Market State

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According to Philip Bobbitt, author of a seminal book on the history of the state form, i.e. The Shield Achilles, the nation-state has been replaced by a new constitutional order, the market-state.

These market states enter also in conflic with "virtual states" such as Al Qaeda.


Citation

"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. States make war, not brigands; and the Al Qaeda network is a sort of virtual state, with a consistent source of finance, a recognized hierarchy of officials, foreign alliances, an army, published laws, even a rudimentary welfare system. It has declared war on the U.S. for much the same reason that Japan did in 1941: because we appear to frustrate its ambitions to regional hegemony." (Bobbitt, cited at http://globalguerrillas.typepad.com/globalguerrillas/2005/11/journal_markets.html)


Characteristics

Clay Spinuzzi:

"The market-state has these characteristics:


  • It depends on international capital markets to create stability.
  • Its political institutions are less representative, more democratic.
  • It “assesses its economic success or failure by its society’s ability to secure more and better goods and services, but in contrast to the nation-state it does not see the State as more than a minimal provider or redistributor” (p.229)
  • It “exists to maximize the opportunities enjoyed by all members of society” (p.229). Personal autonomy is more valued and prevalent (p.668).
  • It sees currency and jobs as simple commodities.
  • It is “classless and indifferent to race and ethnicity and gender” (p.230)
  • It is not characterized by the rule of law, as the nation-state was, but by a level playing field.
  • It often chooses to restrain government in order to reduce transaction costs.
  • The marketplace replaces the factory as the economic arena; people are consumers rather than producers. (p.230)
  • Teamwork and harmony become better indicators of an organization’s long-term prospects than other indices (p.232) (cf. Heckscher & Adler, Castells, Drucker, Toffler)"

(http://spinuzzi.blogspot.com/2010/03/reading-shield-of-achilles.html)


Typology

David Ronfeldt:

"In Bobbitt’s analysis, the nation state came in three varieties that contested for dominance across most of the 20th Century: communism, fascism, and parliamentarianism (or parliamentary democracy) — and parliamentarianism triumphed.


Likewise, he claims, the rise of the market state will induce a new contest — even wars — among its own three varieties: the mercantile state, the entrepreneurial state, and the managerial state:

- “The fundamental choice for every market-state is whether to be (1) a mercantile state, i.e., one that endeavors to improve its relative position vis-à-vis all other states by competitive means, or (2) an entrepreneurial state, one that attempts to improve its absolute position while mitigating the competitive values of the market through cooperative means, or (3) a managerial market-state, one that tries to maximize its position both absolutely and relatively by regional, formal means (trading blocs, etc.).” (p. 283)

Metaphorically, Bobbitt likens living in a system of entrepreneurial states (like the U.S., or China) to The Meadow, managerial states (like the E.U.) to The Park, and mercantile states (like Japan) to The Garden (pp. 721 ff.).


Of the three, he favors the spread of the entrepreneurial version. And he recognizes that nonstate actors may play decisive roles in determining which model prevails — even as he also doubts that business leaders will play their role properly in fostering the entrepreneurial model, the one they should like the best:

- “I speculate that leadership for this move is likelier to come from the leaders of multinational corporations and nongovernmental organizations (NGOs) than from leaders of the national security apparatus and the political establishment, but I concede that business leaders are generally not prepared for such a role today.” (p. 337)

Intriguing points. And I like his recognition of the increasing influence of NGOs and other nonstate actors. Yet, this is a rather benign threesome — too much so. In contrast, his prior threesome consisted of two totalitarian systems (communism and fascism) and one democratic system (parliamentarianism). From a TIMN perspective, those three reflected conflicting views about +M. Communism rejected +M, fascism accepted but suborned it, and democracy embraced it. And democracy’s +M qualities were what enabled it to defeat the other two.

In the future, all market states will be +M to one degree or another; and many may be kinds of democracies that correspond to Meadows, Parks, and Gardens. This should make for a better world. But let’s not discount dark possibilities that some market states may turn out to be so corporatist, controlling, stratified, greedy, and oppressive that they are more like Wilds, Wastelands, Jungles, or Hot Houses. Communism is surely defunct, but fascism — as in “friendly fascism” and “soft fascism” — still has potential. And a kind of quasi-totalitarian “surveillance state” may develop at the core of one or another market state. Not all — perhaps very few — market states will aim to enhance people’s possibilities as Bobbitt proposes. Some may resemble a “spectator state” more than a “participatory state” (to bandy about some other trendy terms).

In other words, from a TIMN perspective, the range of likely varieties is broader than Bobbitt’s threesome; it should be expanded to include more totalitarian as well as more democratic varieties. Furthermore, if liberal democracy’s +M factor explains why it won in the last epoch, and if the contests next time are going to be between late market states, TIMN suggests that the winners next time may be those states that have best figured out the network (+N) form — a form that Bobbitt’s account does not distinguish." (http://twotheories.blogspot.com/2010/04/bobbitts-market-state-vis-vis-timn.html)

Discussion

Critique from David Ronfeldt

"My concern is Bobbitt’s “market state” concept, starting with its definition and timeline. (Note: Unless otherwise indicated, the quotations and page references from Bobbitt’s book are probably from Ogilvy’s document.)

I have yet to spot a full, single definition of the market state. But to judge from scattered elements, it is about states becoming shaped more by global market forces — by globalization — than by national forces of all kinds. It is also about governments redesigning themselves to rely on market-oriented measures: e.g., decentralization, deregulation, privatization, outsourcing, subcontracting. Moreover, Bobbitt claims that “the market state exists to maximize the opportunities enjoyed by all members of society” ( p. 229). It is “above all, a mechanism for enhancing opportunity, for creating something — possibilities — commensurate with our imagination” (p. 232). That purpose, in Bobbitt’s view, is its hallmark, making the market state philosophically and strategically distinct from earlier varieties of the state.

As to timeline, Bobbitt treats the market state as something quite new. He dates its appearance from 1989, and foresees that the “transition to the market-state is bound to last over a long period” (p. 233). At present, “the market-state has not fully emerged or been fully realized and accepted by any society” (p. 335). Indeed, he reiterates in an interview, “We are only just a few of years down the road to what will be a many decades long process, but you can already see signs of this happening.”

Yet, what seems mostly new to me in all of this is Bobbitt’s novel name for the phenomenon. In substance, it is not much different from what Richard Rosecrance earlier termed the “trading state” (1986) and the “virtual state” (1999). More to the point, I’d say, its emergence began in the early 1970s when “transnational interdependence” began to gain notice in writings about the rise of multinational corporations and other nonstate actors, the fusing of domestic and international matters, the globalization of commerce and communications, and hence the growth of new constraints on the traditions of sovereignty and territoriality. (See writings by a host of theorists back then, notably Robert Keohane, Joseph Nye, and James Rosenau).

Thus, it is inaccurate for Bobbitt to go on to argue, as he does in his next book, that developments like these “are outside the frame of reference of the popular theories of international relations that circulated at the end of the 20th century” (pp. 30-31). Many of the trends he emphasizes had been noticed for decades and took hold during the Reagan, Bush, and Clinton presidencies in the 1980s-1990s. Even the individualist, opportunity-maximizing goal that Bobbitt stresses reflects the libertarianism that has coursed so strongly the past decade or two. And it is not at all clear that other market states elsewhere will be so libertarian — possibly quite the contrary.

In other words, insofar as the United States is concerned, Bobbitt’s concept is far more a reflection of the present than a portent of the future, and it’s been developing decades longer than his analysis conveys. It may be true that the nature of the market state is still unfolding in the United States, and that it has barely taken hold elsewhere around the world. But it may also turn out that the recent U.S. version proves more an exception than a rule, more ephemeral than enduring.

Thus, my TIMN angle is that, much as I’m impressed by Bobbitt’s coinage of “market state” as a term, it may turn out to say more about the American present than the world’s future, and it began to emerge decades earlier than he argues. The term does illuminate the exalted (overweening?) influence that global market forces exert over states these days. It also reflects the rising importance of outsourcing, subcontracting, and other market-oriented measures — sometimes called “government by market” (or acidly, “market-mimicking governance”) — as options for government policies and programs. That is useful and revelatory; it means the concept helps focus people’s perceptions on how powerful and pervasive market forces have become. But are we thereby opening our eyes to the beginning or the end of a long trend?

Let’s recall that the +M form began to spread centuries ago, and that its principles long ago filtered into and altered the nature of states, enabling the rise of increasingly open competitive political systems. That helps account for Europe’s evolution from the absolutist state to the liberal democratic (or parliamentary) state — in other words, from a state devoted to hierarchical (+I) doctrines, to a state whose electoral, party, and other structures also rested in part on market-like (+M) political principles.

From a TIMN perspective, then, the market state actually has a long history. It overlaps with the nation state and does not represent a departure from it as Bobbitt claims. Indeed, the world’s major liberal democracies —nation states all — have amounted to early market states for over a century. What Bobbitt has illuminated is the late market state — its overwrought aging, not its youthful rise.

If Bobbitt’s “market state” is better viewed as the “late market state” arising a century or so after the “early market state,” then its rise is occurring on the eve of the next major form: the network (+N). And that suggests a new proposition about TIMN dynamics. I’m not sure, but perhaps absolutism in the Middle Ages may be viewed not only as a pinnacle of the +I hierarchical form, but also as its overwrought exaltation, again on the eve of the rise of a next major form: in that era, the market (+M). Perhaps — and here’s the proposition (phrasing tentative) — the late aging of one form may interact with the germinal stirrings of the next in a way that leads existing regimes to overemphasize the aging form, partly to defend against the rise of the germinal form that those regimes are just beginning to detect.

Indeed, the details of Bobbitt’s analysis — the trends he stresses, the terms he uses — are often as much or more about the +N form than the +M form. He has confounded and conflated the market (+M) form with what is really new and next: the rise of the network (+N) form. A system of late market states is emerging, but so too are the outlines of what will in time supersede the market state: something akin to a network (or nexus) state." (http://twotheories.blogspot.com/2010/04/bobbitts-market-state-vis-vis-timn.html)


Critique from Philipp Blond

"we know what is right and what is wrong with the market state. Clearly the market is a more effective and efficient mechanism for the distribution of many resources than the state. Evidently if one can enter the market place and if one has something to trade - the market creates wealth, prosperity and independence. Finally there is the manifest good of liberty and unless this has an economic reality - one would exist under the permanent subjugation of the state, or the private cartel. Yet we also know what is wrong with the market state – too often it replaces a public monopoly with a private cartel. In the name of breaking up the state too little attempt was applied to breaking up the market. Under the dispensation of the market state, private replaced public monopoly and market entry was effectively and progressively denied to newcomers. The majority of Britons having being denied entry to the market lost any access to investment capital. Thus the ability to transform one's life or situation steadily declined as wealth flowed upwards rather than downwards and a new oligarchical class, asset rich and leverage keen, assumed market freedom was synonymous with their complete ascendancy. Market fundamentalism abandoned the fundamentals of markets. Prudent Chancellors promised no more boom and bust, the state sanctioned monopoly capitalism and sat happy on the tax receipts of unrestrained global gambling. As Labour stoked the engine of inequality - it abandoned the rest of the economy for the receipts of city speculation and the re-distributive power of welfarism . Thus the market and the welfare state merged into one as they both colluded in a system whose bankruptcy is now ongoing and self-evident.

The welfare state and the market state are now two defunct and mutually supporting failures. The real merit of the current conservative renaissance has in some way escaped notice. Those on the now bankrupt left argue that the new Toryism is but a cover for Thatcherism Mark II, while those on the bankrupt right secretly agree and seem to want nothing more than a return to monopoly capitalism and the dominance of their kind of people.

Modern conservatism rejects both dispensations as it seeks to replace the welfare and the market state with the Civic State." (http://www.respublica.org.uk/articles/civic-state)


More Information

  1. in-depth review of the Shield of Achilles, by Clay Spinuzzi at http://spinuzzi.blogspot.com/2010/03/reading-shield-of-achilles.html