07 March 2007

The Market State

"The “Market State” is the latest constitutional order, one that is just emerging in a struggle for primacy with the dominant constitutional order of the 20th century, the nation-state.

"The primary drivers of international politics are economic, yet our habits of thought and our institutions remain powerfully conditioned by the Cold War's focus on interstate relations and the balance of power. The era of the "territorial state" is passing away, and probably has been for a century. "

The Theory of the Modern State
The ongoing development and evolution of the modern state, as presented by Philip Bobbitt, can be traced through the following stages:

1) The Princely States (1494 - 1648)
The princely states, that evolved in Italy during the Renaissance, replaced the previous feudal lords by offering citizens the first significance territorial protection and security in return for granting individual princes territorial power. Under these arrangements, princes hired mercenaries to protected their territories and the trade routes that ran through them. In return, the princes collected taxes and nomalized daily commerce and relations within their domains.

2) The Kingly States (1648 - 1776)
The kingly states emerged under the concept of the divine, God-given right to rule enjoyed by kings. During this era, the state continued to fulfill its responsibility to provide security, albeit for greater territorial areas, through the creation of armies and navies. In return, the subjects of the regime enjoyed a kind of participation in the king’s divine status and the glory of his dynasty.

3) The State-Nation (1776 - 1914)
During the late 18th century, a new order arose under the ideas of freedom and democracy that united a population around a common participation in a national, ethno-cultural identity. During this era, we see the rise of imperialism, and the expansion and exploitation of national identity.

4) The Nation State (1914 - 1991)
Toward the turn of the 19th century, the nation state emerged to benefit the people it governed by providing for the economic welfare of it citizens. During this era, communism, facism, and parliamentarianism competed to provide the greatest welfare to its citizenry.

5) The Market State (1991 - )
Emerging during the 1990s in the U.S. and Western Europe with the global economy.

Democratic State
vs Market State
"Liberal democracy has traditionally meant a self-governing representative system comprised of individual citizens who enjoy freedom and equality under law and together form a people within a liberal democratic nation-state. Thus, liberal democracy means individual rights, national citizenship, and democratic representation."


"As the traditional politics of interstate rivalries cedes place to the global market, (democratically elected*) governments lose unique attributes of their power. Armies and territory count for less."

Whereas the nation-state based its legitimacy on a promise to better the material well-being of the nation, the market-state promise to maximize the opportunity of each individual citizen (or rather that is the way hired PR firms and think-tanked propagandists sell it to the public -
the real goal is of course to maximize the profits of investors, bankers and global corporations*).

Social Liberalism vs Economic Liberalism
"It is a capitalism that is geared
a) to a free market and therefore requires
b) deregulation and privatisation under the aegis of
c) neoliberalism.

All of which, in turn, means that the state no longer works for the welfare of the people as such but in the interests of business--more specifically, global corporations which are, in their turn, the effective controllers of the market system.
The role of the state now is not so much to engender the welfare of the people as to control those excesses of the market which endanger social cohesion and lead to `rebellion'."

"We are moving from the nation state to what Philip Bobbitt, a one-time adviser to the State Department, calls the market-state (except that Bobbitt uses the term favorably).

If the nation state was the vehicle for industrial capitalism, the market-state is the vehicle for post-industrial capitalism.

Bobbitt goes on to say that whereas the nation state served to look after the welfare of the people, the market-state serves to bring out the maximum potential of the individual. (Thatcher and Reagan, he says admiringly, `laid the groundwork' for the market-state and Bush and Blair are `among the first market-state political leaders'.)

The imperatives of such a global economy are the unfettered expansion of the market world-wide, the free access to energy resources (especially oil), minerals, etc., and a political system that submits to such encroachment.

All of which provide the raison d'être for what Robert Cooper (an adviser to the EU) lauds as`post-modern imperialism'."

Big Brother
"The fundamental rights of people are being eroded right across the board. That erosion is taking place
a) directly, through new laws, and
b) indirectly, through spin, the media and the distancing of people from democratic practice itself.

a) Of the new laws that undermine civil liberties, we need, of course, to examine those brought in specifically to wage the `war on terrorism'.

So here it might mean examining what the Anti-terrorism Crime and Security Act allows in terms of detention without trial, how the EU's Common Position on Combating Terrorism and other pieces of legislation fail to distinguish between legitimate political solidarity and terrorism.

And, under cover of terrorism, has come legislation which attacks the rights of asylum seekers, sets up new (and militarized) methods of surveillance of our borders, and extends the border areas themselves so as to circumvent legal processes and the human rights of people in those areas.

b) The indirect erosion of rights stems from the massaging of popular opinion by populist declamations made by a peoples' government prior to bringing in popular legislation on behalf of the populace. (If that sounds like spin, you are right.)

Conversely, to keep its remit as the government of all the people, it takes up the more populist issues as represented by the media and gives them voice. The government is becoming more and more responsive to the media and less and less to the population directly. (The media, of course, is owned either by multinational corporations or international businessmen.)

Inequality, Pollution and Undermined Democracy
"While some opponents of free trade are indeed narrow minded isolationists concerned only with the protection of special interests, the reality is far more complex than most free trade advocates admit. Furthermore, the evident failure of command and control economic planning does not itself remove the critical defects of the unregulated market including its tendency to accentuate divisions between rich and poor, neglect the environmental consequences of economic growth, erode the basis of its legitimacy and undermine democratic governance processes.

Class Structure
Since the earliest days of the industrial revolution the market based economic order has in broad terms divided the national population into three distinct groups:
1) a beneficiary class consisting of industrialists, elite workers and professional middle classes who benefit from the order;
2) a class of dependent workers who have accepted their inferior power and remuneration as a price of avoiding the ranks of;
3) those who are surplus to the industrial system's requirements the market's "disposable people."

"The market state requires people to move freely across borders to work but not necessarily to acquire the benefits of citizenship where they live, perhaps temporarily. "Sojourner rights" would be based on that split, permitting people to work where they needed but not acquire health care, social security, or other specific benefits of citizenship."

Elite Clubs
The problem from an average citizens point of view is that the Market State is completely undemocratic. The national state is reduced to a tool for pacification of the disgruntles lower classes who are losing civil liberties and are forced to either educate themselves to be able to join the elite or have to compete with global slave salaries.*)

"What we've developed in the second half of the twentieth century is what Robert Keohane and I have called the "club model" of international organization. Think of GATT and then the WTO: It's a club of trade ministers. Think of the BIS in Basel: It's a club of central bankers. Think of the IMF: It's a club of finance ministers."

"Even (these) economic institutions, such as the World Bank and the World Trade Organization, are tenuous. On the one hand, they may be less devalued by the market state than are international political or security institutions, for they have value as rule-setters for international commerce, but on the other hand, not only are they swamped by private international transactions—what the IMF or World Bank does is more and more overshadowed by private capital flows—but the status of those institutions is itself ambiguous. They, too, are creatures of governments, not of the forces that are coming to drive international politics."

The fundamental problem with the Market State is that it is made up of non-elected hierarchical entities who have a tendency to make decisions in corporate board meetings, exclusive elite clubs and secret organizations rather than through democratic elections.

Accountability
The transition to the market state will raise enormous issues of legitimacy and accountability, both within states and across them. As the rise of the market state devalues governments, their citizens will accord them less loyalty, a trend probably abetted by the rise of identity politics. At the same time, those citizens may seek to hold their governments accountable for the results of global market forces—witness the curious election-year debate over “outsourcing” in the United States in 2004. If the global economy is a train without a conductor, then who or what is accountable? And if global companies and NGOs are powerful shapers of both national and international society, who selected them for that role? How are they to be held accountable?

Corruption and Conflict of Interest
"The logic of the market state points to dramatic changes in patterns of leadership in government. In the future, it will probably have to be recognized that people will be government officials one year (or day) and private sector executives the next. Indeed, even those labels should cease to be meaningful. But that vision runs smack into procedures for conflict of interest."
(As well as breaking all rules of morality, ethics, trust and impartiality and would land you in jail for corruption in a representative democracy.*)

The China Model
“It has two components; The first is to copy successful elements of liberal economic policy by opening up much of the economy to foreign and domestic investment, allowing labor flexibility, keeping the tax and regulatory burden low, and creating a first-class infrastructure through a combination of private sector and state spending.

The second part is to permit the ruling party to retain a firm grip on government, the courts, the army, the internal security apparatus, and the free flow of information. A shorthand way to describe the model is: economic freedom plus political repression.”

(The same repression could just as easily be achieved by outsourcing surveillance, security, military and other control functions to private companies like for example how the Chinese government hired western companies like Microsoft, Google, Yahoo to build their Golden Shield or Blackwater´s activites in Iraq and recent espionage services that I imagine could serve a repressive totalitarian regime just as well as a democratic.*)

A New Imperialism
In his second essay Robert Cooper (2002) openly advocates a new kind of imperialism. He writes:

What is needed is a new kind of imperialism, one compatible with human rights and cosmopolitan values: an imperialism which aims to bring order and organisation.

Cooper distinguishes between two kinds of “new colonialism” that can “save the world”: the “voluntary” imperialism such as the IMF and the World Bank, which “provide help for states wishing to find their way back on to the global economy”, and the “imperialism of neighbours”, when states intervene to sort out “instability in their neighbourhood”.

War and the Market State
The current conflict is one of several possible wars of the market-states as they seek to open up societies to trade (by force, pay-offs, bribes or coercion*) in commerce, ideas, and immigration which excite hostility in those groups that want to use law to enforce religious or ethnic orthodoxy (or rather environmental, cultural, social and economic protectionism against big business and neoliberal imperialism*)

Bobbit: "States make war, not brigands; and the "Al Qaeda network" is a sort of virtual state. It has declared war on the U.S. because we appear to frustrate its ambitions to regional hegemony. "

(The fact is that the U.S. needs access to central and middle eastern oil and a demonic foe to legitimate their military presence in the region. So it´s actually the U.S. hegemony that is under threat by diminishing oil and challenged petrodollar, rather than any hegemony of disparate insurgent groups clumped together under the "Al Qaeda" umbrella. And since rebelling "virtual states" like "Al Qaeda" or even organizations like Greenpeace have no formal governments, they are outside the juridical framework of national states and their warriors becomes "illegal combatants" or "terrorists" in the eyes of the Market State* )

From Nation State to Market State
From a mere three thousand in 1990 the number of multinationals has grown to over 63,000 today (2003). Along with their 821,000 subsidiaries spread all over the world, these multinational corporations directly employ 90 million people . With its $210 billion in revenues, ExxonMobil is ranked number 21 among the world's 100 largest economies, just behind Sweden and above Turkey.

The ten largest companies in the world each has an annual turnover larger than the GNP of 150 of the 185 members of the UN, including countries such as Portugal, Israel, and Malaysia.8 More subjectively, at least 50 NGOs have more legitimacy than 50 UN member nations.

The New Power Brokers
Four actors—petrodollar investors, Asian central banks, hedge funds, and private equity—are playing an increasingly important role in world financial markets.

MGI details how the rising influence of the four players is jointly shaping global financial markets. Their combined assets grew from just $3.2 trillion in 2000 to an estimated $8.7 trillion–$9.1 trillion in 2006. The factors fueling their growth will persist for at least another five years and, even under conservative assumptions, all four power brokers will grow in size and influence in the years ahead.

*My Comments


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Link1 Link2 Link3 Link4 Link5 Link6 Link7(pdf)

The new liberal imperialism

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