Edited by Jonathan Michie
Chapter 20: The Political Economy of the Third Way: The Relationship between Globalisation and National Economic Policy
Simon Lee Introduction There have been few more important debates in the discipline of political economy in the modern era than those relating to the relationship between globalisation and national economic policy. Three principal perspectives have been advanced (Held et al., 2000). First, the ‘hyperglobalisers’ who have contended that globalisation has rendered national economic policy largely redundant (Ohmae, 1995). Second, the ‘sceptics’ for whom the notion of the powerless state has been exaggerated to the point of mythology (Hirst et al., 2009). Third, the ‘transformationalists’ for whom globalisation has unleashed an unprecedented period of social change upon states and societies (Blair, 1996; Giddens, 1998). These perspectives have been accompanied by a parallel discourse concerning the transition from government to governance in the relationship between the public and private, and the state and market, in the conduct of economic policy-making at all levels from the local to the global (Rodrik, 2007). The ideological context of these discourses has been a vigorous argument concerning the viability and legitimacy of the economic policy prescriptions of the neoliberal orthodoxy of the ‘Washington Consensus’ (Williamson, 1993; Serra and Stiglitz, 2009). On the one hand, the market fundamentalism of the ‘Washington Consensus’ has had its vigorous advocates, notably the former Chairman of the US Federal Reserve Board (Greenspan, 2007). On the other hand, the likely dividend both for global growth and national economic development has been contested by academics (Hutton, 2002; Gamble, 2009), market economists and traders (Soros, 2008; Bootle, 2009), Nobel Prize winning economists (Sen,...
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