The University of Texas at Austin   School of Law

Main menu:

September 7, 2004

Press Contact: Kirston Fortune, UT Law Communications, (512) 471.7330 or Jodi Bart, UT Law Communications, 512-471-7330

How Market-States Can Meet Global Challenges

by Philip Bobbitt
Published September 7, 2004, in the Financial Times
Reprinted with the author's permission

As crisis after crisis has shown, the world's nation-states find it hard to rise to the world's transnational problems. Those that attempt to do so are tarred as imperial because even their noblest motivations are mixed with national self-interest; those that fail even to try can always find national interests to justify their failure. Iraq, Bosnia and now Darfur are examples of this proposition.

The world needs to be governed in new ways, not only because of nation-states' failure to tackle its problems but also because - as I and others have speculated elsewhere - the nation-state itself is being superseded by a new constitutional order. Tomorrow's state will have as much in common with the 21st-century multinational company as with the 20th-century state: it will outsource many functions to the private sector, rely less on regulation and more on market incentives and respond to ever-changing consumer demand rather than to voter preferences expressed in infrequent elections.

A society of such "market-states" would have to fulfil a number of constitutional conditions. It would need a security structure able to defeat challenges to the peace and to tackle problems such as migration. There would have to be a consensus among the great powers on the legitimacy of various forms of market-state, together with clear rules - enforceable by arms if necessary - for any state's behaviour. Unacceptable behaviour would include proliferation of weapons of mass destruction and attacks by a state on its own population. In cases where the great powers have to intervene for the sake of the general peace, a mechanism would have to be in place for providing them with financial backing.

There are several structures that might serve these objectives. One is the "umbrella state". This is a free-trade and/or defence zone that offers a common legal jurisdiction as to some, but not all, constitutive issues. Small societies - cultures too small to be viable as separate states - can shelter under such umbrellas while retaining control over essentially cultural matters, such as education, language and religion. Umbrellas of this kind might permit the reunion of states that were severed by the partitions favoured by the society of nation-states: India, Bangladesh and Pakistan; the Koreas; Rwanda, Burundi and Tanzania; Ireland; Palestine - all states whose insecurity threatens the stability of the society of states.

An umbrella can be seen as one outcome of a market in sovereignty. This is a promising idea. On this basis the European Union has induced applicants to improve their human rights records as a condition for admission.

A second model might also focus on ways of incentivising the market state. This can be attempted both by reducing disincentives for states to take responsibility for global problems and by offering incentives to encourage states to contribute to resolving global issues. In both cases the rules that emerge are ones that, today, are sneeringly referred to as "double standards" but without which no substantial progress on global issues is likely. When the US intervenes in Kosovo or the EU in Sudan - that is, when the national interest of states is low and the need for humanitarian action high - these states must be protected from prosecution by third-party national tribunals. States that seek freedom from coercion by other states must be seen to respect the rights of their own people.

Global governance that emerges from a market-oriented network of states will naturally allow for a number of different non-state institutions to work together for the global good. Several institutions can provide models for this: the UN agencies that are usually blamed for inaction when it is in fact their nation-state masters who prefer stalemate; non-governmental organisations, which might achieve greater accountability through greater transparency; religious institutions; and multinational companies, including the media, whose interests are truly global.

Global governance does not require a global government. Every society has a constitution and the society of states is no different. Our duty is to see that it is a humane one - to see that it gives privilege to the health, safety and opportunity of the people of the earth and not to nations that, generally, do not have the self-interest sufficient to address global problems.

This raises the question of the US, the one state that is already a global power, and the EU, the one umbrella state that has a functioning market in sovereignty. It is crucial that these nascent market states provide an example of humane policies and co-operation in tackling transnational issues. An exemplary US and EU - a kind of Group of Two, as it were, that permitted overlapping memberships - would represent a great step towards solving tomorrow's problems.


The writer is professor of law at The University of Texas. He will be discussing these themes at a free public dialogue in St. Paul's Cathedral tomorrow.

Related Links:
The New York Times Op-Ed: Bobbitt on National Security and Alert Systems: http://www.utexas.edu/law/news/2004/081104_bobbitt.html
About Professor Philip Bobbitt: http://www.utexas.edu/law/faculty/pbobbitt/