Diving into military theory (again).

A core dynamic behind the emergence of the nation-state was it's ability to run a successful protection business (aka racket). A system that has been growing since the treaties of Westphalia in the 1600s. The protection business is relatively simple:

It is a monopoly. It has exclusive ownership over the use of violence. As a monopoly, it must crush all internal competitors. It defends its monopoly from outside interests -- as in warfare with nation-state and non-state competitors. It charges the customers (individuals and businesses) within its geographical areas of control for this service. This isn't optional. Customers presumably benefit from this protection.

Historically Successful Protection Rackets

So what made the nation-state formula for protection so superior to its competitors during its ascent over the last 400 years? It's simple. It delivered value to its customers. Let's dive into this with a paper by Charles Tilly (War Making and State Making as Organized Crime). He cites the economic historian Frederic Lane's simple formula for success:

The protection monopoly must generate tributes in excess of the costs necessary to maintain it's monopoly.

in excess of the costs necessary to maintain it's monopoly. The protection monopoly must generate protection rents for its customers. The amount the customers benefit gain from the protection of their interests less the amount they pay for it.

for its customers. The amount the customers benefit gain from the protection of their interests less the amount they pay for it. Both tributes and protection rents must be positive for long term success. Further, the nation-state that minimized protection tributes in favor of maximizing protection rents grew the fastest (historically, that was partly accomplished through economies of scale). The Status of Modern Protection Rackets The protection formula broke down in the latter half of the 20th Century as the nation-state became more complex. Key elements of this breakdown include: First, the advent of nuclear weapons made full scale war impossible (van Creveld).

Second, the emergence of a global marketplace with global property rights meant that the commercial interests of the nation-state's remaining customers became more powerful than nation-state's interests. This restricted/limited warfare even more.

The result has been a slow unraveling of the nation-state's ability to maintain it's monopoly over violence (and much more) within and outside its geographical borders. This has created a gap in protection at the local level into which small violent groups are now quickly converging. Finally, there is additional evidence that the economies of scale that drove the growth of earlier protection monopolies has broken down. What this Means



It's likely that small groups that emerge to seize local control (as in, create a TAZ), will eventually converge on the successful protection model (delineated above). In fact, we have already seen this shift with groups as diverse in origin as the Sendero Luminoso to the Taliban to the Zetas to MEND. These groups will be successful in so far as they: