Sunday, May 14, 2017

Thinking Beyond The Nation State

Three building blocks of the world order we are accustomed to are Global Financial System, Nation States and Democracy. 

This is what we have built over the last 150 years. The Global Financial System, in its earlier forms such as the Gold Standard, came about in late Nineteenth century. Nation States emerged around the same time, first in Europe and then they were everywhere as European empires disappeared after the Second World War. And, Democracy became the rallying cry, and standard of political systems, since the end of Cold War.

In the post-war world, when the global financial institutions were designed in Bretton Woods, a few key policy-makers knew that the Global Financial System and Nation States may not be perfectly compatible. They, Lord Keynes among them, decided on a system of priorities - they put the Nation States first - and built an 'inter-national' economic system.

This worked for some time, but the system was being dismantled, ever since the day America lost its surplus and Nixon abandoned the Gold Standard, but increasingly and openly so after the end of Cold War, and opening up of previously 'closed' economies, India, China, Russia and South Africa, to global capital flows.

The nineties made us believe that it worked. Despite all the wrenching crisis in Russia, East Asia and South America, that was somewhat a time of optimism. But as that era ended, with the crash of dotcoms and crumbling of twin tower, the tensions between the three building blocks of the world order is apparent.  Princeton's Dani Rodrik said that Global Financial System, Nation States and Democracies could not coexist: One could have two of the three, any two, but not all three. 

From what we have seen in 2016, and the various 'populist turns' in different countries before that, this seems prescient. In the Western nations, there is a popular rebellion against the Global Financial System, which impoverished a section of the population in these countries and they are now voting against it. The British voters unexpectedly sprung a Brexit on its policy-makers, and the American voters chose a tweet-wheeling President Trump, and while the French suddenly looks like a bastion of globalisation (how ironic), its Populist Marine Le Pen is only another incompetent Presidency away from grabbing power. 

On the other side of the world, the choice of two is different. The staunchly democratic India chose the Chinese model of a 'strong leader' so that global investments can flow in: A strong nation attractive to global investment is what they wanted. Philippines, won over to democracy in the 80s, also made a similar choice: A strongman leader at the expense of 'democratic inefficiences'. China remained committed to its combination of Global Financial System plus Nation State, inspiring many African and Asian nations who would rather have development over democracy. And, Russia, of course, has abandoned the democratic rhetoric some time ago and made its choice too.

This means the World System is decisively broken. There is no consensus on global financial system and how it works - and voters in major countries, Britain and America among them, are in revolt against its working. If this is a great moment for democracy, the party is spoilt by the moving away from democracy in equally significant countries such as India or South Africa, or for that matter, Russia, the great prize that democracy's apologists claim at the end of Cold War. However, importantly, there is a clear consensus in favour of the third element of the global system - the Nation State!

Theoretically, a third possible combination - of Global Financial System and Democracy - exists, but there are no takers for this. In theory, European Union is supposed to be the great post-national experiment, but it became, in practise, all about transnational finance marginalising democratic processes. The EU's immense policy-making powers and financial muscle were insufficiently balanced by its democratic accountability and the latter was reduced to tokenism. After the current travails of EU, which exposed how unloved the idea really is, nation state seemed to have triumphed with a sort of unquestionable finality.

However, at this very hour of its ascent, the idea of nation state has grown hollow, drawing legitimacy from the demagoguery, becoming an instrument of corporate interests. Global Finance lost its appeal as it impoverished too many people. Democracy became unappealing as it became too imperiously distant and run by 'professional' politicians who served not their electorate but their party-political interests, being his or her master's voice and puppets of special interest. And, the handiwork of the soulless globality and gutless democracy was to divert all attention from deprivation and inequality and a quest for identity, from which the current obsession with nation state has arisen. And, it is Nationhood now that these special interests have converged on. And, this consensus on Nation State is therefore just another swindle, this time one of exploitation of the vast public resources and of privatisation of the basic services in Health and Education, which will lose its appeal sooner or later.

But even if the Nation State becomes a tool of Global Finance right now, they are inexplicably opposed - the modern states are conceived as viable autonomous monetary unions, and the global flows of capital effectively undermines both the viability and autonomy - and the coexistence of the two is bound to lead to conflict. Without the democratic legitimacy, this conflict is expected to morph either into revolution and chaos, or authoritarian takeovers, and possibly both together (as in Egypt). However, there are other forces too undermining the Nation State: The twin forces of 'geriartrification' and migration undermine the idea of nation state as a political and social community; global networks and connections create an environment of contagious ideas that often challenge the notion of nation state as a conceptually useful category.

So, in conclusion, it is the best and worst of the time for nation states. It is its hour of glory, but its foundations are inexplicably hollow. At this moment when it pervades all aspects of our being, the nation state is being reduced to an apparatus of surveillance and submission. The idea that swept away the Ancient Regimes now looks ancient, out of place and oppressive. As limelight is shone on it, it appears ugly and inadequate, ushering a new opportunity to think beyond it - a new idea of radical global democracy!

 







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