Saturday, August 16, 2008

The Decline of the State

"The state, which since the middle of the 17th Century has been the most important and most characteristic of all modern institutions, is in decline. From Western Europe to Africa, many existing states are either combining into larger communities or falling apart. Many of their functions are being taken over by a variety of organizations which, whatever their precise nature, are not states." This was written by Martin van Creveld, a Professor in the Department of History at the Hebrew University, Jerusalem in his book "The Rise and Decline of the State," published by the Cambridge University Press in 1999.

Who could have imagined as they sat in Number 10 Downing Street at the end of the 19th Century that within 100 years the British Empire on which the Sun never sat, would be reduced to Great Britain and Northern Ireland or that there would be serious talk in Wales and Scotland of secession.

Who could have imagined as they stood atop the Kremlin watching the annual May Day parade in 1980 that in a little over a decade the USSR would be no more and the Berlin Wall would be dismantled by the people of a united Germany?

Czechoslovakia and Yugoslavia are no more. Belgium is in the midst of dividing itself. Ethnic groups such as the Basques and Kurds are eager to part ways with Spain and Turkey. Russia is busily dismantling Georgia, birth place of Joseph Stalin.

How many Americans are aware of the current movements in Vermont and Hawaii to secede from the United States?

To our south Mexico has been fighting for a decade or more to hang onto Chiapas, while Sonora and other northern areas find more and more in common with Arizona, New Mexico, California and Texas. In western Canada and the northwestern United States there is a growing affinity.

In "The Untied States of America," Juan Enriquez visualizes alternative realities in which the United States could grow to as many as sixty states or shrink dramatically from the current fifty within a generation. His speculation is twenty years after a similar analysis by Joel Garreau gave us "The Nine Nations of North America."

And, in his book "The Black Swan" Nissim Nicholas Taleb describes the disintegration of his country, Lebanon.

What is behind this uncertainty regarding state stability? According to the analysis by van Creveld, the state rose to dominance as it became able to achieve a monopoly on violence and the supply of money while becoming a nanny to its citizens.

The primary function of the state in van Creveld's formulation was to wage War on other states. War requires the ability to raise money, tax, organize and mobilize. War also provides an emotional bond and unifying force to bind the state. War necessitates the state. As Randolph Bourne famous essay points out in its title: "War is the Health of the State." Another meditation on this premise is "The Report from Iron Mountain" most probably written by Leonard Lewin and published in 1967.

In the context of creating an emotional bond and a unifying force to bind the citizen to the state, the Olympics are a distant second to War if for no other reason than that the stakes are so much more sane.

Once the expense of War gets to a certain point it becomes advantageous for the state to take control of the medium of exchange and store of value, the money. This enables the state to disguise the true cost of warfare as well as the true cost of the state by the convenient device of debasing the money. Eventually the costs became so high that money became decoupled from any objective measure of value. The ability of a state's money to continue as a medium of exchange is really a function of the willingness of the populace to accept the paper. Put another way, modern state money is really a confidence game.

Simultaneously, in order to demonstrate a value proposition sufficient to justify the state--while keeping the natives satisfied, stifling dissent and creating loyalty--Bismarck came up with the idea of the welfare state. His original system of Social Security, subsequently copied around the world, used the false mathemetics of the proverbial Ponzoi scheme to create the illusion of real and sustainable financial benefits for the individual citizen of the state.

A brilliant analysis of the rise and operation of the American welfare state is, "Dependant on DC" by Charlotte Twight. The Rainmaker suggests you explore Twight's book in depth if you doubt any of the assertions made here about the welfare state.

However, in the last half of the 20th Century the underpinnings of the state became more stressed.
  • Beginning in 1945 the advent and use of nuclear weapons made the prosecution of the state's primary function--War--a more difficult, expensive and risky proposition. Use of these ultimate weapons was effectively denied to Superpower states such as the United States and the USSR, each of which suffered unexpected military reverses in Viet Nam and Afghanistan, but neither deployed nuclear weapons.
  • Beginning in the 1970s the inherent unsustainabilty of the welfare state became apparent. For a time most states attempted the expedient of raising the taxes on workers to sustain the vaunted "Social Safety Net," but eventually with payroll taxes approaching 40% in Western Europe the carrying capacities of modern state economies maxed out, resulting in economic stagnation. The people became ever more aware that the welfare state was at best an empty promise and at worse a fraud designed to exploit citizens.
  • Beginning n the 1980s the decoupling of state monetary systems from real value led to a series of inflationary spikes, speculative bubbles and collapses continuing into the 21st Century demonstrating to more and more people that currencies of nation states are often worth even less than the paper they are printed on and are really mechanisms to impose hidden taxes on citizens while hiding the true cost of government.

Finally, in the early 21st Century the planet's remaining Superpower became involved in a War with a shadowy group of terrorists that were able to resist the massive power deployed against them, evading defeat, capture and punishment for longer than the Axis powers were able to survive after Pear Harbor. In an effort to mobilize and motivate its citizens the government of the United States embarked on a concerted program of increasing state power, eroding civil liberties and symbolic measures such as forcing travelers to remove clothing and surrender toiletries in order to instill fear and justify loyalty.

The Rainmaker believes that as we move deeper into the 21st Century the relevance and power of the state will continue to wane. States in one form or another will probably continue to exist for the foreseeable future, but they will be a shadow of their former selves sooner rather than later.

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