Archive for September 24th, 2009

The Westfailure System

Susan Strange, a British political scientist, is one of the more important analysts of the international political economy in the 20th century.   She died in 1998 at the age of 75, having presented some of the most cogent and powerful analyses of the changing nature of the global political economy.  I saw her speak once  back in early 1983 at the Johns Hopkins School of Advanced International Studies Bologna, Italy center, where I was working on my MA.   She talked about the debt crisis and the dangers inherent in the globalization of capital.

In 1999 an article by Strange appeared, published posthumously, called “The Westfailure system.”  It is a play on the term scholars use to describe the international political system — the Westphalian system.   In 1648 the thirty years war, and 130 years of wars surrounding the reformation, was ended with the Treaty of Westphalia.   That treaty created a new political unit: the sovereign territorial state.   For scholars of international relations, this is where the modern state system began.   In 1625 Hugo Grotius had applied the notion of “sovereignty” (until then describing religious authority) to territorial units, suggesting a new kind of international legal set up.   It worked.  The church was able to relinquish power without having to give up its claim that God was the source of legitimate power, and the “sovereigns” — leaders of the territorial units — could exercise internal control of their land.

In her article, Strange heralds the collapse of this system, noting that by the late 20th century it had proven unable to solve three problems:

“First, there is the major failure to manage and control the financial system—witness the Asian turmoil of 1997. Second, there is the failure to act for the protection of the environment. Third, there is a failure to preserve a socio[hyphen]economic balance between the rich and powerful and the poor and weak.”

Strange’s second and third issues — the environment and the gap between the rich and poor — seemed at the time to be rather obvious.   Global warming was already an issue, and it was clear that globalization of capital, meaning the ability of capital to go wherever labor or resources were cheapest, and regulations the most permissive, made it far easier to pollute and exploit.      The rise of sweat shops and inhumane treatment of workers so we can have cheaper stuff and sustain our consumer life styles had already become a major issue by the late 90s.   This can and does lead to violence and terrorism.

But the first thing on her list struck some people as odd — failure to manage and control the global financial system?  As the world economy grew in the decade after Strange’s article, it was easy to dismiss her pessimism.  Concern that states were losing their power to regulate big money was a constant refrain in Strange’s work, especially after the early eighties debt crisis.   She was being needlessly alarmist, many thought.

Her argument was more specific than just the global financial system.  She was especially concerned about global credit markets, and the risk that unrestrained speculation could create bubbles that, when burst, might cause a major economic crisis.   In short, Strange saw the current crisis in advance, both in terms of massive speculation, but also how global markets allowed states to get out of balance, including high debt levels in the US (perhaps over $50 trillion of debt overall) and unsustainable current accounts deficit (mostly trade).   

I believe Strange’s pessimism about the Westphalian system of sovereign states is accurate.   More precisely, the sovereign state never really took hold in much of the third world.   Lacking true “nations,” throughout Africa ethnic groups have competed for power, with the state an artifical colonial construct.  You go into government because that’s where the bribes are, and the power to enrich yourself or your ethnic group.  Few really focus on the people of the state.  Throughout Africa the state has already failed.  

In places with an already strong sense of identity (including some multi-ethnic states) the state has fared better.  However, rarely has a true democracy took hold, rarely have the people been able to hold those with power accountable.  Asian and Latin American states are a mixed bag, but in general states have seemed to be dysfunctional at truly promoting human and individual rights, or supporting broad development.   Usually they ‘follow the money.’

The “sovereign state” was a European creation, but even in Europe states grew to the point that competition and rivalry lead to massive world wars.   States were large enough to centralize the power to engage and rationalize mass violence, including the European conquest of most of the world in the 19th century (which is why the world got ‘sovereign states’ as its new political organization).   As states centralized power in the 20th century, they became capable of massive destruction and violence, murdering tens of millions in Germany and the USSR, making decisions leading to famines such as the one that killed 30 million in China, or rationalizing horrific regimes, such as the genocidal Khmer Rouge in Cambodia. 

After WWII, Europe slowly moved away from the sovereign state as the central actor, towards a confederal arrangement based on free trade, a focus on human rights, and a distrust of the abuse of power.  The EU has certainly been better for the Europeans than their previous state system was, but still suffers one major flaw: it follows the money.  Tyrants no longer control politics, but large corporate actors do.   The hope is that public opinion, democracy, and the new culture of human rights can keep the EU stable — but that’s more a cultural hope, than one based on the institutions.

In the US so much power is centralized that most Americans see the state as unresponsive.  Hence you get the emotion driven blog and talk radio world on the right, and the kind of ‘movement’ mentality behind Obama on the left.  The state itself is weakening due to a weaker sense of social solidarity, and a sensationalized media coverage that seeks scandal over substance.  Behind it all, big money still dominates, a kind of corporate socialism that encompasses both the GOP and the Democrats.

So maybe, the state is failing as a unit of governance.   Maybe it’s becoming obsolete due to globalization.   But governance always exists, so if the state fails, then some different kind of organization will replace it.   It’s not clear what that could be in an era as complex and uncertain as this.   Don’t get me wrong — this isn’t something that will happen overnight, or even over a short decade or two.  But the era of the dominance of the sovereign nation state may be ending, and may in fact already be on its deathbed in the world outside the West.

We’ve come to see sovereign nation states as the natural and obvious way to organize politics, even though they have such a history of war and oppression.   Once something is seen as natural, it’s hard to look at it critically, or question whether or not it is sustainable.   The state might not be.  But what could replace it?  What should?  The ability to successfully deal with that question might determine whether or not the next century can be stable and prosperous.