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Globalization Between the Hayekian and Polanyian Perspectives: Spontaneous Order Or Embeddedness?

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Globalization Between the Hayekian and Polanyian Perspectives: Spontaneous Order Or Embeddedness? GLOBALIZATION BETWEEN THE HAYEKIAN AND POLANYIAN PERSPECTIVES: SPONTANEOUS ORDER OR EMBEDDEDNESS? Andrea Riccardo Migone Master of Arts, Simon Fraser University, 1998 Bachelor of Arts, University of Genoa, 1993 DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY I11 the Department of Political Science O Andrea Migone 2006 SIMON FRASER UNIVERSITY Spring 2006 All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author APPROVAL Nalme: ANDREA MIGONE Debwee: DOCTOR OF PHILOSOPHY Title of Thesis: Globalization between the Hayekian and Polanyian Perspectives: Spontaneous Order or Embeddedness? Examining Committee: Graduate Chair: Dr. Stephen McBride Professor, Department of Political Science Dr. Laurent Dobuzinskis, Senior Supervisor Associate Professor, Department of Political Science Dr. Michael Howlett, Supervisor Professor, Department of Political Science Dr. Theodore Cohn, Supervisor Emeritus Professor, Department of Political Science Dr. Eugenie Samier, Examiner Professor, Department of Education Simon Fraser University Dr. William Donald Coleman, External Examiner Professor, Department of Political Science McMaster University Diate Approved: December 16th, 2005 SIMON FRASER &Q? UNR~ERS~YIibra ry DECLARATION OF PARTIAL COPYRIGHT LICENCE The author, whose copyright is declared on the title page of this work, has granted to Simon Fraser University the right to lend this thesis, project or extended essay to users of the Simon Fraser University Library, and to make partial or single copies only for such users or in response to a request from the library of any other university, or other educational institution, on its own behalf or for one of its users. The author has further granted permission to Simon Fraser University to keep or make a digital copy for use in its circulating collection, and, without changing the content, to translate the thesislproject or extended essays, if technically possible, to any medium or format for the purpose of preservation of the digital work. The author has further agreed that permission for multiple copying of this work for scholarly purposes may be granted by either the author or the Dean of Graduate Studies. It is understood that copying or publication of this work for financial gain shall not be allowed without the author's written permission. Permission for public performance, or limited permission for private scholarly use, of any multimedia materials forming part of this work, may have been granted by the author. This information may be found on the separately catalogued multimedia material and in the signed Partial Copyright Licence. The original Partial Copyright Licence attesting to these terms, and signed by this author, may be found in the original bound copy of this work, retained in the Simon Fraser University Archive. Simon Fraser University Library Burnaby, BC, Canada ABSTRACT The history of economic systems is the history of the creation and redistribution of wealth for the use of human communities, and of the epistemological paradigms that have underpinned this struggle. In my thesis, I present one facet of this enduring clash through the analysis of two such paradigms, and explore their relation to the current phenomenon of globalization. I believe that the nature of the current explanations of globalization, which are generally one-dimensional, is unsatisfactory and that we need to respond to the challenges to the legitimacy, distribution of benefits and costs that are increasmgly brought against globalization. I use of three tools in my analysis: 1. A multifaceted approach to globalization; 2. A theoretical premise that allows for complex links between market activity, the social sphere and the individual. In this sense I use, at the highest level of abstraction, the dialectic between Polanyian and Hayekian perspectives to highlight the concerns regarding the interplay between states, markets and individuals; 3. An Austrian-Weberian inspired theory of institutions and organizations that, as a mid-range theory of action, organically links the two and leaves individuals room for meaningful action within the two. I argue that the challenges that the globalization is encountering can only be tackled by incorporating a strong participatory process inspired by a deontological vision of human beings. Only by allowing individuals meaningful and free choice can the current model of globalization develop into a legitimate, sustainable socio-economic regime. DEDICATION To Kirsten, without whose support, patience and love none of this would have been possible. ACKNOWLEDGEMENTS This thesis could not have been written without the help and support of many people and organizations. This list is but a sample. I am grateful for the generous and ongoing financial support of Simon Fraser University through my academic career there. Among the individuals who were crucial to the completion of my dissertation I especially want to thank my Senior Supervisor, Dr. Laurent Dobuzinskis for his help and advice, and fo.r enabling me to find the best format and most interesting way of expressing my theories. My thanks also go to the other members of my committee, Dr. Michael Howlett and Dr. Theodore Cohn for their encouragement and invaluable advice throughout the process of writing and reviewing my work. Particular thanks go to my examiners, Dr. Eugenie Samier and Dr. William Coleman who took time out of their busy schedules to read the thesis, attend the defense and who offered precious advice on how to make this work better. Among the other members of the Department I must thank Dr. Lynda Erickson for her constant help and support and for giving me the inspiration to undertake my doctorate; Dr. Patrick Smith for his humor and help when I was starting out and Dr. Stephen McBride for his advice and support. A special thanks to Dr. Giorgio Sola for his mentorship and his belief in my potential. On a more personal note, I would like to thank a group of close friends at Simon Fraser University Political Science department who helped me stay sane. To Scott McLeod, for sharing wit and coffees on campus: 'let's go fishing.' To Greg Clarke, Karen Lochead, and Russ Williams, thanks for being there throughout. Finally a big thank you to the administrative staff at the Department of Political Science who helped with the day-to-day details of academic work making it all seem simple and effortless. Last b'ut certainly not least, I want to thank my parents Marialuisa and Riccardo Migone, and my sister Chiara for their love and support and for instilling in me the love for knowledge and research. Andrea Migone January 2006 TABLE OF CONTENTS . APPROVAL ...................................................................................................................... 11 ... ABSTRACT ....................................................................................................................... 111 DEDICATION ................................................................................................................... iv ACKNOWLEDGEMENTS ................................................................................................ v TABLE OF CONTENTS .................................................................................................. vii LIST OF TABLES ............................................................................................................. ix LIST OF FIGURES ............................................................................................................ x 1. INTIRODUCTION .......................................................................................................... 1 H.uman Activity and Institutional Frameworks ......................................................... 12 The Nature of Markets .............................................................................................. 18 A Theory of Globalization ......................................................................................... 21 2 . DEFINING GLOBALIZATION .................................................................................. 32 Sophisticated vs . Unsophisticated Notions of Globalization ........................................ 34 The Aspects of Globalization ........................................................................................ 47 Economic and Financial Flows ................................................................................ 48 Twhnological Innovations ........................................................................................ 76 Cultural-Ideological Factors .................................................................................... 80 Organizational Structures ......................................................................................... 85 State and Globalization ................................................................................................. 90 Culture and Globalization ........................................................................................... 100 3 . MA:RKETS AND SOCIETIES: BETWEEN HAYEKIAN AND POLANYIAN PERSPECTIVES ............................................................................................................. 105 Markets and Freedom: Catallaxy or Design? .............................................................. 106 Markets between Embeddedness and Rationality: Max Weber and Georg Simmel .. 112 Max Weber:
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