End of the Nation State: The Rise of Regional Economies

The concept of nation state as it is today, is relatively new. Kenichi Ohmae's thesis is that it is already out of date.Nation state has become an excuse for all manner of political ills and goals that are irrelevant to the majority of the public. Kenichi shows that when leaders ignore geopolitical boundaries and encourage cross border cooperations, the result is far more beneficial than the old nationalism. However as nations become less relevant, organisations such as the European Union are to an extent taking their place. The Author argues that these are no more relevant, they are new nation states rit large. In their place, he argues for greater regional cooperation, transending boundaries, not building exclusive trading blocks, but maximising the potential of a city, region or country, through truly international division of labour.The title can be misunderstood, by those who do not read the book, but the driving argument, is that in their current guise, nation states risk becoming irrelevant to the very people that they claim to serve. Left leaning social democrats, will disagree with his theory, as will old style conservatives. Those of you who wish to live in a more connected less divisive world, will find the book a breath of fresh air.

The title suggests that nation states and government in general are things of the past, a world-scale right-wing libertarian vision come to life. That's not quite true. Now 5 years after this book was written, in so many ways, the world either already is what Ohmae said it will be, or it is well on its way. The "End" is not so much a dissolution of national governments, but their growing irrelevance. Fewer and fewer consumers still regard Honda and Toyota as Japanese car manufacturers because so much of their assembly and even machining is now performed in the USA. If Motorola sells portable phones to Japan it does not necessarily benefit Americans, because the phones might be manufactured in Indonesia. The shareholders and other departments of the company might benefit because of new business generated, but it is possible that all employees and shareholders come from Asia or Europe themselves, even if Motorola was originally established in the US.The nation state might last through the end of this lifetime (though unlikely longer than that), but it is less and less an economic entity, rather a final vestige of nationalistic sentiments, the modern and future "opium of the masses." Ohmae reminds us that terms like GDP and GNP are outdated and deserve reconsideration, considering that every large nation state has successful enterprises spaced out among uncompetitive industries and unproductive locales. Gross "Regional" Product might be a more accurate yardstick. A good companion book to this one might be "Jihad vs. McWorld" by Benjamin Barber. That book emphasises that the so-called Transnational Corporations might as well be called anti-national corporations. Consumers scarcely know or care where the banks and manufacturers who provide them with goods and services call home, and the corporations care even less about the nationality of their customers, beyond the point that it might provide information about their purchasing habits.

The End of the Nation State was profound when it was written. It's simple argument was that the power of government would diminish as the ability of people to communicate across lines increased. A simple idea that has been proven time and time again since the book was written. Does he suggest that governments will disappear - not really. What he does suggest is much more subtle - he talks about linkages - for example Tiajuana and San Diego - where the links between the two is more important to the area than either the link of Mexico City to Tiajuana or San Diego to Washington - trade and communications become linked more closely than regulation. Another example - Japanese who could not buy blue jeans at a reasonable price in country discovered ways using federal express to get jeans outside the tariff. All of those are great examples of the benefits and expansions of trade. His conclusion - reinforced in later works and also in a number of other books on the subject (if not in practice and observation) - is that the ultimate beneficiaries of globalized trade are individuals. See for example Future Perfect. For a slightly different view see John Seeley Brown's recent book on the social nature of information - Brown argues that nation states will continue - which is not a direct response to Ohmae but still an interesting perspective.

Ohmae has brilliantly managed to explain in a crystal clear way how the political and economic structures of mankind are starting to experience an impressive change. The book is very revealing in terms of how globalisation is already reshaping the way people interact, making national states unnecessary, costly and counterproducing, as they have just become obstacles in today's world. Ohmae has said in easy words what we all (in favour or against) knew or suspected but couldn't put so clearly: that what he calls "the world according to the United Nations", that colourful political map we all learnt in school, full of borders and flags representing different cultures, levels of income, geopolitical interests, etc., is simply over. With the end of national states comes a new and exciting era when individuals and their spontaneous order, their free associations and their voluntary alliances are important, not any longer the opinions, positions or decisions of government bureaucrats and politicians. With globalisation comes freedom to an extent we humans have no historic precedents for. This logically causes fear among all brands of right-wing or left-wing collectivists and, especially, among that chaste of elegant leaders living on our coerced tax-paying.

If you are interested in international economics, this book is a must read. The fact that Kenichi Ohmae isn't an American makes it even better because he approaches the subject from a different perspective than most other authors you will likely come across. The only down side is that he repeats and reinforces his ideas throughout the book, rather than building on them. You can easily get away with only reading the first half of the book; but that first half is still definately a must read!