Onward to a Hollow State. by John Robb

Posted on Saturday, 12th May 2012 @ 08:44 PM by Text Size A | A | A

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The modern nation-state is in a secular decline, made inevitable
by the rise of a global market system.  Even developed nations, like the
US, are not immune to this process.  The decline is at first gradual
and then accelerates until it reaches a final end-point:  a hollow
state.  The hollow state has the trappings of a modern nation-state
(“leaders”, membership in international organizations, regulations,
laws, and a bureaucracy)  but it lacks any of the legitimacy, services,
and control of its historical counter-part.  It is merely a shell that
has some influence over the spoils of the economy. The real power rests
in the hands of corporations and criminal/guerrilla groups that vie with
each other for control of sectors of wealth production.  For the
individual living within this state, life goes on, but it is debased in a
myriad of ways.

The shift from a marginally functional nation-state in manageable
decline to a hollow state often comes suddenly, through a financial
crisis.  This crisis typically has the following features:

  • Corporations and connected individuals systematically loot
    the nation-state of financial assets and natural resources through a
    series of insider/no cost deals.  These deals are made to “save” the
    nation’s economy or financial system from collapse.
  • Once the full measure of the crisis is known, the
    nation-state’s currency falls precipitously, it’s debt becomes
    expensive, and it is forced to submit to international oversight/rules.
  • The services the state provides rapidly evaporate as its
    bureaucracy is starved for cash/financing.  This opens up a window for
    the corruption of government employees unused to deprivation.


The Dynamic of Primary Loyalties

The decline from functional but weak nation-state is extremely
sudden.  For individuals, there is a rapid and sustained decline in the
standard of living.  Additionally, there are spot shortages of critical
items and commodities — particularly food, medicine, and energy (since
these are globally fungible).  Large and small business fail across the
board, or become prey to connected companies/individuals with access to
the remaining coercive power of the nation-state.  As the deprivation
becomes commonplace, people turn to primary loyalties for support and
services — loyalties to a corporation, tribe, gang, family, or
community.  These groups, energized by new levels of loyalty but deeply
obligated to reciprocate this loyalty with support, become extremely
aggressive in pursuit of their survival.  Once this shift in loyalty is
made, a self-generating cycle of violence, crime, and corruption (fueled
in large part through connections to the global market system) becomes
entrenched.  The nation-state, at that point, becomes irretrievably

The Looting

It’s instructive to view the US Treasury’s plans for a bail-out of
the global financial system through the lens of the hollow state.  By
this measure, the bailout as it stands today, is a form of financial
looting of the US Treasury (it isn’t socialism, since the government
isn’t nationalizing the financial system).  Trillions of dollars in
government monies ($700 billion to begin with) will be infused directly
into the coffers of corporations and wealthy individuals (via hedge
funds).  Specifically, the plan buys toxic assets at inflated prices and
sells them back for nearly nothing — no equity or assets of real value
are provided in exchange for the purchase.  The national debt will
likely grow 20-30% in a single year, with obligations extended to many
trillions more in guarantees.

Given this, one potential next step forward is a decline the credit
rating of US debt (which radically increases the costs of US borrowing),
a collapse in the dollar relative to more stable global currencies, and
a rapid decline in government services.  Other scenarios achieve the
same result with different timing.  Regardless, our (the US and the UK)
journey to a hollow state has officially begun.

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