Why Does Nation-Building Fail?

Nation-building usually fails. It failed in at least 73% of cases in a study by James L. Payne that examined 51 instances of attempted nation-building in the past 150 years or so. This included 24 U.S. attempts and 27 British attempts. A study of 12 cases of U.S. interventions produced a similar finding: 4 success and 8 failures.

The literature on nation-building is largely empirical, that is, a series of case studies. There are numerous factors, varying from case to case, that researchers have identified that they think explain the failures. Their methodology implies that if these factors are handled better the next time around by the nation-builder, then success will result. However, after over 150 years of trying, the formula for success, if there is one, still eludes the nation-builders. Could it be that they are not seeing the real reasons for their failures? Could it be that their hopes and illusions are blinding them to the reality? Nation-building is doomed to failure because a “legitimatized” state cannot be constructed by an exogenous nation-builder.

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It should be noted that America’s nation-builders, even under favorable circumstances in this country, failed or had limited success. The War Between the States (1860-1865) was a strong sign of failure. Today’s nation was “built” upon the worst war in the country’s history in which one coalition of states (the North) defeated another coalition of states (the South). The reconstruction after the war attempted nation-building a second time. Not until 100 years later was a substantial portion of the country, a population subjugated by Jim Crow laws and worse, placed upon equal democratic terms with the rest. It is not clear to this day that this nation-building has succeeded. If the coercive apparatus of the federal government were removed, this country would very likely break apart into a variety of nations. If the legitimacy of the U.S. government is still contested, and our government is supposed to be a model republic or representative democracy which knows the political situation in America intimately, how can it possibly be expected that the U.S. government can intervene in another land of which its knowledge is limited, and create a government that garners the loyalty of the people(s) in that land and is regarded as legitimate?

Why does nation-building fail? We need a theory of why this happens in order to understand that it’s always going to be an ill-fated project and that successes are going to be rare and due to special circumstances that usually do not prevail.

Such a theory can be sketched out by extending the analysis of Mises on the calculation problem of socialism and extending the analysis of Hayek on the knowledge problem. Their work applies to exchange markets. It needs to be generalized to political activities. Government socialism over markets consists of interventions exogenous to markets that intervene with compulsion and force of law. The result is to undermine a market’s entrepreneurial activity. By the same token, government interventions upon a country that are intended to reshape that country’s political system are exogenously imposed by the nation-building government. The result is to undermine that country’s political entrepreneurial activity. The nation-builder attempts to create a certain kind of state, that is, certain political results just as a socialist regulator or a communist bureaucrat attempts to create certain kinds of economic results. One interferes in economic markets, the other, in political transactions that are analogous to markets.

Nation-building in this conception is a thoroughly socialist endeavor thoroughly infused with coercive and distorting means. It is often said by political scientists to be liberal interventionism, by which term the idea is spread that it is intended to create a democracy with rule of law and rights protections. However, if we look upon it as socialist intervention, we emphasize instead that the centralized means being used are not capable of attaining the ends associated with the term “liberal”. We emphasize instead that various forms of coercion and “aid” are being used and that these are going to disrupt the country’s politics and prevent it from developing a state that is either liberal or democratic or legitimate.

According to Mises, the calculation problem of central economic planning is insuperable because the economy has no prices. There is no need for money in such an economy because all decisions are made centrally. The central planner replaces entrepreneurs and presumes to know all preferences and respond to their alterations. Entrepreneurial activity and the profit motive dwindle. The nation-builder, by analogy, centrally plans the target country’s political system and laws. He has no price to begin with since political activity is not guided by a price system. However, just as in the case of a socialist economy, individuals have political preferences and the nation-builder doesn’t know these preferences and has no way of knowing them because they are expressed in ways beyond his ever knowing them. He attempts to know them by learning what specific individuals say, key people that he selects as knowing the turf; but they have their own biases, preferences and political aims that color what they believe, think and communicate.

Robert J. Silverman headed the American Foreign Service Association recently. For a few of his views on nation-building, see here. He asks the vital question: “…why do we continue to get stuck in Groundhog Day?” by which he means repeated failed attempts at nation-building. His answer doesn’t go anywhere near the heart of the matter. He suggests that the foreign service employee will “break the time loop when he learns how to handle the people and the assignment well.” This is totally superficial. The question is why, after 150 years of experience, this nation-building personnel cannot possibly learn how to handle the native people and the assignment, why, that is, failure is built into the attempt no matter what resources are poured in.

Silverman’s suggestions include having the Department of State, of which the AFS is a part, lead the mission. Also “more language training, more and longer interagency leadership education and more priority is given to those with multiple tours in troubled regions.” These superficial recommendations assume that repeated government failures are due to a lack of resources, military personnel, training, will, organization, etc. I am suggesting that nothing can make socialism work either as applied to market interventions or political interventions. Socialism in political and economic theory assumes public or government ownership and control of the means of production. This implies central planning and control. The latter too is the key characteristic of government-planned and government controlled nation-building. An exogenous government presumes to remake someone else’s nation and create a state or make a state over in the desired direction and with desired features.

Nowadays, Special Forces are heavily involved in nation-building as this thesis attests. Its recommendations reveal again that the people who believe in nation-building are blind to its basic inoperability. The blueprint laid out sounds like that of a central planning communist designing a blueprint for making an economy without private property work:

“An interagency, agreed upon, the definition of nation building must be established. This definition will enable each department within the United States Government to define its role within the operation and begin the process of analyzing the resources available within its own department to contribute to the operation. As a result of this analysis, the United States Government, as a whole, will be able to identify a lead agency. The lead agency will be able to establish policy, identify shortfalls in capabilities and resources, establish training strategies, supervise nation building training events, clearly articulate the combined capabilities within the United States Government to conduct nation building, and conduct both deliberate and contingency planning for nation-building operations in the future. Additionally, the lead agency would be able to harness the lessons learned from past nation-building operations from each agency within the United States Government in order to incorporate these lessons learned into future nation-building operations.”

The main theory of how states come into being is that they arise through conquest. They hold together by force and by establishing a degree of so-called “legitimacy”. The latter includes a web of payoffs of privileges and wealth. These garner enough support from those who are favored to offset the losses being inflicted upon other elements of the population. “Legitimacy” depends upon taxing and spending, so as to impose bearable pain and so as to generate support. “Legitimacy” is also brought about by means of various psychological means and propaganda. The state, as propped up by force and its production of “legitimacy”, depends intimately on the people(s) over which it rules or from which it springs. Although states look alike in general respects, their detailed workings depend upon all sorts of social, economic and political factors. The result is great variety in specific laws and specific political structures among different countries. Exogenous central planning cannot create “legitimacy”.

Enter the nation-builder the U.S. government, whose culture from its inception has supported the idea that “progress” can be attained in political as in economic matters by adopting the “right” institutions and practices. The U.S. philosophy is that it can build a nation by a recipe, not unlike the recipe peculiar to America, overlooking the fact that success even in this country has been elusive and one cannot describe the political evolution as embodying anything remotely resembling “progress”. This is a peculiar blindness. The U.S. leaders consider the nation as exceptional, and its productivity certainly has been exceptional, but they fail really to understand that private property and free markets have always been the source of the economic flowering, not central government control.

Extending the notion of America as exceptional to the political sphere, the U.S. government is quite willing to apply its centralized power to the goal of producing states that are more or less in its image. It thinks it has a recipe and that the only problem is that it hasn’t hired the right cooks or given them the right ingredients. Sometimes it grows frustrated with the natives required to eat the cook’s undesired cuisine. Nation-building, as a rule, involves the presence of the military forces of the nation-builder.

American nation-builders fail to grasp that a state depends on the peculiar and individual factors present in a country. A state depends on siphoning wealth from one set of people and transferring it to others, including those from whom it is taxed. It depends on local notions of corruption, laws, religions, language, peoples, tribes, ethnicity, geography, systems of transport and communication, and a hundred other factors. States may arise from conquest, but their maintenance and forms depend on innumerable factors. The central political planner whose directives are implemented by the State Department officer and the Special Forces group, and whose aid projects enter the mix, cannot calculate their impact and cannot know their impact. This planner cannot define the contours of “legitimacy” in the state he is trying to build. He cannot know what such “legitimacy” entails either in the state he’s replacing or the state he envisions. There is a severe knowledge problem in nation-building that’s actually more severe than socialism’s attempts to replace markets. Replacing a state is even more problematic.

Pei and Kasper write “Historically, nation-building attempts by outside powers are notable mainly for their bitter disappointments.” The reason is that the process is one of socialism applied to creating a “legitimate” state, and the centralized control that’s characteristic of socialism cannot handle this challenge in the nature of the case.

James L. Payne writes

“…Lt. Col. John T. Fishel…was…Chief of Policy and Strategy for U. S. forces in Panama, and it was his job to figure out how to implement the mission statement. The orders looked simple on paper: ‘Conduct nation building operations to ensure democracy.’ But Fishel quickly discovered that the instruction was meaningless because democracy was an ‘undefined goal.’ It seemed to him that it wasn’t the job of military officers to figure out how to implement this undefined objective, but, as he observes with a touch of irritation, ‘there are no U. S. civilian strategists clearly articulating strategies to achieve democracy.’”

“The fact that there was no clear definition of the conditions that constitute democracy meant that the Military Support Group and the other U.S. government agencies that were attempting to assist the Endara government had only the vaguest concept of what actions and programs would lead the country toward democracy …”

Central planners could not provide a specific definition of the goal. They could not say in advance what “actions and programs would lead” to achieving that goal. It’s not a matter of “would not”; they couldn’t do it without explicitly looking like fools and conquerors. These lapses in the expression of the mission assigned to Fishel implicitly bear out the above theory that building a state depends upon numerous idiosyncratic local factors that cannot be known or specified in advance. If the central planners had in fact obliged Fishel by giving him specific guidelines, that would not have achieved the objective either, because those guidelines could not possibly embody the localized knowledge necessary to produce a state with “legitimacy”.

Liberal interventionism is for all practical purposes the interventionism proposed by neocons, the only difference being in the role of international institutions. But the term liberal interventionism fails to get to the heart of this policy. Liberal interventionism is actually socialist interventionism. It is central planning to replace one state by a different state. It cannot define or measure the specific processes involved, and they depend on specific aspects of the country whose state is being built. These incapacities doom nation-building to failure.

Nation-building should be discarded as a U.S. foreign policy.

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