1. Read and translate the text.

2. Make a précis and an annotation on the text. The future of the state

In the global struggle between state and market, markets have gained the upper hand – or so governments keep saying. Is it true? Almost any discussion of public policy nowadays seems to begin and end with the same idea: the state is in retreat. It is argued that governments are confronted by two old enemies, stronger now than ever before: technology and ideology. The state is proving unequal to the challenge. Its power to rule is fading.

A new industrial revolution is under way. Advances in computing and telecommunications press relentlessly on, shrinking distance, eroding national boundaries and enlarging the domain of the global economy. Increasingly, these changes render governments mere servants of international markets. Reinforcing the technological shift is a transformation in the realm of ideas, starting towards the end of the 1970^s and reaching its climax ten years later with the collapse of communism. That destroyed the system not only in the form practiced in communist countries but, more important for those in the West who never experienced it directly, as a sustaining Utopia myth. Judged as propaganda, 1989 did for big government what 1929 did for laisser-faire.

Today the main point of this story are almost universally accepted: most tellingly, perhaps, by the world’s political leaders. Left and right, eagerly or reluctantly, bow down before global capitalism. The debate about “globalisation” – whether it is a good thing or a bad thing, whether to embrace it or resist it –is vigorous, but nobody seems to doubt the new power of the international market forces. Indeed, the two main sides in the debate agree not just about that, but also about the nature of the balance that societies must strike as a result.

In one corner are the optimists: an alliance of modernizing conservatives and the new post-socialist left. They regard the triumph of international capitalism as largely a good thing. Governments may have lost some of their freedom to direct economies as they wish, but the world is benefiting from faster technological progress, historically unprecedented opportunities for the relief of global poverty, and greater freedom for millions of people across the globe. Few, if any, optimists doubt that a well-functioning society requires state that is competent in both senses of the word, which makes the state’s shrinking economic sovereignty something of a drawback. Nonetheless, they find the balance comfortably positive.

The case for gloom

The pessimists – a coalition of populist conservatives, assorted communitarians and the old left-agree on the need for a balance between an effective state and the economic efficiency that market forces can provide. They also agree that market forces, for reasons of technology and ideology, have lately gained the upper hand. But unlike the optimists, the pessimists find this deeply disturbing. In their view, the gains from globalisation are far smaller than the optimists suppose, and the drawbacks much greater. And such benefits as there may be will be divided unfairly within society – a crucial point that the optimists tend to ignore.

The new global capitalism, the pessimists concede, will certainly enrich many – but capitalists rather than workers. Moreover, those who fare worst among the workers will be the unskilled, least able to fend for themselves. Globalisation will widen inequality, exacerbate poverty and increasingly lead to social “exclusion” These costs will mount even as globalisation succeeds in its own terms, at a time when government’s capacity to respond is draining away. Its failure to act will undermine the foundations of the democratic state, challenging its very legitimacy. As the remoteless advance of market forces plunges capitalism into a new crisis, Marx will have the last laugh after all.

If this survey had to take sides in the argument it would support the optimists. For reasons to be explained shortly, they are much closer to being right than the pessimists. But both they and the pessimists are wrong in accepting so readily, first, that the state is indeed in retreat; second, that globalisation will play the decisive role in determining the future of the state; and third, that any infringement of the powers of the state must be counted as a cost against corresponding benefits. On the first two points, it seems, both sides share a taste for hyperbole; on the third, they betray similarly collectivist instincts.

A more liberal thinker might ask which powers of government have, in fact, been infringed by international markets, and whether those powers, if any, should have resided with the state in the first place. Perhaps the shrinking state is a good thing in its own right, in which case global market forces deserve a more enthusiastic welcome. Or perhaps, despite the spread of capitalism, the state is shrinking more slowly than it should, or not at all – in which case the main thing wrong with globalisation is that it is not doing its job thoroughly enough. This survey aims to sort through these ideas and come to some conclusion about the future of the state.

One of its main themes will be that the effect of globalisation has been overrated. For the rich West, both its costs and its benefits are less than meets the eye. For poor countries, undeniably, it makes a big difference to the prospects for economic development. International integration is their fast track out of poverty. With small domestic markets, backward technology and inadequate capital, third-world countries have everything to gain from ending their relative isolation and developing close economic ties with the rest of the world. But in the advanced economies, where internal markets are big enough to be fairly competitive, barriers to flow of trade, capital and knowledge have long been lower, and technology is at its cutting edge, there is less to be gained. For these countries, globalisation is a good thing, but hardly a matter of life or death.

In the advanced economies, in other words, faster economic growth cannot be imported, it must be built chiefly at home. The issue is not whether governments will hold back the forces of change from abroad, but whether they will resist the more insistent forces of economic change in general. In the rich countries, most of these forces will be domestic rather than international. Most of them, in one form or another, reflect basic economic liberties. Western nations may have reconciled themselves to freer international movement of trade and capital; but that will not oblige them to embrace economic liberty within their own boarders. The fundamental question for the advanced industrial countries is not, as many suppose, whether democracy is compatible with globalisation, but whether democracy is compatible with liberty.

A funny question

Even to pose that question will strike many as odd. Democracy and freedom seem two sides of the same coin: how can there be one without the other? The connection meets no more skepticism than the idea that global market forces are in the ascendant. Yet both are dangerous simplifications. Freedom and democracy are linked, of course – but so are freedom and capitalism. And, unfortunately, the pessimists are right to question whether capitalism can continue to get along happily with democracy.

They are wrong, however, about the form that a conflict between the two would most likely take. In their view, the danger is that capitalism will in the end prove so socially catastrophic that democratic states will be overwhelmed by protest, leaving fascist or otherwise non-democratic regimes to rise up in their place. Another scenario is more plausible. Democratic states, indulgent of anti-liberal values, may make such demands on capitalism, and place such burdens and restrictions upon it, that it will slowly fade away, along with freedom. The emerging polity might still be “democratic” – but that would make it no less disfunctional and, at the extreme, hardly any less tyrannical.

Just now, avowedly left-of-centre parties rule in much of the advanced industrial world, including America, Britain and France. Popular anxieties about globalisation, advancing technology and economic insecurity may be partly to blame. Arguably, though, left-of-centre no longer means what it used to.

For the most part, today’s left-of-centre governments have made their peace with the world of business. They no longer think of themselves as defenders of organized labour or champions of public spending. Words such as “enterprise” and “opportunity” trip lightly off the tongue. These are post-socialist leftists, if they are leftists at all. Perhaps they are no more likely than the conservative parties they defeated to raise taxes and enlarge the role of the state. Many of them won their elections promising to do such thing. Does this not suggest that the West has, after all, reconciled itself not just to globalisation but also to a greater measure of economic liberty at home?

It does not. The so-called realignment of the left falls far short of a victory for liberalism. The left, on the whole, may have abandoned its traditional figures of speech and even, to a much smaller extent, it preferred instruments of economic control. But it insists that its traditional values have not changes. From a liberal point of view, the new left’s old values – its enduring collectivism and anti-individualism – are precisely the problem. Moreover, many conservative parties, in their own way, are just as keen on these values as the new left. Appeals to collectivism and anti-individualism are clearly popular with voters, especially when detached from any discussion of the policies needed to put them into practice. Democracy is comfortable with these values. Capitalism is not.

But even if this assessment is correct, why is it more plausible to suppose that democracy will undermine capitalism rather than, as the global economy pessimists argue, the other way around? The answer is simple: because that is what has been happening in the West for the past 60 years.