Daily Times

After the Industrial Revolution, one key utility of nation states stemmed from some of the key utilities that states provided to the citizens either on their own or through a monopoly or oligopoly based mechanism. So, whether states were created on the basis of ethnicity, religion or whatever, once created, states would become custodians of the utilities’ infrastructure and that itself would serve as deterrence to secession. So, having those large oil and gas pipeline infrastructures, power distribution companies operating countrywide, large water supply systems, rail networks and telecommunication systems also necessitate the need for a state. And since most of these large scale utility networks are built with statewide focus, they make the cost of breaking up the state higher.

This system worked with little pressure up until the state was the only sizable entity ensuring this utility infrastructure provision. However, with globalisation and technological advancements, this hegemony of the state faces a challenge. The challenge is more profound for states that are reaping the benefits of globalisation and technological advancements and yet the state infrastructure is weak. In such countries, the private sector, powered by technological advancements, is breaking the state’s hegemony on utility infrastructure. Take the example of the power sector in Pakistan: amid the state’s inability to manage power generation and distribution emerged a budding industry of UPS and generator set systems enabling localised power generation for houses and other individual establishments. This is followed by solar powered homes. The trend is heading in a direction where energy independent homes will not be unimaginable even in Pakistan. The moment we reach there, these independent power systems will replace power distribution companies. And since these systems are independent systems, the states’ utility in the provision of a basic amenity through power distribution companies will diminish.

The same story can be found in most of the utility sectors from telecommunications to energy to security. Entrepreneurship, technological advancements and collaborative benefits of globalisation are pushing us towards a future where the state’s role in provision of utilities will be curtailed significantly. And this poses serious risk to the structure of modern states. This risk is less profound in more developed nations though it is not non-existent there. For instance, in a country like the US, with developed capital markets, it is easier to establish large corporations that can replace existing utility infrastructures with statewide corporate infrastructure in utility provision mechanisms. So just when distribution companies face a threat from the advent of energy independent homes, access to capital enables setting up companies like SolarCity that can provide those solutions across the US and thus the interdependency of various parts of the US remains intact, albeit diluted.

However, with countries like India and Pakistan, with the scarcity of capital and weak capital markets, most of the players in this energy independent system domain will be small, fragmented regional players. Even more so, because of lack of capacity, there exists a huge supply gap in the provision of these utilities. So, unlike the present power distribution company setup where the interconnectivity of various areas of state breeds interdependence, in the new energy independent power systems world, in the absence of a common thread, the demands of regional companies and consumers will lead to different policy demands in different regions of the state. So, the citizens of Karachi or Lahore will have lesser and lesser dependence on a countrywide system and thus will have little to offer to a consensus national policy. These frictions and underlying economic realities will ultimately lead to demands for regional autonomy and secession.

This trend towards curtailment of the state’s role as utility provider is not going to be reversed. However, whether this will lead to state collapse in our part of the world or not will depend on how states act to address this threat. While addressing this threat, states have only one surefire weapon in their armoury: devolution. It is only through a massive devolution of policymaking to the localities that these frictions that will emerge can be kept in check. Rather than focusing on holding on to the state’s hegemony of statewide systems, states will be wise to let that hegemony go and devolve. The only way to keep states intact in this era of lesser utility dependence on the state, entrepreneurship and technological advancements, is to devolve. Switzerland offers a great model in this regard and it is about time we also start thinking on those lines.

The other thing that states can do to help ease the impact of the threat is to focus on developing indigenous capital markets with the sole aim of democratisation of capital. This will ensure the emergence of statewide corporations replacing the existing utility infrastructures, ensuring integrity of the state. The trend of the individual’s utility independence is irreversible. It is about time states adapt to it. Otherwise, the cost of state collapse and failures will be huge for human civilisation.

The author can be reached on twitter at @aalimalik