This paper takes a critical look at the way the ‘failed state’concept has been understood and operationalised, especially in the wake of the terrorist attacks of 11 September 2001. Drawing on five case studies—Afghanistan, Somalia, Liberia, Sudan, and the Niger Delta region of Nigeria—it examines the circumstances under which the ‘failed state’label is (or is not) applied. We argue that the use of the ‘failed state’label is inherently political, and based primarily on Western perceptions of Western security and interests. States called ‘failed’are primarily those in which the recession and informalisation of the state is perceived to be a threat to Western interests; in other states, however, this feature of state functioning is not only accepted, but also to a certain degree facilitated, as it creates an enabling environment for business and international capital. These cases are not branded ‘failed states’. Crucially, labelling states as ‘failed’(or not) operates as a means of delineating the range of acceptable policy responses to those states, including the viability of military responses.