The Rise of the Virtual State

[jya@pipeline.com (John Young)]

   Foreign Affairs, July/August, 1996. 
 
   "The Rise of the Virtual State" [Excerpts] 
 
      Richard Rosecrance, UCLA Professor of Political Science 
 
 
   Amid the supposed clamor of contending cultures and 
   civilizations, a new reality is emerging. The nation-state 
   is becoming a tighter, more vigorous unit capable of 
   sustaining the pressures of worldwide competition. 
   Developed states are putting aside military, political, and 
   territorial ambitions as they struggle not for cultural 
   dominance but for a greater share of world output. 
   Countries are not uniting as civilizations and girding for 
   conflict with one another. Instead, they are downsizing -- 
   in function if not in geographic form. Today and for the 
   foreseeable future, the only international civilization 
   worthy of the name is the governing economic culture of the 
   world market. 
 
   Timeworn methods of augmenting national power and wealth 
   are no longer effective. Like the headquarters of a virtual 
   corporation, the virtual state determines overall strategy 
   and invests in its people rather than amassing expensive 
   production capacity. It contracts out other functions to 
   states that specialize in or need them. Imperial Great  
   Britain may have been the model for the nineteenth century, 
   but Hong Kong will be the model for the 21st. 
 
   As a result of these trends, the world may increasingly 
   become divided into "head" and "body" nations, or nations 
   representing some combination of those two functions. 
   The world is embarked on a progressive emancipation from 
   land as a determinant of production and power. 
 
   Diminishing their command of real estate and productive 
   assets, nations are downsizing, in functional if not in 
   geographic terms. Small nations have attained peak 
   efficiency and competitiveness, and even large nations have 
   begun to think small. If durable access to assets elsewhere 
   can be assured, the need to physically possess them 
   diminishes. 
 
   The virtual state is an agile entity operating in twin 
   jurisdictions: abroad and at home. It is as prepared to 
   mine gains overseas as in the domestic economy. But in 
   large countries, internationalization operates 
   differentially. Political and economic decision-makers have 
   begun to recast their horizons, but middle managers and 
   workers lag behind. They expect too much and give and learn 
   too little. That is why the dawn of the virtual state must 
   also be the sunrise of international education and 
   training. The virtual state cannot satisfy all its 
   citizens. The possibility of commanding economic power in 
   the sense of effective state control has greatly declined. 
   Displaced workers and businesspeople must be willing to 
   look abroad for opportunities. In the United States, they 
   can do this only if American education prepares the way. 
 
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