The Pandemic Depression
The Global Economy Will Never Be the Same
You enter the ghetto through a warren of decrepit alleys crowded with locals seeking refuge from the hot night air of their cramped homes. Suspicious stares alert you that you have entered Kingston's gangland. But if the local don -- or "area leader," in the polite lexicon of official Jamaica -- has granted you permission to enter, you are safe. Here, news travels like dye in water.
The local gang maintains its own system of law and order, complete with a holding cell fashioned from an old chicken coop and a street-corner court. It "taxes" local businesses in return for protecting them, punishing those who refuse to pay with attacks on property and people. It provides a rudimentary welfare safety net by helping locals with school fees, lunch money, and employment -- a function that the Jamaican government used to perform. But over the last couple of decades, keen to reduce spending, it has scaled back many of its operations, leaving a vacuum. As one kind of authority has withdrawn, another has advanced.
Jamaica's gangs -- each a fluid but cohesive organization with a clearly demarcated territory -- fund their activities partly through their participation in one of the industries in the vanguard of globalization: the transshipment of illegal drugs. Although at first glance the gangs seem to be at odds with the government, the local police frequently cooperate with the dons, whose ruthlessly efficient rule can make the cops' jobs easier. The result is a tenuous quid pro quo: if the dons keep order, the police turn a blind eye to the drug trade. Besides, direct assaults on the gangs are often futile. Even when the police capture dons or their gunmen, convictions are next to impossible to obtain because potential witnesses remain silent out of loyalty or fear. Just as the rise of the modern state generated conventional symbols of loyalty -- flags, anthems, national heroes -- so does gangland culture reflect the new power structure. The dons patronize deejays who celebrate them in song, and huge crowds turn out for the gang leaders' funerals, waving flags that symbolize their rule.
Kingston's gang-controlled neighborhoods are just one result of a growing worldwide phenomenon: the rise of private "statelets" that coexist in a delicate, often symbiotic relationship with a larger state. Large sections of Colombia have gone this way, as have some of Mexico's borderlands and vast stretches of the Andes and the adjoining rain forest. Countries such as Afghanistan and Somalia are more or less governed by warlords, and Pakistan's borderlands submit to Islamabad only when the state's armed forces force them to. Private militias have carved up whole swaths of the Democratic Republic of the Congo and Papua New Guinea, and at one point militias ruled the Solomon Islands. And the list is growing.
Policy debates and the academic literature on international relations have been preoccupied lately by discussions of so-called failed states. Not all cases in which private actors have assumed statelike functions, however, involve chaos or failure. The gang-controlled communities in Jamaica, for instance, are often among the safest in the country. The performance of traditional state functions in such communities may actually have improved as the official government has receded. Often what takes place is not so much collapse as reconfiguration -- what some scholars have described as the emergence of a new Middle Ages. And close study suggests that the power of statelets and other new political actors will be less transitory, more significant, and more resistant to intervention than is usually assumed.
RISE AND FALL
Historians invented the term "Middle Ages" to describe the period between the fall of the Roman Empire in the late fifth century and the rise of modern monarchies with their own new empires in the sixteenth. The era was considered an interregnum during which Europe's tribes developed ad hoc arrangements to manage the affairs of a suddenly anarchic world.
When the Pax Romana dissolved, roads and seaways grew more dangerous. Trade declined, cities emptied, and economic activity retreated to the countryside. In the provinces, nobles who had previously collected taxes for Rome found themselves adrift. Some disappeared from history. Others negotiated power-sharing arrangements with the leaders of nomadic tribes, collecting taxes for the new overlords in return for protection. Still others, commanding their own armed forces, simply created their own political domains.
Unlike the authority of the Roman nobles, which had ultimately derived from the empire's capital city, the medieval nobility's power was based on its direct control of land and people. Able to tax their vassals and press them into military service, barons could resist efforts to roll back their political and economic gains. Even when imperial forms of rule, such as the Holy Roman Empire, reappeared, they were mostly empty shells or confederations rather than powerful hierarchical institutions.
Still, Rome's fall did not simply smash Europe into shards. Legacies of the empire's unity persisted, the most significant of which was the Catholic Church. For centuries, the church retained the trappings of the imperial age, including Roman architecture, the vestments of the Roman nobility, and Latin. Outside the church, Latin disappeared as a language of commerce and administration as it evolved into the various Romance languages or was absorbed into Germanic languages such as English. As communication between regions diminished, the ability of people from different regions to understand one another declined. But in monasteries, an increasingly rarefied Latin retained its hold on the small, elite class of priest-scholars who kept learning alive and who unified Europe's high culture as they circulated throughout the continent. Through them, most Europeans were able to keep a foot in two worlds: that of their lord's manor, where they spoke a local dialect and seldom traveled farther than the village market, and that of the church, a pan-European sphere where they spoke Latin, even if they did not always fully grasp its meaning.
All this fragmentation yielded the medieval world's complex structure: highly localized economies, social systems founded on plural identities, and a political system composed of multiple and overlapping authorities, each drawing on an autonomous resource base. Complicating the picture further was the fact that the resource bases themselves overlapped: kings could tax trade, while both lords and bishops could tax production. Stability thus rested on constant cooperation and negotiation; when these failed, the result was conflict.
What killed off the European Middle Ages was capitalism. The modern state system dates from the Peace of Westphalia, in 1648, which recognized that governments were sovereign over their territories and that no institution within their borders was exempt from their rules. But medievalism was pushed aside for good only as national economies gradually developed and centralized governments supplanted the plethora of medieval authorities over the next couple of centuries. The growth of cities and the advent of overseas exploration boosted tax revenues from trade and enriched the urban middle classes. Because taxing trade was generally a royal prerogative, the coffers of royal treasuries filled; the nobility, which depended on revenues from agriculture, began an irreversible economic slide. At the same time, the rising business class began to eclipse the lords politically by filling the emergent states' bureaucracies, in which offices were often sold to the highest bidders.
New developments in warfare, including the mastery of gunpowder, favored standing military organizations over mercenary armies and forces raised from feudal estates. The need to protect sea-lanes for trade drove the expansion of centrally controlled navies, and "patriotic" armies appeared on land, filled with conscripts united around new anthems and flags and managed by large new bureaucracies. Financing these militaries required raising new revenues, which led to the rise of increasingly centralized governments. These governments in turn established secure borders and customs posts and sought greater control over their (taxable) citizens. To spur continued economic growth, these governments also ended up regulating commerce, policing cities, expanding education, improving public health, and building and standardizing domestic infrastructure such as roads, railways, and canals. And thus the foundations of the modern world were laid.
BACK TO THE FUTURE
In the last decades of the twentieth century, as capitalism began to operate on an increasingly global scale, the nation-state and the other structures and institutions of the modern era started to fray around the edges, leading scholars to talk of a new medievalism. The concept most often emerged in debates about European integration, as the growing influence of the European Union and its forerunners, the devolution of state powers to regional governments, and the rise of assertive municipalities led some to proclaim a return to Europe's medieval past, with its overlapping loyalties and coexisting local and transnational identities. On closer inspection, however, the concept applies less well to Europe than to the developing world, where the spread of modernity has often been curtailed before it has gone very far.
With the demise of European colonialism, the governments of many newly independent countries in the developing world tried to bring the fruits of modernity to -- and thereby win the loyalty of -- their people, who in some cases had not even heard of the countries in which they lived. (Even today, there are Indian villages whose inhabitants remain unaware of the existence of "India.") States tried to consolidate their sovereignty with a carrot-and-stick approach. They cracked down on ethnic and regional movements that contested the state's legitimacy, producing violent episodes such as the Biafra War in Nigeria and India's invasions of the princely states. Simultaneously, they sought to seduce their citizens by providing them with employment, patronage, education, and health care.
Although this model of the state as patronage provider worked for a while, it was expensive and ultimately unsustainable. From the 1970s onward, the globalization of capital markets forced all governments to compete internationally for investment, pressuring them to reduce their deficits, taxes, and expenditures. New theories of public management prodded rich and poor states alike to reduce their role in the economy by using private and semiprivate contractors to deliver many services. And in developing countries, change often came simply as a result of fiscal necessity: governments ran out of resources and had to adjust to leaner times through cutbacks in public services. Such retrenchment may have been efficient, but it was also highly visible and seen as regressive by these governments' populations -- a perception compounded by their ubiquitous tendency to use sales taxes to shift the tax burden from highly mobile capital and skilled labor to less mobile taxpayers.
Wandering through many cities of the developing world today, one comes up against the limits of modernity. Vast metropolises, growing so quickly their precise populations are unknown, are dotted with shantytowns and squatter camps that lack running water, are crisscrossed by open gutters of raw sewage, and are powered by stolen electricity. Developing states are constantly struggling to catch up. In some places, they succeed, barely. In others, they are losing control of chunks of their territory.
Many of Rio de Janeiro's favelas, for example, are now so dangerous that politicians enter only with the local gang leader's permission. The gangs deliver votes in exchange for patronage. Beyond that, politicians and the state remain largely invisible and irrelevant. The gangs do not wish to secede from Brazil, but they can compel its government to negotiate the terms of its sovereignty. As a result, gang-controlled communities remain safe zones for the transshipment of drugs from the Andes to the world at large. The gangs demonstrate, almost celebrate, their independence and defiance of authority at raucous late-night dances patrolled by local cadres. Such warlordism would have been familiar to the western Europeans of a millennium ago.
Still, although the weakness of the state today is most pronounced in the developing world, the state's retreat is also a global phenomenon. The sovereignty of states was consolidated when they gained control over their territories and populations and secured the exclusive right to tax their output. As economic activity has become increasingly detached from particular local contexts, however, the state's ability to tax production has waned. And so the "barons" of the new global political economy are growing less and less constrained.
The shift toward knowledge-intensive products, reductions in the transport costs of both goods and labor, and the rapid acceleration of technological change have loosened the state's hold on its traditional resource base. At the end of the Middle Ages, states assumed the role of intermediaries between the local and world economies. But today's postmodern economy comprises not centralized national economies operating under state guidance, but small, fragmented, and increasingly autonomous economic units that are increasingly capable of evading state control. What is emerging is a global economy increasingly centered on what some theorists have called "global cities" -- major urban centers that are connected less to their hinterlands and more to their counterparts elsewhere.
Because neoliberal policies have done more to free the movement of capital and goods and services than to reduce barriers to human migration, the balance of negotiating power has shifted in favor of the managers of multinational or even global firms. In many countries, this has skewed the distribution of income, leading to the emergence of pockets of vast wealth and areas of abject poverty. As the more prosperous players plug into a global economy and their production relies ever less on local labor, they retreat into secure enclaves protected by private security forces -- a process former U.S. Secretary of Labor Robert Reich has called the "secession of the successful." Marginalized communities have essentially done the same thing, using a different kind of private security force -- the gang -- to maintain order in the global cities' multiplying and expanding ghettos.
MIND THE GAP
There has long been a chasm between the planet's rich and poor. What is unusual about the income gap today is that it has widened just as dramatic improvements in communications technology have filtered down to even the most impoverished villages. The world's poorest citizens are thus more exposed than ever before to images of how the richest people live, creating an expectations gap between what states can offer and what their citizens demand. The gap has often been filled by private agents, who are more flexible than states and better positioned to exploit current opportunities. In the cities of the developing world, groups ranging from criminal gangs to Islamist civil-society networks have assumed many of the functions that states have abandoned, funding their operations through informal taxes as well as with proceeds from the drug trade, human trafficking, and money laundering.
Violence, too, has been increasingly privatized. The "peace dividend" from the end of the Cold War released millions of people from armed service but left in place much of the infrastructure of violence. Demobilized soldiers and fighters who once served in the proxy armies maintained by the superpowers during the Cold War (guerrilla forces, "national liberation movements," and the like) have gravitated toward mercenary armies, militias, and gangs and now provide security forces for the "new nobility," such as Kingston's dons and the residents of gated communities.
In the postmodern economy, the distinction between formal and informal sectors has blurred. Nonstate actors forge networks linking global cities so as to create a highly adaptive economy that exists largely beyond states' notice. The narcotics trade, for example, uses the lines of communication between the homelands of immigrants from Jamaica, Colombia, and elsewhere and the markets of their new, rich countries of residence. These paths are highly flexible, as demonstrated by the ability of drug gangs to redirect shipments along circuitous routes as soon as one course is blocked. And such paths are not only open to criminals. Resourceful Somali expatriates revived the ancient institution of hawala in order to send money to relatives back home, where the government had collapsed. Later, of course, al Qaeda adapted the system to fund its operations.
The new medievalism, it should be noted, is not always malignant or violent. In many sub-Saharan African countries, for example, the postcolonial state never succeeded in implanting itself deeply in the day-to-day lives of its citizens, let alone their consciousness. In such lands, the state's retreat has led to the reactivation of "traditional" political actors such as ethnic communities and religious brotherhoods. Islamist brotherhoods in Dakar, for example, collect voluntary contributions from large networks of overseas Senegalese, which they then use to support their clients in Dakar's poor quarters.
People everywhere, finally, are leaving behind national symbols and cultures and turning to local and global hybrids. In Dakar, French, the language of the elite, is being displaced by the local tongue of Wolof and hip-hop lingo from the United States. A similar trend is happening in Jamaica, where English is losing ground to the local patois, accompanied by language derived from dancehall reggae and rap. And so the coexistence of local and transnational identities that typified the European Middle Ages has reappeared.
Given the extent of U.S. primacy, it has become a commonplace to compare today's United States to the Roman Empire. The comparison might be telling in unexpected ways. After all, the Roman Empire did not fall to another empire; all of its "peer competitors" had long since been dispatched when it collapsed. Nor, historians are now concluding, did it fall as a result of internal decline, whether cultural, spiritual, or economic. Rather, the empire fell because barbarian tribes gnawed at its edges and eventually toppled its core. Its sheer wealth set it apart from the petty kingdoms on its frontiers, which, denied access to Rome's riches, grew resentful, envious, and finally obstreperous, bringing the mighty low through the death of a thousand cuts.
Today, pundits writing about the future of the U.S. empire tend to adopt an inward-looking approach similar to that of earlier generations of historians of the Roman Empire. For example, scholars debate topics such as whether the U.S. economy can bear the cost of maintaining so many overseas military and diplomatic operations. But they tend to neglect the vast portion of humanity kept at bay beyond the empire's borders, who regard it with the same mixture of awe, longing, and bitterness with which the barbarians once regarded the Eternal City.
As states recede and the new medievalism advances, the outside world is destined to move increasingly beyond the control -- and even the understanding -- of the new Rome. The globe's variegated informal and quasi-informal statelike activities will continue to expand, as will the power and reach of those who live by them. The new Romans, like the old, might not enjoy the consequences.