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.
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.
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.)
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.
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.
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.
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,
"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.