Sovereignty and the World Economy

46 Pages Posted: 20 Jul 2020

See all articles by Paul B. Stephan

Paul B. Stephan

University of Virginia School of Law

Date Written: July 20, 2020


Even before COVID19 struck, we were going through a remarkable moment of political, economic, and social instability. We see disruption of many international institutions, both formal and informal, and a sea change in national politics. The United States tries to renegotiate the terms of its engagement with the rest of the world; the European Union’s structural flaws become manifest, with Brexit only the first crack; the domestic politics of many great states turn towards populism and the obliteration of historically significant political parties; authoritarianism seems on the rise, and liberal democracy waning, in those parts of the world that had seemed transformed in or around the annus mirabilis of 1989; and the dark side of technological innovation manifests itself in the privatization of organized violence, unsustainable inequality, and the erasure of privacy. Then COVID-19 came, with its dire if still not fully realized consequences. The liberal democratic nation-state, supposedly the culmination of a Hegelian process that ended history, is listing, taking on water, and perhaps doomed.

What does this have to do with sovereignty? The present moment invites yet another reconsideration of the liberal democratic nation-state as the nexus of sovereignty. Can we talk about sovereignty without committing to a political or historical theory about particular kinds of social organization? If the liberal democratic nation-state is on the way out, what becomes of sovereignty?

This article argues that we cannot begin to make sense of the present series of crises in contemporary domestic and international politics without accepting the flexibility and elasticity of sovereignty. Localities, substates, nation-states, and the international order all may exercise some form of sovereignty. Sovereignty is a relationship, not a fundamental concept on which to build a general theory of political economy.

My argument is fairly straightforward. First, I lay out the conceptual argument for divorcing the concept of sovereignty from the modern idea of a nation-state. Second, I posit, without spending a lot of time trying to prove, that the most significant force driving economic, political, and social change over the past fifty years is the rise of the knowledge economy. The immediate crisis associated with COVID-19 seems to have amplified this process, although we won’t know for sure for some time. Third, I sketch out the effects of that rise on different sites of sovereignty, local, substate, national, and international. These effects, I argue, create both synergies and antagonisms that play out differently at each level. Finally, I speculate about different scenarios that might result from the inherent tensions within and among these sites of sovereignty.

Keywords: sovereignty, knowledge economy, international law

Suggested Citation

Stephan, Paul B., Sovereignty and the World Economy (July 20, 2020). Virginia Public Law and Legal Theory Research Paper No. 2020-57, Virginia Law and Economics Research Paper No. 2020-12, Available at SSRN:

Paul B. Stephan (Contact Author)

University of Virginia School of Law ( email )

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Charlottesville, VA 22903
United States
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