How has the role of the nation-state changed in a globalised society?

There has been considerable debate about whether globalisation has changed the role of the nation-state. While a somewhat nebulous concept, a nation-state can be defined as a geopolitical entity deriving its legitimacy through the service of a sovereign population or nation (Holton 2011; Croucher 2004). Globalisation can be loosely understood as the increasing political, cultural, and economic interaction of international populations (Al-Rodhan et al. 2006). This essay will look at the changing role of the nation-state in the modern period of globalisation (post-WWII), although there is certainly much to be said about earlier periods. In terms of structure, it will begin by considering economic, political, and cultural changes. This will be juxtaposed by the following section outlining arguments that downplay the relationship between globalisation and the nation-state. It will be concluded that the nation-state has undergone substantial change in the globalised world, but that there remains a great deal of structural continuity. Globalisation has the changed the economic role of the nation-state in several respects. Cerny (1995) suggests an erosion of the ability to provide all three main kinds of public good: regulatory, productive/distributive, and redistributive. One ‘good’ in the first category is a stable currency, the control of which has traditionally fallen within the remit of the national banks or their equivalents. This is still theoretically true, but today foreign governments, organisations, or even individuals can play a critical role because of globalisation. One need only consider Black Wednesday (16 September, 1992) in Britain, when George Soros ‘broke the Bank of England’ by short-selling the pound, or the gradual accumulation of American dollars by China due to the latter’s trade surplus, to see how globalisation has stripped the nation-state of much of its power in terms of controlling currency. In the world of rapid communication, especially via the internet, the situation has become even more difficult to control (Goksel 2004; Evans 1997; Cerny 1995). In addition, globalisation often means the presence of numerous foreign firms within national borders, which can lead to currency fluctuations as a result of foreign remittances. The rapid transfer of economic instability across borders, as was the case during the global financial crisis (2007-8) or the financial crisis in East Asia (1997-8), shows how the role of the nation-state in maintaining economic order has been eroded more generally (Goksel 2004). It is argued by Strange (1997) and others that the balance of economic power has shifted in favour of multinational corporations (MNCs). They believe this process began in earnest in the 1960s and 1970s because of foreign direct investment (FDI) from the USA, but that it has increased since the 1980s due to the influence of Japanese and Western European FDI. The recent revelation that the Trans-Pacific Partnership might bring in legislation allowing MNCs to override American national laws, by appealing to an international tribunal, suggests that there might soon be a significant reduction in the economic powers of the nation-state (Carter 2012). It is impossible to speak of the economic effects of globalisation without also discussing the political consequences. The most important forces in this respect are the supranational bodies to which many nation-states now belong, such as the EU (European Union), which regulates the labour markets, industrial organisation, business practices and trade conditions of its member states. Moreover, the majority of member states have relinquished their former currencies in favour of the Euro, which has meant transference of monetary policy over from sovereign national banks to the European Central Bank (ECB) (Goksel 2004). There are a significant number of other trade blocs (customs unions, common markets, monetary unions) across the globe, such as NAFTA (North American Free Trade Agreement) or the SAARC (South American Association for Regional Cooperation), which operate under similar conditions. These are symptoms and perpetuators of globalisation, all of which represent a diminishment of the economic independence of nation-states. In the 20th century there has been a blossoming of trade blocs, but it should be noted that they go back long before the era of modern globalisation, with the first probably being the 13th-century Hanseatic League (Milner 2002). Large political collectives have had a significant effect on the role of the nation-state in other respects. The state’s role in the globalised world often now includes broader, international objectives focused on sweeping environmental, social, economic or other concerns (Evans 1997). The EU has a budget to which member states must contribute, which further reduces the economic sovereignty of participating nation-states (Wolf 2001; Holton 2011; Goksel 2004). Likewise, groups such as the G7, G8, and G20, which consist of the largest economies in the world, impose new obligations on nation-states, related to issues such as energy consumption, ozone depletion, or acid rain, among others (Goksel 2004). Some of obligations date back many decades, such as the United Nations’ (UN) Universal Declaration of Human Rights, adopted by the UN General Assembly in December 1948. The importance of supranational political actors in particular can perhaps best be seen in the security sphere. Historically, the defence of the populous has been one of the central roles of the nation-state, and to certain extent the main justification for its power (Held 1998; Held and McGrew 1998). It is noted by Strange (1997) that this obligation has largely been removed in some cases from the hands of individual nations, which rely instead on multilateral agreements. As Goksel (2004: 2) puts it, ‘Armies are often kept not so much to enforce territorial claims or to extend them, but rather to maintain civil order.’ The state’s role in providing defence has been altered in order to allow it to fit into a new system of global defence agreements. The traditional military role of the nation-state, which focused on ‘the acquisition, employment and use of military force to achieve national goals’, has been abandoned in many cases today (Held 1998: 226). In a certain sense this is fitting because there are now many global security concerns, such as terrorism, that require multilateral cooperation in matters of intelligence gathering. This has diminished the traditional role of the nation-state in guiding its own defence policy, but in some cases it has enhanced its position. For example, Hobsbawm (2007: 137) believes that by exaggerating the terrorist threat American has been ‘inventing enemies that legitimise the expansion and use of its global power’. Globalisation has perhaps expanded and diminished the security role of the nation-state, depending on where one looks. In either case, however, there has been change. There is also a cultural argument to be considered. The nation-state has been an important locus of identity for individuals and communities for centuries. How long exactly is a matter of fierce controversy, and this topic has divided IR (international relations) scholars into three dominant schools: the primordialists, the ethnosymbolists (e.g., Smith 1987, 1995, 2009), and the modernists (e.g., Hobsbawn 1990; Anderson 1983; Gellner 1983). In any case, it is argued by modernists such as Hobsbawm (1990) that the nation-state’s role as a cultural and social identifier is gradually being eroded as supranational alternatives emerge. This is supported by the fact that in a globalised society flows of information and ideas are rapid, unpredictable, and unrestricted by national boundaries. Platforms such as the internet, for example, are the great facilitators of new forms of indentify that chip away at the traditional position of the nation-state (Hobsbawm 1990). It is not universally accepted, however, that the role of the nation-state has changed in the globalised world. There has been particular criticism of the idea that globalisation might lead to the ‘end of the nation-state’ or otherwise drastically diminish its role, arguments synonymous with the modernist school of International Relations (e.g., Evans 1997; Strange 1997; Ohmae 1995; Hobsbawm 1990; Gellner 1983). Holton (2011) argues that nation-states are still the most important of the actors in the global sphere, despite the influence of supranational organisations. For Holton, it is simply the case that the role of the nation-state has to be reframed in global terms. He does, however, acknowledge that some have experienced a curtailment of their economic and political role through a lack of bargaining power, as the cases of the budgetary crisis in EU member states, such as Greece, Portugal, Ireland and Spain, reveal. Hirst and Thompson (1996) do not believe that any trend towards a more globalised world (something they are sceptical of in the first place) has had a significant impact on the nation-state. They note that while decisions are often passed on to multinational bodies, it falls to individual countries to make decisions within this framework. One might argue, however, that arguments such as this underestimate the independence of self-contained, highly secretive governing bodies such as the European Commission. Hirst and Thompson (1996) are particularly critical of the suggestion that globalisation has diminished the role of the nation-state, contending instead that the enhanced ‘possibilities of national and international governance’ have actually strengthened it. Gilpin (2000) takes a similar line, arguing that many of the changes in the role of the nation-state cannot be attributed to increasing globalisation. Rather, they are part of a pattern dating back to before WWI when the Gold Standard was in place. Indeed, the Gold Standard is a relic of the pre-globalisation world, yet it stripped the state of currency control nearly to the same extent as modern monetary unions (Gilpin 2000). Through this lens, the ‘state may be reverting to its 19th-century role in the economy’, which suggests that many of the changes seen today would be equally operative in the ‘pre-globalisation’ world. Goksel (2004) argues that although globalisation has changed the role of the nation-state, it is important not to view this as something that was guaranteed to happen. In this sense he argues against the ‘deterministic approach’ of scholars such as Strange (1997). This is valid observation with reference to certain elements of globalisation, and it is true that in theory no nation-state is obliged to submit powers to supranational organisations. However, it is not valid with regard to issues such as the dissemination of technology, where the role of the state in controlling national information was always going to be diminished as the world become more globalised. Goksel (2004: 11) also points to the fact that in a very basic way the role of the nation-state has remained the same as ‘there are structural obstacles to the withering away of the state. Votes have to be cast somewhere, taxes have to be paid to particular authorities, which can be held accountable for public services such as education and health. Moreover, states continue to create a regulatory environment for their economies.’ Arguments such as these highlight the importance of not overstating the case for globalisation as a force for change. In conclusion, the role of the nation-state has been reformed by the globalised world. There are a few possible exceptions to this, such as the highly insular North Korea, but such cases are anomalies. In economic terms, there has been a tendency either for the state to lose power to supranational bodies, or to have it eroded by global forces largely beyond its control. The same is true of the political sphere, in which nation-states have generally found their freedoms curtailed by wider forces, or in some cases extended due to advantageous positioning within multinational organisations, such as is the case with the United States and the UN. Nevertheless, there has been an element of structural consistency in the role of nation-states insofar as they are still the predominant actors in international politics, and most of the functions of supranational and other bodies rely on them. The nation-state remains indispensible and arguments that suggest its demise are overstated. The boundaries of this debate, however, are far from fixed, as the proposed legislation related to corporations and the Trans-Pacific Partnership demonstrates. No doubt it is too early to predict the future of the nation-state in the globalised world, but it has certainly undergone change so far. Word count: 1986

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