Talk about empire has become a cliché. Historians and economists busy themselves comparing America's contemporary role with Rome, Napoleonic France and imperial Britain. They assume that empire is the only model for a state seeking to project power and influence--ignoring alternatives from the business world. After all, businesses confront many of the same difficulties that states face. When competitors emerge, firms undergo pressure. A corporation may reduce the cost of its products by cutting the costs of raw materials and labor, increasing sales and finding new technological fixes--just as a state might try to increase economic growth, enhance productivity or develop new weapons systems. But if a company reaches the limits of its economic market, it may consider a merger with like-minded companies to cope with a competitor.

States reaching the limits of their viability as self-sufficient actors can adopt merger strategies, too. Indeed, to preserve its global influence throughout the course of the 21st century, this is a path the United States must consider.

Why do companies pursue mergers? Mergers give companies greater flexibility. They achieve greater scale without increasing production. If new products are involved in the merger, a combined firm can avoid anti-trust problems. Larger scale allows a company to maintain its position in the industry. Usually it can invest in new products, run higher advertising budgets and sometimes achieve lower prices. A large producer can get raw materials at reduced cost. Wal-Mart, the contemporary exemplar of corporate expansion, has not shrunk from plunging into new markets and cutting prices--thereby forcing the merger between K-Mart and Sears. Now Gillette is combining with Proctor and Gamble to offset Wal-Mart's domination in the household sector. Verizon's success in communications is provoking a connection between Nextel and Sprint, and Verizon is in turn seeking to acquire MCI. Oracle and PeopleSoft are merging to counter sap in enterprise software. Hewlett-Packard merged with Compaq to match Dell Computer's gains and is open to new merger strategies. Mergers give nations similar advantages in flexibility, and of course nations do not face anti-trust problems.

What are mergers among states? They are arrangements that combine political leaderships to project greater power and influence in the world at large. A new superstate is not necessarily created. Countries retain separate governments and legislatures. Internal elections and democracy continue. But merged nations also accept a common code of behavior that their electorates sustain. They create merged bureaucracies and common decision-making councils that give effect to their unity. Approval by democratic publics lends credibility to the merger commitment on all sides. The European Union, for example, has developed such institutions and has now become a merged entity of 25 states that boasts a population of 450 million and a combined GDP of over $12 trillion.

In the past, nation-states were usually content to form alliances forged through the balance of power. Ententes offered quick expedients in crises. Some arrangements, such as NATO, have endured even when the reason for their existence has passed. But even the most successful alliances face difficulties when situations change. In addition, alliances are vulnerable to public-goods problems. Why shouldn't countries "free-ride", letting someone else take the lead in opposing an aggressor? Within alliances, there are always attempts to shift burdens on to someone else, as NATO itself demonstrated. Thus, alliance ties may attenuate or become ineffective. The Franco-Russian alliance did not prevent Hitler from rewriting the map of eastern Europe. The Little Entente did not guarantee help for Czechoslovakia from either France or Britain when the German dictator upped the ante in 1938. Stalin's non-aggression treaty with Hitler did not prevent the German attack of June 22, 1941. Though allies rarely attack one another, typical alliances represent a temporary confluence of interest between parties which rests on shifting historical sands. The legal requirement--rebus sic stantibus, things remaining the same--may not always obtain.

Mergers among states are a different kettle of fish and have advantages over alliances. Because they are negotiated on the basis of contractual commitment and intended long-term relationships, they are not as vulnerable to public-goods problems. Instead, interstate mergers provide "club goods"--benefits that only members can enjoy. They emerge as much from historic commonalties as they do from oppositions. Common ideologies and democratic ideas solidify the union. Furthermore, one country cannot politically subsume another, and peoples of the merged states must agree before the union takes place. In fact, political mergers are in some ways more permanent than their industrial counterparts. Hewlett-Packard may sell Compaq. Time-Warner may jettison AOL. In contrast, the European Union reluctantly allowed Norway to opt out while sustaining its other membership commitments. The upcoming national ratifications of the new European constitution could go awry, but ultimately they would be repeated and reaffirmed, just as Ireland's acceptance of Maastricht was years ago. State mergers still retain an open-ended flexibility. They are partial and not complete. Other states may join. Participating nations retain sovereignty. Coordination of policy frequently remains incomplete.

Still, mergers forge a relation among erstwhile nation-states that is stronger than alliances and much more enduring than ententes. Mergers are also superior to the imperial bond. Imperialism is based on force and ultimately on the capitulation of the desired colony. State mergers are sanctioned by the parties involved. Nor are mergers vulnerable to the ups and downs of the balance of power, with participants changing sides as power trends alter. Sustained by democratic ideas, political mergers have a kind of irreversibility. And war between merged units is unthinkable. In the European case, merger has ruled out military conflict between two long-time enemies, France and Germany. The Roman Empire collapsed because subordinate units were unequally treated and excluded from some of its benefits and Rome could not militarily discipline them. The returns from invasions did not rise to cover increasing military costs. This disproportion was axiomatic, as it was in the British rule of India. Political mergers--based on equality--confront no such problems. Thus, a Pax Americana is only one response--and an entirely disproportionate one at that--to a foreshadowed inadequacy in power. Farsighted corporations would aim instead to find a merger candidate to remedy the insufficiency. So should nations.

Merger as Grand Strategy

The European states found their way to merger after World War II. Confronting the two colossi, the United States and the Soviet Union, no single European state had sufficient scale to compete on an equal plane. The German historian Hajo Holborn then declared "the political collapse of Europe", in that individual European states acting separately could no longer achieve a self-sufficient balance of power. Thus, after 1957, European integration and then the European Union provided a make-weight to the superpowers. One must remember that the launching of Europe took place after the invasions of Suez and Hungary and (from the European point of view) reflected the unreliability of the alliance with America as well as the probable hostility of the Soviet Union.

Of course, it is fashionable to downplay the European achievement. Venus never prevails over Mars. But the European merger strategy has been surprisingly successful. In economics, the EU has achieved good if not stellar productivity, even though its rate of growth has not always kept up with the American one. Nonetheless, Philips, Thomson, Glaxo-Smith-Klein, Airbus, Ariane and the Galileo global satellite system have demonstrated key European gains in technology, comparable to those achieved in the United States. Biotechnology, too, is highly competitive. Banking and publications are becoming a European fief, with large European firms frequently swallowing up their American counterparts. And as the European Union admits new members to the east, it also acquires new markets, raw materials and labor to compete with other nations. As it expands further, admitting nations rich in natural resources, it will gain even greater strength. With the U.S. dollar now remarkably low in value, European concerns are engaged in a new buying spree in America, and the EU's GDP has surpassed America's.

The curious anomaly is that Europeans have reversed the centuries-old balance of power as it applies to them. Previously, a consolidating economic and political unit in the center of Europe provided an invitation to balance against it. Following such precepts, France aligned against the Hapsburgs, England countered France, and France once again opposed Germany--these formed the quadrille of diplomacy for more than 200 years. Yet, the agglomerating power of the European Union has occasioned no opposition. Instead of opposing the construction of Europe or tearing down the present edifice, large and small countries alike wait patiently in line to join. Indeed, the process of European integration since the 1950s seemed a triumph over improbability. Time after time, on admissions, a common currency or a two-speed Europe, progress has ground to a halt. The mid-1960s witnessed the French veto on British membership and other matters. Stimulated by the falling dollar in the 1970s, Europe generated the exchange rate mechanism and the "snake in the tunnel" to prop up and unify European currencies, but this did not succeed. When Britain dropped out and France and Italy sought greater bands of fluctuation around the keystone value of the German mark, many concluded that a common currency was beyond Europe's reach. But Europe achieved such a currency at the end of the 1990s. The pessimists who predicted that the euro would remain a low-valued currency and an unused stock of value for foreigners were proved wrong. China has sold dollars to buy euros. Almost every objective once deemed unattainable has been achieved. Countries that once held back or dropped out have rejoined the integrated group.

Essay Types: Essay