Saturday, December 22, 2018

What Wharton Is Thinking About: "Nation-States Are Failing…Will a New, Feudal Order Replace Them?"

Are nation-states failing?
They are changing, that's for sure. And there are lots of people who would like to shape/reshape the world to whatever image of  how-things-should-be that they happen to prefer.
Who knows how people should organize themselves? Or, be organized? Seriously, who knows. A lot of people act as if they know and push one direction or another but maybe no one knows.

From Knowledge@Wharton:
Is the nation-state is broken? How might it evolve and be superseded? Those are the questions that John C. Hulsman and Boris N. Liedtke ponder in this opinion piece. The co-authors believe that while the nation state is not going away anytime soon, it should be recast through a combination of stronger global and local institutions — an arrangement that has political roots going back some 350 years. Hulsman is president and managing partner of John C. Hulsman Enterprises, a global political-risk consulting firm. His new book, To Dare More Boldly: The Audacious Story of Political Risk, was published by Princeton University Press in April.  Liedtke is the distinguished executive fellow at INSEAD Emerging Markets Institute and has more than 20 years of experience in the financial sector. He was the CEO of the largest bank by assets in Luxemburg and board member for operations at the largest German fund manager.
The nation-state simply isn’t working very well anymore, even as its staying power seems beyond dispute.
It is this paradox that explains much of what ails our present world, why “nothing seems to be working.” Indeed, it is in the supposedly well-governed developed world that the nation-state has shown its most glaring inadequacies. Be it the Lehman Brothers crisis, the endless, endemic euro crisis, or the calamity of America’s adventurism in Iraq, the nation-state seems to be showing its age, not delivering on its grandiose claims to facilitate both global governance and political and economic stability for its people.
The model of the nation-state has come under attack from below – in the form of a deteriorating level of trust by the people towards their elected or unelected representatives – as well as from above, by failing to provide appropriate answers to an ever more globalized world.
But if the nation-state does seem to have flatly failed lately at every turn, that does not mean it is about to be replaced. Contrary to the fevered imaginings of European Federalists, the nation-state cannot simply be wished away as an annoying anachronism of a bygone age.
Rather, the dirty little secret at the heart of our new era is that all the rising powers — be they China, India, South Africa, Indonesia, or Brazil — are more sovereigntist, more nationalistic, more wedded to jealously preserving their national prerogatives than is even the United States, long the bane of post-national dreamers. Instead, it is the supposedly modern, post-national European experiment that seems to be in terminal decline. As such, both intellectual defenders of the nation-state and its critics seem to be largely wrong at present.
Lessons from the Thirty Years’ War
Historians have long agreed that the Thirty Year’s war – ending in 1648 with the Peace of Westphalia – was the pivotal moment when the modern nation-state was born.
It is hard to adequately describe what a calamity the war was for the people of Central Europe, and especially Germans nestled in the Holy Roman Empire. It amounts to one of the bloodiest conflicts in all of human history, with an estimated eight million casualties of its ceaseless slaughter. Given the many great powers that joined the fray as the war proceeded (Sweden, Spain, France, Austria), in many ways the Thirty Years’ War amounts to the first true world war of the modern era. And just as was true following the carnage in 1918 and 1945, in 1648 diplomats assembled, determined to prevent such a disaster from ever happening again.
“If the nation-state does seem to have flatly failed lately at every turn, that does not mean it is about to be replaced.”
The Peace of Westphalia did nothing less than change the basic relationship between rulers and subjects. Up until now in the feudal world, people tended to have overlapping (and often competing) political and religious allegiances and loyalties.
However, after the acceptance of Westphalia, this system dramatically changed, as the local princes decided on the religious and political tenor of those they governed. If a prince was Protestant, his state was thought by all to be so too (and vice versa for Catholics). Other princes never again to such a large extent attempted to interfere with the domestic internal workings of another state, in an effort to avoid a further cataclysmic war; the concept of state sovereignty had been born.
Allegiances in the Holy Roman Empire were no longer decided by a mix of the supranational center in Rome, and by the many local German traditions of the empire, as had been the case up until 1618. Instead, while there was less uniformity at the supranational level, as the success of Protestantism led to the diminution in the power of the Vatican, nationalism emerged with the victory of the regional princes, just as supranationalism and localism waned. Our modern state system had been born, with the nation-state in the driver’s seat.
Countries and the relationships among them governed the world for the next 350 years. The world started to increasingly function along national borders with national taxes, national laws, national conscriptions, national education, languages following along largely national geographies, national governments, and national elections.
People were born with a national passport, attended national education that formed their opinion, engaged in national military service where they fought other nations, attended nationally funded universities, paid nationally imposed taxes and adhered to national laws until they passed away. Even in death, the nation-state was inescapable through the national process of death certification and taxes.
The institution of the nation-state served humanity well throughout these 350 years. Increasing life expectancy, the possibility to enjoy leisure time instead of fear (due to increasing internal domestic political stability), economic and population growth, the advancement of knowledge and science, and the incredible output of old and new forms of art are all testimony to the strength of the world order birthed at Westphalia.
The Nation-state’s Zenith Has Passed
Yet, the success of the nation-state has given rise to new challenges for which its structure can no longer provide acceptable answers. While the nation-state solved many problems that the old feudal order was incapable of dealing with — following the Thirty Years’ War there was never again a major religious war in Europe — in doing so it created new ones.
The success story of the nation-state was in creating a globalized world in which prosperity for the many improved dramatically. However, from at least the middle of the 19th century, nations created issues and challenges for humanity, which are no longer national but global.
Any look at the major headlines in the past few years confirms this. For all its power to win the war in Iraq against Saddam Hussein largely on its own, the U.S. (by far the strongest nation-state in the world) failed miserably to win the peace without local Iraqi buy-in. The Lehman Brothers crisis painfully illustrated that national regulators were not up to understanding the global implications of those they regulated. The U.S. Federal Reserve is constituted to deal with American inflation and unemployment rates, even as the dollar’s supranational dominance makes their decisions possess a truly and unthought-of global significance. Increasingly the nation-state is coming to its limit in finding adequate responses to global challenges.
While facing these challenges from above, the nation-state is equally being threatened from below with a rejection by its people of its political ruling class. Advances in technology, through radio, television and later computer technology – and in particular the internet – has brought an unparalleled transparency.
The most important implications of this transparency are twofold. Firstly, transparency has made it clear to all the differing living standards of the world. Secondly, the human fallibility and foibles of our elected political elite are on display as never before.
“The institution of the nation-state served humanity well throughout these 350 years.”
The former has had and will continue to have wide ranging global implications. Specifically, this has already contributed to West’s victory in the Cold War (no one wanted to live in East Germany as opposed to Swinging London) three decades ago and is certainly a big factor behind the present immigration pressure which the U.S. and Europe are experiencing.
The fact that people in Syria, Mexico, parts of China, and the rest of the underdeveloped world can obtain a direct glimpse of the boundless riches of the Western world via the small screens of their internet-connected phones, makes the planet no longer unknowable. Pandora’s box is open – for good and ill – and people in economically-challenged regions are longing to reach the Nirvana they observe on their little screens.
Modern transportation technology has basically removed the “literal” barrier of entry that geography once posed. Planes, cars, ships, etc. have made it theoretically affordable for even the poorest human being to emigrate. It is only the administrative, physical, and commercial barriers erected by the nation-state – frequently using geography in its defense (desert between Mexico and the U.S.; the Mediterranean Sea between Europe and Africa) – that holds back this form of globalized immigration. Yet there is no solution in sight deterring the people from poorer regions desiring a better life through immigration.
So the nation-state’s erected barriers will continue to come under real and philosophical pressure. The question has to be asked: “What right does one human or society have to limit the free and peaceful movement of another through this world?” The nation-state has somehow established this blocking privilege through the creation of artificial borders based on historical events. Remove the nation-state from the equation and the answer becomes simple – “None.”
However, the transparency provided by technology has had equally far-reaching implications in the developed world, going far deeper than just an issue of foreign immigration. With the use of radio by the political elite politics became more accessible to the masses.
FDR perfected the use of radio during his 30 evening addresses between 1933 and 1944 which became known as the Fireside Chats, a great political achievement which welded the American people to his reform program. In 1960, CBS organized the first TV presidential election debate, which many credited as a turning point in favor of the young dashing John Kennedy against a tired-looking, make-up-less Richard Nixon.
“As problems become more transnational … unelected, supranational institutions are increasingly (and often rightly) reviled as anti-democratic, arrogant, and wildly unsuccessful, even as such institutions become more and more necessary.”
Finally, the entertainment value of the Trump period in the White House would certainly be substantially diminished without his many tweets to the masses, even though the information value might be suspect. Through voice, picture, and later internet, the nation-state’s representatives appeared ever more accessible to the American electorate.

All this meant that the average person felt closer to their leaders than ever before. They started to see them – warts and all – as more and more human. Their mistakes and errors became known, and endlessly documented. Leaders of nation-states became first fallible in the eyes of their electorate, then increasingly ridiculed. The mass media soon developed into a hunt for human “gossip” and less a means to facilitate political debate. The paparazzi were let loose on the political elite....