Sun, Feb 19, 2012 - Page 9 News List

The nation-state, for all its drawbacks, is anything but dead

Despite advancing globalization it is still national governments and political leaders that make the decisions, as recent economic crises have demonstrated

By Dani Rodrik

One of our era’s foundational myths is that globalization has condemned the nation-state to irrelevance. The revolution in transport and communications, we hear, has vaporized borders and shrunk the world. New modes of governance, ranging from transnational networks of regulators to international civil society organizations to multilateral institutions, are transcending and supplanting national lawmakers. Domestic policymakers, it is said, are largely powerless in the face of global markets.

The global financial crisis has shattered this myth. Who bailed out the banks, pumped in the liquidity, engaged in fiscal stimulus and provided the safety nets for the unemployed to thwart an escalating catastrophe? Who is re-writing the rules on financial-market supervision and regulation to prevent another occurrence? Who gets the lion’s share of the blame for everything that goes wrong? The answer is always the same: national governments. The G20, the IMF and the Basel Committee on Banking Supervision have been largely sideshows.

Even in Europe, where regional institutions are comparatively strong, it is national interest and national policymakers, largely in the person of German Chancellor Angela Merkel, who have dominated policymaking. Had Merkel been less enamored of austerity for Europe’s debt-distressed countries and had she managed to convince her domestic electorate of the need for a different approach, the eurozone crisis would have played out quite differently.

REPUTATION IN TATTERS

Yet even as the nation-state survives, its reputation lies in tatters. The intellectual assault on it takes two forms. First, there is the critique by economists who view governments as an impediment to the freer flow of goods, capital and people around the world. Prevent domestic policymakers from intervening with their regulations and barriers, they say, and global markets will take care of themselves, in the process creating a more integrated and efficient world economy.

However, who will provide the market’s rules and regulations, if not nation-states? Laissez-faire is a recipe for more financial crises and greater political backlash. Moreover, it would require entrusting economic policy to international technocrats, insulated as they are from the push and pull of politics — a stance that severely circumscribes democracy and political accountability.

In short, laissez-faire and international technocracy does not provide a plausible alternative to the nation-state. Indeed, the erosion of the nation-state ultimately does little good for global markets as long as we lack viable mechanisms of global governance.

Second, there are cosmopolitan ethicists who decry the artificiality of national borders. As the philosopher Peter Singer has put it, the communications revolution has spawned a “global audience” that creates the basis for a “global ethics.” If we identify ourselves with the nation, our morality remains national. However, if we increasingly associate ourselves with the world at large, our loyalties will expand, too. Similarly, the Nobel Prize laureate economist Amartya Sen speaks of our “multiple identities” — ethnic, religious, national, local, professional and political — many of which cross national boundaries.

It is unclear how much of this is wishful thinking and how much is based on real shifts in identities and attachments. Survey evidence shows that attachment to the nation-state remains quite strong.

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