Why Globalization Breeds Terrorism

R. A. Hettinga rah@shipwright.com
Fri, 31 Jan 2003 00:42:07 -0500


30, 2003 

The Wall Street Journal


See previous articles in
this series 1


Why Globalization 
Breeds Terrorism 


Terrorism, the war of small groups against states, has been on the
rise since the end of the Cold War and the collapse of communism. The new
war is not any more mostly between states, but mostly against states. This
is not surprising at a time when the role and power of nation-states is
challenged on all fronts by privatization, tax-cutting, decentralization
and devolution, secession and fragmentation. And the changing fortunes of
states is part of a general trend toward the weakening of all hierarchies,
public and private, as market transactions replace hierarchical
organizations, whether business firms or public bureaucracies. 

the wave of terrorism is world-wide, it must have common causes. The
current rise of competitive violence is a consequence of the erosion of the
monopoly of violence, the main business and the "raison d'Ítre" of states.
The retreat of the state from many areas, including the waging of war,
leaves room for the growth of competitive markets and more freedom but also
allows for a larger supply of competitive violence which partly jeopardizes
the newly gained individual liberties. The Cold War combination of civil
peace -- whether democratic or totalitarian -- and external conflict is
thus replaced by external peace and civil insecurity. 

To understand how
to win the war on terrorism we must first understand what makes terrorists
tick. Unfortunately, since September 11, but also before, most explanations
have had to do with specific acts of terrorism. Commentators have tried to
explain each terrorist campaign in terms of past wrongs, present errors,
alleged injustices or abject poverty generating desperate rebellions. In
this psychological approach, terrorism is seen as revenge. 

The trouble
is, these same motives were also present in the past, at a time when
terrorism was less prevalent than today. So we need to explain the current
revival of predominantly non-state -- that is decentralized -- violence,
variously driven by regional and secessionist, ethnic or religious,
motives, and often a combination of these. 

Small organizations
specializing in violence seek to impose their will on more or less
homogeneous populations by force and blackmail. The goal is to accelerate
the retreat of the state and take control of some part of the population
for extracting revenues. They wage new forms of guerrilla warfare on larger
states, demanding ransom in exchange for sparing the lives of civilians and
soldiers in these states. What has made this offensive so daunting is that
the competitive advantage of these small organizations has recently been
increasing. The general retreat of state power since the 1970s, an
otherwise healthy development, has enabled these organizations to prosper
and challenge governments and their armed forces. 

Large states reached
their zenith in the middle decades of the past century, but have been
declining since the mid-'70s. The basic reason for this is that large
hierarchies, firms as well as states, thrive on economizing information
while smaller production units have to transact mainly through markets
where the use of information is intensive. Thus large hierarchies are more
efficient when information is costly but smaller hierarchies and larger
markets are more efficient when information is cheap. 

With the revolution
of information in the '60s and '70s, the cost of storing, processing and
communicating information has plummeted. It followed that large hierarchies
such as business conglomerates and huge, heterogeneous states lost their
comparative advantage and disintegrated everywhere in the world, trying to
downsize or being replaced by smaller units, while markets expanded

This revolution of organization is also at work in the "war
business." In our era, states are contracting, taking in fewer taxes as a
share of GDP and seeing their borders recede through secession and
fragmentation, with devolution being a less extreme form of disintegration
-- and in the case of the European Union, national borders disappear as
states hand over powers up to Brussels and down to their regions. States
are not looking for new territories to control, especially given curtailed
military budgets. 

Thus traditional wars of conquest between rival and
often adjacent states have tended to be less common. At the same time, this
retreat has left the field open at the margins for rival organizations that
produce violence, whether organized crime, regional political groups trying
to establish their own state, or any groups that can carve out a niche.
That's why smaller interest groups today dominate politics of wealthy
countries. Unlike before, smaller is more efficient in matters of political
pressure and military action, as larger monopolizers of violence -- the
traditional states -- scale back their activities and presence. 

is the form of violence that is best adapted to the small-group advantage.
A small group willing to seize power from the state cannot finance a
regular army with an air force, a navy and large ground forces. It has to
resort to guerrilla tactics and violence against isolated buildings, a few
military targets and, preferably, civilians. 

Weakened traditional states
have been proved vulnerable to guerrilla tactics in several post-colonial
wars, and more recently in Vietnam as well as in Afghanistan. Terrorism
amounts to going one step further in that direction. The diversity of the
small, competitive and violent groups and their non-territoriality, make
them difficult to identity and to control. As a consequence, terrorism is
here to stay for as long as the disintegration of large state hierarchies
continues to be determined by the information revolution. 

In this new
form of war which replaces the world duopoly of the Cold War, the position
of the U.S., however more powerful than that of other states, is
nevertheless weakened. Far from being a "hyperpower" able to control the
whole world, as French diplomacy pretends, it has to rely on allies and
alliances to fight even a smaller contender such as Iraq. But the call of
many Europeans for world governance and an international rule of law
administered by the U.N. is fundamentally mistaken. 

The international
rule of law is breaking down precisely because of the atomization of states
and the weakening of the power of each one of them. Absent such a
superpower as the U.S. was during the Cold War, there is no conceivable
international rule of law, strong U.N. or no U.N. The increasingly
decentralized terrorist violence has to be faced by decentralized forces
and by occasional, and changing, alliances between a few most concerned
states. The decentralized terrorist challenge has replaced the monopolistic
Soviet challenge. And it is here to stay. 

Mr. Rosa is professor of
economics and dean, Sciences Po MBA, in Paris. He is author of "Le second
vingtieme siecle: declin des hierarchies et avenir des nations" (The Second
XXth Century: The Decline of Hierarchies and the Future of Nations)
Grasset, 2000. 

R. A. Hettinga <mailto: rah@ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'