World Economic Forum’s Mark Malloch Brown: The New Frontiers of Loyalty

 This is a tricky time to be a state, and an even trickier time to be a citizen. The nation-state, the classic provider of security and basic wellbeing in exchange for citizens’ loyalty, is under threat – both at home and as the fundamental unit of international affairs.

New types of loyalty and association are challenging the state’s traditional role. Some are geographic. In Europe alone, there at least 40 would-be Scotlands seeking separation of some kind from the countries in which they now find themselves. Other loyalties are based on other kindred identities – not just religious or ethnic, but based on shared commercial, political, or other interests. Today, many more of us are supporters of NGOs than are members of political parties.

In short, our allegiances, particularly in the West, have rarely seemed more divided than they do now. Amartya Sen, the Nobel laureate economist, has argued that we can learn to live with these multiple identities and even thrive with the diversity of citizenship and loyalties that they allow us.

But this diversity is not entirely benign. Many of us work for or hold stock in commercial organizations that seem to pay scant regard to national tax or regulatory authorities. And, in much of the West, states adhere to models of welfare provision that increasingly disappoint their citizens and are often unaffordable. A global reordering of economic growth is punishing the developed countries’ high-cost, high-tax, high-benefits governance model.

The Western state’s shortcomings are strikingly apparent when compared with robust survivors and adapters in other parts of the world. China represents what might be called the Economic Security State: seeking to channel domestic savings into household consumption to sustain GDP growth and popular support, while using its investment power abroad to secure the commodities and energy that underpin its industrialization.

Under Prime Minister Narendra Modi’s leadership, India may prove to be a semi-admiring imitator of China. Russia, by contrast, is a more classic National Security State, now playing Western anxieties like a fiddle to consolidate its tightening grip on Ukraine and suppress domestic opposition with a tide of official nationalism.

So we live in a world of evolutionary state disorder. While some in the West may yearn for the return of the strong, unifying state, most of us recognize that it is not coming back. Indeed, some argue that the inventiveness and internationalism of a world networked by interests and shared causes is likely to be more resilient than one crammed into the artificial – and increasingly constraining – box of the national state.

In that sense, economic success in China or India may be those states’ undoing, as middle-class political aspirations render current arrangements dysfunctional. Conversely, we may find ourselves in a world whose eastern half is organized into strong authoritarian state structures, with the West embracing post-state models of association.

The question for international governance is how to provide a framework of institutions and rules in a world of competing organizational structures. The politicians’ answer is depressingly predictable: in the face of a resurgent Russia and China, this is no time to abandon our own states and diplomacy to their fate.

Yet the old systems no longer offer useful answers, as Russia has demonstrated by brushing aside the United Nations Security Council – the high altar of the state-based international system – over Ukraine and stalemating it over Syria. And, away from the din of their ranting politicians, what Russians, as much as Americans or Chinese, probably want most is a peaceful, predictable international order that allows them to provide for their families and enjoy the benefits of a golden age of global commerce and technology.

A world, in which states’ hard power is contending with the soft power of transnational ideas, invention, and finance, needs rules. We will all pay dearly – in defense budgets and, more important, in lost global opportunities – if we do not summon the courage to design a global order in which non-state actors have a formal role. Otherwise, we would be inviting states to continue pursuing a might-makes-right approach and to shirk the coordinated action on, say, financial regulation and the environment that the world now requires.

Of course, states do not have a monopoly on bad behavior. Transnational economic activity has been an opportunity not only for business, but also for organized crime and others to liberate themselves from effective regulation. At the moment, the United States has stepped into the breach, relying on often-Draconian extraterritorial use of its justice system and control of the international banking system to impose a crude frontier justice.

That is not good enough. What is needed is a legitimate system of rules, norms, and institutions, devised by private as well as government stakeholders, that reflects the emerging global nature of economic, political, and social activity as the old state loses its dominance and must coexist with a patchwork of non-state structures of association.