The Role of the State in the 2020s

20 January 2020

“The truth is that the State in which rulers are most reluctant to govern is always best and most quietly governed, and the State in which they are most eager, the worst.”

Plato said this almost two and half thousand years ago. As we stand on the precipice of the 2020s, a decade of the fastest rate of change in human development, it’s a good time to wonder what role the state should play in our modern societies, if any at all.

States have always been central to the human experience. We formed them as soon as we became human, if not before. A troupe of chimpanzees can be seen as the essence of a state insofar as they organise themselves into social hierarchies, share and exchange resources, and have forms of punishment or banishment, should an individual contravene the good of the whole. Scale this up, add human experience and adaptability and these states went from a few dozens of individuals controlling a few square miles of territory, to vast and complex structures, which formed the first cities and ended up, in some cases, controlling entire continents.

States in the 20th Century perhaps reached their apotheosis. They controlled everything from the means of production to healthcare; from education to space programmes. We saw the rise, and then defeat, of ideologies that championed the state over the individual – namely fascism and communism. Whilst the former was defeated in the fire of war, the latter lingered on and eventually withered away (except in the case of China; more on that later), because it could not control the multitude of inputs and outputs that an economy (and thereby the state) constantly needed to function. The state had met its match. Even the ‘free’ states of Western Europe realised, belatedly in most cases, that they needed to liberalise and be much less involved in economic activity in order to grow faster and become richer.

Businesses, especially those at the cusp of innovation, have now begun to disrupt industries that were previously the preserve of the state. Take the space programme, for example. In the 1960s, the United States, under John F. Kennedy, decided that it was going to put a man on the moon by the end of that decade. What followed was a huge undertaking, where the state was spending almost a tenth of the nation’s GDP on the space programme, just so it could prove its own superiority. It is unimaginable for such a thing to happen today. During Obama’s presidency, NASA announced that it would look to the private sector to procure spacecraft and services – a major departure from what we saw before. We now look to the likes of SpaceX and Blue Origin, founded by tech billionaires Elon Musk and Jeff Bezos, to create the reality of commercial space flight, not the state. But the aerospace industry is moving at a comparative snail’s pace in terms of what’s happening with AI, automation and neural networks, which could prove to be existential threats to what we currently regard as ‘states’.

Firstly – automation. A state’s primary focus is levy taxes off its working population and businesses to fund its social services for those predominantly at the beginning and end of their lives – it provides education, hospitals, care for the elderly, pensions, not to mention its military and security functions – protection from within and without, so that it may perpetuate as a system. When vast swathes of the economy begin to become automated, as it surely will, then a large part of the population will become economically redundant. They will stop paying tax (and the machines that took their job certainly won’t be paying any) meaning that the revenue streams that states currently rely on will run dry.

AI is often seen as the bogeyman for all sorts of future mischief, but one thing is increasingly clear: states will eventually become almost if not wholly reliant on the technology. This will come in the form of a myriad of AI built to fix ‘narrow’ problems – everything from optimising sewage systems to identifying cancer and suggesting treatments. They will become so good at solving these problems, that the humans who manage these governmental departments will simply be onlookers. If the state is effectively run by a series of smart computer systems, then does it cease to be a state, or does it become something else – a construct, for instance?

The development of ‘neurolinks’ – computer chips in our brains – could also spell the death of the nation state, if fully borne out.

The state currently acts as a conduit for collective will, via parliamentary democracy (in our system of government). If we have the ability to bypass the institutions of the state to arrive at collective decisions, then does it have the moral right to tax us or limit us by law?
While all of this may sound like science fiction, these technologies are developing apace. The fact that they will disrupt us as individuals and on a state level is a given, the how and the when is up for debate.

So what the role of the state be in the 21st Century? Is it on a path of perpetual decline? The Chinese example would suggest not, but it is worth noting that this is the only global power of import where state power is in the ascendant (the other perhaps being Russia, but their economy is stagnating due to state-led policies). Part of the reason of China’s increasing state power is a direct inversion of the above examples – it is using the very technology that is making most people around the world freer on their population to make them less free. Despite the veneer of a well-run system, China’s model is riddled with inconsistency and corruption. Although the Chinese state is using all available technological means to pervade every aspect of its citizens’ lives, it does not mean that it will be immune to a popular revolt. This is what the almighty Chinese state fears the most, and it’s unlikely that the recent months-long riots in Hong Kong will have done little to comfort its political leadership.

Leaving China to one side – what will the role of the state become for the free world? Ultimately, it will fall to innovative businesses to solve the biggest problems that we face this century. But whilst business knows that there’s going to be big money in saving the planet, it’s not necessarily being bold enough or moving fast enough to make the difference that we need to see.

This is where the state can step in – to set audacious long-term goals for the market to meet.

Many businesses are too often motivated by short-term wins and share price value to attempt radical and costly programmes that could radically alter the human experience. Even companies that we frequently associate with being ‘innovative’ are often anything but. Take Apple for example – it has spent almost a trillion dollars over the past decade on buying back its own shares, which in turn pushed up its share price, turning it into one of the world’s most valuable companies. This is a business that made its name in creating new categories of products that we didn’t even know we needed, which is now focusing primarily on share price rather than innovation. If Apple had taken even a half of that trillion, and invested it into new products, would we still be seeing product launches like the iPhone 11 which added yet another camera onto the casing, and offering ‘ground-breaking’ features like ‘slow motion selfies’? Maybe once a business gets to a certain size, we have to accept that its motivation and desire to innovate will fall by the wayside, and its instinct turns into monopolisation and domination?

Maybe this is the true calling of the state in the 21st century – to become the catalyst that drives innovation by setting the market audacious goals that it has to achieve, thereby not only saving the planet and our societies, but creating entirely new, sustainable industries.
Why are we waiting for the likes of P&G, Unilever and Nestlé to belatedly come to the conclusion that using single-use plastics for their billions of products is a bad idea? It’s only shifting public attitudes that now mandate that they do something about this. They don’t want to be the last FMCG giant to be seen using single-use plastics; it would surely hole their share price. The fact that they could have made the investment decades ago and spared the world’s oceans billions of tonnes of plastic pollution is quietly forgotten about.

Government as the innovation-driver would seem like a risky move to many, but in an age of mass disruption, where everything is about to change, then why not at least try and set audacious goals for the market to meet? As long as there’s a reasonable runway for these things to happen, then I don’t see that businesses will have much problem adapting. The public will certainly be on board. Could the UK end its use of single use plastic inside three years? I bet it could. Whether we will do so on our own volition, however, remains extremely unlikely.