Thursday, September 14, 2006

The New Market States

I had blogged last year about an interesting article on the creation of the new market state, not a national state perse but a privatized state capable of meeting the needs of global capitalism. That state could be a return to a city state, such as Sinagpore, or it could be a wholly privatized state where-in the citizens were contracted out for services. In effect citizenship was not unlike something out of Heinleins Starship Troopers rather than Rothbards libertarian contract state.
The Shield of Achilles: War, Peace, and the Course of History

by Philip Bobbitt

" A new form of the State — the market state – is emerging from this relationship in much the same way that earlier forms since the 15th century have emerged, as a consequence of the sixth great epochal war in modern history.

The “market-state” is the latest constitutional order, one that is just emerging in a struggle for primacy with the dominant constitutional order of the 20th century, the nation-state. Whereas the nation-state based its legitimacy on a promise to better the material well-being of the nation, the market-state promises to maximize the opportunity of each individual citizen. The current conflict is one of several possible wars of the market-states as they seek to open up societies to trade in commerce, ideas, and immigration which excite hostility in those groups that want to use law to enforce religious or ethnic orthodoxy.

A state that privatizes most of its functions will inevitably defend itself by employing its own people as mercenaries-with equally profound strategic consequences. "

In reality Privatization of the State has created a different model of Bobbits Market State. One we saw this summer in the war between Israel and Hezbollah. The former a national state the latter the creation of an asymetrical mini-state within a larger failed state. Those who refer to Hezbollah as an adjunct of Iran as if it were a poltical or military body under Irans control fail to understand this new state that is coming into being in the era of privatization and globalization. As the national States kowtow to the neo-conservative agendas of the World Bank and IMF that is reducing State owned enterprizes and increasing foreign capitals investment, they also begin to move away from providing services. Reductions in taxes and a incetives for privatization leaves the State incapable of dealing with infrastructure whether it is roads or schools, hospitals or welfare, policing or post offices.

Where the State fails new forms of governance, mini-states appear picking up the slack. While the greater State becomes more market orientated, the old state capitalist functions, welfare, construction, policing, etc. become the preview of the mini-state. In the early days of capitalism this was known as the pirate states. Areas given over to the freebooters on the high seas such as Madagascar, Jamaica, etc.

The return of these pirate states in the era of globalization shows the bankruptcy of the IMF/WB neo-con agenda. This is no less true in Bolivia today, the greatest failure of the IMF policy of privatization which has left poor provinces and one rich autonomous zone. The former now run the central government on the basis of the impoverished cocaine growers.

Drugs and narcotics, which allow for easy capitalization, are the source of monies for many of these new mini-states. In the United States in California after Proposition 13 which removed the State's tax base, the reduction in state services saw an increase in gang culture, as Real Estate brokers made money in the suburban developments and large commercial developments, leaving the heart of the cities to the poor. Here new mini-states were created by gang culture as Mike Davis has noted.

The disenfranchised who are left behind by the privatization of the capitalist state become subjects of the franchisee's of these new mini-states. Not citizens but prisoners in their neighbourhoods. Only an anarchist revolution which returns power into the hands of the masses to create and maintain their communities can counteract the continuing development of both the larger Market State and its mini-state franchises.

The New Middle Ages
John Rapley
From Foreign Affairs, May/June 2006

Summary: The Middle Ages ended when the rise of capitalism on a national scale led to powerful states with sovereignty over particular territories and populations. Now that capitalism is operating globally, those states are eroding and a new medievalism is emerging, marked by multiple and overlapping sovereignties and identities -- particularly in the developing world, where states were never strong in the first place.


You enter the ghetto through a warren of decrepit alleys crowded with locals seeking refuge from the hot night air of their cramped homes. Suspicious stares alert you that you have entered Kingston's gangland. But if the local don -- or "area leader," in the polite lexicon of official Jamaica -- has granted you permission to enter, you are safe. Here, news travels like dye in water.

The local gang maintains its own system of law and order, complete with a holding cell fashioned from an old chicken coop and a street-corner court. It "taxes" local businesses in return for protecting them, punishing those who refuse to pay with attacks on property and people. It provides a rudimentary welfare safety net by helping locals with school fees, lunch money, and employment -- a function that the Jamaican government used to perform. But over the last couple of decades, keen to reduce spending, it has scaled back many of its operations, leaving a vacuum. As one kind of authority has withdrawn, another has advanced.

Jamaica's gangs -- each a fluid but cohesive organization with a clearly demarcated territory -- fund their activities partly through their participation in one of the industries in the vanguard of globalization: the transshipment of illegal drugs. Although at first glance the gangs seem to be at odds with the government, the local police frequently cooperate with the dons, whose ruthlessly efficient rule can make the cops' jobs easier. The result is a tenuous quid pro quo: if the dons keep order, the police turn a blind eye to the drug trade. Besides, direct assaults on the gangs are often futile. Even when the police capture dons or their gunmen, convictions are next to impossible to obtain because potential witnesses remain silent out of loyalty or fear. Just as the rise of the modern state generated conventional symbols of loyalty -- flags, anthems, national heroes -- so does gangland culture reflect the new power structure. The dons patronize deejays who celebrate them in song, and huge crowds turn out for the gang leaders' funerals, waving flags that symbolize their rule.

Kingston's gang-controlled neighborhoods are just one result of a growing worldwide phenomenon: the rise of private "statelets" that coexist in a delicate, often symbiotic relationship with a larger state. Large sections of Colombia have gone this way, as have some of Mexico's borderlands and vast stretches of the Andes and the adjoining rain forest. Countries such as Afghanistan and Somalia are more or less governed by warlords, and Pakistan's borderlands submit to Islamabad only when the state's armed forces force them to. Private militias have carved up whole swaths of the Democratic Republic of the Congo and Papua New Guinea, and at one point militias ruled the Solomon Islands. And the list is growing.

Policy debates and the academic literature on international relations have been preoccupied lately by discussions of so-called failed states. Not all cases in which private actors have assumed statelike functions, however, involve chaos or failure.

Also See:

A History of Canadian Wealth, 1914.

Free Trade; Hong Kong & Somalia

The Spectacle of War on Terror

Calgary Fraud Funds Dubai Boom

The Soviet Union Capitalism's Bulwark

Are Income Trusts Money Laundering

Plutocrats Rule

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