The very foundations of state power are shifting before our eyes.
We are entering a world where the most important resources are the least tangible; where land is less important than an educated populace, where stockpiles of goods, capital and labor are less important than flows; and where developed nations struggle not for political dominance but for a greater share of world output.
A new type of nation is emerging – the virtual state. As a result, the influential nations of the coming century will look less like traditional Great Powers and more like Hong Kong or Singapore: small, with little military power, few natural resources and little agriculture or manufacturing, but powerful in using managerial, financial and creative skills to control assets everywhere. The developed world will be divided into “head” nations, which create products and manage services, and “body” nations, which manufacture goods in a new and productive partnership with head nations, or virtual states. In this world, military conquest will make little sense; armies can only seize real estate, and real estate does not confer knowledge or capital.
In the United States, management, services, creativity and expertise have already become more important assets than bread, steel or factories. With 70% of our gross domestic product coming from services and only 18% from manufacturing, we stand on the edge of becoming a virtual state.
The Rise of the Virtual State explains what international relations and commerce will look like in the world of the next century. Renowned international relations scholar Richard Rosecrance defines how this world will emerge, how the United States will figure in this new system of international politics and economics and who are the likely winners and losers on the coming international scene.
Richard Rosecrance is the author of The Rise of the Trading State and America’s Economic Resurgence. He is Director of the Ronald W. Burkle Center for International Relations and Professor of Political Science at the University of California, Los Angeles.