Nettime -- Brian Holmes -- Invisible States -- 10.05.06

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[I would like to publish on nettime this rather long essay, which was
commissioned for Capital (It Fails Us Now) - not only a song by the
Gang of Four, but also an exhibition held in Oslo at the end of last
year and in Tallinn at the very beginnning of this one. The reason
for publishing this text on nettime is simply to ensure the free
circulation of cultural content, irrespective of its "value" (well
done, poorly done, not done at all, as Robert Filliou used to say).
The text has been printed, along with many other documents from the
exhibition, by Simon Sheik, Katya Sander and B_Books, Berlin. Get your
copy from them. I haven't yet seen the results but I'm sure it's a
good thing.

The essay attempts to diagnose the vicissitudes of the welfare state,
particularly in northern Europe, over the last 50 years. It is based
on my research and on interviews which I conducted in Norway and
Estonia, making use of the funds of the soon-to-be-defunct institution
NIFCA (a relic of the Cold War, you will no longer need to know what
the letters stand for). There is some solid analysis in here. I
believe this is a lucid and precise look at the decay of the common
over that period of time. The recent Swedish elections prove the
point. Continued belief in this kind of state would be idiotic - if
there weren't so much to lose by abandoning it all together. For
better and for worse, the invisible welfare state is the paradox of
our time. We will all remain hamstrung until we collectively go beyond
it.

best, BH]

***

Invisible States
Europe in the Age of Capital Failure

Introduction

After 9/11 and its worldwide consequences, after the travesty of
Iraq?s supposed weapons of mass destruction, after the collapse of the
project for an EU Constitution, after the banlieue riots in France
and all they reveal about neocolonial racism on the Old Continent,
it might be easier to agree that capital is really failing us, right
now. But the most important question is: who are ?we?? And how exactly
do we experience the very real breakdowns of that immense and highly
abstracted articulation of society which goes under the name of
capital? How to map out that articulation, as it changes over time to
reach a point of what now appears as permanent crisis? How to locate
and name the living flesh of capital failure?

The exhibition Capital (It Fails Us Now) has its locus in two national
states on the northern edges of Europe: Norway, which has declined to
be a formal member of the European Union, and Estonia, which is among
the new members in the former East. In both these countries (but for
very different reasons) the form of the state as a democratic instance
and an economic project is intensely at issue. In what follows I will
not give any account of the exhibition itself, but rather focus on the
changing forms of the capitalist state, within a European context that
is structured not only by its shaky supranational architecture, but
also by far-ranging transformations of the world economy.

The point is not to expect salvation or damnation from what Engels
famously referred to as ?the ideal collective capitalist.? [1]
Instead, the point is to create a framework for understanding the
transformations of an institutional and legal mix (the state) that
attempts to mediate, on the one hand, between the inhabitants of a
national territory and the individual capitalist enterprises that
organize their productivity; and on the other, between this bounded
national territory and the relatively anarchic transnational space
into which it is inserted by the constant flux of trade, investment,
interstate alliances and relations of force.

Within the world-system composed by the capitalist democracies of the
post-WWII era, the state has in effect been called upon to act a kind
of double filter, articulating the specific relations between its
various classes of inhabitants, as well as their general relations
with the outside world. In this respect, the state is - or more
precisely, has attempted to be - the ?integral of power formations,?
to borrow the phrase with which Felix Guattari once described capital.
[2] The democratic state, as a crossroads of economic power and
popular representation, has at its best been something like the means
which society has given itself to make capital visible, to place
its operations on the negotiating table. One need not be surprised,
then, to find a complex and problematizing exhibition of visual art
exploring precisely the ways in which this project of visibility now
appears to fail.

Indeed, the postwar democratic state has claimed to be an integrally
public and fully transparent articulation between all the conflicting
forces at play in the human universe, including not only the powers
of capital and its associated imperatives of military production and
warfare, but also the expressed needs and desires of populations
outside any economic logic or will to domination. It is precisely the
existence of this claim, or this aspiration - concretized for a time
in what was known as ?the welfare state? - that allows us to speak of
the failure of capital. But it is also this democratic claim that is
clearly and inexorably breaking down, as the form and function of the
mediating national state morphs and reconfigures under the pressure of
global economic forces and conflicting wills to dominance. The result
of the breakdown is a murky, opaque society, a world of unexpected
clashes and fires in the night. What we should then explore - if there
is any wish to even begin rediscovering a ?we? - is the very texture
of this opacity: the forms of capital failure. [3] Which are also the
forms of our lives today.

Metamorphoses of the Welfare State

In an article published in 1982, and destined to become an enduring
definition of a fast-disappearing reality, the American specialist in
international relations John Gerard Ruggie described the structure
of the post-WWII economic compromise as ?embedded liberalism.? [4]
This was before the days of US Army journalism, when one could still
aspire to express complex meanings. Ruggie borrowed his key term
from an anthropologist, Karl Polanyi, who had maintained that in
all known societies prior to that of nineteenth-century England,
exchanges of goods were embedded in an institutional mix, indeed in a
human ecology: there was no separation between specifically economic
calculations and a broader set of social reciprocities regulating
the care and reproduction of land (i.e. the natural environment),
labor (the human body/mind) and money itself (whether the cowrie
shells of the Trobriand Islanders, or the fiduciary currencies of
nation-states). Polanyi showed that the development of English
economic liberalism, propelled by the industrial revolution and
extended to worldwide dimensions by the gold standard, had effectively
disembedded the economy from society, transforming land, labor and
money into what he called ?fictitious commodities,? continuously
bought and sold on a supposedly ?self-regulating market.? [5]

Why are these three commodities any different from the average widget?
The thing that makes them ?fictitious,? in Polanyi?s sense, is that
their production and sustainable reproduction is not ensured by market
mechanisms. Land that isn?t cared for beyond the cycle of a cash-crop
or a mineral dig can be durably blighted by misuse; labor with no
life-support outside the workplace can be physically destroyed by
downward pressure on wages; and the very medium of exchange, money,
can be discredited by speculative trading of promissory notes without
regard for the institutions from which their value derives. All these
phenomena, which had been observed since the Industrial Revolution,
were experienced at their cruelest extremes during the early twentieth
century, and most acutely, during the Great Depression of the 1930s
- and Polanyi was hardly alone in identifying the liberal doctrines
of free trade and self-regulating markets as the underlying causes
of the wars themselves. The essence of the postwar international
regime could therefore be convincingly portrayed by Ruggie as an
attempt to ?re-embed? the worldwide economy of liberalism within
territorial systems of checks and balances, regulated at the level of
the nation-state.

?Embedded liberalism? described the effort to reconcile the benefits
of international trade with the domestic policies for full employment
and social welfare that had first emerged (though in disastrously
isolationist forms) during the period of closed currency zones
and trading blocs in the 1930s. The postwar instruments of this
reconciliation were regulated international currency exchange (Bretton
Woods), import quotas and tariffs to protect certain productive
sectors (the General Agreement on Tariffs and Trade) and labor
legislation and social programs (the domestic welfare states). This
compromise, striking a balance between the two normative principles of
domestic well-being and international free trade, provided what Ruggie
called the ?generative grammar? of postwar interstate relations,
shaping the possible forms of action by the participating states and
contributing to what he called ?the internationalization of political
authority.?

Closer to our time, the regulation-school economist Bob Jessop has
developed the most comprehensive description of the general form or
ideal-type of the capitalist state that resulted from the postwar
compromise. [6] He calls it the ?Keynesian Welfare National State?
(KWNS), in reference to the economist and statesman John Maynard
Keynes, the English negotiator at Bretton Woods. Keynes was the first
to theorize the full employment of the working classes, supported
by government debt-financing of works projects, social services and
social insurance payments. He saw full employment as the source
of ?effective demand,? which could spur industrial economies to
virtuous cycles of continuous growth. The application of this type
of policy accompanied the postwar exportation to Canada, Western
Europe, Australia and New Zealand of the American Fordist model of
industrial development, driven by large, multi-divisional, vertically
integrated mass-production corporations. These were the engines of
extraordinary economic expansion for some thirty years, in the context
the reconstruction boom in Europe, and at a time when mass production
had not yet begun in most other regions of the world (excepting Japan
and the Asian ?tiger? economies, which developed more centrally
planned or authoritarian variations on the Euro-American model).

The Keynesian pattern of state intervention took on different shapes
depending on the size and political culture of the country in
question, with the most purely social-democratic forms developing
in Scandinavia. The aim (and the some extent, the result) was to
create a nexus of supportive and reparative institutions in which
competitive economic functions could be embedded, so that their
violence could be tempered, softened. Today, for better and often
for worse, the KWNS (and the white, male, industrial factory worker
who was its privileged subject) still serves as the normative and
nostalgic horizon for discussions of public economic policy. But the
interest of Jessop?s analysis, and of the regulation school more
generally, is to help us see how a change in the ?generative grammar?
of international relations, from the mid-1970s onward, has provoked a
gradual metamorphosis of the forms of the state, which would only be
given clear ideological expression with the ?Third Way? programs of
the British New Labour party at the very close of the century.

What happened to the compromise of embedded liberalism? As markers
of its crisis, all the historians point to the breakdown of the
Bretton Woods currency system in the period of 1968-71 and the
emergence of the floating exchange regime, the oil shock and recession
of 1973-75, and more broadly, the spread of Fordist production
throughout the world and the resultant saturation of markets for
mass-produced industrial goods. Equally important from a more
radical viewpoint were high levels of labor militancy, rejections
of bureaucratic normalization and widespread protests against the
colonial and imperialist postures of the Western powers. [7] The
industrialized countries were beset with persistent conditions of
industrial stagnation coupled with inflationary wage-price spirals
(?stagflation?), and from the mid-1970s onward, the decline of the
United States itself was widely predicted. More recently, however,
understanding has grown of the way that the US hegemon was able to
convince the rest of the world to go on funding what seemed to be
a terminally indebted economy, both by forcing OPEC countries to
continue pricing their oil in dollars, and more broadly, by ensuring
that dollar-denominated financial markets remain the most highly
performing investment destination for global liquidity - among other
things, because only those markets are insulated from the violent
exchange-rate swings that periodically affect all other currencies
with respect to the dollar. [8] The upshot of all this has been to
make the US (with its sophisticated financial markets, its control
over transnational institutions like the IMF and the World Bank,
its far-reaching media sector and its unparalleled army) into the
institutional support-structure of what, for all other economic
agents, is essentially a stateless world currency, a necessary but
uncontrollable medium of exchange. Thus the dollar remained the
linchpin of the floating exchange regime, while around it multiplied
the sophisticated forms of credit-money (futures, options, swaptions
and the entire panoply of derivatives, managed in direct competition
with national fiduciary currencies by hedge-fund operators like George
Soros).

>From the early 1980s onward, this new position of the US as an
extremely aggressive world financial player, with its industrial
production shifting towards a strategic focus on cutting-edge
growth technologies (stimulated and directed by lavish defense
spending), gave it every reason to force greater trade and investment
liberalization on all the countries that wanted access to its gigantic
and endlessly debt-financed consumer markets. The IMF emerged as the
global prophet and enforcer of this liberalization, which was to be
coupled with austerity policies for all governments other than that
of the hegemon. [9] The liberalization of foreign direct investment
(and the ultimate disappearance of the revolutionary threat posed
by really-existing Communism) meant that much more productive plant
could be located outside the core countries of the world-system,
and therefore, beyond the reach of the national labor and ecology
movements. A new pattern of global circulation then took form, where
formerly underdeveloped countries (such as China) could export not
only raw materials, but also high-level manufactured goods; while the
professionals of the former industrial core would focus on financial
management, technological innovation, project coordination, and
cultural services (including tourism, which has become one of the
largest sectors of the world economy). Such was the basic system of
constraints - the underlying grammar of international relations -
that generated the initial trend toward what Jessop analyzes as the
SWPR: the ?Schumpeterian Workfare Postnational Regime,? named in
reference to the Austrian economist Joseph Schumpeter, who focused
on entrepreneurial innovation as the motor of economic growth.
[10] What?s indicated with that reference is the transformation of
the welfare state according the requirements of the transnational
information economy.

The SWPR, also known as the ?competition state,? does not represent
the clean break with welfare and the eclipse of interventionist
?big government? that is usually evoked in simplistic descriptions
of neoliberalism. Instead it signifies a deep and still-ongoing
modification in the ways that intervention is carried out, for whom,
and to what ends. The former goal of extending employment and benefits
programs to all citizens is effectively cast aside, having become
impossible under the conditions of functionally borderless economies.
The wage is treated, not as a source of effective demand to be propped
up for the general good, but instead as a factor of production among
others, which can be pushed downward according to the needs of the
competitive struggle. The primary focus of intervention now becomes
high-quality information access and lifelong education: in other
words, the grooming of the most productive citizens for innovation
in transnational knowledge and image markets, whose operations can
no longer be regulated by a national state, but only adapted to by a
postnational regime, which seeks insofar as possible to influence the
parameters within which productive individuals make free choices.

A pattern of changes in the forms of state intervention then sets in,
which is fulfilled unequally, depending on the specific conditions
of each country. These changes are often proposed in the form of
?performance-based contracts? between public administrations and
citizens. Automatic unemployment benefits, suspected of encouraging
idleness, tend to be scrapped in favor of workfare ?activation?
programs that require continuous job searches, compulsory retraining,
or community service (with the Danish ?flexicurity? model becoming the
new paragon of perfectly calibrated government intervention to meet
the needs of a high-turnover job market). In the name of efficiency
(but also as a disguised form of societal indoctrination) the former
notion of public services provided to citizens is replaced by that
of ?public enterprises? competing with each other on subsidized
?quasi-markets? for the patronage of non-paying ?customers.? Vouchers
or compensatory tax breaks may also be offered to those who prefer
private service-providers, notably in the areas of health and
education. Voluntarist or charitable ?third sector? associations
(often religious in nature) are called upon to fill in the gaps
of stripped-down social programs; while in business operations,
centralized state regulation is limited in favor of ?governance?
exercised by networks of interested parties or ?stakeholders.?
Infrastructures to support high value-adding sectors, which would
formerly have been built by employment-generating state agencies
as a form of pump priming for the Keynesian economy, are now done
almost exclusively by ?public-private partnerships? (PPPs), which are
renowned (justifiably or not) for their superior efficiency - and
which above all do not create more fiscal liabilities on the state?s
unemployment or retirement rolls.

This is the basic repertory of the ?New Public Management? that
has spread from Britain throughout the formerly social-democratic
countries (including Norway in particular), and has also been proposed
as a model of state-formation for the post-socialist countries of
the former East. [11] The avowed aim of its neoliberal ideologues is
to gradually strip the public sector down to the hardcore functions
of a night-watchman state: police, justice, diplomacy, army. But
for electoral reasons that goal can never be attained, at least not
in northwestern European lands, because it would require a break
with too many core constituencies, even on the right side of the
political spectrum. Full neoliberal ?regime shift? has occurred only
in a few countries, primarily the US and Britain. Elsewhere, what
results are subtle but far-reaching changes in the way the state
socializes its populations, the kinds of expectations it cultivates,
the types of subjectivity it fosters. [12] Thus the ?disembedding?
of the transnational economy from its sustaining institutional nexus
is accomplished under the veil of a persistent, but increasingly
attenuated and gradually hollowed-out social democracy. [13] The hope,
it seems, is that the gaping zones of exclusion and alienation of
entire populations can be covered over for just a little while more -
until the productive classes have learned to take responsibility for
cultivating their own blindness.

Towards a New Political Ecology

A deeper understanding of the structural transformations that
have come to bear upon the European societies obviously requires
consideration of the European Union, in its relationship of
cooperation and competition with the United States. Postwar European
reconstruction was decisively influenced by the US, first via the
Marshall Plan, then through the formation of NATO. For the US,
Europe was a less an export market than a region for direct foreign
investment and the implantation of industry. This was chiefly done
in Germany, the largest and most industrially advanced European
nation, whose postwar constitution had been written by the United
States. The creation of the European Economic Community offered an
expanded market for US corporations established in Germany, and as
such received strong US encouragement. [14] In the 1960s and 70s,
only France resisted the fundamental Americanization of Europe; but
even there, the resistance was merely gestural and diplomatic. Yet
as understanding grew, in the 1980s, of the ways in which the US
had succeeded in changing the rule-sets of global production and
trade, European elites came to press for a single means of exchange,
which would lessen their dependence on the dollar as the de facto
international reserve currency. Monetary union was proposed in 1986
with the Single European Act, launched in 1992 with the Maastricht
treaty, and completed with the introduction of paper notes in 2002. In
order to escape similar dependence on the American consumer market,
the European Economic Area (EEA) was created in 1994, and has been
continuously expanded since then. It should be noted that despite
its refusal to be part of the EU, Norway is a fully fledged member
of EEA, via the European Free Trade Association (EFTA), of which
it was a founding member as far back as 1960. In this way it has
become something like an invisible member of a purely functional,
non-democratic European economic union.

>From 1994 onward, a specular rivalry can be observed between European
expansion and the process of hemispherical integration in the
Americas. The EU tends to become the distorted mirror-image of
NAFTA - though without recognizing itself as such. In many ways, it
is again the embedding and disembedding of liberalism that is at
stake. From the idealizing perspective of European social democrats,
monetary union and the single market should allow the reconstitution
of a domestic territory outside the dictates of the world market,
so that social relations can be regulated democratically, not just
economically. Indeed, the classic European diplomatic posture is
to insist on such regulation; and the EU?s leading cosmopolitan
philosopher, J?rgen Habermas, constantly invokes the normative horizon
of a ?world domestic policy? (Weltinnenpolitik). [15] But one should
never forget that the EU only functions as a democracy at one remove,
via the Council of Ministers and the European Commission, both of
which emanate from the arcana of national administrations, leaving
room for only very limited direct representation of the continent?s
voters in the European Parliament. And behind the internationalist
symbols of the Hague Court and the Kyoto climate-control protocols,
the EU?s tendency toward an objective alliance with the US within the
World Trade Organization, against the demands of the Global South,
reveals a quite different function of international public law. As
Peter Gowan remarks: ?The imperial secret of the whole concept lies
in who writes the rules in the first place... The model here is,
of course, the European-inspired WTO which presents its rules as
rooted in universalist-liberal free trade norms while in fact they
are a concoction of positive law rules serving Atlantic capitalist
interests.? [16]

A similar pattern can be seen within the really-existing domestic
territory of the EU, particularly since the ten-member enlargement
of May 2004. The result of the enlargement is a three-part division:
Core Europe, New Europe, and what might be termed ?Edge Europe,?
i.e. the peripheral countries to the south and east of the current
borders. Ideally, the social rights of the core countries would be
extended through redistribution programs to the new members, while
foreign aid and the umbrella of cosmopolitan trading laws would allow
the gradual integration of the peripheral zones, whose resources and
labor forces are, in any case, streaming into the center. In reality,
a hierarchy emerges between the full citizens of Core Europe, who
expect some democratic control over the evolution their societies;
the subordinated citizens of New Europe, whose political privileges
have been substantively weakened by the loss of economic control over
their industries and the westward migration of their younger and
more educated people; and the dominated populations of Edge Europe,
whose territories and resources are wide open to exploitation by
transnational corporations - and whose rights, if they are migrants,
can be curtailed arbitrarily, as painfully shown by the experience of
French citizens of African origin under the recent state of emergency.

A New Europe country like Estonia exemplifies this three-tiered
situation. Its most promising industries and the mainstays of its
banking sector were snatched up by corporate investors from the
core countries (particularly Finland and Sweden) in the wake of the
worldwide financial crisis of 1997-98. Meanwhile, the country?s
enormous Russian-speaking population - imported from across the empire
to work in the Soviet versions of Fordist industry - languishes for
the most part without employment and without any right to citizenship
and a passport, which are unobtainable without mastery of the
complex Estonian language. This means that full-fledged Estonian
citizens occupy what at times can seem like a narrow strip of their
own small country, between the economic incursions of their more
powerful European neighbors and the inconvenient presence of a former
working class which they feel they did not ask for, and to whom,
in any case, they cannot really speak. The current heroin epidemic
among this former working-class population, and the explosion of HIV
that inevitably accompanies it, raises the specter of a long-term
condition of ghettoization and social exclusion, with the attendant
development of the police apparatus and prison complexes that
have been characteristic of neoliberal regime-shifts. Under these
circumstances, the formation of a state to match far-off Keynesian
standards of inclusion and social welfare is more than just difficult.
Leaders, parties, political programs succeed each other in a confusing
whirl; and what stands out from the rest is the default option of
nationalist populism.

But just how far from that same sort of predicament are the
hollowed-out social-democratic states of the European core, including
Norway and the other Scandinavian lands? The generative grammar of
global liberalism - which has structured the development of the EU,
and was even written into the articles of its proposed constitution -
has given rise to an extraordinarily dynamic upper-middle class, whose
members, often involved in the business of culture, are able to switch
countries, languages and affective universes with an ease and fluency
that could be staggering, if there were any outside perspective from
which to judge it. However, the very acceleration of transport and
transaction tends to isolate the rarefied upper echelon of the core
populations within a highly cohesive network of mobility, insulated
from the increasingly heterogeneous composition of the societies they
live in (or move through). The decline of the old working classes and
the relative eclipse of national traditions in favor of a syncretic,
recombinatory culture, coupled with the arrival of new service classes
and technology specialists from Edge Europe and beyond, makes it
very difficult for the would-be reformers of state services to craft
a political platform that can appeal to any kind of majority. The
needs of the rising sectors of society and of the financial elites
will be satisfied in any case, since these are the foundation stones
and principal clients of the SWPR state-form. But to address the
people outside the ideal profiles of the knowledge-workers and the
corporate financiers, two basic solutions present themselves, which
are generally taken together. The first is to cut sectoral deals
for specific voting blocs: farmers, unionized industrial workers,
functionaries, small businessmen, state pensioners, etc., all of
whom still have access to established representational mechanisms
dating back to the Fordist era. And the second solution is to cover
over those sectoral deals with a broad populist rhetoric of national
identity and national dramas, which do not necessarily exist in
reality.

The obvious danger in Core Europe today is that of slipping into a new
political ecology of fear, which sutures the gaps between diverging
social fractions by the knee-jerk scapegoating of the easiest targets,
who are the immigrants, the people gathered to do the jobs that aging
Core Europeans no longer desire to perform, or are no longer allowed
to perform in an economy that needs under-the-table employment as
the only possible way to compress the wage-variable, and therefore
continue to make a profit in a fiercely competitive economy. To
manipulate the figure of the immigrant as a security threat (or
even worse, of the Muslim as a civilizational threat) is the most
expedient way to cover up much more difficult negotiations over the
dismantling of the old welfare state, while avoiding complaints about
its replacement by a hodgepodge of changing dispositions that obey
no particular sense of justice or even economic rationality. And the
problem is that this dynamic of scapegoating and cover-up can only
get worse, as core populations grow older and more immigrants are
called in to replace them, despite the growing crunch on work permits
and residency papers. The question then becomes, why does such an
obviously short-sighted tactic seem to be spreading throughout Europe?
Why are we looking at the rise of liberal-fascism, and talking about
something else? What explains this inability to see the future, when
it?s already right here before our eyes?

The Chances of Vision

In the finance-driven, networked economy of the postnational
competition regimes, it is necessary to add a fourth ?fictitious
commodity? to Polanyi?s list of three (land, labor and money).
This fourth fictitious commodity is knowledge, in a spectrum of
forms ranging from science, technology and law to literature,
cooking and everyday know-how. Its production depends on long-term
institutionalized learning and teaching experiences, publicly
available libraries, archives, museums and databanks, internalized
modes of individual self-cultivation, urban spaces of improvisational
or structured group interaction, processes of hybridization between
different cultural traditions, the constitution of critical and
dissident discourses ranging from punk rock and poetry slams to
networks of concerned scientists or alliances of traditional and
organic farmers, and so on through a near-infinite spectrum of
practices whereby objective observation, theoretical abstraction,
individual expression and patterns of social solidarity are laid down
in complex traces and artifacts that can be taken up and transformed
by successive individuals, groups and generations. The impossibility
of completely functionalizing this subtle interweave of practices
and motivations is obvious, and was recognized throughout the long
era of national institution-building, from the early nineteenth
century onwards in most parts of the Western world. As Jessop writes
concerning education during the Keynesian period: ?In stylized terms
that were never fully matched in reality, we can say that education
was expected to promote equality of access and opportunity, to
create the basis for a talented and just ?meritocracy? that would
undermine inherited class and status structures, to create, codify and
disseminate a shared national identity and culture appropriate to a
universal and solidaristic welfare state, and to develop knowledgeable
and critical citizens able and willing to participate in an expanding
public sphere as well as a mass plebiscitary democracy.? [17] In
terms of practices, values, experiences of time and the other, the
educational and cultural spheres undoubtedly formed the most complex
institutional mix produced by the era of embedded liberalism.

The expansion of the state?s cultural and educational mandate, and
its hesitant extension to class, gender and ethnic groups that were
formerly excluded from representation, brought new conflicts and
challenges to this institutional mix, which undertook a difficult
period of transformation in the wake of 1968 and the decade of unrest
that followed. It is precisely this ?difficulty of representation,?
precluding any simple reiteration of supposed national icons
and values, that has been the source of most vitally engaging
developments in culture over the last thirty years; and the same
kind of questioning has even extended into a reevaluation of certain
economic and technoscientific functions. However, with the educational
streamlining of the Bologna process, with the corporate sponsorship
and instrumentalization of the arts and sciences, with the retooling
of national cultural institutions for the transnational tourist
market, and with the pervasive trend towards the commodification of
knowledge under intellectual property law, what is being challenged
right now is the very ideal of the educational-cultural sphere as the
locus of a problematic quest for mutual understanding in a pluralist
society. Indeed, the commodification of knowledge is the driving
force and central goal of the Schumpeterian competition state, to
the precise extent that the leading edge of capitalist production is
redefined as technological and managerial innovation (particularly
in the financial sphere). All the flowerings of human aspiration
and experience can then be treated not just as commodities, but as
investments in an entrepreneurial self, as the economist Gary Becker
has shown with his notion of ?human capital.? [18] One of the ways
Europeans now experience capital failure is when education and culture
come packaged with a price tag that disfigures them, even when it
doesn?t leave them completely out of reach.

Paradoxically, the damage caused by this capitalization of knowledge
is at once a primary factor in societal blindness, and a chance to
bring the new states of human coexistence under the neoliberal regimes
to visibility. The collaboration of artists with social scientists,
labor organizations and ecology movements during the recent cycle of
antiglobalization counter-summits, and now around the theme of the
?precariousness of existence? in the flexible economy, has marked
a step forward in the ability to name and describe the effects of
the neoliberal transformation process. Art has become one of the
means of investigation, akin to social science, but irreducible to
it. Similarly, a transnational organization such as Attac, whose
economic critique has gained a certain influence in social-democratic
countries like Norway, seeks to make visible the negative influence of
a stateless, privatized currency on the fundamental realms of human
labor and the natural environment, but also on the cultural-scientific
domain that constitutes a second nature or an artificial environment
(just as necessary as the air we breathe - and as likely to be
polluted). [19] The growth of the Socialist Left Party in Norway
(reaching 12.5% of the vote in the 2001 general elections) represents
an attempt at a political translation of such investigations. When
artists begin to explore the operations of capital, and to point
directly to instances of capital failure, they are participating with
their own expressive methods in a complex response to the gradual
installation of the competition regime, imposed as a single set of
exclusive and increasingly intolerant rules for the difficult and
irrevocably multiple states of human coexistence in society. The
process of exploring and interpellating these currently invisible
states is one aspect of the broader effort to constitute social
formations that might act in common, having not only shared objective
interests but potentially even an interest in each other.

The problem, however, is not only the gradual phasing-out of national
cultural institutions, together with their outdated canons of beauty
and elitist ideals of identity. The deeper problem is that in order
to survive as exploratory and transformative practices, and in
order to generate enough interest and involvement to reconstitute a
socialized cultural sphere under fresh auspices, the contemporary
arts have to throw off their blatant or subtle dependence on the new
corporate-oriented institutions that promote an opportunistic and
flexible subjectivity. And this is easier said than done, as shown
by the ambiguous relations between cultural producers on the museum
circuit and activists seeking forms of organization for precarious
labor. [20] Because it?s easy to invest in a little anguish over the
biopolitical instrumentalization of one?s own creativity, in order to
produce a new niche product for the originality markets. And it?s just
as facile to criticize that investment. Indeed, hyperindividualization
and the capitalization of everything seems to be the very formula for
the breakdown of solidarities, and the emergence of liberal-fascism.
What?s more complicated - as those involved in different aspects
of the precarity movements are discovering - is to create lines of
invention and critique that reinforce each other in their differences,
across professional and class divides. In this respect, the role
of knowledge producers in recreating an ability to say ?we? is
potentially decisive. [21] By pursuing a new transvaluation of the old
national values, it may be possible to arrive at what is now lacking:
a sustainable constitution of multiplicity. But there is no assurance
whatsoever that this potential will be realized.

The accession of ten new members to the European Union underscores
the difficulty. The problem is that none of these countries can
find any interest in maintaining the conditions of a welfare state
which they cannot afford, and whose restrictions would block their
own path to development. One can then only ?join the union? on a
battle footing - as proved by the preemptive drafting of certain
former Eastern states into the Iraq war. Fighting to support the
US petrodollar becomes a paradoxical guarantee of sovereignty, at
the very moment of subsumption under a supranational hierarchy. As
though the long-held project of becoming a fully fledged member
of the EU could only be realized through a dream of the American
way of life. To be sure, great dreams are natural, positive, after
decades of foreign occupation. But what some Estonian observers
consider to be a contemporary culture of wish-fulfilling narcissism
(punctuated or punctured by deep mistrust and aggressivity) could also
be understood as a way of coping with traumatic change, in the sense
of the Polish sociologist Piotr Sztompka, who goes so far as to speak
of a ?trauma of victory.? [22] How to lend tangibility and public
visibility to theoretical freedoms that are not always matched by
substantive improvements? An entire cartography of existence has been
redrawn in fifteen years. The ambiguous class-status and uncertain
integration of whole populations along Europe?s eastern rim, within
and beyond the New Europe, marks the need for lucid and challenging
artistic practices that can reveal and transform the unconscious
conflicts that lurk beneath the surface of contemporary experience.
Ways must be found to carry on this kind of work within the framework
of new social relations that are unfolding across the entire European
territory, at a time when cultural institutions have no clear mandate
or support base for dealing with the difficult questions of identity
and difference.

These concerns must surely feel distant to those who live in the
state of Norway, outside most of the EU?s political constraints, and
close to the North Sea oil wells, with a newly elected center-left
government coming into power in the fall of 2005. The Norwegians
seem to inhabit a different cartography. Yet despite the hopes of
intellectuals, the Socialist Left Party lost ground to traditional
Labor in the last elections; while the conservative liberal right-wing
Progress Party, with its populist and racist leanings, received ?only?
22% of the vote, making it the second largest force. Is it possible
for a small nation to steer itself safely through tumultuous changes
in the world-system? For a few weeks that same fall, in the self-run
space of the artists? union in Oslo, highly abstracted forms of
capital failure were on display. Behind them, one could almost glimpse
the invisible states of the union.


Notes

Thanks* I would like to thank all the people, in Estonia and Norway,
who generously allowed me to interview them in preparation for this
text; as well as Anders H?rm and Trude Iverson, for arranging those
conversations.

1 F. Engels, Herrn Eugen D?hring's Umw?lzung der Wissenschaft
(1878), part 3, chap. 2: ?Der moderne Staat, was auch seine
Form, ist eine wesentlich kapitalistische Maschine, Staat
der Kapitalisten, der ideelle Gesamtkapitalist?; online at
www.mlwerke.de/me/me20/me20_239.htm#Kap_II. English version:
?The modern state, no matter what its form, is essentially a
capitalist machine, the state of the capitalists, the ideal
personification of the total national capital?; online at
/www.marxists.org/archive/marx/works/1877/anti-duhring/ch24.htm.

2 F. Guattari, "Capital as the Integral of Power Formations", in:
Chaosophy: Soft Subversions (New York: Semiotext(e), 1996).

3 In this text I will use the term ?capital failure? to describe the
combined shortfalls in human well-being caused by what sociologists
know separately as ?market failure? and ?state failure.? As I
will show, the possibility of separating these two categories is
increasingly reduced as the entrepreneurial dimension of neoliberal
governance comes to predominate.

4 J. G. Ruggie, ?International Regimes, Transactions, and Change:
Embedded Liberalism in the Postwar Economic Order,? in: International
Organization 36, vol. 2, 1982.

5 K. Polanyi, The Great Transformation (Boston: Beacon, 1957/1944).

6 B. Jessop, The Future of the Capitalist State (Cambridge: Polity,
2002), chap 2 and passim. The introductory chapter can be dowloaded at
http://www.lancs.ac.uk/fss/sociology/papers/jessop-future-of-the-capit
alist-state-chapter1.pdf.

7 For the crisis of US hegemony in relation to previous world-systemic
crises, cf. Giovanni Arrighi, Beverley Silver et. al., Chaos and
Governance in the Modern World-System (Minneapolis: University of
Minnesota Press, 1999).

8 For interpretations of the shift towards a new international regime,
cf. among others David Harvey, The New Imperialism (Oxford UP, 2003),
as well as Peter Gowan, Global Gamble (London: Verso, 1999).

9 For the new role of the IMF since the early 1980s, cf. D. Harvey, A
Brief History of Neoliberalism (Oxford UP, 2005), chap. 1.

10 Cf. J. Schumpeter, Capitalism, Socialism and Democracy (New
York: HarperCollins 1975/1942), chap. 7, ?The Process of Creative
Destruction,? p. 83: ?The fundamental impulse that sets and keeps the
capitalist engine in motion comes from the new consumers' goods, the
new methods of production or transportation, the new markets, the new
forms of industrial organization that capitalist enterprise creates.?

11 The term was coined by Christopher Hood, in the article ?A Public
Management for All Seasons?.? in: Public Administration 69 (1991).
For a critical review of the practices it describes (which date
from the 1980s, and betray the influence of the ?Total Quality
Management?procedures developed in Anglo-Saxon business circles), see
among others Linda Kaboolian, ?The New Public Management: Challenging
the Boundaries of the Management vs. Administration Debate,? and the
articles from the symposium on ?Leadership, Democracy and the New
Public Management,? in: Public Administration Review vol. 58, #3
(May-June 1998).

12 For an ideal-type of ?flexible subjectivity? in fully
neoliberalized societies, see B. Holmes, ?The Flexible Personality,?
in Hieroglyphs of the Future (Zagreb: WHW, 2002).The text is also
available in my archive at www.u-tangente.org.

13 A classic case in this respect is France. For an account of the
way the country?s economy has been flexibilized around a dwindling
core of unionized workers who still serve as representative for the
entire labor force, via the classic tripartite state-labor-employer
bargaining structures, cf. Christian Boltanski and Eve Chiapello, Le
nouvel esprit du capitalisme (Paris:Gallimard, 1999), chaps. 4 and 5
(?La deconstruction du monde du travail? and ?L?affaiblissement des
defenses du monde du travail?).

14 Consider this quote from Arrighi et. al. (Chaos and Governance
in the Modern World-System, op. cit., p. 139), which sums up the
perspective of the postwar American elites on European unification:
?As John Foster Dulles had declared in 1948, 'a healthy Europe' could
not be 'divided into small compartments.' It had to be organized into
a market 'big enough to justify modern methods of cheap production
for mass consumption.' To this end, the new Europe had to include a
reindustrialized Germany. Without German integration into the European
economy, remarked General Motors corporation chairman Alfred P. Sloan,
'there is nothing that could convince us in General Motors that it was
either sound or desirable or worthwhile to undertake an operation of
any consequence in a country like France.'?

15 See for example J. Habermas, ?The Postnational Constellation
and the Future of Democracy,? in: The Postnational Constellation:
Political Essays (Cambridge: Polity Press, 2001).

16 P. Gowan, ?US Hegemony Today,? in: Monthly
Review, vol. 55, #3, July-August 2003, online at:
www.mail-archive.com/marxist-leninist-list@lists.econ.utah.edu/msg0476
2.html.

17 B. Jessop, The Future of the Capitalist State, op. cit. pp. 162-63.

18 G.Becker, Human Capital: A Theoretical and Empirical Analysis
with Special Reference to Education (University of Chicago Press,
1993/1964).

19 See www.attac.no and www.attac.org.

20 The missed encounter between ?rtists and activists at the
Klartexte! conference in Berlin in January 2005 was an example of this
ambiguity. As Marcelo Exp?sito writes: ?It?s essential to understand
what blocks the compatibility in practice between the remarkable
work of the Kleines postfordistisches Drama and Marion von Osten on
the new figures of cultural production, and the necessary process of
politically organizing precarious social subjects defended by Alex
Folti of Chainworkers.? See Exp?sito?s review of the conference,
?Hablando Claro,? in: Brumaria 5 (Barcelona, 2005).

21 See the text by the French intermittents du spectacle,
?La puissance du nous? [The Power of the ?We?], at
www.cip-idf.org/article.php3?id_article=1124. The absolute
untranslatability of this text, which is immersed in the remnants of
the French welfare state, itself speaks volumes about the difficulty
of establishing solidarities on a European level.

22 P. Sztompka, ?The Ambivalence of Social Change: Triumph or Trauma??
(2000), online at http://skylla.wz-berlin.de/pdf/2000/p00-001.pdf.
Also see Sztompka?s contribution to J.C. Alexander et. al., Cultural
Trauma and Collective Identity (Berkeley: University of California
Press, 2004).






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