The slippery road: the imperative for state formation.

In a perfect world, people would live in prosperity and peace, enjoying everything a perfect market and a perfect state have to offer. Unfortunately, this is a far cry from today's reality, even in the industrialized world. A large number of countries face deteriorating living conditions and serious setbacks in human development.

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"State failure" is the term used by scholars, development agencies, and politicians to describe a very complex situation in which such degeneration occurs. While some argue that this failure translates into a threat to Western societies, the empirical evidence shows that the threat to life and limb is mostly directed toward the inhabitants of the affected countries. Typically, there is or was internal war, in which external participants, malnutrition, lack of medical services, warlords, child soldiers, refugees and internally displaced people, and impunity for all sorts of war crimes make matters very problematic in the future.

At the Crisis States Research Centre, we define a "failed state" as a condition of "state collapse"--e.g., a state that can no longer perform its basic security and development functions and no longer has effective control over its territory and borders. A failed state is one that can no longer reproduce the structures and capacities for its own existence--such as present day Somalia and Iraq after the US-led invasion. This term is used in very contradictory ways in the policy community. For instance, there is a tendency to label a "poorly performing" state as "failed"--a tendency we reject. The opposite of a "failed state" is an "enduring state," and the absolute dividing line between these two conditions is difficult to ascertain. Even in a failed state, some elements of the state, such as local state organizations, might still exist. What is clear is that a failed state has gone through severe conditions of crisis and fragility, caused both by internal and external factors.

Why do states collapse and cease to exist in the sense that they cannot function for their own populations or in the global community? In our view, if the modern nation-state collapses, structures of authority continue to exercise personalized power over populations on a sub-national level. Ultimately, this happens because political coalitions at the center of the state break down under the pressure of a crisis, lack of resources, and lack of economic growth in general. It is crucial to first examine the most prevalent explanations of failed states to show that international intervention is best justified by the patrimonialism explanation of failed states.

The Role of Corruption

Perhaps the most powerful contemporary explanation for state failure, in terms of its political impact, is the argument that a powerful elite or "state bourgeoisie" manages to institutionalize theft and corruption, thus destroying the economy, social fabric, and state infrastructure. This is the perception underlying the promotion and institutionalization of the "good governance" agenda (transparency, accountability and democracy) advocated and financed by the United Nations, the Bretton Woods twins, and the donor community, with the aid of numerous NGOs.

This argument rests theoretically on Hartmut Elsenhans' "state class" construct. Since classes such as landlords, workers, and bourgeoisie were generally absent in the agrarian societies that became independent countries during the 1960s, he identified the upper and middle echelons of the state bureaucracy to be the central political and economic actors: the "state class." He described them as "kleptocratic";--that is, they had an urge to steal. According to Elsenhans, the resources of the state, as well as the few islands of economic surplus production, were privately appropriated. The "kleptocracy" was safeguarded by repression and by the cooptation of an aspiring bourgeoisie. It formed an economic, social, and political system that was characterized by corruption and a waste of resources. Thus it is anti-developmental, regressive, and destructive to the state in the end.

Variations of this argument place intrinsic corruption, the lack of free markets, or the lack of political will to reform at the center of explanations for state collapse. Accordingly, cures for reconstruction recommend a combination of competitive politics and market liberalization (instead of asset-building and the promotion of functional rather than personal rule).

This argument, while it is in fact more complex than presented here, does not take into account the historical ups and downs of the "state class" in different countries and their very different achievements. In some countries this "state class" enjoyed remarkable developmental success after independence, but this same class either failed to stay in power or failed to continue their state-building project. Even more so, this argument fails to explain why members or groups of the "kleptocracy" opt to become "roving bandits" (warlords under anarchy), instead of remaining "stationary bandits" (tyrants who care about economic success of the state) as Mancur Olson calls them.

The "Resource Curse"

The resource curse argument, which is most prominently advocated by Paul Collier, has become very popular in recent years. The dependency on natural resources, as he argues, increases the likelihood of civil war. When rebel groups cannot achieve their aims through secession, they form a trinity consisting of a political organization, a business, and an army. Mostly for business reasons, or greed, they exploit natural resources and terrorize the populations around their "businesses." Many NGOs and popular media, such as films like Blood Diamond, powerfully support this view.

There are, however, some problems with this explanation of state collapse. Most developing countries are characterized not by industry, but by an overwhelming dependence on agriculture or mining. These sectors comprise the principal area of economic activity in these countries for rebels, ordinary businesspeople, national or international companies, and the state itself. Therefore, one would have to explain why natural resource extraction at some points in history is organized on a non-violent basis and at other times by a warlord mode of extraction.

Furthermore, it is very plausible that mining and forestry could contribute in a major way to economic recovery and the reconstruction of the state after episodes of war or violence. There is, however, the big difficulty of changing a warlord mode of extraction, once it has been established, into a regulated legal business structure. In such a regard, the availability of lootable resources magnifies difficulties.

Lootable resources can contribute to stability (diamonds in Botswana) or to instability and war (diamonds in Sierra Leone). They can be present in one part of the country while the "rebels" are elsewhere (as in the Central African Republic). What transforms them from being curses to blessings?

The answer, according to Richard Snyder in Comparative Political Studies, lies in the political pact between the government and private extraction actors. As long as there is a joint extraction agreement, the outcome can be political stability. Using a system of sticks and carrots, (legalization of illicit trade, threats to publicly monopolize extraction, and offers of protection against rivals) the state can bargain a deal with private economic actors, who in turn no longer need their own military forces to continue extraction.

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Shifts in the balance of power undermine this order. For example, private enterprises can acquire so much wealth that their own military forces might be a preferable. The loss of the state's coercive capacity would promote a similar outcome.

This arrangement of joint extraction becomes particularly difficult under circumstances of personalized rule. Personal rule--both in politics and business--points to the necessity of understanding the institutional framework in countries that have collapsed or are under severe stress.

Patrimonialism and Institutional Multiplicity

Personal rule, authoritarian rule, and corruption are often linked to the concept of "neo-patrimonialism," which was originally based on Max Weber's concept of patrimonialism in pre-modern societies. The "neo" is meant to indicate personalized rule in a modern world, under which societies follow the scheme of family authority such as the relationship between a father and his son. There is no clear distinction between a person and a function, between private and public, or between private property and state resources. Most developed countries should know this story very well, given centuries-long successions of kings and rival lords, doges and rival clerical authority, samurai and emperors. While all these actors, exercising personal rule over smaller or larger groups of population or portions of territories, eventually turned out to be state-makers, their methods, applied today, would provoke an international outcry. As Klaus Schlichte argues in his article "Administering Babylon," "Any modern-day state-leader who attempted to create a strong state by employing the means that Prussia's Frederick the Great [used] ... would probably quickly find himself facing the International Court of Justice."