In This Review

Rise of the Virtual State: Wealth and Power in the Coming Century
Rise of the Virtual State: Wealth and Power in the Coming Century
By Richard Rosecrance
Basic Books, 1999, 256 pp

The best book yet on how modern capitalism is transforming international relations. A decade ago, Rosecrance argued that Germany and Japan -- trading states that acquired wealth and influence by mastering world markets -- were the model of the future. Now Singapore and Hong Kong have taken over as prime examples of "virtual states" that manage the movement of capital and foreign investment. Today, territory and traditional geopolitical competition are even less essential to accruing wealth and power. The world is increasingly divided into interconnected countries with corresponding interests, dispositions, and rewards. But Rosecrance's progressive vision, which sees prosperity rising and warfare declining, invites questioning. Is it possible that the great driving forces of history -- politics, ideology, religion, inequality, and nationalism -- can be rendered impotent by capital movements and global firms? What happens if the world economy contracts or the financial system crashes? Even in a world of virtual states, there are winners and losers.