Year XXX, 1988, Number 3, Page 208
NATION STATES AND A NEW INTERNATIONAL SYSTEM *
In recent years several structural changes have emerged in the world economy, so that nation states have found themselves in a decisively new situation. These changes have become especially evident and influential since the 1970s, affecting every aspect of social and economic life.
Post-war structural changes in the productive forces and production relations have been accompanied by an extremely rapid internationalization of the world economy. Never before had such a high degree of internationalization been experienced, affecting every sector of the world economy and characterized by the emergence of various world economic problems.
This large scale internationalization first became apparent in the very rapid expansion of world trade. International co-operation has become especially strong in manufacturing and has led to substantial changes in the structure of international trade. Internationalization has extended to every sphere of the reproduction process. The expansion of international production has been achieved especially since the 1960s, thanks mainly to multinational corporations. International scientific and technological co-operation has been intensified as a result of the scientific and technical revolution. The international flow of capital has accelerated, and internationalizing of capital, especially among industrialized capitalist countries, has become one of the main features of the process. International trade and capital flows have been accompanied by the large-scale expansion and integration of international financial markets. The international exchange of services has become a significant factor in international relations.
In the 1970s world economic problems intensified sharply. New threats arose: exhaustion of traditional energy resources, especially hydrocarbons, long-term shortages of food production, pollution of the environment and the growth of the world’s population beyond the capacity of economic expansion in the developing countries. The problems connected with the use of space and oceans should also be mentioned.
Common features of the world problems are that their causes, consequences and solutions are mainly international in character, arising on a world scale, and countries, whether small and large, cannot afford to ignore them. As far as causes are concerned, studies generally share the view that the major responsibility for the world growing problems lies with the social, economic and technological development, based on national, group or individual interests and mainly irresponsive to the long term interests of mankind.
The process of internationalization has been uneven, varying considerably from region to region. Since World War II, various attempts have been made to form organizations of regional integration, like CMEA and the EEC. They play a vitally important role mainly in the economic development of smaller states.
In the 1970s multilateral adjustment to the conditions of internationalization and interdependence began. No country could avoid taking steps towards adjustment and many collective steps were made in this direction. Adjustment to the world economy began on both a national and an international level. The crisis of the 1970s is often compared with developments in the 1930s. One of the main differences between the two can be found in internationalization. Inward orientation has not occurred in the present crisis. Moreover, many facts show that the process of internationalization has become even more rapid. Though the roots of the crisis can be found in internationalization and in its unsatisfactory regulation, the majority of countries has responded to it with a fuite en avant and have reacted to the difficulties with a more intensive and efficient adhesion and adjustment to the international division of labour.
In some spheres international efforts towards regulation have increased.
However, it can be said of every sphere of the world economy that the harmony between the given level of internationalization and interdependence on the one hand and the regulating system of international economic relations on the other has been broken and the existing world economic system is neither able to maintain the necessary level of coordination among nations nor able to handle world economic problems or to solve them. It is widely accepted that a new system of international connections is required.
Some experts express the view that the internationalized world economy could be managed by an international supreme body vested with political and economic authority. It could be given sufficient powers and, where necessary, it could give orders to nation states and other parties involved in international relations. From time to time influential figures on the world’s political and economic stage suggest the establishment of a world government or a significant increase in UN powers. However, others remain sceptical about the reality of any supranational institutions in the future. It is argued that in recent years we have experienced growing nationalism and the nation states are still the best means of regulating economies and coping with the most serious problems.
The EEC in particular had ambitious plans for supranational political integration and many people considered the economic integration initiated in 1950s as the basis for a United States of Europe. In the 1940s the Western European federative idea was a defensive programme fighting for consolidation based on the cold war. Later on, in the 1960s, when détente was emerging, arguments in favour of supranationality were linked mainly with the efficient functioning of the economic union. To underpin its monetary and economic union, the EEC formulated the goal of the European Union at the beginning of the 1970s. It should have been achieved by 1980, but views concerning the exact shape of the political union differed from the start and, due to the crisis in the 1970s, plans for political union were shelved. Since the end of the 1970s, however, renewed efforts have been made in the EEC to extend integration. The EMS was launched in 1979, which led to intensive monetary co-ordination among the national banks for stabilization of exchange rates, and the ECU emerged as a real collective currency. Co-ordination also increased in the spheres of stabilization, energy and structural policies, and a full common market is envisaged for 1992. Several steps have been made towards political co-operation. It is commonly thought that a new stage of integration calls for federative institutions and structures and a political integration based on federal institutions has gained increasing public support.
In these circumstances a new system of institutions and regulation of international relations seems to be slowly emerging in the world. It goes far beyond the traditional international institutions and mechanisms but its perspectives are to achieve the “breakthrough” into supranationality in some areas only. I call this new system a co-national structure.
I use “co-national” to describe a new system of international relations that, besides maintaining national sovereignty, brings intensive cooperation and widespread co-ordination on the different levels (individual, corporate, government bodies, etc.) of economic, social and political life. In this system there is the possibility and a willingness to reach compromise on the basis of differing or conflicting interests, and nation states enter the stage of collective behaviour and activity in the fields in which it is rational and necessary.
Regional economic integration, co-ordination of economic policies, direct co-operation in production have appeared already in the post-war years. However, co-nationalism based on mutual dependence only came to the fore in the 1970s. A co-national system is in the process of being developed and can be considered as the trend for the future. The co-national system is a stage of transition between traditional and supranational type of international co-operation. In some areas it gives a long-term perspective and solution, in others it may be a starting point and foundation for supranational and federative structures.
The essential characteristics of co-nationalism in my opinion are as follows:
1)When national economic policies are formulated and implemented, international factors are to be taken into account. In recent years the national economic policy’s autonomy has been declining, but interdependence has not always been taken into consideration. The failure to reckon with interdependence has led to tensions within the nation state. From the late 1970s, however, a number of countries had to adjust to changing conditions dictated by the world economy. Adjustment calls for specific means, as the establishment of special institutions (modification of planning due to uncertainty within the economy). This is natural, because the nation state adjustment is not only a question of good perception and taking appropriate measures, but it also requires bilateral or multilateral consultations and leads to a certain type of co-ordinated economic policy, especially with the main economic partners (planning of foreign trade is important and the whole economic system has to be able to cope with entirely new conditions). From the late 70s, for the sake of more efficient adjustment, quite a number of countries opened up and let themselves be influenced by the world economy. This was the case even when world economic processes led to political and social tensions. The more efficient national adjustment to the world economy has far reaching consequences in internal politics.
2) Adjustment to the new terms dictated by the world economy calls for an intensive and complex development of international economic relations. Due to the permanent development, the significance in particular of regional integrational institutions will increase. This question is of great importance to smaller countries; however we should not rule out the increasing interests of larger countries towards integration. The CMEA and the EEC are expected to support more schemes for integration in the future and closer co-operation in production, for the sake of industrial adjustment, along with the improvement in the co-ordination of macroeconomic processes and policies. In capitalist Europe, on the basis of economic and political interests, the integration process will gradually incorporate the whole of western Europe (new adhesions, the increasing dependence of the rest of EFTA), even if expansion slows down integration and causes internal tensions within the EEC. In regional integration, social and political interests are going to have priority, and the possibility of strengthening economic relations will depend on them. Besides the two European integrations, the process is gaining ground in other regions as well (for example in developing countries).In spite of the dilemma whether to choose intensive collaboration among themselves or traditional links with the developed capitalist countries, the developing countries will find the, extension of South-South relations increasingly possible and necessary. Regional integration does not conflict with the world development of economic relations, and regional autarky is becoming redundant.
3) In the future, the significance of international co-operation in production will increase. The term “international co-operation” involves every sphere of reproduction, from research to marketing. Due to pressures brought about by up-to-date technology and structural changes, companies from both large and small countries will be forced to cooperate, and, in the wave of structural change, in the future, international co-operation will become even more intensive. International cooperation in production is one of the important sources of increasing efficiency. Making the most of the advantages offered by the cooperation in production is not just in the individual producer’s interest, but also in the interest of the national economies as well. Co-operation in production is an important factor in integration processes.
As far as western industrialized economies are concerned, their cooperation in production is expected to develop within the framework of transnational corporations. Transnational corporations play an important role in shaping international power relations; and dualism in their power relations (state vs. TNCs) will persist in the future. There is no doubt that transnational corporations stepping over national borders point in the direction of a co-national economic system. The claims to regulate and control them in a supranational framework may increase, though I do not expect a breakthrough in this respect. On the one hand, transnational corporations enjoy the support and protection of the nation state (industrialized countries) and, on the other, they are exposed to growing control. They will increasingly have to adjust in order to conform to the norms of international regulations (UN norms of behaviour, etc.).
4)Handling and solving global economic problems is one of the fields of co-national co-operation we have to work on. In our present structure it is generally acknowledged that only by increasing international cooperation can we put into effect the changes made necessary by higher energy prices and growing spending on environmental protection (transition to energy-sparing technologies and new products and capital-intensive complex technological development projects). Smaller countries cannot take a leading role in co-operation: they can either follow the methods applied by the developed countries or “participate” in their work. If radical structural changes are carried out (introducing alternative energy sources, new technologies, products and infrastructures) cooperation will be essential. Of course, in some fields it is possible to handle and solve world problems within the framework of traditional international co-operation (co-operation in production among enterprises, intergovernmental programmes). In other fields, however, a solution is offered only by the establishment of new international institutions by the introduction of new forms and mechanisms of co-operation. Most of the global problems can in fact be defined as global externalities in the functioning of the world economy and a solution to them would require global financing, for which there is as yet little enthusiasm. As to the solution and handling of world problems, so far only some common goals and tasks have been set down and collective policies and actions have not yet taken form.
Our present world economic institutions and mechanisms are unable to regulate and control world-scale or regional economic processes. In the future we can act collectively only if the interests of the parties concerned coincide. We must emphasize this, since one of the decisive criteria for the efficiency of the co-national system is the realistic assessment and rational compromise of interests. But we must find solutions for the problem even in those spheres in which interests are hard to harmonize, and even sacrifices without any compensation can be made in cases of severe distortions (recovery programmes for environmental protection on a world scale).
When speaking about conflicting interests, we cannot dismiss the question of economic security. The balance of security gains particular importance in the co-national system. None of the Superpowers wants to become dependent on another country for strategic war materials or territories of strategic importance or encounter unexpected problems. Rational co-operation or the joint development of technologies or energy sources might, however, call for it, and solutions can be produced by the “balancing” of interdependence and security. As to co-national cooperation it can be expected that a joint policy for the solution of global problems will remain a weak point in the long run: progress in this respect can be expected only through crises.
5) In given circumstances, differences in the level of development, social differences, different historical and cultural traditions and values might become the source of grave conflicts. Our greatest concern in the world economy today is the widening gap between the developing and developed countries. Internal and external factors are equally important as far as the problems of the developing world are concerned. It would be difficult to say which of the two factors is more important. Rapid progress in the developing world depends on successful trade relations and it is in the political and economic interest of the whole world to help these countries catch up with developed economies.
6) Though interdependence has been increasing, only very little progress has been made among countries in acting together and working out co-ordinated, common policies. Measures to be taken in order to co-ordinate economic policies among the industrialized countries (at EEC and OECD level, at summit meetings of the leading countries) have either been insufficiently effective or went little beyond simply outlining what needed to be done. Though in the 70s measures were taken to improve the co-ordination of the plans of the socialist countries, they do not yet meet all the requirements of a complex and effective economic policy. I consider extensive co-ordination of economic policies among nations as one of the most important factors in the co-national system.
Even some co-ordination of economic policies among the socialist and capitalist countries or among the developed and developing countries — based on mutual recognition of each other’s interests — is not completely out of the question. Though the few plans for such a co-operation seem to be little more than dreams, they might be welcome in some spheres in the near future. International co-ordination of economic policies involves a number of problems.
7) The co-national system is linked to a further development of the international system of international relations. In the co-national system the participants in economic relations (institutions of nation states, enterprises, international organs, etc.) are taking a more active role. Their functions are adapted to changing circumstances (reform of the international monetary system). Participation in international organizations is becoming more comprehensive (even with socialist countries) and this affects the character and function of the organizations in question. It is thought that in the near future the enterprises of the socialist countries — both national and international — will increase their importance in foreign economic relations. New international organizations will be needed (particularly in connection with the so-called global problems of the world economy) disposing of efficient instruments able to counterbalance harmful influences in the world markets (e.g. by helping solve the problem of food supply, or limiting extreme price fluctuations).
It is a predominant feature in the co-national system that all its subjects are endeavouring separately and collectively to realistically assess, explain and analyse the processes of the world economy. A co-national system begins with the realization and understanding of interdependence. After World War II several international institutions were vested with wide information and analysis functions. Under the pressure of the crisis of the 1970s, there was a tendency to increase their efficiency (as in the cases if IMF, EEC, OECD, etc.). They investigated the causes of processes, alternative actions and means and the consistency of national economic policies. In our rapidly changing world the importance of economic foresight has increased, and the various “reports” and conferences of the last decade (Club of Rome, Trilateral Committee, Brandt Committee) have served as a basis for orientation of policy and the activity of governments and international organizations.
A reform of world economic mechanisms in several directions, the acceptance of new principles and norms of collaboration are postulated by the co-national system. There are several grave problems which cannot be solved through the present mechanisms of the world economy (putting an end to world famine) in spite of the fact that their solution is in the long-term political and economic interest of mankind. The practical application of certain new humanitarian and moral principles and norms (equality and solidarity) is increasingly desirable.
Depending on the social, economic and political conditions, the conational system will reach different levels of process control.
Co-ordination and collective regulation of economic relations can be expected to reach the most intensive level in relatively homogeneous regions with basically similar or harmonizing interests. Special emphasis can be placed on integrational organizations, which, in some cases, may take supranational forms (EC). Nevertheless, I think that co-national relations have to be treated as a comprehensive system for the whole world economy. The co-national system does not contradict regional federalism and it may be the basis for supranational structures in the future. Internationalization is a worldwide process which has transcended the borders of social and political systems and of groups of countries of various levels of development. The role of “global solutions” for the problems of the developing world can hardly be contested, but co-national collaboration in inter-system relations is also needed in several fields and promises great advantages. It is not in conflict with a comprehensive system approach that in the latter spheres interdependence and regulation may be less intense. Naturally in certain spheres the explosion of world economic problems can fundamentally modify the scene. Therefore the evolution of the co-national system is hard to forecast.
In the sphere of economic management the co-national system means, first of all, the modification of the relations of production in the world economy, and in close connection with the deep-rooted changes in the production structure, fulfils the real tasks of the new era of the world economy in the future. In my view, co-national co-operation is an absolute necessity in spite of the present differences in socio-economic relations and levels of development in the world.
The 1970s have demonstrated that political agreement and cooperation can advance very slowly even among countries that have the same social system and belong to the same political, economic and military alliances. From a historical point of view it was extraordinarily unfortunate that détente came to a halt; moreover, in certain fields there was a retreat in spite of the fact that the truth of the Marxist thesis that peaceful coexistence is an objective necessity of our age is increasingly being demonstrated. This is supported by the evolutional requirements of the co-national system. Therefore, in many respects, politics and the requirements of the economy in the 1970s were moving in opposite directions.
In the middle of the 1980s hopes have risen that the previous tendencies can be reversed and a co-national type of co-operation will emerge.
* This heading includes interventions which the editorial board believes readers will find interesting, but which do not necessarily reflect the board’s views.
 I suggest the prefix “co” to denote the above-mentioned phenomena, and do not limit its use to the original Latin meaning. I do not wish to create new words by any means or force new concepts on anyone. I think, however, that in the case of new and important phenomena, one must unequivocally define the words used to describe them. The use of categories or words having many other interpretations can be misleading. The name “transnational corporations” caused many problems when it entered common use. Also now we often use confusing terminology, that does not convey the idea of the phenomena they refer to being totally new (for example “international corporation” or “super-monopoly”). The word “international”, in my opinion, is too general and includes the meaning “co-national”. We could also say “transnational interstate relations”, but this is easily associated with transnational corporations. Besides, the new regulatory system not only passes the borders, but also involves collective action. On the other hand, also the term “supranationalism” should be excluded. Hence, I think, the introduction of a new term is to be recommended.