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8 The World Financial Review March - April 2015
THE WORLD OF
STATES
BY JOHN L. CAMPBELL AND JOHN A. HALL
In this article, adapted from their book The World of States John
Campbell and John Hall argue that despite globalisation, European
integration and other forces allegedly causing states to wither away,
nation-states still matter in the world today. They are as important as
ever in global politics and political economy as centers of power and
national cohesion.
Politics
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10 The World Financial Review March - April 2015
We live in a world of states - or, if you will, the world
in which we live is still structured by the behavior of
states. To say this is to deny the claim so often made
that states have lost their significance because the forces of glo-
balisation undermine their capacities from above and below.
Things are not so simple. The functions of the state - maintain-
ing internal order, establishing security in the international en-
vironment and creating a sense of belonging among its people
- are as vital as before. But states have changed, diversifying
rather than dying.
Let us begin with the sources of change before turning to
the diversity of states within the contemporary world - that is,
before we examine the ways in which different types of states
manage the functions that we have identified. An initial novelty
often forgotten is that one of the main forces of globalisation has
been that of the spread of the ideal of the nation-state: a polit-
ical territory inhabited by people sharing a particular common
culture. Empires have gone and those who do not have na-
tion-states badly want them. Much conflict in the contempo-
rary world revolves around state and nation building, above all
filling in large areas of emptiness left behind by European impe-
rial powers, areas often marked by struggles between different
ethnic groups within the same territory. So one type of state in
our time is habitually referred to as the failed state (e.g. Somalia,
Sudan, Afghanistan, Haiti), so lacking in the capacity to tax that
it cannot provide internal order nor do much to secure cohesion
within its territory.
A second novelty is negative. Nuclear weapons have changed
the behavior of the great powers: war is no longer a rational form
of policy, which is not to say that civil wars, interventions and
traditional interstate wars no longer exist. Even though this is so,
it is very noticeable that few state borders have changed since
1945. The surprising fact that so many failed states continue to
survive, results from this general acceptance of the internation-
al norm of non-intervention.
This is related to a third point of immense importance. Before
1945 great powers felt that the possession of territory would
lead to prosperity. The world wars serve as but two exemplars.
The rise of nationalism destroyed empires, but the economic
prosperity at the core of capitalist society did not come to an
end. The states of the North (i.e. North America, Western Europe,
Japan) discovered that less is more; that trading with each other
especially in high tech markets mattered most of all. Brains
triumphed over brawn. The ability to enhance human capital, to
move up the product cycle, seems to be the secret of success in
late industrial society, not the possession of territory per se.
Let us turn now to the issue of diversity. One of the first areas
where the diversity of state forms can be seen has gained a label,
that of the BRIC (Brazil, Russia, India and China). As it happens
this is a rather unhappy term insofar as it conceals much di-
versity. Brazil and India are certainly developing fast, and both
have considerable allegiance to democracy. In contrast, Russia
and China are authoritarian: the former still in large part a de-
clining great power, the latter the most important rising power
of the modern world. Those who take the past as a guide to the
future are worried about the emergence of new powers. When
powers rose in the past they sought to challenge the ordering of
the world polity, famously in the case of Wilhelmine Germany
seeking its own “place in the sun.” Here is an area in which pro-
gressive change seems at least possible. No rising great power
can now seriously contemplate war. Just as importantly the eco-
nomic failure of the Soviet Union seems to put some premium
on market principles rather than those of central command.
Rising powers are irritated by the way in which international
institutions are controlled by the northern powers that created
them, but there is little sign that they wish to destroy the world
that has allowed their own rise. Rather, they wish to change the
terms of world order at the margin: to gain seats on the key in-
ternational institutions (e.g. World Trade Organisation), to di-
minish the power of the dollar and to have a greater say in the
ordering of world affairs. The key example here is China. It
holds trillions of dollars in US debt that has afforded the United
States the luxury of fiscal profligacy, but is unwilling to down-
load them in case this leads to the collapse of its greatest export
market. This is a strange situation, one of co-dependency.
The second area in which we can see different sorts of state
at work is in the North, the geographical territory often seen as
that in which the power and salience of the nation-state has
been weakened. Of course, there has been change: such states
are no longer complete power containers, with most of them
dependent in the postwar world on the United States for the
provision of their defense, something that has allowed them to
compete economically rather than geopolitically. Still, varia-
tion is immense.
Data makes it clear that there has not been much change in
matters of equality in social democratic and Christian demo-
cratic countries. These two models retain their historic charac-
ter, both keen on welfare spending but with the former having
a larger percentage of women in the labor force. The more
statist models of France and Japan are extant as well, though
the speed of market change means that their form of planning
has become largely outdated. In contrast, newly developing
In varying degree welfare states have been
diminished, neo-liberal policies favored and
inequality massively increased.
Politics
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nation-states, such as Korea and Taiwan,
still do benefit from basic infrastructur-
al planning allowing them to build, on
the basis of notable national homogene-
ity, infant industries that are released onto
the world market once they are fully es-
tablished. This is not to say that there
has not been substantial change. Perhaps
the most notable is the extent to which
Anglo Saxon countries, from the United
States and Great Britain to Australia and
Canada, have reverted to the character
of their past: in varying degree welfare
states have been diminished, neo-liberal
policies favored and inequality massive-
ly increased.
As this insistence on diversity may
seem counter-intuitive it is worth
looking for a moment at the European
Union. Surely here, critics might say, is
the slow emergence of a transnational
world, the ending of nation-state auton-
omy. Nothing could be further from the
truth. The European Union does repre-
sent a vast improvement in human affairs:
heads of state meet regularly in confer-
ence halls, their armies no longer on the
battlefield. It is a forum of internation-
al agreement, or bargaining and co-or-
dination, not a state in its own right. The
central budget is not much more than
1% of the Union’s total product while
the identities of its members remain na-
tional rather than European. More to
the point the most recent developments
suggest that it is unlikely that there will
be an increase in transnational elements
within the Union. Stark differences have
emerged between the richer core coun-
tries and their weaker peripheral col-
leagues, especially following the finan-
cial crisis, and there is certainly general
reluctance to allow Germany to lead
Europe in any significant way. Europe
will remain an economic giant, and a mil-
itary worm. Perhaps this is no bad thing.
One state stands out from all others
in the modern world. The United States
is the greatest power in the history of
the world. That this is so now is clear in
military terms: this single country is re-
sponsible for something like half of all
world military spending, with its ca-
pacity to shock and awe being generally
recognised. At its best in the immediate
postwar world the United States behaved
as a liberal hegemon, providing defense
to its northern allies and encouraging free
markets made possible by the dollar, the
global medium of exchange. It could do
this easily for its primacy, in economic
terms, was massive - the United States
produced nearly half of world GDP in
1945, slipping since then but still ac-
counting for perhaps a quarter of that
total. One of the great questions of the age
is whether the United States can main-
tain its primacy and what might happen
should its decline proceed apace. It is too
soon to decide on the first issue, as dif-
ferent evidence points in opposite direc-
tions. Economically, the United States
does retain huge capacities for innova-
tion. In contrast, partisan political stale-
mate seems ever more characteristic of
the country, suggesting that decline may
come less from inevitable forces of things
like globalisation than from a form of
self-indulgent collective suicide.
This brings us to the future. Two real
dangers are looming on the horizon,
both of which cannot be solved without
a much greater commitment to change
on the part of the United States. First, the
ordering of the world political economy
has become badly disordered. The global
imbalances in the world economy - the
failure of the United States to balance its
budget leading to the massive holding of
dollars elsewhere - did much to cause
the Great Recession that began in 2007
because surpluses that were lent out led
to very risky investments and dangerous
housing bubbles. No solution in this key
area is as yet on the table, no new agree-
ment for our world equivalent to that
created in 1944 at Bretton Woods.
The second danger is totally new,
and much harder for all of us to under-
stand. Politicians of all types have, for at
least two hundred years, claimed their
societies to be successful when eco-
nomic growth roars ahead. This is still
the case. But what can be said about
the health of the planet? Might it be
the case that the seed of ruin lies in the
moment of triumph. If global warming
is not soon arrested serious catastro-
phes will take place: swings in the se-
verity of the weather, flooding, migra-
tion and starvation. Such horses of the
apocalypse will strike the weaker states
of the South first. But it will not be pos-
sible for the North to insulate itself
against such pain forever.
The article is adapted from The World of
States (Bloomsbury Press, 2015).
“A surefooted, well-written,
and highly intelligent survey
of states across the world. It
is easily the best account of
modern states because it is
fully aware of both the great diversity of
states and their inter-relations in a global
system of states.”
Michael Mann, Distinguished Research
Professor, University of California — Los
Angeles.
About the Authors
John L. Campbell is the
Class of 1925 Professor of
Sociology, Dartmouth College,
and Professor of Political
Economy, Copenhagen Business School.
John A. Hall is the
James McGill Professor
of Sociology at McGill
University.
Europe will remain an economic
giant, and a military worm.
Perhaps this is no bad thing.
