Nation state and democracy in the globalizing world

Second part of the paper presented at a Tilburg University seminar on 26 November 1998 by prof. Ruud Lubbers and Jolanda Koorevaar. The first part of this paper is The Dynamic of Globalization.

1. Introduction

Within globalization studies a debate is going on about the effects globalization has on the governance-capacity and role of the state. A lot of authors claim, either with enthusiasm (Ohmae) or with regret (Strange), that the state is 'losing out'. Others (Sassen) take a more nuanced stance, claiming that indeed the state is weaker in fulfilling its traditional roles (like redistribution), but that it is at the same time gaining strength with respect to other policy-functions (like protection of contract-rights/private property, like the creation of international standards regulating international trade/investments, etc.). All authors stress the importance of governance by intergovernmental institutions (IGOs). They all point at the internal and external security deficit haunting all states.

In this chapter we will claim that the state is losing governance-capacity, but also that it is changing its role since the state now is embedded in a more varied governance-constellation as ever before. We will discuss the development of this complex governance-structure within globalizing societies on a theoretical level.

2. Globalization and nation states

As we have seen in The Dynamic of Globalization globalization can be defined as a technologically and ideologically driven process in which geographic distance becomes irrelevant for socio-cultural, political and economic relations. People become conscious of this fact. Therefore, networks of relations and dependencies become potentially bordercrossing and even worldwide.

This process has per definition consequences for the functioning of nation states, since state-authority is confined to geographic borders. In the following analysis we will take a look at the (ideal-type) development of the modern democratic nation-state as a consequence of (European) Enlightenment in the broad sense. Later we shall turn to the effects of globalization on this type.

3. Development of the democratic nation state in the West

With the peace of Westphalia in 1648 European powers agreed that their political power was limited to specific geographic borders. In fact the Westphalia pact can be seen as the basis of the modern principle of territoriality. That is: no external power can gain authority over a states territory, unless states have first willingly agreed to give up their sovereignty with respect to certain policy-issues and/or subjects. Thus, nation states function in a defined territory.

In the course of history state-power became also exclusive: internal rivalry over authority was settled, absolute monarchs became 'heads of states' once they succeeded to monopolize both tax-raising and means of (legitimate) violence. In the eighteenth century notions of democratic government revived from classic history and matured in the following two centuries. State power was slowly encaged within mechanisms assuring its democratic character. The sovereignty of the people was and still is guarded in several ways:

First of all the head of state is either chosen by the people, or has only a symbolic function.

Secondly, government-power is controlled by and shared with a representative parliament, or in some cases via direct democracy with the people at large. To assure the representativeness of parliament and to allow people to evaluate and influence government policies, a multi-party system is build up, characterized by political pluralism. For this system to function a society has to have access to meaningful information guaranteed by openness, a free press and the right to freedom of speech.

Thirdly, government power is divided among three dependent, but autonomous institutions: the judiciary, legislative (parliament) and administrative (government) power. These three powers are bound together by the constitution, paper laws and law enforcing institutions.

To these more or less formal rights, duties and mechanisms can be added three general principles that should be the starting point for all democratic institutions. These are: transparency, accountability and integrity. Institutions and outcomes must be transparent, so that that 'outsiders' can gain insight quickly and thus can control easily. Furthermore, institutions must account for their actions and should justify themselves to external actors/society at large. Last but not least, institutions must be incorruptible, they need to show integrity in all their actions. Integrity means that those who act on behalf of an institution do not accept personal favors or benefits for other institutions as for those which they represent.

4. The spread of the state-concept

With the maturing of the democratic nation state, peoples all over the globe came into the limelight next to 'power-elites'. But it was only in the beginning of the twentieth century that existing, powerful states came to recognize the principle that each people had the right to its own democracy. Most colonizing states did not accept the consequences of this principle until after they had lost their colonies, but nevertheless, in the course of this century it became widely accepted. Decolonization became a fact of life after the Second World War.

Political actions based on the notion that each people had the right to its own democracy resulted in a situation of which the ideal type can be named 'democracy by (United) Nations'. The realization of this principle (decolonization) had its own setbacks and problems. First of all, the concept of a democratic nation state was often alien to the historical indigenous developments and traditions of ex-colonies. In the West nation-states matured over centuries, in the non-Western countries democracies were expected to be functional within a very short time.

Secondly, the borders of new countries were often drawn pretty much careless, based on previous wars fought by the Western colonizers and on compromises reached between them. This resulted in new states that housed different peoples with different cultural backgrounds and historical experiences between its borders. So, not yet matured democracies were also expected to accommodate several peoples in their territory, to protect minorities against the majority and to built one nation out of several ones. If there is a lack of internal cohesion and democratic tradition it is difficult to find accommodating mechanisms and even more difficult to succeed in nation building. States than easily become failed states, like many former African colonies and more recently Yugoslavia. We have the strange experience that the vanishing of the super-powers as they existed in the Cold War produces a side effect of more failed states. At the same time one has to realize that the increased worldwide media coverage makes violence in failed states more visible.

5. Internalization of law

After the Second World War the amount of autonomous states grew enormously. These democratic nation states existing together on one globe needed common rules to regulate cross-border and inter-state processes and activities. This need resulted in a process of internationalization of law. International regulation embodied in institutions like the UDHR, ILO, WTO and international treaties of all kind, limit the sovereignty of the national states. However, they do so only after states themselves have accepted the specific regulation, after they have ratified treaties. Furthermore, states usually play a role in implementing the rules in their national territory.

A historic step is when courts (to support the implementation of international law) not only come to judgments about states (to practice 'rights' vertical), but also about the horizontal relevance (citizen to citizen, resp. societal units). States than allow external juridical authority to 'interfere' with subjects within their borders. States give up (at least partly) their territoriality-claim, respectively their territorial sovereignty claim.

Due to technological innovations especially in the Information and Communication Technology (ICT) the democratization process is stimulated. The visibility of non-democratic measures committed in places far away, arouses awareness and indignation in the international community. This pressures states to refrain from friendship and economic ties with non-democratic countries. That in its turn weakens the position of non-democratic countries within the inter-state system and on the world market (again, we are talking about an idealtype development!).

Internal forces opposing dictatorial regimes also gain strength from ICT, because it can channel support, advice, consultation and so on across borders. The ease with which information can flow, also makes it hard for suppressing regimes to withhold information from their citizens. Therefore more and more dictatorial regimes collapse.

The recent internationalization of economic life is increasing the need for international civil law: for example arbitration and standards. International civil law tends to restrict itself to purely economic relations. Issues such as security, equity and ecology are considered to be tasks of primarily nation states.

What we see developing than is an international democracy, of which the moral groundrules and more pragmatic economic regulations are laid down in universal declarations, international conventions and international treaties. The rules are being implemented by nation states, but also by inter- and supra-national courts, tribunals and organizations. The development of the sovereignty of the people, of a worldwide system of democracy encompassing all of humanity, becomes visible also in the growth in international issue organizations like NATO, WTD, UN-Commissions and so on and in the more recent regionalization trend.

The democratic nation state is a matured concept, the democracy of nation states together is not matured (yet). What is clear however is:

that more and more states within the interstate system become democratic,

that regulation within the interstate system is becoming denser, with international declarations, treaties, international civil laws, conventions and so on and

that political organizations (to which the 'right to rule' is attributed) on the level above the state are growing in number.

This governance-system of nation states and governmental organizations together has its shortcomings. As we have seen in the last chapter, governance realized by states and the interstate system suffers from a security, social, ecological and democratic deficit.

This has puzzled political scientists. How will democracies and the interstate system develop in a globalizing world, given the observation that the interstate-system is not delivering enough governance to realize values and quality of life in the globalizing world? In the literature we usually find four alternative governance-models:

The first is what we could call 'Adam Smith revisited'. This boils down to 'trust the market, let states and other political institutions disturb the market as little as possible'.

The second model is called 'Fragmentation'. In this vision, states will eventually return to their own 'national business'. Globalization will not succeed because economic, cultural and/or political conflicts will break out.

A third option is the Pax Americana. The now chaotic worldwide governance-network will be structured by the hegemonic United States. Problems will be solved in 'the American way', under American leadership.

The last alternative model is 'Global coordination'. In this model states, regional institutions and IGOs all play a function. Within this system national governments exist next to regional governance-institutions and next to the (global) UN. Across these geographic layers, there are also functional dividing lines, that is to say, there is also governance per issue.

In the real world we see a mixture of those four models. There are trends towards Fragmentation and coordination, towards liberalization and Americanization.

6. New governance

However, next to (a blend of) those four which are all elaborating on the 'nation state/democracy model', we can identify a supplementary model named 'new governance'. The word 'governance' was originally used for non-matured democracies who needed to overcome the lack of integrity and democratic tradition by showing 'good governance'. We can now use the word to distinguish between new governance and traditional government (the democratic nation state and the inter-state/IGO system).

Governance refers to the capacity to realize societal values, while this capacity is not based on the possibility to form and enforce laws, but has strength beyond the law. Governance is not based on territorial jurisdiction, on the parliamentary approach, on a constitution and paper law, on law enforcing institutions. It is based on values practiced in and by societal institutions. These values are to be realized by both states/politics, transnational companies (TNCs)/business and non-governmental organizations (NGO)/civil society.

NGOs stand for certain societal values: sustainable development, nature conservation, human rights, neighborhood improvements, solidarity, equality, and so on. On the one hand institutions try to realize those values in a direct, active way: they actually plant trees, built schools, lend money to women, take care of the ill and desperate and so on. On the other hand NGOs put pressure on other actors to realize core values, in the least not to harm them. In that respect NGOs monitor the actions of businesses and states, they inform members, mobilize media and mobilize consumers/voters. In doing so they make use of consumer power. Consumers in matured economies can be mobilized to punish misbehavior of businesses. These consumers, being voters as well, can also pressure states not to tolerate misbehavior of businesses (withhold permits) and other states (economic sanctions).

It is a business's goal to make profit. However, in today's world, businesses need to be aware of values and norms living in their social surrounding and they are more conscious that this serves their own interests:

As discussed already, NGOs can mobilize consumers and politicians if a corporation violates important societal values: for example if it violates human or labor rights.

Secondly, businesses are vulnerable to actions of NGOs since employees and staff of TNCs do not like 'their' company to be scandalized (the shame factor). Management is afraid of demotivation of personnel.

Thirdly, judges have now started to penalize TNCs when they violate soft law principles, such as the pre-cautionary principle. Judges do not only base their verdicts on hard law, but also on national and international values which are widely accepted.

So, civil society has gained influence on business; NGOs mobilize consumers, stimulate politicians to punish firms, go to court and/or mobilize the 'shame factor' of business-employees.

Business becomes quite often motivated, internally as well, to realize societal values and to promote ecological and social sustainable development. Experience learns TNCs that going for safety and environment improves quality of production and cost awareness. There are many so called win-win experiences.

Both internal motivation and the external pressure causes TNCs to internalize societal values into their organizations. They do so by mission statements: by formulating explicitly societal next to business/profit missions. They do so by the formulation of codes of conduct: a group of TNCs makes a list of wanted and unwanted behavior in different situations and commits itself to adhere to the expressed norms. Thirdly corporations internalize societal values into their business via voluntary agreements. In the environmental area for example some companies agree to develop new, environmental friendly technologies. These technologies will later be translated in legal norms. Companies who now invest in finding the cleanest technologies, will have the highest initial costs, but will at the end of the day have far less costs once the legal norms are implemented. The free rider problem is thus handled with. Finally, we also see developing the practice of green and social accounting/reporting.


Next to NGOs and TNCs states also play their role as law-makers and -enforcers. In the governance model here described, societal values and quality of life is realized by NGOs business and government together. A new symbiosis of government, business and civil society is slowly developing. Societal values are realized in all three segments. By companies, NGOs, states and IGOs. All these segments need transparency, accountability and integrity/no corruption.

Ruud Lubbers, 1998