Saturday 2011-04-23

The Rise of the Virtual State by Richard Rosecrance

In the twentiy-first century, nation-states will remain the major organizing factor in international politics. Nations will continue to compete. As intangibles move to the fore, however, competition will not mean conflict over territory. Economic competition will reflect itself in flows of goods and key factors of production -- flows that cannot take place unless societies and economies are open. These economies cannot perform unless there is some form of political coherence among great states, supervising and protecting the market. If such protection succeeds, the twenty-first century will be the first epoch in history to offer the prospect of peaceful transformation and enduring global stability.
-- The State and the World

Rosecrance reads like a political theorist applying economic rational actor theory to national governments. However, history indicates that governments are subject to ideological capture (imperialists, nazis, socialists, etc.) and do not necessarily act in an economically rational manner. Even democratic governments do not appear immune.

Multi-party governments tend to grow over time due to this regulatory capture. I.e., some theorist presents a plausible argument, e.g. a stronger navy will bolster economic interests. Shipbuilders, financiers, and everyone in the navy now support this idea and shop it incessantly. When the economy turns up, tax receipts go up, and we get a larger navy. Later, other ideas come along, e.g. a strong presence in space will bolster scientific and economic interests. All the beneficiaries line up, and when the economy turns up, we get a space program.

At any point we can try to reduce spending on old ideas, however each idea has a vocal minority who will fight to the death to keep them funded. And the government continues to grow.

A remedy might be to retool the system of checks and balances between the tax-paying, military, demagogic, and governmental powers in a country.