The rise of market capitalism and neo-liberal policies has brought about chnges in the nature of state.The modern nation-state is in a secular decline, which was made inevitable by the rise of a global market system. Even developed nations, like the US, are not immune to this process. The decline is at first gradual and then accelerates until it reaches a final end-point: a hollow state.
The shift from a marginally functional nation-state in manageable decline to a hollow state often comes suddenly, through a financial crisis. This crisis typically has the following features:
Factors leading to hollow state
- Corporations and connected individuals systematically loot the nation-state of financial assets and natural resources through a series of insider/no cost deals. These deals are made to "save" the nation's economy or financial system from collapse.
- Once the full measure of the crisis is known, the nation-state's currency falls precipitously, it's debt becomes expensive, and it is forced to submit to international oversight/rules.
- The services the state provides rapidly evaporate as its bureaucracy is starved for cash/financing. This opens up a window for the corruption of government employees unused to deprivation.
The decline from functional but weak nation-state is extremely sudden. For individuals, there is a rapid and sustained decline in the standard of living. Additionally, there are spot shortages of critical items and commodities -- particularly food, medicine, and energy (since these are globally fungible). Large and small business fail across the board, or become prey to connected companies/individuals with access to the remaining coercive power of the nation-state.
As the deprivation becomes commonplace, it refers to people turn to primary loyalties for support and services -- loyalties to a corporation, tribe, gang, family, or community. These groups, energized by new levels of loyalty but deeply obligated to reciprocate this loyalty with support, become extremely aggressive in pursuit of their survival. Once this shift in loyalty is made, a self-generating cycle of violence, crime, and corruption (fueled in large part through connections to the global market system) becomes entrenched. The nation-state, at that point, becomes irretrievably hollow.
Trillions of dollars in government monies will be infused directly into the coffers of corporations and wealthy individuals (via hedge funds). Specifically, the plan buys toxic assets at inflated prices and sells them back for nearly nothing -- no equity or assets of real value are provided in exchange for the purchase. The national debt will likely grow 20-30% in a single year, with obligations extended to many trillions more in guarantees.
A good example of a Hollow State is Zimbabwe where the Government under Mugabe no longer has legitimacy. Government systems are either in a state of collapse (witness the looting of food carried out by the Army) or are non existent (the health system). State infrastructure is broken (water) and the population has to rely on other sources, from charities or private citizens.