The nation-state, a vanishing act or not?

Brexit has been going on for so long I often forget it is happening. The bolt of lightning that was the 2016 referendum result has given way to a bureaucratic nightmare over fishing rights.

So it was refreshing to stumble onto a piece by David Edgerton from last October (how long ago does that feel) that situates Brexit within certain dynamics that are still very relevant today.

The article’s puzzle is how the Conservative party, ostensibly the party of big business, could champion Brexit despite the loud objections of most sections of British capital.

He argues this is because globalisation has rendered “British capital” an anachronism. National capitalism, national industry, and national champions – what the French collectively call Dirigisme – no longer really exists as a meaningful concept.

One of the implications has been the untethering of the Conservative party from this traditional base, and Brexit. The other, more relevant for us, is the decay of the state.

His implied argument is that a capitalism built around strategic and intimate relations between industry and state requires a degree of state capacity that a more globalised capitalism does not.

The piece was written in October 2019, and the performance of the UK with Covid-19 makes its claims about state capacity look prescient. It’s especially relevant today, as opinion in policy circles again warms to the idea of a more active state. There has been a lot of talk about the re-emergence of the nation-state thanks to Covid – I’ve written about it. Has it emerged only to stumble?

For progressives, the years since the GFC have been spent battling those who insisted the state simply had no money. The tragedy of the years after the GFC was that the richest countries in world history convinced themselves they were broke, so broke there was no option but to sacrifice a generation in self-defeating austerity. In important ways, that argument has given way to acceptance that debt is not quite the constraint we imagined. However, just as we solved the money problem, we ran smack into the capacity problem. This is the new battle.

Two caveats. Firstly, central banks muddy any story of declining state capacity. They have displayed incredible agility, creativity, and skill since 2007 shepherding the global economy.

Second, it is important to not romanticize national capitalism. It can easily be a corrupt boys club. Nor is it automatically progressive, as America’s grotesque military industrial complex demonstrates. If progressives want a more active state they need to fight for it to be a democratic one.

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