Amanda Orza

Prof. Ivelin Sardamov

POS 304a, Global Political Economy
May 4, 2012
Take- Home Final Exam

In the conclusion to his book, The Rise and Decline of the State, van Creveld describes a future
beyond the state, where, on balance, the dangers and the opportunities are probably about
equal (p.421). Do you think this is a valid argument?

As Drucker noted, despite the fact that there has been much talk of the demise of the
nation-state in the face of globalization, the state has showed resilience. The common
economic wisdom guided by market liberalism propagated the benefits of globalization while
now it becomes obvious that it undeniably also brings dangers to the maintenance of the nation-
state system. Moreover, globalization imposes growing challenges which continue to burden the
state and question its ability to respond to these in an adequate manner. States continue to deny
the corrosion of national security despite their growing inabilities to tackle these challenges.
Structural changes are noted in numerous spheres as for example the world economy, financial
markets and societies. In a nutshell, as the situation is unfolding, states do not seem to be alert to
structural changes and they appease the business elite or offer similar strategies and policies
which have been proved in the past to be dysfunctional. If the states move away from the
common known paradigms, there is a chance that they would be able to balance the dangers and
the opportunities of globalization as van Creveld asserted. However, as it is, the states seem
lulled in their false sense of security.
The state created as van Creveld says an independent persona, which in time ceased to
be the unique in the provision of public goods and had to share authority with numerous non-
state and supranational actors that compensate for its shortcomings. As Susan Strange elaborated,
corporations and firms gain bargaining power in the arena of international relations and change
the nature of diplomacy. Drucker contends that the companies are still not beyond the reach of
the states as they have to adapt to different legislation and control. However, we see states losing
leverage and fighting over foreign and national firms to conduct business on their territory in
order to create wealth. The creation of virtual world money which exists only in the global
economy serves no economic function but as a means to real (political) power (Drucker).
Consequently, corporations have a significant influence not only on the global political
economy but also on the maintenance of order which used to be a function reserved for the state.
Moreover, through corporative interlinkages and complexities, a structural weakness developed.
As individuals strive to diminish their personal risk, the systemic risk increases. The economic
reality is that these decisions are made in and by the global economy rather than the state. Since
the corporations took advantage of the borderless world and created supply and production
chains across national and economic fault lines, through the diffusion of economic power, the
global economy became more liable to individual states whims (Lynn). The result was the
erosion of the states national security. However, the population and state functionaries still do
not grasp the magnitude of these interlinkages and believe in the preeminence of the state and its
ability to protect its citizens against the global market if needed.
The financial and economic crisis showed the inability of the international institutions to
effectively mitigate the consequences of the global networks. Consequently, it became clear that
the dangers lay in the increased interconnectedness and interdependence of the markets and the
unwillingness of states to hand over a part of their sovereignty to the international institutions. In
the absence of a global role-making authority that would understand that the threat was systemic,
national regulators and global institutions failed to control financial activity. While the global
financial system grew in complexity the global institutions and economic theories failed to
follow suit.
The dangers that globalization brings upon states are not reserved to the economic sphere.
With the diminishing of national sovereignty, the illegal trade intensified. Governments due to
their jammed bureaucracies, and obsolete strategies and laws have continuously proved
themselves unable to fight this transnational war (Naim). In other words, international trade,
instead of being a peacemaker as devised by democratic theory, facilitated the expansion of
global criminal. International law which was supposed meet these and other challenges, did not
develop any regulatory mechanisms but remained relentlessly concerned with the prevention of
protectionist measures and the maintenance of free trade. In this sense, the ideology of free trade
wrongly presupposes that trade and international trade organizations remain above politics
(Howse).
The global interdependence and the widespread promotion of consumerism had
influenced the social sphere as well. Moreover, they encouraged a sort of civic schizophrenia
embodied in the narcissistic individual which has largely been ignored. Private choices
inevitably have public outcomes which have to be suffered as a collective. A mere example of
social changes produced by cultural globalization is the New Girl Order lifestyle described by
Hymowitz. In this vein, the Western media introduced the values of brands, female
emancipation, and careerism, which fundamentally affected the demographics in terms of
population growth and gender imbalance. The state was supposed to respond to the challenges
imposed by a shrinking young population, and growing old population.
However, globalization seems to benefit only the ones already prosperous as it does not
provide safety nets for the marginalized parts for the society. While Drucker predicted the
decline of manufacturing and the creation of a knowledge society, Blinder saw an industrial
revolution leading to a division of labor based on the works compatibility with the information
and communications technology. In both cases the uneducated individuals and those who
provide personally delivered services are not accounted for. Thus, if the state does not step in and
repair safety nets, the unqualified individuals will not be able to pull through.
Globalization imposed numerous pressures on the state which it was not able to channel
and turn into its advantage. Due to the global market, global communications and global
terrorism the dynamics of sovereignty altered. Consequently, the international arena is not any
more demarcated by territorial but by market boundaries. The governments and their populations
remain oblivious while economic theories become inapplicable. Despite all of its failures, the
state is still regarded as a relevant structure. in order to prevail, the state needs to evolve,
recognize the potential dangers and benefits that globalization endows and turn them into its
advantages. Thus, as Drucker put it, the best way to predict the future is to create it.