Making Sense of Brexit

[naf140230]

Here is this article from Stratfor called "Making Sense of Brexit":

Quote:Of the millions of words written in the past few days about Brexit — the British vote to leave the European Union — the word "State" has seldom appeared. Very few commentators seem to appreciate the one concept that unites the otherwise disparate and paradoxical elements of the Brexit vote. For unless one appreciates that the driving historical force that has brought us to this impasse is the decay of one constitutional order, the industrial nation-state, and the emergence of its successor, the informational market state, the crises brought on by Brexit will simply confound us.

We need conceptual tools to make sense of these phenomena, the first of which is that the most economically vulnerable persons in the United Kingdom and those who have suffered most under the British government's policy of austerity voted in favor of Brexit with the full knowledge that it would, in all likelihood, turn an estimated positive growth in GDP to a negative and plunge the economy into recession, jeopardizing the entitlements and falling prices on which these persons depend. Indeed, considerable numbers of voters in economically depressed areas that receive significant amounts of EU aid voted to leave the bloc.


The second phenomenon is that, having won the battle to keep Scotland in the United Kingdom, the government has taken the one step — because it is irrevocable — that now puts secession back on the table, not only in Scotland but also in Wales, which voted for the Brexit. Moreover, a campaign against the "democratic deficit" in Brussels has led to the removal of a prime minister democratically elected only 13 months ago, and thus years in advance of his statutorily prescribed term. The British public, meanwhile, in alarm at a possible migration inflow of refugees has effectively voted to end cooperation with France and other countries by which refugee camps were maintained — and refugees vetted — outside of Britain. At the same time, a large majority of the opposition Labour Party supports a leader whose shadow Cabinet has lost over two-thirds of its members in protest in less than 24 hours, acting in panic at the prospect of going into an election with that leader and the looming extinction of their historic political party.

Finally, the Conservative Party, having won a difficult general election in which only 36 percent of the public supported it, has chosen to break apart on an issue whose downstream consequences are bound to continue to inflame divisions within the party for a decade. For the first time since the breakup of the Liberal Party into a faction led by a former prime minister, Herbert Asquith, and one led by his successor, David Lloyd George, the party has recreated an internal political divide that could result, as it did with the Liberals, in the party's elimination as a governing entity.

Looked at in terms of policies, these events appear to be the actions of neurotics. As policies, they seem irrational, and therefore as policies, they are hard to come to grips with in a democratic society that depends upon rational party leaders and reasoning voters.

But the problems really aren't about policies, and thus aren't amenable to policy analysis and solutions. What is going on is a seismic change in the constitutional order, and only an awareness of the constitutional nature of this crisis will make sense of it. This is true of Britain's EU partners as well, which have acted no less irrationally by refusing to make the one concession before the referendum vote — decoupling the requirement of an unfettered labor market from access to the single trading market — that would have materially helped the Remain campaign. Here, too, the problem was a total misunderstanding of the historic question at stake: Some EU leaders feared making these concessions because they cling to the decaying corpse of a European super nation-state with no clue as to what alternative other than breakup and secession there might be; others feared the renegotiation by other member states seeking the same sort of arrangements that would have been won by the United Kingdom. The latter don't grasp that what was at stake was not a negotiating tactic but the way true reform might have come about.

Thus the underlying phenomenon of constitutional crisis of the nation-state explains why both sides of the Brexit debate, as well as the countries on both sides of the channel, while appearing at odds are in fact united in confronting the same problem — a paradoxical combination of lack of faith in the effectiveness of government and hostility to the objectives of contemporary leaders, whose ineffectiveness ought therefore to be reassuring — and misunderstanding its source, thus fumbling its solutions. Even the method that ignited this crisis, the use of a national referendum to replace the judgment of elected leaders and parliaments, is a function of this underlying constitutional change. So while we may be surprised at the outcome, the means by which it has come about are precisely what was predicted more than 15 years ago.


So let us review that analysis.

The Constitutional Crisis of the Nation-State

We live in industrial nation-states, the constitutional order that arose in the United States and Germany in the latter half of the 19th century and that, following World War I, superseded the imperial state-nations that dominated Europe and the world from the end of the 18th century. The constitutional order of the industrial nation-state brought us mass, free education; the mass voting franchise, which expanded to include not only men without property but also women; old-age pensions, unemployment compensation and disability benefits; the public funding of science; state-owned enterprises such as national airlines and railroads, telecommunications and energy companies; and total warfare, warfare against the nation. Perhaps we have lived so long in imperial state-nations and industrial nation-states that we are inclined to forget that the nation is not a state, but a people, defined by its cultural, linguistic, ethnic and political traditions. Some nations — the Kurds, or the Palestinians — do not have states. And modern states, which have been a presence for five centuries, have only relatively recently, say two and a quarter centuries ago, fused their constitutional structures with nationalism.

These distinctions are important because if one were to believe, as so many do, that the only constitutional order we have known since feudalism is the nation-state, one would be quite disinclined to believe that our present constitutional order is rapidly being supplanted by a new one. Yet that is precisely what is happening, and it accounts for so many of the upheavals — political, cultural, economic and strategic — by which we are now beset.

Almost at the moment of its greatest triumph, the end of the Long War that had roiled the 20th century beginning in 1914 and ending in 1990, the industrial nation-state was forced to confront a series of delegitimating challenges. One was the global system of communications that makes it impossible for any nation-state to isolate or even insulate its national culture, penetrating every society and replacing the festivals of national cultural establishments with social networking technologies. Another was a legal system of international human rights that supersedes any nation-state's own laws and that has provided the legal basis for armed attacks on states that pose no threat to the attacking state. The third was an international system of trade and finance that has passed to markets the control over national economies, with the consequence of dramatic increases in inequality and an ever-widening expectation of material entitlements that nation-states will be unable to provide as national populations age. (The dilemma Britain faced as a member of the European Union — that it could have access to increasing national wealth only by accepting immigration that inevitably weakened the institutions and traditions of the nation — is one every state will face.) Transnational threats like AIDS and SARS, climate change and global, non-national terrorist networks that no state can hide from or arrest by its own efforts alone formed a fourth challenge. And finally, the emerging commodification of weapons of mass destruction, where crucial components of weapon systems hitherto monopolized by the great nation-states can either be sold or bartered on a clandestine market or simply downloaded via the World Wide Web, created a fifth challenge. (For example, the information by which a benign mousepox can be engineered into a deadly human pathogen is available on the Internet.)

At the beginning of the 21st century, we still live in industrial nation-states, and the legitimating premise of this constitutional order — that the state will better the nation's well-being — still defines the contemporary state. But this premise is getting harder and harder to maintain. Governments know this (though the word apparently hasn't reached European Commission President Jean-Claude Juncker) and their publics know this.

The lesson of five centuries of the evolution of the modern state, however, is not that it survives such crises by shaping shrewder policies. In fact, at a moment like the present one, governments are incapable of bringing forth and executing policies that will re-establish the legitimating premise of the industrial nation-state. The paradoxical phenomenon of hamstrung governments and collapsing leaderships in the face of immense increases in global wealth and peace is no coincidence. If the past provides any precedent for the development of constitutional institutions, the State will change the legitimating premise by which it claims power. When it cannot say, "Give us power and we will improve your material well-being, preserve the cultural patrimony of the nation and protect the people's safety," it will say something else. I venture to guess it will be something like, "Give us power and we will maximize the opportunities of the individual" — giving her choices to express and experience more national solidarities within the state, more choices for differentiating the individual life, yet potentially greater wealth and risk-sharing as part of a larger, transnational community.

The Emergence of the Market State

One can already see the elements of this new constitutional order of "market states" entering our politics. States go from the reliance on regulation and legal institutions so characteristic of the nation-state to deregulating not only industries, but far more importantly, women's reproduction. States move from conscription to an all-volunteer force to raise armies, as all the most powerful NATO states have done. States end their policies of tuition-free higher education in favor of some combination of fees and merit-based scholarships in order to cope with the rising costs that are themselves the result of the demands of students who see themselves as customers. States transition from administering direct cash transfers like the dole and workmen's compensation schemes to providing job training and teaching the skills necessary to enter a changed labor market. State-owned enterprises are everywhere replaced by sovereign wealth funds. Regimes of market democracy like referendums, recall votes and voter initiatives that circumvent parliamentary practices and traditional systems of representation become widespread. In all of these developments we are seeing the emergence of a new constitutional order.

Further evidence of this emergence is the backlash against it, a reaction that is reshaping the political parties and traditional structures of democracies. As the constitutional premise of governing changes, adherents to the old order feel betrayed, while their apparently inexplicable resistance to change is exasperating to the adherents of the new order. Those who cling to the old order can't quite credit the sincerity of those who advocate the policy proposals of the new order because they are so unresponsive to the assumptions of the industrial nation-state about what the State is for. Such proposals — like the legal recognition of same-sex unions or attempts to privatize state pensions and health care — seem unprincipled. As intolerance for representative government grows, the ability of government, of whatever party, to manage the country's affairs erodes.

We in America know that this disillusionment is not confined to Britain. But what many are only now realizing is that states everywhere are threatened by the emergence of the market state. A recent survey for the Pew Foundation disclosed that in France only 38 percent of people still hold a favorable view of the European Union, six points lower than in Britain. The fact that in none of the countries surveyed was there support for transferring powers to the European Union perhaps also reflects the shadow of the looming market state. To see that this is a constitutional reaction and not just a matter of policy, note that each nation seems to have something different to which it objects. Mediterranean states like Greece, Italy and Spain resent austerity and blame the German leadership of the European Union. In France, the European Union is characterized as being too market-oriented and as playing a neo-liberal hand; the British, by contrast, see the European Union as thwarting — in Matthew d'Ancona's words, an independent, buccaneering nation of entrepreneurs sinking in "the wet cement of communitarian obligations." In Eastern Europe, nationalist groups excoriate the European Union for imposing cosmopolitan values like gay marriage and the dissolution of national church-state relations. More generally shared is the reaction to the "self-styled aristocracy of experts" and a shared antipathy to political elites, multinational capitalism and the velocity of global change.

Perhaps even more significant is the widespread fear and hostility toward immigrants. Market states pose the problem that it is much harder to win a nation's endorsement of action by a state that is no longer the champion of the nation's cultural values. The sense of a single polity, held together by adherence to fundamental values, is a sense that is shattered by the market state with its buffet of options and its consumer-citizens.

At a meeting of the Royal Institute for International Affairs in which the topic of Europe's future was under discussion, the principal speaker began, "Europe doesn't have a future. The past 60 years of postmodern integration have been an experiment to fit certain historical circumstances that no longer obtain..." so Europe will return to the nation-states of the Westphalian settlement of 1648. This profound misunderstanding of the situation facing states is compounded by the absurd and ahistorical belief that a state may revert to an earlier constitutional epoch. Such options are no more available to societies than they are to individuals. A middle-aged man may behave like an adolescent if he wishes, but he could never be an adolescent; despite all the charges of "imperialism" that are flung at contemporary states and the insistent advocacy by some that the most powerful states pursue "empire," this is no more than a metaphor. One can no more be an imperialist than one can be Napoleon.

So where are we — suspended between a market state that we fear and despise but unable to return to a vanishing nation-state? Across the developed world, political movements are rising that want to restore the low economic inequality, shared membership in culture and centralized competence of governing. Perhaps these objectives are especially appealing to persons of my generation who experienced them in the decades immediately after World War II. If this is not possible, if we must accept states that are far more decentralized and are maintained both by an appeal to advancing individualism and multiculturalism, where will the momentum of these reactionary movements go?


A Market State of Our Making

Market states, like nation-states, share a legitimating premise, but this by no means determines the political society that they bring into being. In fact, the Long War of the 20th century was fought over just that issue: What kind of industrial nation-state — communist, fascist or parliamentarian — would be the legitimate heir to the collapsed imperial state-nations they superseded? So it will be up to us to determine what kind of market state we will live in.

It seems clear that the reaction to the threatening emergence of market states is in large part a moral one. The market state is classless and indifferent to race, ethnicity, sex and sexual orientation; its yardstick for evaluation is the quantifiable, and in an era of Big Data this is fortuitous. But market states are also indifferent to values of loyalty, reverence for sacrifice, political competence, privacy and the family. The British voters who sacrificed their material interests by endorsing the referendum to leave the European Union are not fools, and they are not unaware of the value of expertise. It's just that economists and policymakers are not considered experts on the questions of moral value on which the election turned.

So what is the next step? Since exports to the European Union (13 percent of GDP in 2014) are so much greater for Britain than exports to Britain (3 percent of GDP in 2014) are for the European Union, the United Kingdom won't have much leverage in its negotiations. In any case, it is hemmed in by the Brexit requirement that it not allow free access to labor, an indispensable element of the "Norway" solution that otherwise might have allowed Britain access to the single market. Britain should seek a free trade agreement with the United States, which could then use its combined bargaining power to negotiate a more favorable Transatlantic Trade and Investment Partnership. This would help restore some of Britain's lost access to the European market and give it access to the American market in dimensions hitherto foreclosed by the United Kingdom's EU membership. It has been estimated that free trade with the United States that addresses both tariff and non-tariff barriers would add about $16 billion to the British economy. For Europe, the Continent should recognize the British exit as a wake-up call and decide, proactively, on reform that will create different spheres of membership around a core centered on the founding members: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. If that doesn't happen, the European Union may well lose the French and the Dutch, and the peripheral states — for whom EU membership has meant so much politically and strategically — will simply break off as they are taken over, one by one, by nationalist parties.

When I was in university — a very long time ago — my alma mater had an unusual system of social organization entirely indifferent to the "Oxbridge college envy" that has infected so many schools. Students lived in dormitories with roommates and suitemates whom they had chosen, but they took their meals and went to parties in clubs that had chosen them. So, in my case, my closest friends with whom I wished to live were in different clubs from each other, and from me. Each day we would leave the dormitory we shared and walk to the street where the clubs were, dropping out as we passed the one each belonged to. The virtue of this system was that it provided overlapping opportunities for making friends and experiencing different points of view. Club membership was exclusive; you couldn't belong to more than one eating club. But other organizations — sports teams, literary societies, musical groups — were inclusive and membership was simply limited by the interests, resources, talent and energy of the student. Classrooms, like dormitories, were preclusive: Taking one class might preclude a student from taking another, but the choice was his. Taking these three spheres together, some were overlapping, some were coextensive, some were exclusive.

I drag out this ancient social history to provide a homely model. One can imagine — and I have written about — a world in which a state might be confined to only one territorial space yet belong to more than one security alliance, so long as these operated in different geographies, while participating with others in multiple interlocking and potentially overlapping trade regimes with varying degrees of integration. For example: Why can't Scotland remain a part of the United Kingdom with its own parliament and limited, devolved powers and also be a member of the European Union, for which it overwhelmingly voted? Don't tell me that it doesn't fit the model of industrial nation-states with opaque sovereignty, because that's just the point. And don't tell me that Article 50 of the Lisbon treaty doesn't contemplate such a solution; of course it doesn't, but neither does it forbid such an innovation, which can be negotiated as part of the British secession.

As Ian Morris has put it recently,

Quote:"Throughout history, when things have gone wrong, people have blamed their leaders. In the West, things are now going wrong more than they used to, and in the decade to come they will go wrong even more. There is nothing that Western leaders can do to turn the clock back; the only way to try to keep up in this brave new world is through innovation, which means the creative destruction of much that many of us hold dear."

Brexit voters wanted the constitutional order of the industrial nation-state — the welfare state — and the cohesive cultural communities of their national past. They saw those objectives as threatened by a globalized financial and trading system that had suborned corrupt and incompetent elites who could not be trusted. Unless they come to realize that the advantages of the welfare state and an ethnically and culturally holistic community can only be protected by a reimagining of the State itself, by shaping the market state that is their future, we will face a reaction of despair, suspicion and violence that will shake the foundations of all states.

[Eric the Green]

The British, mainly the English, have an exaggerated sense of their own unique and historic importance; much like those Americans who consider the USA "the exceptional nation." Brexit is a mass, collective ego-trip that so-far none of the other EU countries have indulged in.

Other pundits say that Brexit was an "anti-establishment" vote protesting the lousy economy and current leadership. If so, why did they vote the Tories in with a large majority so recently?

[tg63]

thanks for posting that naf ... the concept of the market-state as opposed to the nation-state is an interesting lens through which to look at things

[naf140230]

(06-30-2016, 11:46 AM)tg63 Wrote: thanks for posting that naf ... the concept of the market-state as opposed to the nation-state is an interesting lens through which to look at things

I just felt the article would make a good discussion point given what has happened.

[Eric the Green]

[Ragnarök_62]

(06-30-2016, 10:57 AM)Eric the Green Wrote: The British, mainly the English, have an exaggerated sense of their own unique and historic importance; much like those Americans who consider the USA "the exceptional nation." Brexit is a mass, collective ego-trip that so-far none of the other EU countries have indulged in.


No, it's a collective flip the bird to a bunch of self preening Eurocrats.  The EU is a clusterfuck and the British had enough sense to dump it.

Other pundits say that Brexit was an "anti-establishment" vote protesting the lousy economy and current leadership. If so, why did they vote the Tories in with a large majority so recently?

Maybe Labor didn't really offer up much AND Labor supported Breremain.


I think the US should exit NATO for the same reason. It's an economic sink hole the US can't afford no more.

[Ragnarök_62]

Map 4: Imagining 2017’s Brexit


This Week in Geopolitics

The Geopolitics of 2017 in 4 Maps
By George Friedman and Jacob L. Shapiro
January 16, 2017
International relations and geopolitics are not synonymous… at least, not the way we understand them at Geopolitical Futures. “International relations” is a descriptive phrase that encompasses all the ways countries behave toward one another. “Geopolitics” is the supposition that all international relationships are based on the interaction between geography and power.
Our brand of geopolitics takes this a step further and asserts that a deep understanding of geography and power enables you to do two things. First, it helps you comprehend the forces that will shape international politics and how they will do so. Second, it allows you to identify what is important and what isn’t.
This makes maps an extremely important part of our work. Writing can be an ideal medium for explaining power, but even the best writer is limited by language when it comes to describing geography. So this week, we have decided to showcase some of the best maps our graphics team (TJ Lensing and Jay Dowd) made in 2016… not just because these four maps are cool (though they are), but because we think they go a long way in explaining the foundations of what will be the most important geopolitical developments of 2017.
Map 1: Russia’s Economic Weakness

Click to enlarge

This map illustrates three key aspects of Russia that are crucial to understanding the country in 2017. First is the oft-overlooked fact that Russia is a federation. Russia has a strong national culture, but it is also an incredibly diverse political entity that requires a strong central government. Unlike most maps of Russia, this one divides the country by its constitutive regions. There are 85 of these regions… 87 if you count Crimea and Sevastopol. Not all have the same status—some are regions, while others are autonomous regions, cities, and republics.
The second aspect is that there is a great deal of economic diversity in this vast Russian Federation. The map shows this by identifying regional budget surpluses and deficits throughout the country. Two regions have such large surpluses that they break the scale: the City of Moscow and Sakhalin. Fifty-two regions (or 60% of Russia’s regional budgets) are in the red. The Central District, which includes Moscow, makes up more than 20% of Russia’s GDP, while Sakhalin and a few other regions that are blessed with surpluses produce Russia’s oil.
The third aspect follows from combining the logical conclusions of the first two observations. Russia is vast, and much of the country is in a difficult economic situation. Even if oil stays around $55 a barrel for all of 2017, that won’t be high enough to solve the problems of the many struggling parts of the country. Russian President Vladimir Putin rules as an authoritarian. This is, in part, because he governs an unwieldy country. He needs all the power he can get to redistribute wealth so that the countryside isn’t driven to revolt.
Russia is making headlines right now because of Ukraine, Syria, and alleged hacking. But the geopolitical position of Russia is better described by studying the map above.
Map 2: China’s Cage

Click to enlarge

Maps that shift perspective can be disorienting, but they are meant to be. Our minds get so used to seeing the world in one way that a different view can feel alien. But that is even more reason to push through the discomfort. The map above attempts to do that by looking at the Pacific from Beijing’s perspective.
China's moves in the South China Sea have received a great deal of attention. In a Jan. 12 confirmation hearing with Congress, nominee for US Secretary of Defense James Mattish identified Chinese aggressiveness as one of the major reasons he believes the world order is under its biggest assault since World War II. But we believe the Chinese threat is overstated. This map helps explain why.
China’s access to the Pacific is limited by two obstacles. The first is the small island chains in the South and East China Seas. When we look at this map, China’s motive in asserting control over these large rocks and molehills becomes clear. If China cannot control these islands and shoals, they can be used against China in a military conflict. (If there were small island chains off the US coast in the Pacific or the Atlantic, US strategy might look like China’s.)
The second obstacle is that China is surrounded by American allies. Some such as Japan (and to a lesser extent South Korea and Taiwan) have significant military forces to defend themselves from Chinese encroachment. Taiwan sticks out as a major spur aimed squarely at China’s southeast coast. Those that don’t have sufficient military defenses, like the Philippines, have firm US security guarantees. China is currently at a serious geographic disadvantage in the waters off its coast.
This map, though, does not reveal a critical third piece of this puzzle—the US Navy outclasses the Chinese navy in almost every regard, despite impressive and continuing Chinese efforts to increase capabilities. But looking at this map, you can see why China wants to make noise in its coastal waters and how China is limited by an arc of American allies. You can also see why one of China’s major goals will be to attempt to entice any American allies to switch sides. Consequently, China’s moves regarding the Philippines require close observation in 2017.
Map 3: Redrawing the Middle East

Click to enlarge

It has become cliché to point out that the Middle East’s current political borders were drawn after World War I by colonial powers like the United Kingdom and France, and that the region’s wars and insurrections in recent years are making these artificial boundaries obsolete. What isn’t cliché is doubling down on that analysis. We’ve drawn a new map of the Middle East based on who controls what territory, as opposed to the official boundaries recognized by international organizations like the United Nations.
The map above reveals what the Middle East really looks like right now. Many will object to some of the boundaries for political purposes, but this map is explicitly not trying to make a political statement. Rather, it is an attempt to show who holds power over what geography in the Middle East.
From this point of view, Syria, Iraq, Yemen, and Libya don’t exist anymore. In their places are smaller warring statelets based on ethnic, national, and sectarian identities. Other borders (like those of Lebanon and Israel) are also redrawn to reflect actual power dynamics. Here, a politically incorrect but accurate map is more useful than an inaccurate but politically correct one.
Just as important as redrawing the borders of countries that no longer function as unified entities is noting which countries’ borders do not require redrawing. These countries include three of the region’s four major powers: Turkey, Iran, and Saudi Arabia. The borders of the other major power, Israel, are only slightly modified. (Egypt is an economic basket case and does not qualify as a major power, even though it has arguably the most cohesive national culture in the Arab world.)
The Middle East is defined by two key dynamics: the wars raging in the heart of the Arab world and the balance of power between the countries that surround this conflict.
Map 4: Imagining 2017’s Brexit

Click to enlarge

Analyzing this map must begin with a disclaimer: This is, first and foremost, an analytical tool and a means of thinking about Europe’s future. It is explicitly not a prediction of what Europe’s borders will look like in the future.
The map identifies areas in Europe with strong nationalist tendencies. Those regions with active separatist movements are not italicized. The italicized regions are those demanding increased autonomy but not independence. In many of these regions, secessionist movements may be favored by a minority of the population. The point here is not their size, but rather that in all these regions, there is some degree of national consciousness that is dissonant with the current boundaries of Europe’s nation-states.
The European Union is a flawed institution because its members could never decide what they wanted it to be. The EU is not quite a sovereign entity, but it claims more authority than a free trade agreement. European nation-states gave up some of their sovereignty to Brussels… but not all of it. So when serious issues arose (such as the 2008 financial crisis or the influx of Syrian and other refugees), EU member states went back to solving problems the way they did before the EU. Instead of “one for all and all for one,” it was “to each their own, but you still have to buy German products.”
Brexit shook the foundations of the EU in 2016. Elections in France and Germany and domestic instability in Italy will shake those foundations in 2017. But Brexit also opened the doors to a deeper question: How will national self-determination be defined in the 21st century? Not all of Europe’s nation-states are on stable ground. The most important consequences of Brexit may end up being its impact on the political future of the United Kingdom. And in Spain, Catalonia already claims it will hold an independence referendum this year.
Brussels, meanwhile, keeps trying to speak with one voice. This map communicates just how hard that is… not just for the EU, but also for some of Europe’s nation-states.
Conclusion
The saying goes that a picture is worth a thousand words. Maps are worth many more. Our perspective on the world is rooted in an objective and unbiased approach to examining geography and power. Maps like these are foundational components for building that perspective. These four maps are especially helpful in thinking about the geopolitical forces that will shape the world in the year ahead.
And finally…
Over the last couple of weeks, we’ve shared some sneak peeks of our 24-page forecast, The World in 2017. If you’ve enjoyed these snapshots, you can now download your free copy of a special report that further illuminates the year ahead. The report, Top 3 Economic Surprises for 2017, contains information on what the future holds for three geopolitically important countries. Simply click here to get your free copy.
Plus, for a limited time only, you can get the full 2017 forecast and one full year of access to everything Geopolitical Futures publishes for just $99… that’s a 60% discount. You’ll gain access to our online library of long- and short-range forecasts, daily reality checks, watch lists, deep dives, weekly graphics, and more, all for less than $2 per week. Find out more about this special offer here.

Source:  http://www.mauldineconomics.com/this-wee...-in-4-maps

[Warren Dew]

Thanks. Nice maps. Looks like Friedman is doing some of his best work elsewhere than Stratfor these days; I may have to shuffle my subscriptions.

[Galen]

Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

[Warren Dew]

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

I'm not sure whether that's the case or whether it's just that the borders are wrong.  Since the June article, it has become more clear that Brexit is about recovering sovereignty from a supranational organization.  The market state was an interesting idea, but I don't think that's how things are panning out.

[Galen]

(01-23-2017, 10:34 AM)Warren Dew Wrote:

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

I'm not sure whether that's the case or whether it's just that the borders are wrong.  Since the June article, it has become more clear that Brexit is about recovering sovereignty from a supranational organization.  The market state was an interesting idea, but I don't think that's how things are panning out.

There is a case for many borders being wrong, particularly in the mid-east.  I maintain that the cost of projecting power from the center is rising versus the cost for defense.  Look at wrote Davidson and Lord Rees-Mogg because political systems are dependent on the logic of violence to impose their will.  If the conditions of power projection change, I think they are changing, then artifacts of politics such as borders will change.

[Warren Dew]

(01-23-2017, 03:49 PM)Galen Wrote:

(01-23-2017, 10:34 AM)Warren Dew Wrote:

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

I'm not sure whether that's the case or whether it's just that the borders are wrong.  Since the June article, it has become more clear that Brexit is about recovering sovereignty from a supranational organization.  The market state was an interesting idea, but I don't think that's how things are panning out.

There is a case for many borders being wrong, particularly in the mid-east.  I maintain that the cost of projecting power from the center is rising versus the cost for defense.  Look at wrote Davidson and Lord Rees-Mogg because political systems are dependent on the logic of violence to impose their will.  If the conditions of power projection change, I think they are changing, then artifacts of politics such as borders will change.

Interesting.  How do you think the relative cost of power projection is changing?

[Galen]

(01-23-2017, 04:28 PM)Warren Dew Wrote:

(01-23-2017, 03:49 PM)Galen Wrote:

(01-23-2017, 10:34 AM)Warren Dew Wrote:

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

I'm not sure whether that's the case or whether it's just that the borders are wrong.  Since the June article, it has become more clear that Brexit is about recovering sovereignty from a supranational organization.  The market state was an interesting idea, but I don't think that's how things are panning out.

There is a case for many borders being wrong, particularly in the mid-east.  I maintain that the cost of projecting power from the center is rising versus the cost for defense.  Look at wrote Davidson and Lord Rees-Mogg because political systems are dependent on the logic of violence to impose their will.  If the conditions of power projection change, I think they are changing, then artifacts of politics such as borders will change.

Interesting.  How do you think the relative cost of power projection is changing?

It is getting increasingly harder to project power from the center which implies that the cost of offense relative to defense is increasing.  Five hundred years ago the reverse was true and so you saw the end of feudalism which depended on defense being cheaper relative to offense.  It is also worth noting that the preeminent institution of the time, the Church, was going bankrupt.

[Warren Dew]

Sorry. By "how", I was hoping for details on the mechanism. Is it an issue of technological change? Social change? Institutional change?

[David Horn]

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

By your argument, the elites, having extracted all the 'meat' from their respective nations are now going to allow the locals to gnaw on the bones.  That's pretty bleak.

[Galen]

(01-23-2017, 04:45 PM)Warren Dew Wrote: Sorry.  By "how", I was hoping for details on the mechanism.  Is it an issue of technological change?  Social change?  Institutional change?

The process is often by technological change.  In the case of feudalism ending it was development of effective cannon and the matchlock that changed the logic of violence in favor of offense.  The change in political structures tends to be a consequence.

[David Horn]

(01-23-2017, 10:34 AM)Warren Dew Wrote:

(01-23-2017, 04:23 AM)Galen Wrote: Those maps suggest to me that era of the nation state is ending.  The fact that all of the western nations are effectively bankrupt helps underscore that point.

I'm not sure whether that's the case or whether it's just that the borders are wrong.  Since the June article, it has become more clear that Brexit is about recovering sovereignty from a supranational organization.  The market state was an interesting idea, but I don't think that's how things are panning out.

Brexit was about Olde England rebelling against Globalism.  Wales didn't vote out, nor did Scotland, London or Northern Ireland, though Wales was close. In the end, it was the old inward looking economy (and social strata) that voted out.  Trump voters have similar profiles.

[sbarrera]

(06-29-2016, 10:40 PM)naf140230 Wrote: Here is this article from Stratfor called "Making Sense of Brexit":

Quote:Of the millions of words written in the past few days about Brexit — the British vote to leave the European Union — the word "State" has seldom appeared. Very few commentators seem to appreciate the one concept that unites the otherwise disparate and paradoxical elements of the Brexit vote. For unless one appreciates that the driving historical force that has brought us to this impasse is the decay of one constitutional order, the industrial nation-state, and the emergence of its successor, the informational market state, the crises brought on by Brexit will simply confound us.

We need conceptual tools to make sense of these phenomena, the first of which is that the most economically vulnerable persons in the United Kingdom and those who have suffered most under the British government's policy of austerity voted in favor of Brexit with the full knowledge that it would, in all likelihood, turn an estimated positive growth in GDP to a negative and plunge the economy into recession, jeopardizing the entitlements and falling prices on which these persons depend. Indeed, considerable numbers of voters in economically depressed areas that receive significant amounts of EU aid voted to leave the bloc.


The second phenomenon is that, having won the battle to keep Scotland in the United Kingdom, the government has taken the one step — because it is irrevocable — that now puts secession back on the table, not only in Scotland but also in Wales, which voted for the Brexit. Moreover, a campaign against the "democratic deficit" in Brussels has led to the removal of a prime minister democratically elected only 13 months ago, and thus years in advance of his statutorily prescribed term. The British public, meanwhile, in alarm at a possible migration inflow of refugees has effectively voted to end cooperation with France and other countries by which refugee camps were maintained — and refugees vetted — outside of Britain. At the same time, a large majority of the opposition Labour Party supports a leader whose shadow Cabinet has lost over two-thirds of its members in protest in less than 24 hours, acting in panic at the prospect of going into an election with that leader and the looming extinction of their historic political party.

Finally, the Conservative Party, having won a difficult general election in which only 36 percent of the public supported it, has chosen to break apart on an issue whose downstream consequences are bound to continue to inflame divisions within the party for a decade. For the first time since the breakup of the Liberal Party into a faction led by a former prime minister, Herbert Asquith, and one led by his successor, David Lloyd George, the party has recreated an internal political divide that could result, as it did with the Liberals, in the party's elimination as a governing entity.

Looked at in terms of policies, these events appear to be the actions of neurotics. As policies, they seem irrational, and therefore as policies, they are hard to come to grips with in a democratic society that depends upon rational party leaders and reasoning voters.

But the problems really aren't about policies, and thus aren't amenable to policy analysis and solutions. What is going on is a seismic change in the constitutional order, and only an awareness of the constitutional nature of this crisis will make sense of it. This is true of Britain's EU partners as well, which have acted no less irrationally by refusing to make the one concession before the referendum vote — decoupling the requirement of an unfettered labor market from access to the single trading market — that would have materially helped the Remain campaign. Here, too, the problem was a total misunderstanding of the historic question at stake: Some EU leaders feared making these concessions because they cling to the decaying corpse of a European super nation-state with no clue as to what alternative other than breakup and secession there might be; others feared the renegotiation by other member states seeking the same sort of arrangements that would have been won by the United Kingdom. The latter don't grasp that what was at stake was not a negotiating tactic but the way true reform might have come about.

Thus the underlying phenomenon of constitutional crisis of the nation-state explains why both sides of the Brexit debate, as well as the countries on both sides of the channel, while appearing at odds are in fact united in confronting the same problem — a paradoxical combination of lack of faith in the effectiveness of government and hostility to the objectives of contemporary leaders, whose ineffectiveness ought therefore to be reassuring — and misunderstanding its source, thus fumbling its solutions. Even the method that ignited this crisis, the use of a national referendum to replace the judgment of elected leaders and parliaments, is a function of this underlying constitutional change. So while we may be surprised at the outcome, the means by which it has come about are precisely what was predicted more than 15 years ago.


So let us review that analysis.

The Constitutional Crisis of the Nation-State

We live in industrial nation-states, the constitutional order that arose in the United States and Germany in the latter half of the 19th century and that, following World War I, superseded the imperial state-nations that dominated Europe and the world from the end of the 18th century. The constitutional order of the industrial nation-state brought us mass, free education; the mass voting franchise, which expanded to include not only men without property but also women; old-age pensions, unemployment compensation and disability benefits; the public funding of science; state-owned enterprises such as national airlines and railroads, telecommunications and energy companies; and total warfare, warfare against the nation. Perhaps we have lived so long in imperial state-nations and industrial nation-states that we are inclined to forget that the nation is not a state, but a people, defined by its cultural, linguistic, ethnic and political traditions. Some nations — the Kurds, or the Palestinians — do not have states. And modern states, which have been a presence for five centuries, have only relatively recently, say two and a quarter centuries ago, fused their constitutional structures with nationalism.

These distinctions are important because if one were to believe, as so many do, that the only constitutional order we have known since feudalism is the nation-state, one would be quite disinclined to believe that our present constitutional order is rapidly being supplanted by a new one. Yet that is precisely what is happening, and it accounts for so many of the upheavals — political, cultural, economic and strategic — by which we are now beset.

Almost at the moment of its greatest triumph, the end of the Long War that had roiled the 20th century beginning in 1914 and ending in 1990, the industrial nation-state was forced to confront a series of delegitimating challenges. One was the global system of communications that makes it impossible for any nation-state to isolate or even insulate its national culture, penetrating every society and replacing the festivals of national cultural establishments with social networking technologies. Another was a legal system of international human rights that supersedes any nation-state's own laws and that has provided the legal basis for armed attacks on states that pose no threat to the attacking state. The third was an international system of trade and finance that has passed to markets the control over national economies, with the consequence of dramatic increases in inequality and an ever-widening expectation of material entitlements that nation-states will be unable to provide as national populations age. (The dilemma Britain faced as a member of the European Union — that it could have access to increasing national wealth only by accepting immigration that inevitably weakened the institutions and traditions of the nation — is one every state will face.) Transnational threats like AIDS and SARS, climate change and global, non-national terrorist networks that no state can hide from or arrest by its own efforts alone formed a fourth challenge. And finally, the emerging commodification of weapons of mass destruction, where crucial components of weapon systems hitherto monopolized by the great nation-states can either be sold or bartered on a clandestine market or simply downloaded via the World Wide Web, created a fifth challenge. (For example, the information by which a benign mousepox can be engineered into a deadly human pathogen is available on the Internet.)

At the beginning of the 21st century, we still live in industrial nation-states, and the legitimating premise of this constitutional order — that the state will better the nation's well-being — still defines the contemporary state. But this premise is getting harder and harder to maintain. Governments know this (though the word apparently hasn't reached European Commission President Jean-Claude Juncker) and their publics know this.

The lesson of five centuries of the evolution of the modern state, however, is not that it survives such crises by shaping shrewder policies. In fact, at a moment like the present one, governments are incapable of bringing forth and executing policies that will re-establish the legitimating premise of the industrial nation-state. The paradoxical phenomenon of hamstrung governments and collapsing leaderships in the face of immense increases in global wealth and peace is no coincidence. If the past provides any precedent for the development of constitutional institutions, the State will change the legitimating premise by which it claims power. When it cannot say, "Give us power and we will improve your material well-being, preserve the cultural patrimony of the nation and protect the people's safety," it will say something else. I venture to guess it will be something like, "Give us power and we will maximize the opportunities of the individual" — giving her choices to express and experience more national solidarities within the state, more choices for differentiating the individual life, yet potentially greater wealth and risk-sharing as part of a larger, transnational community.

The Emergence of the Market State

One can already see the elements of this new constitutional order of "market states" entering our politics. States go from the reliance on regulation and legal institutions so characteristic of the nation-state to deregulating not only industries, but far more importantly, women's reproduction. States move from conscription to an all-volunteer force to raise armies, as all the most powerful NATO states have done. States end their policies of tuition-free higher education in favor of some combination of fees and merit-based scholarships in order to cope with the rising costs that are themselves the result of the demands of students who see themselves as customers. States transition from administering direct cash transfers like the dole and workmen's compensation schemes to providing job training and teaching the skills necessary to enter a changed labor market. State-owned enterprises are everywhere replaced by sovereign wealth funds. Regimes of market democracy like referendums, recall votes and voter initiatives that circumvent parliamentary practices and traditional systems of representation become widespread. In all of these developments we are seeing the emergence of a new constitutional order.

Further evidence of this emergence is the backlash against it, a reaction that is reshaping the political parties and traditional structures of democracies. As the constitutional premise of governing changes, adherents to the old order feel betrayed, while their apparently inexplicable resistance to change is exasperating to the adherents of the new order. Those who cling to the old order can't quite credit the sincerity of those who advocate the policy proposals of the new order because they are so unresponsive to the assumptions of the industrial nation-state about what the State is for. Such proposals — like the legal recognition of same-sex unions or attempts to privatize state pensions and health care — seem unprincipled. As intolerance for representative government grows, the ability of government, of whatever party, to manage the country's affairs erodes.

We in America know that this disillusionment is not confined to Britain. But what many are only now realizing is that states everywhere are threatened by the emergence of the market state. A recent survey for the Pew Foundation disclosed that in France only 38 percent of people still hold a favorable view of the European Union, six points lower than in Britain. The fact that in none of the countries surveyed was there support for transferring powers to the European Union perhaps also reflects the shadow of the looming market state. To see that this is a constitutional reaction and not just a matter of policy, note that each nation seems to have something different to which it objects. Mediterranean states like Greece, Italy and Spain resent austerity and blame the German leadership of the European Union. In France, the European Union is characterized as being too market-oriented and as playing a neo-liberal hand; the British, by contrast, see the European Union as thwarting — in Matthew d'Ancona's words, an independent, buccaneering nation of entrepreneurs sinking in "the wet cement of communitarian obligations." In Eastern Europe, nationalist groups excoriate the European Union for imposing cosmopolitan values like gay marriage and the dissolution of national church-state relations. More generally shared is the reaction to the "self-styled aristocracy of experts" and a shared antipathy to political elites, multinational capitalism and the velocity of global change.

Perhaps even more significant is the widespread fear and hostility toward immigrants. Market states pose the problem that it is much harder to win a nation's endorsement of action by a state that is no longer the champion of the nation's cultural values. The sense of a single polity, held together by adherence to fundamental values, is a sense that is shattered by the market state with its buffet of options and its consumer-citizens.

At a meeting of the Royal Institute for International Affairs in which the topic of Europe's future was under discussion, the principal speaker began, "Europe doesn't have a future. The past 60 years of postmodern integration have been an experiment to fit certain historical circumstances that no longer obtain..." so Europe will return to the nation-states of the Westphalian settlement of 1648. This profound misunderstanding of the situation facing states is compounded by the absurd and ahistorical belief that a state may revert to an earlier constitutional epoch. Such options are no more available to societies than they are to individuals. A middle-aged man may behave like an adolescent if he wishes, but he could never be an adolescent; despite all the charges of "imperialism" that are flung at contemporary states and the insistent advocacy by some that the most powerful states pursue "empire," this is no more than a metaphor. One can no more be an imperialist than one can be Napoleon.

So where are we — suspended between a market state that we fear and despise but unable to return to a vanishing nation-state? Across the developed world, political movements are rising that want to restore the low economic inequality, shared membership in culture and centralized competence of governing. Perhaps these objectives are especially appealing to persons of my generation who experienced them in the decades immediately after World War II. If this is not possible, if we must accept states that are far more decentralized and are maintained both by an appeal to advancing individualism and multiculturalism, where will the momentum of these reactionary movements go?


A Market State of Our Making

Market states, like nation-states, share a legitimating premise, but this by no means determines the political society that they bring into being. In fact, the Long War of the 20th century was fought over just that issue: What kind of industrial nation-state — communist, fascist or parliamentarian — would be the legitimate heir to the collapsed imperial state-nations they superseded? So it will be up to us to determine what kind of market state we will live in.

It seems clear that the reaction to the threatening emergence of market states is in large part a moral one. The market state is classless and indifferent to race, ethnicity, sex and sexual orientation; its yardstick for evaluation is the quantifiable, and in an era of Big Data this is fortuitous. But market states are also indifferent to values of loyalty, reverence for sacrifice, political competence, privacy and the family. The British voters who sacrificed their material interests by endorsing the referendum to leave the European Union are not fools, and they are not unaware of the value of expertise. It's just that economists and policymakers are not considered experts on the questions of moral value on which the election turned.

So what is the next step? Since exports to the European Union (13 percent of GDP in 2014) are so much greater for Britain than exports to Britain (3 percent of GDP in 2014) are for the European Union, the United Kingdom won't have much leverage in its negotiations. In any case, it is hemmed in by the Brexit requirement that it not allow free access to labor, an indispensable element of the "Norway" solution that otherwise might have allowed Britain access to the single market. Britain should seek a free trade agreement with the United States, which could then use its combined bargaining power to negotiate a more favorable Transatlantic Trade and Investment Partnership. This would help restore some of Britain's lost access to the European market and give it access to the American market in dimensions hitherto foreclosed by the United Kingdom's EU membership. It has been estimated that free trade with the United States that addresses both tariff and non-tariff barriers would add about $16 billion to the British economy. For Europe, the Continent should recognize the British exit as a wake-up call and decide, proactively, on reform that will create different spheres of membership around a core centered on the founding members: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. If that doesn't happen, the European Union may well lose the French and the Dutch, and the peripheral states — for whom EU membership has meant so much politically and strategically — will simply break off as they are taken over, one by one, by nationalist parties.

When I was in university — a very long time ago — my alma mater had an unusual system of social organization entirely indifferent to the "Oxbridge college envy" that has infected so many schools. Students lived in dormitories with roommates and suitemates whom they had chosen, but they took their meals and went to parties in clubs that had chosen them. So, in my case, my closest friends with whom I wished to live were in different clubs from each other, and from me. Each day we would leave the dormitory we shared and walk to the street where the clubs were, dropping out as we passed the one each belonged to. The virtue of this system was that it provided overlapping opportunities for making friends and experiencing different points of view. Club membership was exclusive; you couldn't belong to more than one eating club. But other organizations — sports teams, literary societies, musical groups — were inclusive and membership was simply limited by the interests, resources, talent and energy of the student. Classrooms, like dormitories, were preclusive: Taking one class might preclude a student from taking another, but the choice was his. Taking these three spheres together, some were overlapping, some were coextensive, some were exclusive.

I drag out this ancient social history to provide a homely model. One can imagine — and I have written about — a world in which a state might be confined to only one territorial space yet belong to more than one security alliance, so long as these operated in different geographies, while participating with others in multiple interlocking and potentially overlapping trade regimes with varying degrees of integration. For example: Why can't Scotland remain a part of the United Kingdom with its own parliament and limited, devolved powers and also be a member of the European Union, for which it overwhelmingly voted? Don't tell me that it doesn't fit the model of industrial nation-states with opaque sovereignty, because that's just the point. And don't tell me that Article 50 of the Lisbon treaty doesn't contemplate such a solution; of course it doesn't, but neither does it forbid such an innovation, which can be negotiated as part of the British secession.

As Ian Morris has put it recently,

Quote:"Throughout history, when things have gone wrong, people have blamed their leaders. In the West, things are now going wrong more than they used to, and in the decade to come they will go wrong even more. There is nothing that Western leaders can do to turn the clock back; the only way to try to keep up in this brave new world is through innovation, which means the creative destruction of much that many of us hold dear."

Brexit voters wanted the constitutional order of the industrial nation-state — the welfare state — and the cohesive cultural communities of their national past. They saw those objectives as threatened by a globalized financial and trading system that had suborned corrupt and incompetent elites who could not be trusted. Unless they come to realize that the advantages of the welfare state and an ethnically and culturally holistic community can only be protected by a reimagining of the State itself, by shaping the market state that is their future, we will face a reaction of despair, suspicion and violence that will shake the foundations of all states.

Here's a link to the article with attribution: https://worldview.stratfor.com/article/m...nse-brexit

It's by Philip Bobbitt, a constitutional law scholar who came up with the term "market state" to describe a new emerging constitutional order.

I'm actually surprised there is no thread anywhere on this forum about his work. It's a theory of periodic transformations in government and fits here along with other cycles. I guess I'll have to fix that.

[Eric the Green]

What Brexit was, was an appeal to fear and prejudice, very similar to Trump's campaign. All these refugees are coming across the channel. We've got to secure the border and keep the UK more white. We are nostalgic for the British Empire and we want to make the UK great again. That is all brexit was about.

[David Horn]

(08-19-2022, 04:17 PM)Eric the Green Wrote: What Brexit was, was an appeal to fear and prejudive, very similar to Trump's campaign. All these refugees are coming across the channel. We've got to secure the border and keep the UK more white. We are nostalgic for the British Empire and we want to make the UK great again. That is all brexit was about.

A lot ot truth here.  The Brexiteers leaned hard on "the nation" and not at all on "the state".  It's clan thinking raised to the sky.  Insularity always generates lower growth in all ways: economic, social, intellectual and whatever consitutes expansiveness.  Eventually, the Brits will rue the day, but that may take a long time ... longer than we have on this earth to actually see it.

Sad.