THE TRANSFORMATION OF THE NATION-STATE INTO A ‘COMPETITION state’ lies at the heart of political globalization. In seeking to adapt to a range of complex changes in cultural, institutional and market structures, both state and market actors are attempting to reinvent the state as a quasi-‘enterprise association’ in a wider world context, a process which involves three central paradoxes. The first paradox is that this process does not lead to a simple decline of the state but may be seen to necessitate the actual expansion of de facto state intervention and regulation in the name of competitiveness and marketization.
Globalization transforms collective action in domestic and international politics. As the scale of markets widens and as economic organization becomes more complex, the institutional scale of political structures can become insufficient for the provision of an appropriate range of public goods. A process of this sort occurred prior to the emergence of the modern nation-state, which itself constituted a paradigmatic response to this predicament. Today, however, a complex process of globalization of goods and assets is undermining the effectiveness of state-based collective action. Overlapping “playing fields” are developing, made up of increasingly heterogeneous—transnational, local, and intermediate—arenas. The residual state retains great cultural force, and innovative projects for reinventing government are being tried. Nevertheless, the state's effectiveness as a civil association has eroded significantly, and this may lead to a crisis of legitimacy.
Despite the apparent development and spread of liberal democratic state forms in the 1980s and 1990s, possibilities for genuine democratic governance overall are declining. Firstly, the emergence and consolidation of modern liberal democracy was inextricably intertwined with the development of the nation-state and is profoundly socially embedded in that structural context. Secondly, in today's globalizing world, cross-cutting and overlapping governance structures and processes increasingly take private, oligarchic (and mixed public/private) forms; hegemonic neoliberal norms are delegitimizing state-based governance in general; and democratic states are losing the policy capacity necessary for transforming democratically generated inputs into authoritative outputs. Consequently, robust constraints limit the potential for (a) reinstitutionalizing the 'democratic chain' between accountability and effectiveness, (b) rearticulating the multitasking character of authoritative institutions and (c) renewing the capacity of authoritative agents to make the side-payments and to undertake the monitoring necessary to control free-riding and assimilate alienated groups. Rather than a new pluralistic global civil society, globalization is more likely to lead to a growth in inequalities, a fragmentation of effective governance structures and the multiplication of quasi-fiefdoms reminiscent of the Middle Ages.
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