Inside Power, Inc. - By David Rothkopf

8/13/2019 Inside Power, Inc. - By David Rothkopf

1/5


2/5

3/2/12 Inside Power, Inc. - By David Rothkopf | Foreign Policy

2/5www.foreignpolicy.com/articles/2012/02/27/inside_big_power_inc?print=yes&hidecomments=yes&p

fairness for all -- and your society will thrive in the 21st century. Get the equation wrong, and the results will

be measured in social instability, diminishing prosperity, and declining ability to shape your destiny. Choices

that seem entirely domestic in nature will have massive geopolitical consequences.

In the United States, it is the defining political issue of the moment. Is government too big, a burden to

society, and a threat to individual liberties? Or is it too ineffective a protector of average people, co-opted by

big business and moneyed interests? Is it contributing to the general welfare, or is it institutionalizinginequality, serving the few -- the 1 percent -- rather than the many?

In Europe, such controversies also roil furiously but are joined by an intense argument over how much powe

individual countries should pass on to a collective European Union, and about whose interests are best

served by such collaborative governance -- a departure from the traditional idea and role of the nation-state.

Ask a German and a Greek this question, and you'll get vastly different answers.

In China, the public-private tug of war is visible at every level of a society reinventing itself at such a

breathtaking pace that stability and growth often seem as irreconcilable as they are essential to each other. It

is a challenge faced elsewhere in the emerging world, from the pitched battles between Russia's oligarchs and

its political leaders to the ongoing social tumult in the Arab world, where the uprisings of the last year have

been as much against cronyism and governments that have served the economic interests of elites as they

have been for individual freedoms and opportunities.

We must get this balance right. A decade and a half ago, the United States was celebrating the triumph of

American capitalism and the defeat of state power by the forces of the marketplace. It was a victory dance on

the graves of communism and socialism. But it is clear today that the party was premature.

Companies Aren't Just People -- They're Actually Whole Countries.

Employees vs. populations.

We have since gone from a battle between capitalism and communism to something even more complex: a

battle between differing forms of capitalism, in which the distinction between each is in the relative roles and

responsibilities of public and private actors. As the freewheeling market model promoted by Washington is

reeling from self-inflicted wounds, other approaches are gaining ground. Rising models are vying with one

another for influence -- from Beijing's "capitalism with Chinese characteristics" to the "democratic

development capitalism" of India and Brazil, from Northern European economies with strong fiscal disciplin

but also a strong public-private compact to the small state "entrepreneurial capitalism" of places like Israel,

Singapore, and the United Arab Emirates.

In the United States and in other countries that have adopted the U.S. model, the sense that the heavy thumb


3/5



of the economically empowered rests on the legal, legislative, and

regulatory scales fuels complaints that the balance has tilted too far in

favor of private power. Inequality has grown in terms of both economic

outcomes and apparent privileges of a super-empowered elite within --

and beyond -- the law. Nothing has illustrated flaws in the American system so well as the recent financial

crisis, in which a few big institutions shrugged off regulation, abused their freedoms, persuaded the

government to bail them out (but not their victims), and then managed to forestall real reform and return to

almost all the practices that got them in trouble in the first place. The result is a backlash seen in everything

from Occupy Wall Street to nationalist protests against globalization.

The world needs a new framework that reflects this new reality. Most

countries have had so many of their sovereign prerogatives stripped

away or diminished that their real authority is not what it once was. Tak

basic pillars of state power like controlling borders, printing money,

enforcing laws, or projecting force. All have been irreversibly changed. Thanks to the Internet, modern

transportation, and globalization more broadly, states can no longer see, quantify, or manage much of what

crosses their frontiers. Only a few countries produce truly tradable currencies, while the quantities of privatel

issued instruments of value, like derivatives, vastly outstrip the world's supply of government-issued cash.

Global companies now have the ability to shop venues when it comes to tax and regulatory regimes, simply

shifting locales if governments impose legislation they don't like. And fewer than 20 countries have any real

ability to project force beyond their borders for any extended period of time.

Meanwhile, a big company like ExxonMobil, with sales around $350billion in 2011, operates in more than twice as many countries as a

significant, wealthy country like Sweden has embassies. In 2010,

Sweden's defense expenditures were about one-sixth of Exxon's

budgeted expenditures. The energy behemoth has more free capital to distribute worldwide, plays a much

bigger role in the economic lives of more countries, and mobilizes more resources to influence political

outcomes than do the Swedes. Ask yourself: Which entity, Sweden or Exxon, probably has a greater impact

on the outcome of global climate talks? On the adoption of environmental policies worldwide?

Comparing the sizes of companies with those of countries is a fraught business, with imperfect metrics, but

consider this: The 1,000th-largest company in the world has annual sales greater than the GDPs of 57

economies. That company, Owens-Illinois, makes glass bottles; its sales exceeded $7 billion in 2010, more

than the GDPs of Benin, Bermuda, Haiti, Kosovo, Liechtenstein, Moldova, Monaco, Nicaragua, Niger,

Rwanda, Tajikistan, and dozens of others. In fact, of the world's 500 largest companies, according toFortun

magazine, all 500would rank among the top 100 economies on the planet.(GDP is a complex, if misleading,

value-added metric, and it does not directly compare with a company's sales. But the comparison does give a

sense of scale.)

The phenomenon of corporate power is, of course, hardly new. The British East India Company ranthe


4/5



Indian subcontinent and managed one of the world's largest armed forces; Andrew Carnegie and Henry For

built small cities for their thousands of workers, complete with employee housing and schools. Over the past

century, however, the state-like roles of companies have grown and changed, becoming more common and

more complex as multinational corporations themselves have grown bigger. Today's corporations often

conduct something very much like their own foreign policy. They launch active political advocacy campaigns,

such as ExxonMobil's lobbying to kill U.S. acceptance of the Kyoto Protocol. They undertake significant

security initiatives, as in the company formerly known as Blackwater's defense contracting during the Iraq

war. They also provide health care, training, shelter, and other functions that states ought to but can't or won'

provide.

The result is societies that are profoundly out of whack, with far too much power in the hands of massive,

oftendistant corporate entities that are only accountable, fundamentally, to their shareholders. Meanwhile,the public is seeing that the increasingly weak institutions designed to give them a voice are unable to meet

some of the most basic terms of the social contract, as the issues that need to be addressed are effectively

beyond their jurisdiction.

This is not a call for revolution. If the bloodshed, social experimentation, and ideological polarization of the

20th century have offered us one lesson, it is that extreme solutions do not work when we try to square publi

and private power. No society can flourish without a balance between the two. For some Americans, it may b

unsettling to realize that we have lost some of our ability to influence how that balance is struck. But for the

majority, the disenfranchised who make up today's 99 percent, the hybrid capitalism likely to emerge from

the current competition in the global marketplace of ideas may well be a fairer, more sustainable alternative.

Save big when you subscribeto FPHerman Wouters/Hollandse Hoogte/Redux

David Rothkopf, CEO and editor at large of Foreign Policy, is author of Power,

Inc.: The Epic Rivalry Between Big Business and Government -- and the

Reckoning That Lies Ahead, from which this article was adapted.

(6) SHOW COMMENTS LOGIN OR REGISTER REPORT ABUSE

FOLLOW US ON TWITTER| VISIT US ON FACEBOOK| FOLLOW US ON RSS| SUBSCRIBE TO FOREIGN POLICY

ABOUT FP| MEET THE STAFF | FOREIGN EDITIONS | REPRINT PERMISSIONS | ADVERTISING | WRITERS GUIDELINES | PRESS ROOM | WORK AT FP

SERVICES:SUBSCRIPTION SERVICES | ACADEMIC PROGRAM | FP ARCHIVE | REPRINT PERMISSIONS | FP REPORTS AND MERCHANDISE | SPECIAL REPORTS | BUY BACK IS

PRIVACY POLICY | DISCLAIMER | CONTACT US

Like 192

eo le


5/5



1899 L STREET NW, SUITE 550 | WASHINGTON, DC 20036 | PHONE: 202-728-7300 | FAX: 202-728-7342

FOREIGN POLICY IS PUBLISHED BY THE FP GROUP, A DIVISION OF THE WASHINGTON POST COMPANY

ALL CONTENTS 2012 THE FOREIGN POLICY GROUP, LLC. ALL RIGHTS RESERVED.

Inside Power, Inc. - By David Rothkopf

Documents

Transcript of Inside Power, Inc. - By David Rothkopf