THE SHIELD OF ACHILLES (43 page)

The revolution in modern communications that began with the telegraph changed warfare and virtually ensured the emergence of the nation-state.
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Ultimately, developments in communications technology also were decisive in the Long War. It has been argued, by Mary Fulbrook among others,
that it was the manifest incompetence of the East European regimes, as reflected in the implicit contrasts made available by West European television to the publics of those regimes, that ultimately delegitimated the governments of the Warsaw Pact.
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Eric Helleiner's book,
States and the Reemergence of Global Finance: From Bretton Woods to the 1990s
,
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convincingly argues that the government policies of nation-states have played a decisive role in the stunning globalization of commodity pricing, interest rates, and the availability and pricing of credit.
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I should like to connect these works of scholarship by suggesting that it was the change in the nature of the states fighting the Long War, a change brought about in part by communications technology, that moved those states gradually and then rapidly to shift away from controls on the private movement of capital and ultimately to permit the virtually uninhibited flow of capital among developed states. Very simply, the victorious Western nation-states of the Long War, plus West Germany and Japan, by relying on the market to allocate resources efficiently within their domestic economies effectively extrapolated this approach to all the states of their alliance. What had been true within a single state proved true among states. The attempt to control currencies and investment in the socialist states turned out to be a crippling mistake, draining away investment that might have been indifferent to the human rights shortcomings of such regimes, and walling those states off from international trade that required convertible currency. The nation-state, which had established its reputation as a provider of welfare to the nation by guaranteeing a unified national market and providing protection against foreign competition and access to foreign markets, was supercharged when the liberal democracies applied the same principles to their interstate trade and finance. The effect of the reduction on direct controls and taxes on capital movements, the liberalization of long-standing regulatory constraints on financial services, the expansion of relationships with offshore financial harbors, and the disintermediation that accompanied these steps made states much wealthier. At a price.
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The price these states were compelled to pay is a world market that is no longer structured along national lines but rather in a way that is transnational and thus in many ways operates independently of states. At the micro level, this is true of the multinational firm, which moves its location to optimize conditions for its operation, taking into account the nation-state only as a source of tax breaks and incentives to be sought, or as a nettle of regulations to be avoided. Far from being dependent on the local government, these corporations are seen as providing desperately needed jobs and economic activity, so that the state is evaluated on whether
its
workforce has the necessary skills, and whether
its
infrastructure has been suitably configured to attract the corporation. At the macro level, this development applies to capital flows, in the face of which every country appears powerless to manage its monetary policy. Walter Wriston, the former chairman of Citibank, described and defended the process of capital decontrol as follows:

Approximately four trillion dollars—a figure greater than the entire annual GDP of the United States—is traded every day in currency markets. The consequences of these trades for the economic well-being of any particular nation-state can be decisive. There is a grotesque disparity between the rapid movement of international capital and the ponderous and territorially circumscribed responses of the nation-state, as clumsy as a bear chained to a stake, trying to chase a shifting beam of light.

Finally, communications—in the broadest sense of that term, encompassing all human logistics—have increased the dangers posed by transnational threats (like those of new diseases once confined to remote incubators, or wounds to the global environment that once took centuries to materialize, or abrupt population shifts and migrations that were once locally confined, to take but three examples). Moreover, the global communications network itself presents a new and fraught fragility as to which merely national protection is pathetically inadequate.

The most important consequence of these developments is that the State seems less and less credible as the means by which a continuous improvement in the welfare of its people can be achieved. Many states, including most notably the United States, have experienced considerable difficulty in achieving stability even regarding their own budgets. Their difficulties with chronic deficits and ever-mounting debt are instructive. Of course there is nothing wrong with a state taking on debt. Every corporation does this. If taxes can be analogized to equity contributions, then it can properly be said that a state should maintain the balance of debt and equity it thinks appropriate at any given time. During the development of the American West, and during the Second World War, the U.S. government acquired debt as an even greater proportion of its national wealth than today. What marks the current period as different is the way in which the funds thus acquired have been used: the proceeds of this borrowing have been returned as consumption—that is, to improve the immediate welfare of the people—rather than to fund investment in infrastructure; and much of that consumption has been expatriated as earnings to foreign firms. A nation-state government simply finds itself unable to either balance its budget (because it cannot reduce welfare outlays to all sectors) or redirect the proceeds of its borrowing, because only by borrowing money can it continue plausibly to claim that it is bettering the welfare of its people, much as the manager of a Ponzi scheme, by distributing to investors the proceeds of fresh participants, can continue to claim that his stock portfolio is thriving. Such policies have an inevitable end, as everyone recognizes. There is no reason why a state cannot grow out of its deficit, but to do so, however, it will have to increasingly abandon the objective of the government's maintaining the ever-improving welfare of its citizens.
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That is, it will have to change the crucial element of the basis for its legitimacy as a nation-state. As we will see in a later discussion, this is precisely what the Bush administration in the United States and the Blair government in Great Britain were in the midst of doing at the beginning of the twenty-first century.
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From this perspective President Reagan and Prime Minister Thatcher were among the last nation-state leaders. Although they offered radically new policies, they appealed to the same basis on which to judge those policies—whether they improved the welfare of the people—as did their great welfare-state predecessors. Bush and Blair, however, are among the first market-state political leaders. They appeal to a new standard—whether their policies improve and expand the opportunities offered to the public—because this new standard reflects the basis for a new form of the State.

Although it may surprise many readers, the corporation was a nation-
state vehicle to improve the welfare of its citizens. Replacing the great trusts and partnerships of the state-nation, the corporation bureaucratized the management of business, making it feasible for the State, through regulation, to temper the profit motive with concern for the public welfare, replacing the enterprising if ruthless entrepreneur with the modern manager. This varied in degree from nation-state to nation-state, but through-out the First World the corporation was the legal structure by which the political objective of improving welfare was grafted onto the market.

The revolution in debt financing of the 1980s dramatically changed this. By mobilizing hitherto uninvolved shareholders and drawing on capital raised by high-yield (junk) bonds that promised—and delivered—excellent rates of return, wave after wave of mergers and takeovers transformed the management of large corporations. The “fat” that new managers were able to squeeze out of the companies they took over in order to pay the interest on the debt by means of which they had bought a controlling percentage of shares, in some measure came from the nonprofit, public welfare role of the corporation. Huge savings did not accrue through shutting down private dining rooms, whatever the corporate raiders said. Savings on this scale came from downsizing and layoffs. The productivity gains made possible by the computer chip and the immediacy of information brought about by the revolution in communications combined to replace corporate managerial control (which tended to favor stability over enhanced competitiveness) with control by the capital markets. The corporation had failed to maximize the opportunities of its shareholders because it insulated business decisions from competition. Indeed there was really no way that even the most enlightened managers could both protect the welfare of the community and create the lean, nimble enterprises capable of prevailing in the global marketplace.

The third promise of the nation-state was that it would protect the cultural integrity of the nation. Whether this applied to national liberation movements in Third World colonies whose cultures had been suppressed or to ethnic groups like the Czechs or Poles, who found themselves submerged within a larger national culture, or to the Germans, whose culture was fragmented among many states, or to the Italians, to whom all of these disabilities at one time applied, the nation-state promised a wholeness. One nation, one state.

Here too the strategic innovations of the Long War played a transformative role. Mass electronic communications made possible mass ideological propaganda on a scale and of an immediacy hitherto impossible. Of course propaganda has long been a military tool: Napoleon's battle dispatches no less than his calls for liberty and equality were studiedly drafted to move
public opinion. Romanticizing war-making served his political goals. Napoleon did not believe that public opinion would decide the issue at Waterloo or Austerlitz or Borodino, however. By contrast, the morale of the entire nation is crucial to the prosecution of twentieth century warfare. That is why the morale of any enemy public—as opposed to the morale of the army and its ruling elites for Clausewitz and Napoleon—must be crushed by the nation-state at war. For the same reason the morale of one's own nation must be inspired and reassured.
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The globalization of communications, however, wrests control of this morale from the instrumentalities of the nation-state. Foreign broadcasts, for example, are the primary news source for 60 percent of educated Chinese, despite the efforts of the People's Republic of China to control the content of information going to its public. Access to the Internet will inevitably increase this figure.

On behalf of the victorious nation-states of the Long War, propaganda has been chiefly directed at advertising the ideology of democracy, equalitity, and personal freedom. With respect to democracy, it may be that, in the words of one analyst, such advertising has persuaded “too much,”
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for few nation-states can provide examples of the kind of democracy that is propagandized. In any case, it is well-documented that the publics of the Western democracies do not generally believe in many of the practical constitutional underpinnings of the parliamentary states. For example, the publics in the United States and the United Kingdom do not believe in an adversarial political system (“Why can't the politicians put partisan differences aside and do what's best for the country?”); they do not believe in the protection of criminal rights (“If he's not guilty, why do you think he was arrested and indicted? A criminal should not go free on ‘technical' grounds”); they do not believe in the adversarial role of lawyers (“If we could just sit down without the lawyers, we could sort out our differences. A lawyer only wants you to hear his side of the story”) and cannot bring themselves to believe that an ethical attorney would defend a client he believed to be guilty or take a position on a legal question solely because it was in his client's interest to do so
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Americans, by significant majorities, believe there should be prayers in the public schools, that news reporters should be forced to reveal their sources when presented with a subpoena, that a refusal to testify on one's own behalf is tantamount to a confession of guilt, and that politicians generally—though not, it should be noted, one's own congressman—are professional liars and that federal judges
should not have life tenure—all attitudes that are considerably at variance with the constitutional operation of the system that, taken as a whole, Americans revere.

Nor can the nation-state assure equality, if by that is meant the equal treatment of different cultural communities. The boundaries of the states of the world do not, and could not, coincide with the various cultural communities that make up their populations, communities that are bound by common religion, language, or ethnicity, because these communities themselves are often overlapping and multiple but seldom coextensive. Moreover, the nation-state is, oddly, the enemy of “nations” as such, or ethnicity, because, at least in its most popular form, it must ally one, and only one, ethnic group with the State, which also must be unitary, with one and only one sovereign. Bismarck's nation-state, not Lincoln's, has generally been the model for the world.

Or to put it another way, we will inevitably get a multicultural state when the nation-state loses its legitimacy as the provider and guarantor of equality. And this legitimacy it must lose if equality is understood as an equality among ethnic groups. This is apparent in such appalling but doubtless well-intended experiments as the Australian adoption and relocation of Aboriginal children, as well as the useful but regrettable American practice of affirmative action. In both cases, a dominant national group is setting the terms of assimilation on the basis of which the State will assure equality to individuals and, by setting those terms, implicitly denying equal status to the group that is thought to be in need of assistance. Without affirmative action, the presence of some ethnic groups will be diminished in some meritocratic professions and institutions; with affirmative action, many will be confined to a second-class status that is re-enforced by the hostility of those who are displaced. Either way, it is the cultural standards of “merit” that set the terms of the debate, that is, that require “affirmative” action in the first place, or that seek to block that action on grounds that it is unjust.

These two opposing but interacting phenomena—the oppression of minority groups by the nation (that is, by the dominant ethnic group with whom the State is identified) and the resistance to an assimilation that might overcome oppression—are damaging to the legitimacy of those nation-states that are based on the promise of assuring equality among all national members.
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As a result, it is increasingly difficult in multicultural, multiethnic states to get consensus on public-order problems and the maintenance of rule-based legal action, which are core tasks of the State.

Finally, the techniques of mass propaganda also threaten the claim of the State to ensure the conditions of freedom.
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This is most easily seen in
the immense power of the modern electronic media and the press. More than any other development it is the increased influence of the news media that has delegitimated the State, largely through its ability to disrupt the history of the State, that process of self-portrayal that unites strategy and law and forms the basis for legitimacy. This perhaps is most egregiously evident in phenomena like the digitized re-creation of President Kennedy's assassination in a movie “showing” a government plot to kill the president, but it is also evident in the nightly news broadcasts, where confident and placid presenters portray the political events of the day as repetitive, formulaic entertainments. Journalists themselves soon become the important characters in the historical narrative portrayed by journalism; politicians and officials merely provide the props. The story of government becomes the story of personalities in conflict with the media itself, and the story of official evasion and incompetence unmasked by the investigative entrepre-neurs of the news business.

The press and electronic media, far more than the drab press releases of any government, are the engines of mass propaganda today, and it should be borne in mind that the press, when it is not controlled by the State, is driven by the need to deliver consumers to advertisers,
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and whether State-owned or not, is animated by the conditions of competition among all news media. Whatever the individual aspirations of its reporters and editors, the ideology of media journalism is the ideology of consumerism, presentism, competition, hyperbole (characteristics evoked in its readers and watchers)—as well as skepticism, envy, and contempt (the reactions it rains on government officials). No State that bases its legitimacy on claims of continuity with tradition, that requires citizen self-sacrifice, that depends on a consensus of respect, can prosper for very long in such an environment. It must either change so as to become less vulnerable to such assaults, or resort to repression. Some nation-states do the latter; the liberal democracies, whose claims to ensure civil liberties are as much a part of their reason for being as any other functions, cannot do this. At best they can manipulate information and resort to deception, thus poisoning the history on which they themselves must ultimately depend. This is the province of the “spin doctor” whose role in government has become correspondingly more important.

International telecommunications are also responsible for the exposure of human rights abuses and the resulting demands on the nation-state that it obey laws not solely of its own choosing. In the war in Kosovo, to take a single example, NATO entirely bypassed both the U.N. Charter and the laws of Yugoslavia in order to stop ethnic cleansing by Serb officials who could claim, doubtless correctly, that they were only obeying the orders of a lawfully elected government in Belgrade. It now appears that even reconciliation commissions cannot confer effective amnesties for acts by officials
within their own countries. They may, it seems, be prosecuted after all by courts in other countries as happened to General Pinochet when he ventured abroad for medical treatment. These developments show no sign of abating.

There are other strategic innovations that arose during the course of the Long War that will have an important effect on shaping the new constitutional archetype that will succeed the nation-state. Foremost among these innovations was the introduction of the computer. It was an early computing device and a team of mathematicians, for example, that allowed the British and later the Americans to read the classified communications of the Nazis and the Japanese during World War II.
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This permitted the strategic deceptions at Normandy and at Midway without which the war certainly could not have been won at the time and in the dramatic way that it was won by the Allies. The Long War did not merely co-opt but actually caused this technology to be developed. The Internet, for example, a system of linked computer networks, was the outgrowth of an American defense agency effort to create a communications system that would survive a nuclear attack.

Computer technology has decentralized the availability of information and at the same time opened up new channels of information to the nation-state. More information now flows to every public official than he or she can possibly assimilate. Computer accessibility to government and government information has had the ironic effect of so overloading officials that they must ignore more pleas for audiences and reply perfunctorily to more appeals than any despot making his progress through a crowd of peasants.

Moreover, insofar as computer technology has breached the security of the State and ever more widely distributed the information government once claimed to possess solely, it has contributed to the decline in prestige of the State. The Xerox copier not only threatens national currencies; it threatens the currency of the bureaucracy, which is the control of the flow of information. What national leader can be confident, as he faces a live interview, that the confidential memo he saw yesterday will not be thrust in his face if he denies its contents today? This may be an important contribution to openness and honesty in government, but it cannot be a step that strengthens the nation-state, a structure that must often maintain itself by taking decisions and then, and only then, persuading its public. Most dramatically, the Internet will frustrate government attempts to use law to enforce moral rules—the very raison d'être of the nation-state. Canada, for example, was unable to enforce its strict blackout rules on the news coverage of sensational criminal trials; Singapore, despite searches of tens of thousands of files, has not been able to stem the receipt of pornography.
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Espionage using electronic file transfers—that is, replacing the “dead
drops” of spies that were concealed in hollowed-out trees with the parking of computer files on nonsecure e-mail sites—allows a single agent to turn over more information to his control in an instant than could be analyzed in a decade. The nation-state is maddened by such developments and, like the bear with painful dental caries in Milosz's memoir, becomes dangerous to itself and others in its frustration.

These various developments, and others, have led to a disintegration of the legitimacy of the nation-state. In summary, no nation-state can assure its citizens safety from weapons of mass destruction; no nation-state can, by obeying its own national laws (including its international treaties) be assured that its leaders will not be arraigned as criminals or its behavior be used as a legal justification for international coercion; no nation-state can effectively control its own economic life or its own currency; no nation-state can protect its culture and way of life from the depiction and presentation of images and ideas, however foreign or offensive; no nation-state can protect its society from transnational perils, such as ozone depletion, global warming, and infectious epidemics. And yet guaranteeing national security, civil peace through law, economic development and stability, international tranquility and equality, were the principal tasks of the nation-state. Developments born in strategic conflict can, however, as they have done before, also lead to a regeneration of the State. What would a new constitutional order look like?