ONWARD TO A HOLLOW STATE

The modern nation-state is in a secular decline, made inevitable by the rise of a global market system. Even developed nations, like the US, are not immune to this process. The decline is at first gradual and then accelerates until it reaches a final end-point: a hollow state. The hollow state has the trappings of a modern nation-state ("leaders", membership in international organizations, regulations, laws, and a bureaucracy) but it lacks any of the legitimacy, services, and control of its historical counter-part. It is merely a shell that has some influence over the spoils of the economy. The real power rests in the hands of corporations and criminal/guerrilla groups that vie with each other for control of sectors of wealth production. For the individual living within this state, life goes on, but it is debased in a myriad of ways.

The shift from a marginally functional nation-state in manageable decline to a hollow state often comes suddenly, through a financial crisis. This crisis typically has the following features:

• Corporations and connected individuals systematically loot the nation-state of financial assets and natural resources through a series of insider/no cost deals. These deals are made to "save" the nation's economy or financial system from collapse.
  
• Once the full measure of the crisis is known, the nation-state's currency falls precipitously, it's debt becomes expensive, and it is forced to submit to international oversight/rules.
  
• The services the state provides rapidly evaporate as its bureaucracy is starved for cash/financing. This opens up a window for the corruption of government employees unused to deprivation.

The Dynamic of Primary Loyalties

The decline from functional but weak nation-state is extremely sudden. For individuals, there is a rapid and sustained decline in the standard of living. Additionally, there are spot shortages of critical items and commodities -- particularly food, medicine, and energy (since these are globally fungible). Large and small business fail across the board, or become prey to connected companies/individuals with access to the remaining coercive power of the nation-state. As the deprivation becomes commonplace, people turn to primary loyalties for support and services -- loyalties to a corporation, tribe, gang, family, or community. These groups, energized by new levels of loyalty but deeply obligated to reciprocate this loyalty with support, become extremely aggressive in pursuit of their survival. Once this shift in loyalty is made, a self-generating cycle of violence, crime, and corruption (fueled in large part through connections to the global market system) becomes entrenched. The nation-state, at that point, becomes irretrievably hollow.

The Looting

It's instructive to view the US Treasury's plans for a bail-out of the global financial system through the lens of the hollow state. By this measure, the bailout as it stands today, is a form of financial looting of the US Treasury (it isn't socialism, since the government isn't nationalizing the financial system). Trillions of dollars in government monies ($700 billion to begin with) will be infused directly into the coffers of corporations and wealthy individuals (via hedge funds). Specifically, the plan buys toxic assets at inflated prices and sells them back for nearly nothing -- no equity or assets of real value are provided in exchange for the purchase. The national debt will likely grow 20-30% in a single year, with obligations extended to many trillions more in guarantees.

Given this, one potential next step forward is a decline the credit rating of US debt (which radically increases the costs of US borrowing), a collapse in the dollar relative to more stable global currencies, and a rapid decline in government services. Other scenarios achieve the same result with different timing. Regardless, our (the US and the UK) journey to a hollow state has officially begun.

NOTE: Philip Bobbitt got it wrong in his book, "The Shield of Achilles." The prosperous market-state he envisioned through constitutional reform isn't possible. The REAL market-state, the form of governance that that has truly embraced the global market system, is hollow. In effect, a state that doesn't place any barriers between itself and the global marketplace. As a result, the only real opportunities created by the emergence of the market-state are opportunities to steal extreme wealth.

Comments

[jrmas]

Grover Norquist must be awfully cheery these days, he with the desire to make government small enough to drown in a bathtub. Design or accident?

[Cole Tucker]

This may reflect my ignorance, but it seems that the substantial capital (both infrastructure and knowledge-based) in the United States can ameliorate the debasing of living conditions to a large extent. My understanding of the consequences of hollow states comes mostly from your writings and McMafia, but it seems that the most catastrophic effects of globalization in Eastern Europe and the Middle East have arisen with a jump from almost feudal societies to open markets. Both regions appeared to have little of value to the global markets other than natural resources and desperate populations.

The recent financial depression seems to have awoken many people to the rampant corruption going on and mass-media can no longer keep the lid on it. What happens if the marks wise up before the real wealth departs and deteriorates?

[roamer]

Ok so to me it is clear we need resilent communties very soon. Local currencies, barter economies coupled with local food and energy production are doable, but one really big hinderance is that the base of any economy is the land. And my guess is that non oil based economy can not compete amongst petrodriven land prices nor afford the land tax rates. So how the heck do you see local economies starting short of collapse of the state?

[Duncan Kinder]

"The real power rests in the hands of corporations and criminal/guerrilla groups that vie with each other for control of sectors of wealth production. For the individual living within this state, life goes on, but it is debased in a myriad of ways."

The emerging role of drug gangs is complex.

For example, in Brazil's slums, there are complex relationships between drug gangs, on the one hand, and evangelical ministry, on the other:

"Brazil evangelicals seek drug gangs' lost souls"

http://www.reuters.com/article/worldNews/idUSN0132664320080915?pageNumber=1&virtualBrandChannel=0

quote:

With intense competition for souls among hundreds of evangelical denominations and a belief that anyone can be "saved," pastors have reached out to the traffickers.

"There was a trafficker in the community who killed people, chopped them up and ate them -- drank their blood. Now he is a man of God," the powerfully built pastor Ezequiel, wearing a cream-colored suit over a turquoise shirt, said before a recent sermon.

"What is behind the men who kill and take drugs is the Devil -- the Devil is imprisoning them. Vidigal can't be known as place of traffic; it must be known as a place of God."

Pastors have been known to preach on stage at the wild funk parties in slums that are financed by drug gangs

One pastor, known as Marcos, says he has rescued several hundred traffickers from imminent execution after trials by "tribunals" run by drug gangs, and helped them find God.

And once a drug trafficker goes to prison, he is ripe for conversion: evangelical prisoners are often housed in separate wings that are the envy of other inmates for their cleanliness and strict order -- with parallels to the appeal of Islam in U.S. prisons.

For drug bosses, good relations with the local pastor make the community easier to control. Sometimes, the two can even find themselves unlikely allies, such as when they defend their community from perceived police abuses.

The pastors and the drug traffickers have become so close in some places that there is a growing unease over the relationship.

"As traffickers have become stronger, they have started to try to have more control over religion in different slums," said Maria das Dores Campos Machado, a professor at Rio's Federal University who has studied evangelicals. "At the same time, as churches have grown, they have less control over pastors."

One result has been that traffickers in some slums get tattoos of the Christian cross on their arms and stop taking drugs themselves -- but continue to sell them to others and to kill their rivals.

"I think it's quite dangerous for the evangelicals to have this kind of connection, because it brings them more prejudice from society," Campos Machado added.

BENEFITS OF FAITH

But slum dwellers have few other options, with many left behind by the economic gains enjoyed by the rest of the country under President Luiz Inacio Lula da Silva and feeling abandoned by a Catholic church they see as out of touch.
:end of quote

[gmoke]

There is a similar relationship between drug dealers and a Catholic sect in Mexico. I read about it in Puerto del Sol, a Spanish language teaching audio magazine and don't have the details in front of me.

[Duncan Kinder]

gmoke:

You're probably thinking of Jesus Malverdi, the narco saint.

http://en.wikipedia.org/wiki/Jes%C3%BAs_Malverde

"Jesús Malverde, sometimes known as the "narco-saint", is a folklore hero in the Mexican state of Sinaloa. He is celebrated as a folk saint by some in Mexico and the United States, particularly among those involved in drug trafficking, but he is not officially recognized as a saint by the Roman Catholic Church."

[Padre]

John, would it be correct to term your theory of primary loyalties to a modern, globalised Roman Clientela, or patron-client relationships?

[Padre]

Sorry, I meant: ... would it be correct to term your theory of primary loyalties AS a modern ...

[Duncan Kinder]

"The services the state provides rapidly evaporate as its bureaucracy is starved for cash/financing"

The mighty American navy apparently no longer is in control of the high seas:

"US Navy: Shipping companies must tackle piracy"
http://ap.google.com/article/ALeqM5gvNw0t1OC6kJZbd9ofbbx92TdLgQD93CIS300

quote:
The international shipping industry must take on more responsibility to protect vessels against pirate attacks and kidnappings in the dangerous waters of Somalia rather than rely on the U.S. Navy, the commander of the 5th Fleet warned on Monday.

Vice Adm. Bill Gortney said the U.S.-led coalition patrolling the Gulf of Aden simply doesn't "have the resources to provide 24-hour protection" for hundreds of commercial vessels passing daily through these dangerous waters between Somalia and Yemen.
:end_of_quote

[Cavolonero]

Ways out ? Declare war and militarize the economy ( either vs. Iran or an abstract concept, ' terror ' ). Stall, ( bailout, wait and see what happens, hem and haw ). Sell out ( dust off my Chinese textbook ). Disolve union ( I liked ' True Lies ', but I don't want Arnold on my currency really ) What have you ?

[felixdzerzhinsky]

For Vice Adm. Bill Gortney. The Felix Dzerzhinsky Workers Defence Collective is willing to assist the international shipping industry in protecting against piracy. I am sure Blackwater will help out also in what Ralph Peter's has described as the "outsourcing of [in this case the US Navy's] honor.

In a totally different form of piracy I went to a Microsoft workshop in Cambodia recently and was lectured about the dangers and imorality of software piracy. Aftewards I received a pirate Lacoste T-shirt with Microsoft on it.

The USA is going down more from lack of morality than anything else. I used to be an American Ally.

[felixdzerzhinsky]

That last comment should read lack of morality in the political process. The corporate snouts at the political trough are going to do the US in.

I am NOT saying all Americans are immoral.

[complexfatwa]

"Philip Bobbitt got it wrong in his book, "The Shield of Achilles." The prosperous market-state he envisioned through constitutional reform isn't possible. The REAL market-state, the form of governance that that has truly embraced the global market system, is hollow. In effect, a state that doesn't place any barriers between itself and the global marketplace. As a result, the only real opportunities created by the emergence of the market-state are opportunities to steal extreme wealth."

Boy, I'm glad somebody finally called this one out.

One of the major faults of most academia is they rarely take seriously the idea that corporations have real-world power, and that this power has ramifications for the broader social structure. The days of egalitarian all-American industrial institutions are long gone; the market powers of today have little interest in prosperity, justice, or freedom. Why would a market state have any these?

One wonders whether or not Bobbitt ever stopped to consider how the Soviet collapse played out. Constitutional reform? Not when there's power to be had.

[Duncan Kinder]

Re: Somali pirates:

quote:

(CNN) -- A Ukrainian ship carrying tanks and ammunition has been seized by pirates off the coast of Kenya, the Ukrainian Defense Ministry told CNN.

The vessel Faina, flying a Belize flag, was headed to the Kenyan port of Mombasa after departing from Nikolayev, Ukraine, according to Lt. Col. Konstantin Sadilov, spokesman for the defense ministry.

He said it was seized by pirates on Thursday not far from its destination.

According to the defense ministry, the ship was carrying 33 Soviet-made T-72 tanks, tank artillery shells, grenade launchers and small arms.

The weapons were sold to Kenya by Ukraine, said Ukraine Defense Minister Yuri Yekhanurov, according to the Interfax-Ukraine news agency.

:end_of_quote
http://www.cnn.com/2008/WORLD/africa/09/26/ship.tanks/

[anarchonihilist]

The statist clowns posting above, bemoaning the demise of greedy, controlling government and hating free markets and freedom itself, are like children.

The financial mess was caused by too much gov't regulation and generosity to "redlined" home buyers.

[moon]

Duncan Kinder said: "The mighty American navy apparently no longer is in control of the high seas."

No one controls the high seas. Sea control has only ever been a local, temporary affair.

[Duncan Kinder]

Here is another perspective regarding the proper role of the U.S. navy vs. pirates:

quote:

Taking a historical view it pains me to read this. One of the primary reasons he United States of America dumped The Articles of Confederation and wrote the Constitution of the United States was to gain the power of taxation, and the primary reason the founding fathers needed taxation was so the country could build a Navy for the specific purpose of fighting pirates.

http://informationdissemination.blogspot.com/

:end_of_quote

[complexfatwa]

"The financial mess was caused by too much gov't regulation"

Really? Silly me, I thought complex derivatives and the credit-default market had something to do with it...

Perhaps you misunderstood; I have no illusions about the wasteful and self-serving nature of centralized government. But the idea that a Market-state is going to increase your opportunities ignores the vast empirical evidence that increased corporate autonomy does NOT result in increased freedom for the majority of the population (i.e. Mexico, Chile, the Philippines, Russia, Dubai, U.S. trends in income distribution and upward mobility), but rather vast inequality, corruption and institutional fragmentation.

But heck, what good are facts when you can resort to name calling, ideological parrot?

[anarchonihilist]

Those who want the government to use force to redistribute wealth to the "correct" amount per person are immoral and ignorant of history, as well as being my enemy and enemy of all freedom lovers.

[complexfatwa]

Who said anything about wealth redistribution? You're missing the point.

Did you even read John's brief? We're talking about market powers using the coercive powers of the state to enrich themselves, not social entitlement programs.

Think empirical trends, not politics.

[complexfatwa]

Correction: market elites, not market powers.

[Duncan Kinder]

The British navy also is recommending that merchant shippers arm themselves as protection against pirate attacks:

quote:

At a time when there is a record number of ships being hijacked off the coast of Somalia, Commodore Keith Winstanley said he believed that the situation has become so serious that civilian vessels should be armed.

He said that private security companies deployed in Iraq or Afghanistan could be better used guarding ships, which in pirate-infested regions need a "visual deterrent" such as mounted heavy machine guns. "This coalition headquarters is advocating that as an option," he said in an interview with The Daily Telegraph.
:end_of_quote

http://www.telegraph.co.uk/news/newstopics/politics/defence/3158498/UK-Civillian-ships-must-be-armed-against-pirates.html

[Eclipse Now]

Hey ComplexFatwa, great post when you wrote:

"Perhaps you misunderstood; I have no illusions about the wasteful and self-serving nature of centralized government. But the idea that a Market-state is going to increase your opportunities ignores the vast empirical evidence that increased corporate autonomy does NOT result in increased freedom for the majority of the population (i.e. Mexico, Chile, the Philippines, Russia, Dubai, U.S. trends in income distribution and upward mobility), but rather vast inequality, corruption and institutional fragmentation."

I'm going to have to agree with you. For all their "evil" and lack of democracy and accountability (as demonstrated in movies like "The Corporation"), could part of it be that we have a marketplace and multinational corporation system that HAS gone global, but democratic institutions that HAVE NOT?

High ranking members of the EU are now starting to talk about needing GLOBAL governance on the marketplace.(And this from conservative interviews in "Certain Ideas of Europe", a podcast from "The Economist!")

Anarchonihilist will probably call me a "global communist" but I'm all for democracy, but think we need to start developing a truly international democratic system of government. The EU seems to be the most exciting development in the last 20 or so years because it offers a model worth much more than a "United States of Europe". It offers the possibility of a world Federal government. So rather than the United Nations approach of diplomats working behind closed doors, we could move into a world of democracy out in the open and accountable.

My initial and developing thoughts on it are here
http://eclipsenow.blogspot.com/2007/06/reform-global-government.html

One of the arguments I have is that if the EU can develop out of a steel and coal agreement, why can't global agreements like the all-too-necessary Oil Depletion Protocol head us in a similar but global direction?

I'm interested in your thoughts?