STATE-BUILDING

Governance and World Order in the 21st Century

By Francis Fukuyama

Cornell Univ. 160 pp. $22.50

History, some would say, has been unkind to the end-of-history thesis, which famously forecast that the collapse of communism would put an end to ideological conflict. Since Francis Fukuyama floated that notion in his famous 1989 essay, conflict has actually become more common than it was during the cold war. And surely Sept. 11 was a vindication of the rival theory advanced by Samuel Huntington: that our age would be marked not so much by the end of history as by a clash of civilizations.

Fukuyama's latest book, a slim collection of essays, is not an explicit defense of his old thesis. It is about nation building -- why we need it, how you do it. But Fukuyama's choice of subject is a logical extension of his thinking. History, in the sense of mortal competition between rival world views, has indeed ended, he is suggesting. We are left merely with untidiness, with anarchic societies incapable of attaining the intellectually victorious formula of liberal democracy. We are left, in short, with nation building.

One can argue about whether Islamic traditionalists represent an ideological challenge to the West as formidable as communism, in which case the end-of-history thesis was false. But Fukuyama has at least some evidence on his side. Nearly all the wars that have broken out since 1989 are not clashes of civilizations. Rather, they represent a failure by weak societies to attain civilization. In Somalia, Haiti, Cambodia, Bosnia, Kosovo, Rwanda, Liberia, Sierra Leone, Congo and East Timor, that failure has forced Western intervention. Nation building has indeed become a pressing challenge of the times.

The first essay here teases out the irony of this development. At the end of the Cold War, the collapse of communist big-statism was greeted as a victory for the Reagan-Thatcher faith in free markets and small government. But the ensuing 15 years have seen the pendulum swing back again: There's been a renewed appetite for the idea that government should be at least strong, if not necessarily big. Debacles from Russia's botched privatization to Enron's implosion have demonstrated how markets need tough regulators; science has reminded us of the need for government that can tame its deployment, as Fukuyama has written of biotechnology; and meanwhile the failure of developing countries to respond to free-market prescriptions has prompted a new focus on corruption, dysfunctional civil service management and other aspects of governance. The preoccupation with failed states, and with nation-building efforts to fix them, is part of this new Zeitgeist. Having celebrated a triumph over government, the world has found itself wondering how government can be built up.

That irony established, Fukuyama proceeds to his most provocative essay. It is also the most dispiriting one, for it explains why nation-building is as hard as it is necessary. The idea that Westerners can arrive in a failed state and create effective bureaucracies represents a misunderstanding of how institutions function, Fukuyama argues. There is no genuinely robust science of public administration, and no way of deriving globally valid rules for designing bureaucracies. It follows that there's no fail-safe formula for transferring successful Western institutions to troubled, far-off lands.

Fukuyama's pessimism comes down to one central idea: The formal rules governing institutions matter less than informal norms. Advocates of public administration as a quasi-science assume that institutions will function if you set clear goals for them, establish mechanisms to hold them accountable and motivate their workers with merit-based pay. Fukuyama doubts whether any of this rule-setting will amount to much.

Take clear goals. In real life, most public institutions must pursue multiple objectives. A police force, for instance, has to set priorities among the several sorts of crime it could be fighting, and it has to choose among several methods. The right sequence of priorities will change according to circumstance, and can't be reduced to instructions in a manual. Setting clear goals is unfortunately not simple.

Or take the scientific idea that monitoring and oversight can drive government institutions to perform well. This presumes that such monitoring, too, is straightforward: that the quality of public-sector work can be easily measured. But service-sector productivity is notoriously hard to score objectively -- how do you know that your architect performed above the average? -- and productivity in government services shares this problem. How do you assess whether the leader of an AIDS education campaign is doing the best job possible? What is the right benchmark? How do you judge an activity whose results will materialize only years down the road? You can't reduce these functions to instructions in a manual.

Or take employee motivation. When people go shopping, they respond to commerical incentives and price signals; but is the same really true when they go to work? Employees may prefer pay systems that reward performance and honesty. But aren't they also motivated by the desire for social recognition -- for psychic income rather than the financial kind? Plenty of jobs require people to work extraordinary hours without much financial incentive; in the armed services, to cite an extreme example, people risk their lives out of loyalty to comrades. Because the culture of organizations is so important to explaining professionalism and motivation, creating new organizations is difficult. You can't arrive in a failed state with your manual and expect speedy progress.

Fukuyama's third essay is the least original. It parses the familiar debate between American and European views of the world. After the powerful argument on the non-transferability of institutions, one is left wishing that Fukuyama would develop his ideas on nation-building further -- and perhaps, in a future volume, he will. For regardless of whether you agree with him, Fukuyama is a wonderful synthesizer of grand subjects, an adventurer who doesn't mind summing up the history of development theory in one chapter and the history of organizational theory in the next. He pulls this off with minimal resort to jargon, and he pulls the reader along with him. I look forward to more books. *

Sebastian Mallaby is an editorial writer and columnist for The Washington Post and the author of "The World's Banker: Failed States, Financial Crises and the Wealth and Poverty of Nations," to be published this fall.