevitable if not essential to meet global aggregate demand and, moreover, the reach of economic interdependence lifts societies from poverty, enables corporations to compete worldwide, yet, as we will see, requires a convergence of political philosophies among hundreds of nations a tall order for a diverse, international community.

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5. ETHICS OF GLOBALIZATION 5.1 The Governance of Interdependence Rooted at all thematic levels in this essay are the goals of articulating a new philosophy that elucidates right reason for the aspirations of nations and firms to reach into the open world. Evidence thus far indicates that both curiosity of discovery and demand for resources compel nations to trade - but at what cost? Opponents of globalization like Kemal Dervis argue that the price of prosperity is unbalanced and simply unfair to those, primarily the poor and uninformed, who have no voice in world economic affairs. He writes,
Global markets require good global politics. Today we have globalization without representation and thus without the checks and balances, the rule of law, the level playing field, and most important of all, the sense of ownership and legitimacy that democracy brings to market economies (2005, p. xi).

One might believe Dervis assessment to be disconnected from much of the progress globalization has upheld as described throughout this paper. He, like my colleague identified in the introduction, is neither fully right nor wrong; rather, his approach is more aligned with social justice for those without ownership of resources from which to rise. The exploitation of labor, resources, and the environment is prevalent throughout the modern world and has been a demon in the political economy of nations for centuries. The big question is simply who governs globalization in a world where global reach is not only permanent, but paramount. Chandra contends, global governance involves regulating people over a finite place. It began with warriors taking charge of a territory, establishing control over people and resources, collecting taxes, and recruiting citizens into the army (2008, p. 120). Indeed, control is synonymous with governing, but so, too, are values. It is inconceivable to imagine the modern, interdependent world needing a central command center for governing aggregate behavior, actions, and outcomes. Like the centrally commanded economy of the former Soviet Union where every aspect of life was allocated by appointed governing elites, the result of centrally governing the modern, diverse world order would result in political turmoil, bureaucratic captivity, economic decline, and, ultimately, a collapsed global society. In fact, the more globalized and liberal (free or accessible) resource acquisition through markets becomes, the better off the aggregate society grows to be. The answer is not big governing, but rather shared values. For example, the worlds
open, self-organizing economic system [or] free enterprise, is effective only because most of the time most of its participants abide by internally motivated positive values, such as trustworthiness, fairness, and honesty. The common presence of these values is so anticipated that it goes largely unnoticed, but it is the context within which reliable cooperation can occur without huge costs of self-protection and third-party policing (Goodenough and Cheney, 2008, p. xxiii).

5.2 Global Institutions and Governance The majority of the world trades safely, fairly, regularly, and transparently this is due to shared values as described above. The theoretical framework for understanding this phenomenon is identified within liberalism and idealism. However, many regions of the world are in conflict or post-conflict situations where policing of these values is required by third-party forces the United Nations (UN) among the most global in scope, responsibility, and legitimate authority. Additionally, nongovernmental organizations (NGOs) are together with inter-government organizations (IGOs), like the UN, and individual states for that matter, capable of mediating crisis, distributing resources, and protecting societys assets. NGOs are traditionally not for profit organizations and not accountable to international laws. Among the recorded 40,000 NGOs, some notable ones include the International Red Cross (accountable to Geneva Convention laws), Oxfam International, Doctors Without Borders, CARE International, and the International Chamber of Commerce each serving in tandem with or independently from traditional, sovereign governments to address the consequences of the open world.

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In concert with the sharing of values associated with the morality of the market addressed above, is the strength of both political and economic institutions and the respect for the rule of law (Chesterman, 2004). Yet, the issue of national sovereignty remains the dominant force for controlling political, economic, and social norms throughout the world. To contend with this reality, the world community showcases its multilateral approach to problem solving through the following primary global institutions. At the end of World War II in 1945, the immediate global ratification of the United Nations is the worlds attempt to organize a legitimate body of nation-states to convene on issues of international law, economic development, human rights, and world peace. Similarly, in 1947 the General Agreement on Tariffs and Trade (GATT) served as an independent, global council charged with reducing the barriers of trade among participating members. In 1995, GATT was replaced by the World Trade Organization (WTO) whose primary function is to oversee existing trade agreements as well as to serve as the global negotiating forum to develop new, multilateral agreements among nations (Hoekman and Kostecki, 1995). Additionally, the World Bank, established in 1944 and the International Monetary Fund (IMF), also established in 1944, respectively provide developing nations with loans and grants as well as manage the entire global financial payment system. The questions persist do these institutions work and is global governance possible? Indeed, the world has not witnessed a political catastrophe on the scale of World War II nor an economic tragedy equal to the Great Depression of the 1930s. The reasons can be attributed to a united approach to solving political and economic challenges whereby the marketplace of ideas, products and services, credit, and aid have traditionally funneled through one or more of the above global institutions. Success is measured by results and, hence, through its global institutions, the community of nations appears engaged without large scale conflict, remains focused on minimizing war, and, more than ever, are trading at a growing and seemingly infinite pace. In addition to the global governing administrative councils and NGOs identified above, perhaps no other list exemplifies the reality of global engagement and interdependence within their direct regions and spheres of political and economic influence than the numerous alphabet soup of trade agreements presented below:
Andean Community, CAN Asia Pacific Economic Cooperation, APEC Association of Southeast Asia Nations, ASEAN Australia New Zealand Closer Economic Relations Trade Agreement, ANZCERTA Caribbean Community, CARICOM Central American Common Market, CACM Central American Dominican Republic Free Trade Agreement, CAFTA-DR Common market of the South, MERCOSUR Common Market for Eastern and Southern Africa, COMESA Commonwealth of Independent States, CIS Council of Arab Economic Unity, CAEU East African Community, EAC Economic Community of Central African States, ECCAS Franc Zone Gulf Cooperation Council, GCC International Monetary Fund, IMF Latin American Integration Association, LAIA Latin American Free Trade Agreement, LAFTA League of Arab States, LAS European Economic Community, EEC Economic Community of West African States, ECOWAS Southern African Development Community, SADC South Asian Association for Regional Cooperation, SAARC Economic Community of the Great Lakes States, CEPGL European Union, EU Organization for Economic Cooperation and Development, OECD xv North American Free Trade Agreement, NAFTA .

The great challenge for all authoritative bodies is legitimacy and accountability to which the institution serves. Hurrell simplifies the implications of governance on a global level by differentiating that governing is the hierarchical authority of a single state, where governance is the horizontal interaction of multiple stakeholders. He writes, global governance is the sum of the many ways individuals and institutions, public and private, manage their common affairs. It is the continuing process through which conflict or

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diverse interests may be accommodated and cooperative action may be taken (2007, p. 95). In the case of the above global institutions, challenges to the state remain constant, but indeed, that is why they are political. Again, as discussed earlier, it is the politics of any institution that creates the economics by which its constituents are the beneficiaries of their policies whether they are good or bad. For example, with regards to environmental protection, a contentious topic around the world, Esty argues that representativeness of organizations like the WTO serves its member states and not the citizens to whom the policies often have direct impact. He argues, public support cannot be founded on government authority. Individual acceptance is what matters. The organization must therefore demonstrate that it has genuine connections to the citizens of the world and that its decisions reflect the will of the people across the planet (1999, p. 99). 5.3 The Ethics of Globalization By ethics we mean habit or right conduct with the assumed destination of some universal good. What has been discussed here includes the human ambition to prosper beyond domestic or regional boundaries. Toward the open world, therefore, is the reach that humanity in the form of nations and corporations has pursued this goal. The results are mixed from the most recent emergence of two massive countries providing products and services to much of the world (China and India) at prices most global consumers can afford to the wide scale infusion of technology throughout hundreds of nations including those developing countries in Africa receiving advanced medicines, electronics, and books that only market efficiencies could ever provide. However, the costs of development and prosperity include unregulated deforestation activity in South America, the politicizing of oil exports from the Middle East, to human rights violations across Asia and beyond. The ethics, or guidelines, to manage the expansive, fragile, essential, and often dangerous interdependence of the world its nations and corporate supply chains are represented in three categories: first, the statutory authority of the state (often nonnegotiable); second, the governance of legitimate global institutions; and third, the intangible and universal practice of values trust, cooperation, fairness, and honesty. From this catalog, modern societys engagement in eternal interdependence has performed at the level of the good, but with a profound gap below the pinnacle of virtue. Globalization refers to both economic and political reach predominantly driven by market forces that also aims to the good. Amartya Sen avows that it is important not only to give the markets their due, but also to appreciate the role of other economic, social, and political freedoms in enhancing and enriching the lives that people are able to lead (1999, p. 9). Indeed, it is the collection of all elements that create the good society politics, economics, institutions each a social endeavor with self interested, imperfect actors required to cooperate among regions each with a global link. In summary, the ethics of globalization are the tangible and intangible regulators discussed throughout this essay that must be understood, shared, and protected. Only then can the world society become a globally virtuous society where prosperity is attainable for those who share the common and pragmatic vision that globalization is and not merely a trend that must be mastered. 6. CONCLUSION GLOBAL REACH 6.1 Toward a Modern Philosophy of Globalization This essay has addressed the following three questions: What are the motives of nations to reach beyond their borders? What are the consequences of this outreach? What are the ethics of worldwide commerce? My hope is that what is presented here provides not necessarily the complete answer to these debatable questions, but that a network of conversation and collaboration can ensue among students of globalization and practitioners within its force a spirited dialogue supported by the values stated above of cooperation and trust within the spirit of competition toward innovating the intellectual and universal understanding of this vast, contentious, and momentous topic. On the nature of networks, Grewal says, a network is an interconnected group of people linked to one another in a way that makes them capable of beneficial cooperation, which can take various forms, including the exchange of goods and ideas (2008, p. 20). The result of this network, like those among nations and corporations, is a more efficient elucidation to attain the greater endeavor of certifying a philosophy of globalization.

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Hence, a new philosophy of globalization has been shaped around the idea that global reach is not only the ambition of nations to extend and share their power and influence, nor only the obligation of a nation to obtain resources for national security and prosperity, nor only the quest for profits from MNCs competing for market share, but, rather, and more simply, that global reach is centered within the ethical ideal of shared values. And so, a modern philosophy of globalization is upheld on the given truth and right reasons that humanity as a collective society of nations fueled by market ingenuity prospers at the speed of good governance, good politics, good markets, good institutions, and, most importantly, on the good of people.

REFERENCES Barnes, Jonathan, Ed. The Complete Works of Aristotle: The Revised Oxford Translation. Princeton University Press, Princeton, NJ, 1995. Chandler, Alfred D. and Mazlish, Bruce, Eds. Leviathans: Multinational Corporations and the New Global History. Cambridge, UK: Cambridge University Press, Cambridge, UK, 2005. Chesterman, Simon. You, The People: The United Nations, Transitional Administration, and StateBuilding. Oxford University Press, Oxford, UK, 2004. Chandra, Nayan. Runaway Globalization without Governance. Global Governance, (14), 2008, 119125. Dervis, Kemal. A Better Globalization: Legitimacy, Governance, and Reform. Brookings Institution Press, Washington, D.C., 2005. De Soto, Hernando. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Basic Books, New York, NY, 2000. Dollar, David. Globalization, Poverty, and Inequality. In Weinstein, Michael M., Ed. Globalization: Whats New? Columbia University Press, New York, NY, 2005. Esty, Daniel C. Environmental Governance at the WTO: Outreach to Civil Society. In Sampson, Gary P. and Chambers Bradne W. Trade, Environment, and the Millennium. United Nations University Press, New York, NY, 1999. Fishman, Ted C. China Inc.: How the Rise of the Next Superpower Challenges America and the Word. Simon & Schuster, New York, NY, 2006. Haakonssen, Knud. The Cambridge Companion to Adam Smith. Cambridge University Press, Cambridge, UK, 2006. Hoekman, Bernard M. and Kostecki, Michel M. The Political Economy of the World Trading System: From GATT to WTO. Oxford University Press, Oxford, UK, 1995. Havrylyshyn, Oleh and Van Rooden, Ron. Institutions Matter in Transition, But So Do Policies. International Monetary Fund, Washington, D.C., 2000. Hurrell, Andrew. On Global Order: Power, Values, and the Constitution of International Society. Oxford, UK: Oxford University Press, Oxford, UK, 2007. Farazmand, Ali. Globalization and Public Administration. Public Administration Review, (59), 6, (NovDec), 1999, 509-522. Goodenough, Oliver and Cheney Monika G. Is Free Enterprise Values in Action? In Zak, Paul J., Ed. Moral Markets: The Critical Role of Values in the Economy. Princeton University Press, Princeton, NJ, 2008. Grewal, David S. Network Power: The Social Dynamics of Globalization. Yale University Press, New Haven, CT, 2008. Jasso, Sean D. The Ethic of Capitalism: Peace, Prosperity, and the Good Life through Microfinancing. Journal of International Management Studies, 3, (Feb), 2008, 195 - 205. Kamdar, Mira. Planet India: The Turbulent Rise of the Largest Democracy and the Future of Our World. Simon & Schuster, New York, NY, 2007. Legrain, Philippe. Open World: The Truth About Globalization. Ivan R. Dee, Chicago, IL, 2004. Morgenthau, Hans J. Politics Among Nations: The Struggle for Power and Peace, 3rd Ed. Alfred A Knopf, New York, NY, 1965.

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Morton, Rebecca B. Methods and Models: A Guide to the Empirical Analysis of Formal Models in Political Science. Cambridge, UK: Cambridge University Press, Cambridge, UK, 2002. Mott, William H. Globalization: People, Perspectives, and Progress. Praeger, Westport, CT, 2004. Nasstrom, Sofia. What Globalization Overshadows. Political Theory, (31) 6 (Dec), 2003, 808-834. Nussbaum, Martha C. Kant and Stoic Cosmopolitanism. Journal of Political Philosophy, Volume 5 (4), 1997, 1-25. Nessbaum, Martha C. and Sen, Amartya, Eds. The Quality of Life. Oxford University Press, Oxford, UK, 2002. Ray, James L. and Kaarbo, Juliet. Global Politics, 9th Ed. Houghton Mifflin, Boston, MA, 2008. Rivoli, Pietra. The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. Wiley & Sons, Hoboken, NJ, 2005 Russell, Bertrand. A History of Western Philosophy. Simon and Schuster, New York, NY, 1945. Sawyer, Chalres W. and Sprinkle, Richard L. International Economics, 3rd Ed. Pearson Prentice Hall, Upper Saddle River, NJ, 2009. Sen, Amartya. Development as Freedom. Anchor Books, New York, NY, 1999. Schofield, M. The Stoic Idea of the City. Cambridge University Press, Cambridge, UK, 1991. Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Methuen and Co., Ltd. Ed Edwin Cannan Library of Economics and Liberty, 1904. www.econlib.org/LIBRARY/Smith/smWN13.html Spiegel, Steven L., Matthews, Elizabeth G, Taw, Jennifer M. and Williams, Kristen P. World Politics in a New Era, 4th Ed. Oxford University Press, Oxford, UK, 2009. Ward, Michael D. and Gleditsch, Kristian S. Globalizations Impact on Poverty, Inequality, Conflict, and Democracy. In OLoughlin, John, Staeheli, Lynn, and Greenber, Edward, Eds. Globalization and Its Outcomes. Guilford Press, New York, NY, 2004. Vaidya, Ashish K. Globalization: Encyclopedia of Trade, Labor, and Politics. ABC-CLO, Oxford, UK, 2006.

Dr. Sean D. Jasso is a professor of economics at the Graziadio School of Business and Management at Pepperdine University and lecturer in management at University of California, Riverside. He writes, consults, and teaches in the areas of political economy, world politics, ethics, and strategy. You may contact him at sean.jasso@pepperdine.edu.

Originally presented at the annual meeting of the Western Economic Association International, Waikiki, Hawaii, July, 2008 Barnes, Jonathan, Ed. (1995). The Complete Works of Aristotle: The Revised Oxford Translation. Princeton, NJ: Princeton University Press. iii Schofield, M., (1991). The Stoic Idea of the City. Cambridge, UK: Cambridge University Press. iv Haakonssen, Knud (2006). The Cambridge Companion to Adam Smith. Cambridge, UK: Cambridge University Press. v Nussbaum, Martha C. (1997). Kant and Stoic Cosmopolitanism. Journal of Political Philosophy, (5) 1, pp. 1-25. vi Nessbaum, Martha C. and Sen, Amartya, Eds. (2002). The Quality of Life Oxford, UK: Oxford University Press. vii International Relations, Global Politics, and Comparative Politics are often interchangeable. viii The term state refers to a government that holds legal sovereignty over a defined territory. ix rd Morgenthau, Hans J. (1965). Politics Among Nations: The Struggle for Power and Peace, 3 Ed. New York, NY: Alfred A. Knopf. x The Wealth of Nations, Book I, I. xi The WTO is further discussed in Section 5. xii Capitalism is a political and economic system characterized by the private ownership of the factors of production including land, labor, capital, resources, knowledge and entrepreneurship. It is also identified with the free market system. xiii Weekly Statistical Supplement. Reserve Bank of India (June 1, 2007). xiv The Wealth of Nations, Book IV, II. xv A further comprehensive list of International Trade Agreements available in Vaidyas Globalization: Encyclopedia of Trade, Labor, and Politics, 2005.
ii

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