The new institutionalist thesis

While the complex thesis has proved phenomenally influential in the globalization literature, another position to achieve considerable prominence is that of the self-titled ‘new institutionalists’.

Thus, new institutionalists contend that globalization may actually serve to enable nation-states rather than simply constrain them. Indeed, Garrett (1998) argues that it is not despite, but because of, globalization that social democratic countries have continued to thrive. This is because globalization rewards ‘coherent’ strategies - whether market liberal or social democratic corporatist - but punishes ‘incoherent’ regimes. Social democratic corporatist regimes can offer significant benefits to business (such as co-operation between employers and employees and a highly skilled workforce) that provide greater returns on investment than would a low taxation environment. On these grounds, the institutionalists agree wholeheartedly with the sceptics that considerable scope remains for government intervention in economic and social affairs. However, unlike the sceptics, this does not lead them to reject globalization as a ‘myth’. Rather, globalization is associated with continuing - and even growing - divergence between market liberal and social democratic regimes (Garrett 1998; Hall and Soskice 2001; Weiss 2003). In this sense, globalization is still seen as a crucial driving force for change.