Toward a Political Economy of Regime Values,Ethics,and Institutions in a Context of Globalization and Hypermodernity

Social and Public Institutions and the Nation-State

American social and public institutions, and associated regime values took a clear shape in the era of the nation-state (Bobbitt, 2002; Reich, 2007). Three competing versions of the nation-state—liberal democracy, communism, and fascism—largely defined the political economy of the 20th century. In the United States, public institutions generally advanced the interests of the people by providing a social and economic safety net through the application of technical rationality and public policies to social, economic, and political problems, while other institutions, including major corporations, governmental organizations, and other businesses provided jobs, health care benefits, and retirement pensions. The always uneasy partnership of democracy and bureaucracy produced unprecedented innovations, organizations, and programs: reformed city governments, the New Deal, a reorganized and expanded federal government, a “military-industrial complex,” the Great Society, the war on poverty, the social and economic “safety net”—the very infrastructure of 20th-century industrial society.

Despite many accomplishments, public ethics and public values in the nation-state offered a mixed picture at best. On the one hand, there were many successes. From a utilitarian or outcome perspective, in the post–World War II era, the nation-state enjoyed nearly a half-century of success in promoting the welfare of most of its citizens through a partnership of government, corporations, and labor unions. From a deontological or process point of view, the insulation of administration from (corrupt) politics and the proliferation of bureaucratic and professional norms and procedures reduced corruption and established reliable and responsive organizations at all levels of government and industry. Professions and their standards for performance and conduct became the norm for ethical behavior and for translating scientific discoveries into practical means for solving societal problems and producing wealth (Schon, 1983). On the other hand, these same organizations and professions were blinded by their power and success, masking their limitations and the destructive consequences of their actions, even as they pursued lofty goals and ambitious programs in the name of the public interest and economic prosperity (Adams & Balfour, 2009).

The Emergence of Market States

By the closing decades of the 20th century, a new world order emerged in the wake of the collapse of the Soviet Union (for discussions, see Bobbitt, 2002; Friedman, 2007; Fukuyama, 1992; Huntington, 1996; Reich, 2007; Sassen, 1998). Traditional boundaries between organizations, regions, and nations mattered less as the world moved toward greater “rationalization” of markets, labor, and states. These developments not only, legitimated by the political ideology of neoliberalism (Harvey, 2005), created phenomenal opportunities to generate wealth and prosperity but also opened the doors to new conflicts and to deepening poverty and deprivation among the multitudes who lacked access to these new opportunities, or whose fortunes remained tied to the “old” economy and boundaries. The market state de-emphasized the programmatic and legal/Constitutional aspects of governance in favor of mechanisms for enhancing opportunities (Bobbitt, 2002; Rosenbloom & Piotrowski, 2005) while increasing the risk of ethical and value failure, inequality, and social fracturing. The transition to the market state dramatically accentuated the core assumptions of classical liberalism even as it diminished the capacity of governments to achieve advances in democratic practices. Indeed, in public discourse today, a “free market” is thought by many to constitute democracy (see Edsall, 2012).

Bobbitt (2002) identified three types of market states comprising national and regional systems that roughly parallel the three variants of the nation-state of the political economy of the 20th century: entrepreneurial, mercantile, and managerial. The three types of market state are distinguished not just by their economic and strategic approaches to dealing with global competition but also by distinctive regime values and relationships between the individual and society. They afford the opportunity to reflect upon the relative merits of regimes that emphasize libertarianism (entrepreneurial state), utilitarianism (managerial state), or virtue ethics/national solidarity (mercantile state). Table 1 summarizes these three variants of the market state, their ethical bases, and regime values.

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Table 1.

Market State, Ethics, and Regime Values.

Type of market state	Primary ethical basis	Regime values
Entrepreneurial	Libertarian	Protection of individual rights, innovation, risk-readiness, accountability, self-reliance
Managerial	Utilitarian	Sustainability, public interest, balancing of interests, stakeholder/shareholder value, professionalism
Mercantile	Virtue	Common good, social cohesion, regime stability, sustainability, loyalty

The prospect that the market state in its current form can sustain public values and ethics remains quite uncertain. The reason for this can be found in large part in the ethical basis and regime values (Rohr, 1998) of each of the three forms of the market state. The entrepreneurial market state has at its core an ethic that combines market values, individualism, and libertarianism (Bobbitt, 2002; Reich, 2007; Sandel, 2009). The primary purpose of public policy in the entrepreneurial state has been to empower the marketplace, or more precisely, to privatize the functions of government, dismantle the regulations of the nation-state, and give as free a rein as possible to business interests— “make the world available.” Ideally, government will perform better in its more limited role, but the reality has been that all countervailing interests to unfettered markets, including regulations, labor unions, and consumer protections, are progressively delegitimized as threats to “job creation,” wealth, and individual initiative. And, after just 30 years of the market state, public policy is virtually paralyzed by the influence of a growing, pervasive “new corruption” (which we have referred to elsewhere as “Praetorian times”; Adams & Balfour, 2012) within both private and public institutions and also by a greatly diminished sense of collective identity and national purpose (Hacker & Pierson, 2010).

The managerial market state does not appear to be faring any better than the entrepreneurial state. With regime values based in utilitarianism—achieving the greatest good for the greatest number through rational policy making in a regional market framework—it suffers from an underlying contradiction between its commitments to social equality (vestiges of the nation-state) and the demands of managing a large regional economy in a global financial marketplace. Under a utilitarian framework, policies deemed to maximize the public interest may be enacted with little attention to minority or individual rights (Sandel, 2009). In the most prominent example of the managerial state—the EU—when push has come to shove, market values have taken precedence in the form of austerity measures aimed at bringing fiscal discipline to countries (e.g., Greece, Ireland, Portugal, Spain, and Italy) that, under the common currency and structure of the EU, lack the means to manage their own economies. Once again, the primary casualties are public values and democratic governance as bureaucratic power is invoked to impose “market discipline” on countries that cannot sustain their social and economic policies as members of the regional framework.

Meanwhile, several mercantile market states (South Korea, Taiwan, Singapore, the Hong Kong SAR, and earlier, Japan) have achieved impressive growth rates with minimal social strife by mobilizing the labor of the entire society and encouraging high accumulations of capital (Bobbitt, 2002, p. 672). Mercantile market states differ from the entrepreneurial and managerial states in their emphasis on a form of virtue ethics that cultivates values of social cohesion and national self-sufficiency, and that seeks to maximize the relative position (market share) of the nation in the global marketplace by investing in national achievement and competitiveness. They also tend to discourage immigration and imported goods, and focus on finding their niche in the world economy. Economic power tends to concentrate in this model, and it requires an ethic of followership and communal loyalty that some societies (such as the United States) find stifling and counter to regime values of individualism, risk-taking, and initiative. Furthermore, there is often little room for minority rights or citizen involvement in policy making.

While the economic success and social solidarity of these nations make the mercantile model an attractive one, a global system of such states would be driven by protectionism, tariffs, and subsidies, and the inevitable conflict such policies engender. Thus, finding a new direction for sustaining public values may lie less in changing the form of governance than in understanding and influencing the cultural and political context within which all three types of state must function. The market state is both the progenitor and creature of this global political and economic system that has overwhelmed the nation-state and created a fundamental challenge to the very possibility of democratic regime values, public ethics, and ethical institutions.

A Challenging Context for Public Service Values, Ethics, and Institutions

As both Heclo (2008) and Stiglitz (2010) have argued, the ascendancy of the market state over the past 30 years at least has undermined the trustworthiness of social, political, and economic (cultural) institutions and organizations. Discussing the financial meltdown of 2007-2008, Stiglitz points out the damage not only to the economy but also to society more broadly as a result of pervasive breaches of trust (2010, pp. 275-276). Indeed, we appear to be entrenched in a vicious, self-sealing cycle: As institutions and organizations become increasingly corrupt and venal, the more people mistrust and expect the worst from them. Organizations and institutions become the last place that individuals look to for the nurturing of values; individuals instead see them as settings in which only the foolish or stubborn act with high ethical standards (Callahan, 2004). Consider the list—only partial—of individual corporate scandals provided by Heclo (2008, p. 15): Adelphia, AIG, Cendant, Global Crossings, Tyco, Phar-More, HealthSouth, Waste Management, WorldCom, and leading the way, Enron. Heclo goes on to list categories of corporate misconduct (2008, p. 15): Savings and Loan; Junk Bond; BCCI Money Laundering; Mutual Funds; Public Accounting Firms; Investment Banks. For the public sector, he lists 39 scandals (2008, pp. 17-21) in the United States stretching from 1958 (Sherman Adams’—President Eisenhower’s chief of staff—acceptance of bribes in the form of gifts) to 1999 (President Clinton’s impeachment after lying to cover up an affair with a White House intern). A longer list could be constructed just for the years since. And of course, the nonprofit sector has hardly been immune to such scandals.

This ongoing, progressive erosion of trust in institutions and organizations has sent a different and unfortunate signal around the globe that discredits the American systems of democracy as corrupt and unaccountable (Stiglitz, 2010, pp. 225-226). While we might prefer a political economic (cultural) context that would foster and sustain public values and ethics, instead it appears to undermine in a rather thorough going way the foundations of institutional life, including public values and ethics. A closer examination of the cultural context is a fruitful next step for this discussion.

The cultural context in the United States (and increasingly globally) during the modern age can be characterized in part as one of technical rationality—that is, a way of thinking and a way of living that exalted the scientific-analytical mind-set and a belief in technological progress (Vanderburg, 2005). Schon (1983, p. 21) and others have argued that technical rationality has been the most powerful influence on how we have thought about both the professions and the institutional relations of society, government, and business. One author has described technical rationality as the first universal human culture (Vanderburg, 1985; see also Barrett, 1979; Bauman, 1989; Ritzer, 2004). Technical rationality emerged in full form in the 20th century and continues in the 21st century as central to the mental map of globalization. Technical rationality underpins globalization and economic rationalism, which in turn have energized and sustained various versions of the market state.

Technical rationality has come to characterize—and ultimately define—rationality, resulting in a narrowing of the concept of human reason, and the devaluing of other sources and processes previously thought to develop knowledge. The closely connected belief in technological progress is essentially both a fascination and a faith in each successive technological advance—and the typically unquestioned assumption that each new technology is in fact an advance. Both individual and social problems are thought to be fixable by a (new) technique or technology. These assumptions are reinforced within a self-sealing way of thinking and way of living that simultaneously produces the outcomes that are made inevitable by the prior assumptions.

For a time, many thought that modernity had given way to the postmodern condition. More recently, various authors have noted the persistence of modernity and technical rationality, but with a vengeance, and have termed these latest developments as hypermodernity (Charles, 2009), supermodernity (Auge, 1995), and liquid modernity (Bauman, 2005), all of which share in common what Portillo and Costa (2010, p. 482) call “technical fundamentalism.” Paul Virilio (1977/2006), the French cultural theorist, refers to these phenomena collectively as the “empire of speed.” Today’s institutions and organizations are largely creatures of hypermodernity and the acceleration of technical rationality. Yiannis Gabriel (2005) has characterized contemporary organizations as a “glass cage” (p. 314) that more subtly entraps those enthralled with the speed and technological wonders of hypermodernity.

The Prospects for Public Ethics, Values, and Institutions

If the considerable challenges to public ethics, values, and institutions arise within a global cultural context, a global political regime may be a necessary governance counterweight to unchecked economic rationalism. At least three interrelated trajectories can be identified. The first of these trajectories is to build on the modest progress made toward a global human rights regime (Ignatieff, 2012), including the UN Charter, the Universal Declaration of Human Rights, the Geneva Conventions, the Refugee Convention and the Convention against Torture and Other Forms of Cruel, Inhuman or Degrading Treatment or Punishment. The second trajectory may be captured under the broad rubric of sustainability. Sustainability includes the natural environment and the socially constructed environment, as well as the interaction between the two. Sustainability requires amelioration of climate change at a minimum, along with the development of “corporate” and social responsibility in both public and private organizations/institutions. The final trajectory involves some effective regime of restraint on capital. Unchecked economic rationalism globally seems likely to lead to planetary ruin. There may be more trajectories than these. Rather than imagining any rapid progress toward “solutions” to global problems, a more promising approach may be simply doing no harm, and perhaps even just doing a bit less harm (what we have referred to, borrowing from Judith Shklar, 1985, as “putting cruelty first”; Adams & Balfour, 2012). Even so, this represents a daunting and formidable agenda.