One of our era's foundational myths is that globalisation has condemned the nation state to irrelevance. The revolutions in transport and communications, we hear, have vaporised borders and shrunk the world. New modes of governance, including transnational networks of regulators, international civil society organisations and multilateral institutions, are transcending and supplanting national legislators. Domestic policymakers, it is said, are largely powerless in the face of global markets.
The global financial crisis has shattered this myth. Who bailed out the banks, pumped in the liquidity, effected fiscal stimulus and provided the safety nets for the unemployed to thwart an escalating catastrophe? Who is rewriting the rules on financial-market supervision and regulation to prevent another emergency? Who gets the lion's share of the blame for everything that goes wrong?
The answer is always the same: national governments. The Group of 20 leading and emerging economies, the IMF and the Basel Committee on Banking Supervision have been largely sideshows.
Even in Europe, where regional institutions are comparatively strong, it is national interest and national policymakers, largely in the person of Angela Merkel, the German chancellor, who have dominated policymaking. Had Mrs Merkel been less enamoured of austerity for Europe's debt-distressed countries, and had she managed to convince her domestic electorate of the need for a different approach, the euro-zone crisis would have played out quite differently.
Yet even as the nation state survives, its reputation lies in tatters. The intellectual assault on it takes two forms. First, there is the critique by economists who view governments as an impediment to the freer flow of goods, capital and people around the world. Prevent domestic policymakers from intervening with their regulations and barriers, they say, and global markets will take care of themselves, in the process creating a more integrated and efficient world economy.
But who will provide the market's rules and regulations, if not nation states? Laissez-faire is a recipe for more financial crises and greater political backlash. Moreover, it would require entrusting economic policy to international technocrats, insulated as they are from political accountability.
In short, laissez-faire and international technocracy do not provide a plausible alternative to the nation state. Indeed, the erosion of the nation state ultimately does little good for global markets as long as we lack viable mechanisms of global governance.
Second, there are cosmopolitan ethicists who decry the artificiality of national borders. As the philosopher Peter Singer has put it, the communications revolution has spawned a "global audience" that creates the basis for a "global ethics". If we identify ourselves with the nation, our morality remains national. But if we increasingly associate ourselves with the world at large, our loyalties will also expand. Similarly, the Nobel laureate economist Amartya Sen speaks of our "multiple identities" - ethnic, religious, national, local, professional and political - many of which cross national boundaries.
It is unclear how much of this is wishful thinking and how much is based on real shifts in identities and attachments. Survey evidence shows that attachment to the nation state remains quite strong.
A few years ago, the World Values Survey questioned people in scores of countries about their attachments to their local communities, their nations, and to the world at large. Not surprisingly, those who viewed themselves as national citizens greatly outnumbered those who regarded themselves as world citizens. But, strikingly, national identity overshadowed even local identity in the US, Europe, India, China, and most other regions.
Geographical distance is as strong a determinant of economic exchange as it was half a century ago. Even the internet, it turns out, is not as borderless as it seems: one study found that Americans are much more likely to visit websites in countries that are physically close than in countries that are far away.
For now, people still must turn for solutions to their national governments, which remain the best hope for collective action. The nation state may be a relic bequeathed to us by the French Revolution, but it is all that we have.
Dani Rodrik is a professor of international political economy at Harvard University and the author of The Globalization Paradox: Democracy and the Future of the World Economy
* Project Syndicate
twitter: Follow our breaking business news and retweet to your followers. Follow us
