Enhanced technologies of computation and communications will further accelerate the shift to the market-state that maximizes opportunity (which is an information good) and the shift away from the nation-state that maximizes welfare. This movement, however, may provide the best inoculation against trade wars. A nation-state only wishes to improve its relative position, in order to be able to control its environment and thus bring a better life to its people than its ideological competition; a market-state attempts to improve its absolute position, because only in so doing can it maximize the opportunities available to its citizens. For this reason, nation-states were actually more likely to wage trade wars and market-states more likely to concentrate their energies on more aggressive competition—though we must bear in mind that the two strategies are by no means mutually exclusive.
NORTH-SOUTH CONFLICTS
The long-term decline in the demand for raw materials that began in the late 1970s has inevitably had important effects for the states of what was once called the Third World. If, for example, raw-materials prices had not collapsed in these years, Brazil would have had an export surplus almost 50 percent higher and would have had little difficulty in meeting the interest payments on its foreign debt. Indeed, if raw-materials prices had remained at 1973 or even 1979 levels, there would have been no debt crisis for most debtor countries, especially in Latin America.34 More important, the terms of trade—the ratio between the prices of manufactured goods and services and the prices of raw materials—are at present as unfavorable to the underdeveloped, raw-material-producing states as they were in the deflationary period of the Great Depression.
This is partly the result of abundant harvests and greater efficiencies in producing raw materials. It is also the result of the smaller—and shrinking—component that raw materials make up of finished products. An IMF study concludes that the amount of raw material needed for a given unit of economic output has been declining at the rate of 1¼ percent per year since 1900.35 In 1984 Japan consumed only 60 percent of the raw materials consumed for the same volume of industrial production in 1973.36
Several factors are responsible for this change. Industrial production is switching away from products like automobiles (40 percent of whose cost is in raw materials) to microchips (1 percent to 3 percent). Automobiles and other traditional goods are themselves using cheaper, artificial materials (steel is being replaced by plastics made of raw materials with half the cost of steel); fiberglass cables can transmit as many messages over 50 – 100 pounds of cable as are carried by one ton of copper wire.
Additionally the comparative advantage of low labor costs in the underdeveloped world is increasingly of less significance as labor costs themselves amount to a smaller percentage of total manufacturing costs. Partly this is due to increasing automation and the replacement of manual labor by machines, including robots. But this change in the components of production costs is also due to the shift from industries that were labor-intensive to those that are information- or knowledge-intensive. The manufacturing costs of the semiconductor microchip are estimated to be about 70 percent intellectual (research, development, testing, marketing) and less than 12 percent labor. About the same figures obtain for pharmaceuticals, whereas even the most highly robotized automobile plant would still find about 20 – 25 percent of its costs consumed by labor. Because raw-materials earnings and profits from labor-intensive industries are used to provide the capital for industrialization, one can wonder on what basis development can take place in the Third World when these avenues are denied them. Peter Drucker notes:
In the rapid industrialization of the nineteenth century, one country, Japan, developed by exporting raw materials, mainly silk and tea, at steadily rising prices. Another, Germany, developed by leap-frogging into the “high-tech” industries of its time, mainly electricity, chemicals, and optics. A third, the United States, did both. Both routes are blocked for today's rapidly industrializing countries—the first because of the deterioration of the terms of trade… the second because it requires an infrastructure of knowledge and education far beyond the reach of a poor country… Competition based on lower labor costs seemed to be the only alternative; is this also going to be blocked?37
The potential consequence for the society of states is a disjunction between one group composed of market-states and a second group of states whose underdevelopment hampers their making a constitutional transition to the new form. Of course, at any moment in the story of consti-tutional change, there are always examples of different models being simultaneously pursued. Many Third World states (such as Taiwan, Jordan, or Guatemala) did not become nation-states until almost the end of the era of the nation-state itself, but most had long been nation-states (though some, such as Saudi Arabia and Brunei, resemble much earlier constitutional forms).
The consequence for the society of states can be profound, however, because the unassimilated states will be unable to participate effectively in the multistate institutions and practices that this new constitutional form creates. The relationship between the G-7 and the Group of 100 (proto-market-state institutions) scarcely parallels that which exists between the U.N. Security Council and the General Assembly (with regard to nation-states). Unlike nation-state institutions with virtually universal membership based on the political equality of states, there is a price of admission to the society of market-states (though there may be “scholarships” for some). Some states will be left behind. With no stake in the system as a whole, and following a different archetype for the very basis of legitimacy of the State, these unassimilated states may form a competing, retrograde society, or simply become solipsistic, venomous states, alternately dedicated to isolation from the rest of the world and to its destruction.
TRANSNATIONAL PROBLEMS OF THE ENVIRONMENT
So much important work has been done to bring to the attention of the public the inherently transnational nature of environmental problems that it hardly seems necessary to stress that the society of market-states, like that of nation-states before it, will have to devise ways of coping, as a collectivity, with these matters. Here I want only to discuss two issues: environmental problems that have the potential for disconcerting the society of states, and the contribution that rapid computation, perhaps in conjunction with telecommunications, can make to the resolution of these problems.
Three major environmental events have occurred since 1970 that manifested this potential to bring about rapid and profound disquiet: the AIDS epidemic, the nuclear core accident at Chernobyl, and the scientific confirmation that the earth's ozone layer is being destroyed. Each of these events arose as a function of the interactions among the states of the new global economy, the mass movement of peoples and products, the transfer of previously familiar technologies to new settings, and the development of new technologies and materials.38 Part of what is disconcerting about these three events is precisely their links to this new world; the eruption of Mount Saint Helens perhaps had a greater environmental consequence than any of the three, but it did not have their unsettling quality.
Acquired Immunodeficiency Syndrome (AIDS)
AIDS is the physical condition of malaise leading to death that occurs as a consequence of an attack on a human being's immune system by the human immunodeficiency virus (HIV). Its origin remains obscure, but it seems to have bridged the gap of space and culture from West Africa to the developed states in the late 1970s. One plausible explanation is that it was the result of the transfer to human beings of a retrovirus previously found in monkeys, through the use of hypodermic needles that were employed to inject monkey blood and plasma into human beings as part of a cultural ritual. This theory of origin, if true, places AIDS among those other diseases with a technological component, such as toxic shock syndrome (caused by the superabsorbency of a tampon) and Lyme disease (caused by the changing ecology of suburban growth, reforestation, and the altered demographics of deer populations), the Hanta virus, the zebra mussel contamination in the Great L
akes, and the discovery of radon in homes.
Other infectious diseases have exposed residents of the temperate zones to tropical infections owing to increased travel in both regions, the global sources of the food supply, and the ever-increasing number of human hosts within which viruses may proliferate. Whatever its origin, AIDS has been widely spread among heterosexuals in the developed world by the use of hypodermics, and by sexual practices among both heterosexuals, mainly in underdeveloped states, and homosexuals in all states.
Its disconcerting nature has to do with at least three factors: first, such epidemics were widely believed to have been relegated to the past by modern antibiotics; second, AIDS has been invariably fatal, striking the young and otherwise healthy with a grim inexorability; third, although AIDS has been largely confined to groups that, for differing reasons, can be marginalized from the mainstream culture of the developed states, yet it has the potential to overwhelm the populations of those mainstream cultures. AIDS is now the leading cause of death among Americans under the age of twenty-one.
In 1976, the historian William McNeill, writing about the role of plagues in the past, presciently observed that
it now requires an act of imagination to understand what infectious disease formerly meant to humankind, or even to our grandfathers. Yet as is to be expected when human beings learn new ways of tampering with complex ecological relationships, the control over microparasites that medical research has achieved since the 1880s has also created a number of unexpected byproducts and new crises.39
Thus AIDS is probably not the last of such disconcerting diseases. Unexpected outcomes of recombinant DNA activities, toxins developed for the purposes of biological warfare, obscure parasites sprung from their remote geographical niches, or even familiar viruses that have developed strains resistant to modern antibiotics are all candidates for the plagues of the twenty-first century. They pose a unique challenge for the society of market-states, as threatening in its way as the challenge posed to Christian faith by the bubonic plagues of Europe because developments in molecular biology—fueled by abundant investment made possible by the financial liberalizations of the market-state—have given many persons a faith in technology and in its ability to grant something like immortality to human beings.
The society of market-states will have to confront its fundamental ordering principle, the market, at a juncture where the market works poorly, the decision to whom to give life-saving medical care. If each state decides on its own, in the manner of current states, then some persons will be excluded from care because they are not members of the preferred groups of recipients, while others will be excluded for lack of personal or institutional resources. If, on the other hand, some multinational market is set up, then the wealthy from one country will sop up the health resources of others, as in the example of richer persons buying kidneys and other organs from impoverished donors.40
The encouraging fact is that a society of market-states will be better prepared to evaluate, analyze, and treat such diseases because it will most efficiently allocate resources to the task and have a worldwide charter to do so. The mere fact of a state boundary will not stand in the way of ad hoc groups, authorized by the society of such states, who act to protect the world from an apocalyptic pestilence. But this too will test the legitimacy of that system, as it assumes authority—by what right?—that the peoples of the world have not given it by any recognizable plebiscite, or other method approved by the nation-state. Moreover, actions by a society of market-states will inevitably bring the values of the market to bear—espe-cially pricing—on goods (such as life itself) that we have tried to treat as priceless.*
Chernobyl
Chernobyl was not the first such health event to result from the introduction of dangerous technologies into contemporary life. The nuclear release at Three Mile Island; the chemical releases at Seveso, Italy; the explosion at Bhopal, India; and the pollution of the water table at Love Canal in the United States all come to mind.
The disturbing nature of these events is traceable to their origin in the malfunctions of human-designed and -maintained machines. Unlike the infectious retrovirus, the operations of a nuclear reactor are well understood. Similarly, the effects of the toxic gas used in the production of pesticides at Bhopal were perfectly predictable. In such cases, a series of human errors and equipment failures combined to bring about the disaster. At both Chernobyl and Bhopal there was little oversight or effective regulation. Mandated safety standards by the state were ignored owing partly to a lack of the technical and institutional resources necessary to achieve compliance.
This sort of crisis strikes at a weak point in the political superstructure of the society of market-states, its moral vulnerability. At Bhopal, Chernobyl, and elsewhere, the lives of persons whose economic worth was negligible were put at risk in order to provide cheap chemicals to agriculture or cheap power to electricity consumers. So long as it is profitable to do so, we can expect multinational corporations to draw the calculus of safety no more expensively than the global possibilities of relocation demand, and we can expect state enterprises to do the same (because even though they cannot relocate, they must compete against the global multinationals).
Here too, however, there is hope. Chernobyl was a national failure, prompted as much by the shortcomings of Russian technology as by the inevitability of accidents. The society of market-states would be able in principle to deploy technicians within a global market, denying dangerous technologies to those states that do not provide adequate safeguards and helping poorer states to maintain the complex equipment that may be located there.
Chlorofluorocarbons
Chlorofluorocarbons (CFCs) are synthetic chemical compounds first developed in 1928 to replace the hazardous refrigerants, such as ammonia, methyl chloride, and sulfur dioxide then in use.41 By the 1970s CFCs—nontoxic, nonflammable—had completely transformed the refrigeration industry, replacing chemicals in refrigerators and launching the fledgling air-conditioning industry. Eventually CFCs were adopted as propellants in ubiquitous aerosol spray cans for everything from whipped cream to hair spray.
When, in 1974, two scientists published a technical paper suggesting that CFCs might threaten the environment, the world was producing almost a billion kilograms of CFCs a year, with the amount doubling every five years. These scientists hypothesized that CFCs were slowly drifting upward into the stratosphere where, having broken down molecularly, they were releasing chlorine atoms that destroy stratospheric ozone, causing higher levels of ultraviolet radiation to reach the surface of the Earth. This might lead to a deadly rise in the occurrence of skin cancers.
Robert Kates picks up the story here and sketches the ironic turn of events that ensued:
Urged on by activist scientists and a concerned Congress, U.S. media took the lead in spreading the alarm. They devoted an extraordinary amount of coverage to CFCs in 1975 and helped to fix inexorably in the public mind the image of frivolous spray cans blasting holes in the sky. The prospect of increased cancer risk lurked just offstage. Local political action and consumer boycotts against products containing CFC propellant spread rapidly. By the time the U.S. government officially banned CFC propellants in 1978 the action was virtually superfluous: Domestic use had already fallen precipitously, solely on the basis of an as yet unproved hypothesis…. A decade after the initial surprise, the threat of ozone depletion had been all but forgotten by the media, politicians and the public. After dropping somewhat, worldwide CFC production climbed back above its 1974 level. [It was only] the discovery of a… hole in the ozone layer in 1985 [that] put the issue back onto the public agenda.42
The unnerving aspect of the ozone case lies in its grotesque transformation of something ordinary and benignly mundane into something unexpectedly malignant. Similar shifts have occurred with respect to cigarette smoke, asbestos fibers, and lead in paint and gasoline. In the market-state, there are powerful lobbies with a stake in persuading the public and pub
lic officials that there is really nothing to worry about, and a no less powerful media and public interest alliance anxious to detect an alarming new crisis as frequently as possible. The lobbies depend upon companies whose sale of the dubious substance is threatened, but the media and public-interest groups also have a material stake in the matter, because the market-state requires that they make their way on the basis of public contributions,* which requires an ever-escalating hyperbole to stimulate giving. In the ozone-depletion case, public reaction first outran and then lagged behind the science of the matter.
The society of market-states is vulnerable to such threats to the environment and yet in some ways better equipped than the society of nation-states to deal with them. This new society is vulnerable because it places such a high value on the autonomy of the market. CFCs are, after all, a cheap and otherwise safe method of refrigeration and vapor propulsion; there will be some countries that choose to continue their use, noting along the way that because their impact is so minor compared to that of market giants like the United States, little harm will result to the atmosphere. Global marketing will allow the transfer of such products to those countries whose publics are not so sensitive (or who feel they cannot afford to be sensitive) to charges of environmental degradation.
At the same time, the global corporation is itself vulnerable to reports in its major markets disclosing practices it would like to confine to marginal markets. Boycotts, not laws, led to the original decline in CFC use in the United States. The problem is how to organize the actions of the society of market-states in much the way nation-states were able to mobilize multilateral legal regulation. Law will continue to be a resource available to state but it will occupy a very different role in the world of market-states than it did in the world of nation-states.
THE SHIELD OF ACHILLES Page 101
