w7

View from the top: Bobbitt, Gibbon, Kennedy, and Rothkopf

Week 7

Introduction

As history is written by the victors, so economics is written by the economically ascendant, The result is that we are disproportionately drawn to the study of the biggest and most powerful states, and we construct our image of development around them, with comparatively little consideration of the world’s majority states – with populations below 100 million (only 11 states have more than 100 million people). We will try to keep this in mind as we explore the view from the top, and consider the rules and regimes contemplated by Bobbitt, and by others who have explored power and markets over time, and the rising power of non-state corporate entities.

 

This week, we will compare Bobbitt’s key ideas about the evolution of the market state with concepts from other practitioners of macro-social enquiry, including Gibbon (a progenitor of the method), Paul Kennedy (with whose analysis Bobbitt compares his own), and David Rothkopf, who worked with Bobbitt in the Clinton administration and has recently published his own book on the coming clash between states and corporations.

 

Bobbitt’s concept of the market state seems to entail two different aspects, which he discusses at the end of Chapter 11. First, it entails an erosion of the capacity of the state to manage its environment because of the ascendancy of markets. Optimistically, he suggests that this provides an opportunity for greater freedom for individuals within a market:

“What critics writing in the security area have not contemplated is a change in the constitutional structures of the European (and other) states that does not surrender sovereignty to yet another state, but returns it even more radically to the people themselves.” (Ch. 11, p. 80/81)

Rather than greater accretions of supranational managerial power in institutions like the EU, this implies greater individual freedom within markets to act across international boundaries.  Of course, “individual” is a loaded term.  Corporations have the legal personality of individuals under American legislation dating back to the 1920s (Dewey, 1926). These powerful “individuals” will move freely within and between states. Other individuals, like low-wage earners, will simply be buffeted by the international economy without having the option of moving across boundaries – unless they do so as precarious economic migrants and refugees (Betts, 2010).

 

Bobbitt describes three types of market states: the entrepreneurial market state, the mercantile market state, and the managerial market state. He defines these in terms of their objectives:  the mercantile market state seeks to improve its position relative to other states; the entrepreneurial market state seeks to improve its absolute position; and the managerial market state seeks to improve both its relative and absolute position through formal regional structures (Bobbitt, Ch. 12).

 

Bobbitt argues that Paul Kennedy’s Rise and Fall of the Great Powers, “is largely devoted to documenting the fall of mercantile states whose balance sheets between economic reinvestment and military expenditure tipped them into relative, and eventually absolute decline.” (Ch 12, p. 3/105).

 

Thinking of American security interests, Bobbitt advocates pursuit of the entrepreneurial model, which indeed seems to be the path pursued by the US in the 1990s as it sought to solidify the trade bloc it dominated in the Western hemisphere through NAFTA, the FTA, and bilateral trading regimes with commodity exporters like Chile, Columbia, Caribbean states and Argentina.

 

Consider the position of America’s trading partners, particularly Canada and Mexico within NAFTA.  What sort of market state options do America’s trading partners have?  What about majority states, with smaller populations and territories, less influence in international financial institutions and global trading arrangements – what options do they have?  Do they, in fact, fit the conceptual definition of market states, or are they still essentially nation-states, with varying control over their territory?  Do they now face the same dilemmas that states faced in the conservative ‘20s and revolutionary ‘30s described by Polanyi, as their capacity to provide employment and preserve industry was eroded by the interconnected international economy?

 

If the vision from the top was clouded (see Bobbitt’s discussion of Bush’s lack of vision in 1998, ch. 25, p. 3/126) it was no clearer for lesser states. But in each case, the narrative of markets and the responsibilities of states were handed down from an earlier era, which we have seen Polanyi describe. We can follow this back even further to the macro-social narratives of the rise and decline of the West dating back to the enlightenment, hence a quick diversion to consider Gibbon.

 

Gibbon’s analysis of the decline and fall of the Roman empire is seminal in many ways, and is frequently referenced both directly and implicitly by later macro-social enquiries. Pocock (2005) puts Gibbon in the context of other narrative accounts of civic governance and decline.  Ignatieff (2003) compares America’s imperial burdens and decline to Gibbon’s paradigm. Gibbon argues that Rome decayed through loss of civic and military virtue, inviting barbarians to defend it rather than relying on its own citizens, only to find the barbarians within the gates.  The 1846 edition has an introduction which is at pains to distance the editor from the criticism of Christianity as a source of weakness in the empire. For the Christian British Empire, it was anathema to see Christianity as a source of weakness.

 

For Paul Kennedy, covering much the same historical period as Bobbitt (1500-2000), market discipline has replaced the discipline of Roman civic virtue, and the mercantile state must constrain its military spending and invest in preserving and expanding its productive capacity.  Decline occurs when military spending outstrips the capacity of a great power tot support it, taking into account the potential profit from war, in the form of booty, new productive territory, vassal states and so on–all of which are greatly diminished by international law and custom in the modern era. Loose references to economic malaise frequently feature in descriptions of decline (Cox, 2010) and many of these accounts refer back to Kennedy’s arguments (see Kupchan, 2002; Garrison, 2004; Scheuer, 2005). But while Kennedy tries to combine economic and military history, the later critics of empire confine themselves to strategy and diplomacy – closer to Bobbitt than Wallerstein or Kennedy, Stiglitz or Polany.

 

Rothkopf is an exception. Kennedy’s vision of economic power is limited to the mercantile state; Bobbitt advocates the entrepreneurial alternative, confident in the power of markets, and America’s market dominance, to harness the power of liberal markets to generate prosperity. But to Polanyi’s caution that unregulated markets destroy society, we must now add Rothkopf’s caution that liberal markets produce corporations that outstrip the power of states. This has been permitted by the extraordinary legal status of corporations in the US, and the extraterritorial application of American law.

 

This brings us to the subject of revolution, and role of revolutions in changing the relationships between states, enterprises, and society.

Learning Objectives

  1. Understand the types of market states posited by Bobbitt, their objectives and strategic challenges.
  2. Understand the roles of non-state corporate entities in building up and in undermining the power of states.

Required Reading

re-read Bobbitt, Ch 12, first section on the three types of market states and their objectives: mercantile, entrepreneurial, managerial.

 

Read Bobbitt, Ch 24 on the three types of market states, then skim the rest up to conclusions.  As you are skimming, note the definitions of “meadow,” “park,” and “garden”.

 

Read Bobbitt, Ch 25 on the drivers and trends of the future, then skim the rest of the chapter. (Compare Gore’s drivers of change). Skim the future history scenarios  (how plausible are these now that we are a decade into the future Bobbitt dared to foretell?)

 

Read Rothkopf, Ch. 6, “How Rule of Law Backfired,” pp. 44-46/46

Optional Reading

Gore, A. (2013). The future (p. 592). Random House.  Consider the drivers of change, and compare them to the drivers identified by Bobbitt in Chapter 25.

 

Gibbon, E. ([1776, 1781]1829). The history of the decline and fall of the Roman Empire (particularly Vol. 4). J. & J. Harper.

 

Dewey, J. (1926). The historic background of corporate legal personalityYale Law Journal, 655-673.

 

Betts, A. (2010). Survival migration: A new protection frameworkGlobal Governance: A Review of Multilateralism and International Organizations16(3), 361-382.

 

Pocock, J. G. A. (2005). Barbarism and Religion: Volume 3, The First Decline and Fall (Vol. 3). Cambridge University Press.

 

Ignatieff, M. (2003). The burdenAustralian Universities’ Review, The46(1), 3.

 

Kennedy, P. (2010). The rise and fall of the great powers. Random House LLC.

 

Cox, M. (2007). Is the United States in decline—again? An essayInternational Affairs83(4), 643-653.

 

Kupchan, C. (2007). The end of the American era: US foreign policy and the geopolitics of the twenty-first century. Random House LLC.

 

Scheuer, M. (2005). Imperial hubris: Why the west is losing the war on terror. Potomac Books Inc.

 

Garrison, J., (2004). America as empire: global leader or rogue power?. Berrett-Koehler Publishers.

 

Rothkopf, D. (2012). Power, Inc.: The Epic Rivalry Between Big Business and Government–and the Reckoning That Lies Ahead. Macmillan.

Assignments

Please post responses to the self-assessment questions on Moodle.

Self-Assessment Questions

3. Compare Bobbitt’s forms of market state to the range of states that exist in the world today.  Is there an even transition from nation-state and earlier versions to the putative market state?  Do we, for example, find throwbacks to the “princely state” in the form of territories controlled by petty warlords in the absence of stronger state structures?

4. How have corporations served as handmaids to the rise of hegemonic powers, and how do they now threaten the power of states?  Is this a problem for all types of market states, or do states which constrain enterprise to the service of the state (Korea, China, Singapore) face different challenges?

Seminar

The seminar this week will be asynchronous. Please post to Moodle.

David Last, updated September 2014, lastdav@gmail.com