East Asia and the Global Economy: Japan's Ascent, with Implications for China's Future Book

[Disclaimer: This is a snapshot of my thoughts on this book after just reading it. This is not meant to serve as a summary of main/supporting points or a critique - only as some words on how I engaged with this book for the purposes of building a theoretical framework on strategy.]

-- Assigned chapters 1-7; 12; 14-17 for School of Advanced Air & Space Studies -

This book by Dicken is more of a textbook covering the varying aspects of globalization rather than a coherent thesis or theory. Therefore, I'll cover some of the aspects (and my thoughts as I develop my own perspective on military strategy) on each of the chapters that we were assigned to read:

Chapter 1: Good introduction. Dicken frames the rest of his book with his intent "to develop a firmly grounded understanding of both the processes involved and their impacts on people's lives" (8). He describes globalization as a "complex, indeterminate set of processes operating very unevenly in both time and space…continuously in flux" (8). He defines globalization in two ways, "one refers to the actual structural changes that are occurring in the way the global economy is organized and integrated. The other meaning refers to the neo-liberal, free-market ideology of the 'globalization project'. Of course, the two are not separate." (2). Dickens proposes globalization as a concept versus a term, which now plays a central role in, outside of, and between states, non-states, and individuals. He uses this introduction to identify some of the varying perspectives on globalization, as well as to dispel some of the myths, e.g. globalization does not remove borders, despite what the hyper-globalists believe.

Chapter 2 (Global Shift: Changing Geographies of the Global Economies): This chapter explains some of the major economic shifts occurring, including a decline in US influence, uneven European performance, and the emergence of transitional economies in Eastern Europe and the Russian Federation. As a result of globalization, the world's economic growth has become volatile. While a few of the core economies still dominate the economic system, China has become a dynamic growth region - significantly changing the "geography of the global economy…A relatively simple global geographic division of labour has been replaced by a far more complex, multiscalar, structure: 'a mosaic of unevenness in a continuous state of flux" (47-48).
My thoughts: The exponential establishment of transnational corporations (TNC) for the purposes of foreign direct investments (FDI) may have a legitimate impact on state v. state conflict. For example, if the US's economy could be damaged as a result of attacking another nation with significant US FDIs/TNCs, then the US may hesitate to conduct such an attack. This can be viewed from a realist or liberal perspective, both resulting in a hedge against violence. If great powers were to encourage this type of globalization, perhaps it would be mutually beneficial while maintaining the international order. However, states still have to be incentivized to legislate FDIs in a way that maintains the order instead of trying to use the economy to affect the order. This would remain a challenge in a realist system.

Chapter 3 (Tangled Webs: Unravelling Complexity in the Global Economy):
"The core of a GPN is the circuit of interconnected functions, operations, and transactions through which a specific commodity, good or service is produced, distributed and consumed" (56). "Of all the advanced business services, financial systems play the central role" (58).
"Global production networks not only integrate firms (and parts of firms) into structures which blur traditional organizational boundaries...but also which have enormous implications for their economic development and well-being. At the same time, the specific characteristics of national and local economics influence and 'refract' the operation and form of larger-scale processes. In that sense, 'geography matters' a lot" (72).
"The geoeconomy, therefore, can be pictured as a geographically uneven, highly complex and dynamic web of production networks, economic spaces and places connected together through threads of flows" (72).
"Institutions, broadly defined, therefore, play a vital role in how network actors behave, whether or not they are aware of this...The macro-structures of the global economy are essentially the institutions, conventions and rules of the capitalist market system" (55).
The key, from my perspective to this entire system is the consumer -- there must be a valued (symbolic), long-term need (functional) for whatever products are being sold. (64) There is also the concepts of traded and untraded interdependencies, where goods/services or labor pools (for example) pool in geographical clusters. These may not be easy to distinguish, and will play a role in politics.

Chapter 4 (Technological Change: 'Gales of Creative Destruction'):
This chapter covers the aspect of how technology has changed how we operate in time and space, and that it will continue to be a changing function in decision making.
"The process of knowledge creation and innovation, therefore, consist of a complex set of networks and processes operating within and across various spatial scales, from the global, through the national and the regional, to the local" (106).
My thoughts: Knowledge and technological advancement will continue to be a sort of currency, shaped by geography, and manipulated through asymmetric information and intelligence gathering. The very idea of technology can create risk, as well as the demonstration of it. Technology often implies intent, especially as it is related to geography.

Chapter 5 (Transnational Corporations: The Primary 'Movers and Shapers' of the Global Economy): This appears to be Dicken's core chapter, explaining the multi-layered complexity of TNCs - how they can be intra and international, can work within regional constructs, can tie regions to regions, and can operate between the tension between states and regions. The complexity of TNCs can both cause conflict as well as mitigate it, depending on the circumstances.
My thoughts: TNCs likely flourish where states encourage them; and if states choose not to "play," they only risk their own potential for prospering from them. Certainly TNCs will benefit some more than others, but I'm willing to concede that there must be room for TNCs in strategy, how they support or detract from the international system, and what they mean for the future of US security. Perhaps leaders of TNCs should be part of the security process since what they do will have ramifications in their domestic politics and state foreign policy. Additionally, while TNCs are quite independent from their state politics, others may be more closely tied to them. This is an important consideration when dealing with state-sponsored espionage and defense posturing. It is also important to understand the TNC alliances that may or may not support state defense strategy.

Chapter 6 (The State Really Does Matter): This chapter describes the role the state plays with regard to globalization - more of a summary of what the author has been alluding to in his first few chapters. States have domestic variables that matter (containers), make laws that affect how they interact with other states and across global infrastructures (regulators), do in fact compete against one another (competitors), and do also work together (collaborators) through institutions and partnerships.
My thoughts: What if globalization is simply an extension of Ikenberry's proposition - that institutions can be the mechanism by which power can be locked in for a lower cost and for potentially shared gains?

Chapter 7 (The Uneasy Relationship between TNCs and States: Dynamics of Conflict and Collaboration): This chapter is an "explicit" focus on the relationships between TNCs and states since both play a role in shaping the global economy: "[they are] both cooperative and competing, both supportive and conflictual. They operate in a fully dialectical relationship, locked into unified but contradictory roles and positions, neither the one nor the other partner clearly or completely able to dominate" (222). States need firms (TNCs) and TNCs need states - therefore, they are in a bargaining relationship to gain from each other [TNCs acting as 'virtual' states???] as well as support each other.

Chapter 12 ('Making the World Go Round': Advanced Business Services - Especially Finance): Advanced Business Services - "banking, accountancy, insurance, logistics, law, advertising, business consultancy, high-level personnel recruitment - are central to the operation of the economy" (368). They act as circulation, and commodities or products themselves. The term casino capitalism was used to describe the large sums of money that are put at risk across the globe in the volatile market as made so by ABSs.
- Structure: Financial services: Commercial bank, Investment bank/securities house, credit card company, insurance company, accountancy firm; Professional business services: Legal firm, Business consultancy firm, advertising agency, executive recruitment firm. They also act as intermediaries in the process of production, distribution and consumption (370) - may be similar to (one of the theorists we just read) with regard to intermediaries.
- Markets: "Very often the relationship established between ABS firms and their customers in a domestic context are transferred to an international context because of the build-up of trust. Alternatively, the geographical differentiation of rules and regulations between different national territories creates opportunities for ABS firms to construct more complex and geographically diverse operations and to build extensive networks" (372).
-- Market saturation, disintermediation (non-bank loans), deregulation of financial markets, and internationalization of financial markets
- Technology: "Information is both the process and the product of ABS" (373).
- Role of the State: Most ABSs "depend fundamentally on having a direct presence within their markets" (377).
- Corporate Strategies: Concentration and consolidation, product diversification, and transnationalization
- Geography: Cities as the 'natural habitat for ABSs (key point here), global network of financial centers, geographical decentralization and offshoring, and offshore financial centers.

Chapters 14-17: Valuable look at the further interconnectivity of TNCs, how their value is affected by salaries and labor, location (geography), environmental impact, geoeconomics, and contribution to society at large. They also play a critical role in the actual governance of the globe and hold the potential of being alternative economies to the traditional state-based economies.
My thoughts: Within TNCs lie the potential to shape the world as it is interconnected through them; however, this would require bringing the rest of the unconnected world into its network. For this reason, states will still continue to matter, as well as the management of conflict between them. Great powers will still have great say in how the globe is managed, and lesser powers will tend to rely on great powers for any crumbs that fall from their tables.