In recent years, the debate in contemporary political science has centred around the political institutions that limit or check power, like democratic accountability and the rule of law. However, as Francis Fukuyama has pointed out in his article, “What is Governance”, little attention has been paid to the institution that actually accumulates and uses this power – the state. While there have been repeated claims of the withering of the state over the past decades, few of these have proven accurate. In fact, there has been a need for increased government capacity to deal with the increased demands placed on the state. In many countries, this has been exacerbated by an underinvestment in public sector capacity over the past few decades. We need to go beyond the usual conversation about how the state carries out the business of governance and back to the more fundamental questions of what is the role of the state and why this is important.
To understand the trends that affect the role of the state, we have to consider the context in which the state operates. Governance falls roughly between the fast- and slow-moving components of society, nature and culture on the one hand and infrastructure, commerce and fashion on the other. This presents an interesting challenge for states because the components that change quickly get all the attention, but those that change slowly have all the power. The fast learn, propose, and absorb shocks; the slow remember, integrate, and constrain. Managing the tension between the fast- and slow-moving components of society is core to the role of the state and how it will evolve. In Singapore, it might mean that while it is relatively quick to change policies with regard to home loan restrictions, cultural norms and values around home ownership can take a longer time to shifts.
In his book, “The End of Power”, Moises Naím suggested that we were “on the verge of a revolutionary wave of positive political and institutional innovations”. Naím described the shift in power through three revolutions, which in turn would impact the role of the state:
The More Revolution: As people became more numerous and were living fuller and longer lives, they became more difficult to regiment and control.
The Mobile Revolution: As people became more mobile with the ease of migration, power lost its captive audience.
The Mentality Revolution: As people became more affluent they had higher expectations of living standards.
Looking at this from the perspective of relative rates of change, one observes that these revolutions have taken place within the timespan of one to two generations, much more quickly than similar changes that have taken place in the history of societies. This has led to a compression of timescales within which the state operates. The middle-class uprising in countries like Brazil, where there has been a mismatch of expectations around the sustainability of economic growth and improved standards of living, is a manifestation of the tensions that can emerge from these revolutions.
So the key question to answer is can governance keep pace with the changes in the rest of society?
According to David Ronfeldt, new information and communication technologies have enabled dispersed, often small actors to connect, coordinate and act jointly as never before. This favours and strengthens network forms of organisation and represents a structural change in the operating environment for states.
When institutions and markets were the dominant organisational form, there were economies of scale allowing for the efficient management of large units, in many cases by the state. However, in a network, the state is but one of many stakeholders. Without economies of scale through centralisation, common market-based measures of state performance, like efficiency and productivity, also become less useful.
Not all participants in a network are equal, and leadership still matters. In a network structure, the state would have to adapt the way it exercises power and performs its role. Leaders can have a louder voice, but have to build the legitimacy to exercise it. This would increasingly become the challenge for states operating within the network. Ronfeldt therefore suggests that power and influence appear to be migrating to actors who are skilled at developing multi-organisational networks, and at operating in environments where networks are the dominant organisational form. In general, non-state actors are ahead of state actors operating in this environment and this may present a shock to established centres of power, as will be described in the following section.
In a network form, other entities compete with the state for influuence within the web, like environmental, human rights, and other activist nongovernmental groups, which operate at many levels of government around the world. This new dynamic changes the role of the state. Non-state actors are starting to have state-like power and capability, ranging from diplomacy to urban planning to provision of public services. For example, Zappos’ founder, Tony Hsieh, invested $350 million to transform the decaying and blighted part of the old Vegas Strip into the most community-focused large city in the world. The Downtown Project has already funded over 60 tech start-ups and 21 small businesses with the ultimate goal being to invest in 100-200 entrepreneurs. This makes Tony Hsieh the de-facto mayor of downtown Las Vegas. This type of activity is not limited to entrepreneurs. According to a CNN report in 2006, “Hezbollah did everything that a government should do, from collecting the garbage to running hospitals and repairing schools”.
Globalisation and the free movement of capital have enabled multi-national corporations to become a network of supranational entities, exporting goods and services as well as culture and ideology to the states in which they operate. For example, Procter & Gamble was the first company to hire women in Saudi Arabia. Although Saudi labour laws have a provision for employing women, many companies have been unwilling to cause cultural controversy. Multinationals also form the basis of connectivity in a transnational network, providing air travel, sea freight and global telecommunications capabilities. What results is that domestically, multinationals have assets and access to resources that can rival some states. They have a disproportionate say on the regulation and public policy agenda when they represent industry lobby for national safety standards as a result of their global supply chain.
The state is relatively good at dealing with the problems that are defined in terms of the Westphalian concept of state, for example, sovereignty and international trade. It typically has established mechanisms to safeguard its interest and power. However, it has become increasingly difficult to establish what the state actually has jurisdiction over and this creates new forms of market failures. While states retain the jurisdiction to manage resources within their physical and geographical boundaries, many resource and public-good problems resist a state-centric approach. For example, governance by norms, spheres of influence and interlocking societal relations rather than comparatively inflexible international law could make the management of trans-boundary problems easier.
In a G-Zero world, where every state is for itself, ineffective mechanisms to deal with the growing trans-boundary nature of problems will lead to more pressure for a distributed, bottom-up model of global governance system. Small states like Singapore have a clear interest in an open, rule-based system as they face heightened risk in a system where there are no longer strong institutional platforms to safeguard their interests. Such states may find themselves shifting from playing price-taker or “pivot” roles to advocating for strong international rule of law and no unilateral actions.
Today, many individuals regard themselves as “city-zens”, that is, their residency in a city is core to their identity regardless of their actual citizenship and voting rights. However, the current governance system is not good at taking into account factors such as the preferences of the non-voter (for example, city-zens), the environment and future generations. What results is not only rising expectations on the part of citizens (voters in the political process), but that the state increasingly also has to look at the interests of non-voters as well.
As technology expands at an ever-increasing rate, society struggles to keep up. This has led to the erosion of Social Mobility: The rise of robotics and automation is wiping out many middle-skill jobs. Coupled with the expansion in higher education opportunities in emerging markets, there will be fierce competition for such jobs. In addition, the structure of the modern economy is changing. The increased demand for high value services imposes a high barrier to entry. Only a fraction of the workforce is able to participate in value creation that these sectors provide. What results is what Kenichi Ohmae called the “M-shaped society”, where income distribution in Japan is becoming polarised due to the impact of technological change and globalisation. The ability to provide education and middle-skilled high-paying jobs was one of the state’s levers for upward social mobility in the past, but this has eroded over time.
The rise of social media and surveillance technologies has led to changing expectations of the policy making process. On the one hand, individuals are more empowered; on the other, empowered individuals demand more from the state. What results is what John Keane calls “monitory democracy”, where “the powerful consequently come to feel the constant pinch of the powerless”. New technology also presents governance challenges as the state struggles to regulate in an increasingly complex and uncertain environment. For example, stringent IP laws may become obsolete with new production technologies like 3D printing and autonomous vehicles could change the transport landscape, creating new liability issues.