Balance of Power

In the face-off between companies and countries, don't underestimate the growing power of the state.

David Rothkopf ("Inside Power, Inc.," March/April 2012) points out that ExxonMobil spends six times more money than Sweden spends on its defense. Is it reasonable, however, to extrapolate from this and an impressive list of other company vs. country statistics that some private corporations may now have a larger impact than some states "on the outcome of global climate talks"?

I don't think so. Here's another Exxon-related statistic that throws Rothkopf's larger argument into question: There are 15 energy companies in today's world that own more oil than Exxon, and all but one is at least partially state-owned. National oil companies like Saudi Aramco, Gazprom (Russia), CNPC (China), NIOC (Iran), PDVSA (Venezuela), Petrobras (Brazil), Abu Dhabi National Oil Co., Kuwait Petroleum Corp., and Petronas (Malaysia) own about three-quarters of the world's crude oil reserves. Private international oil companies, meanwhile, hold just 7 percent, and ExxonMobil less than 1 percent. When it comes to energy and the environment, this is a more revealing indicator of the balance of power between companies and countries.

These are not the only sectors of the global economy where privately owned companies face a new generation of challenges. Ideas and information continue to cross borders at high speed, but China and other states are developing new ways to build walls in cyberspace. What happens if China succeeds in its attempt to create "one world with two Internets?" What does that say for the future of Facebook, Google, and Twitter as they compete with state-empowered competitors like Renren, Baidu, and Sina Weibo?

I couldn't agree more with Rothkopf that a balance between the public and private is best for the global economy and those who participate in it. But his assessment of that balance sharply underestimates the lasting (and growing) power of the state.

President, Eurasia Group
New York, N.Y.

David Rothkopf replies:

Ian Bremmer's core point -- that some states still have considerable power and can make life difficult for corporations -- is hard to dispute. I don't attempt to do so in either my article or the book on which it is based, Power, Inc. But to suggest that states have considerable power is not to demonstrate that private power has not grown with the rise of giant multinational corporations, which are designed to operate nimbly on the global stage in ways countries -- especially small- and medium-sized states -- cannot.

That a few giant state-owned enterprises exist in the oil sector is simply an exception, as is the ability of states such as China to control the Internet (though I am virtually certain these efforts will fail because international market pressure will quickly turn web censorship into an unsustainable competitive disadvantage). As far as nationally owned oil companies are concerned, most depend on private oil giants to bring their products to market, which certainly compromises their leverage -- and was intended to do so, because this system was cooked up by big oil companies in the first half of the 20th century.

The core question, acknowledged by Bremmer, is balance -- seeking to ensure that the benefits of democracy and markets exist in ways that ensure society's greater goals of equity, opportunity, justice, and a higher quality of life for all. History shows that when the needle swings too far toward either public or private power, imbalances and disruptions sometimes occur. Americans find themselves in such a moment in the United States, where the political system has granted extraordinary power -- greater in some respects than those accorded to average people -- to the artificial persons of the corporate world, and money plays a dominant and corrupting role in the political process.


Occupy This!

An Occupy Wall Street leader highlights the global reach of his movement.

In his call for Occupiers to "stop whining," Charles Kenny ("We're All the 1 Percent," March/April 2012) mocks the victims of the recession, fails to comprehend global social movements, and feebly attempts to resurrect a reactionary, 19th-century narrative of nationalist class collaboration to discourage popular resentment about the economic crisis.

Out of either ignorance or malice, Kenny portrays the Occupy movement as exclusively concerned with domestic issues without realizing that Occupy groups exist on every continent. When we speak to activists from Colombia, Egypt, Indonesia, or Serbia, they don't castigate our efforts because of American wealth; they ask, "What took you so long?" Organizers from the Global South have no misconceptions about American affluence, and for that very reason they emphasize the interconnectedness of our struggles against economic exploitation. When the Nigerian government eliminated fuel subsidies in January, the people didn't turn to policy institutes. They organized Occupy Nigeria.

If these activists aren't telling us to "stop whining" and let "the richest 1 percent … help the rest catch up," then why would Kenny? His argument recalls those of anti-union employers who told skilled workers to "stop whining" because they had it better than the unskilled. Kenny echoes imperial officials who told their citizens to "stop whining" because they had it better than the "natives." They exhorted working-class people to think in terms of their nation rather than their class and see themselves as part of an international ruling elite.

If Kenny were tens of thousands of dollars in debt from medical bills and struggling to find a job, would he consider himself "really, really rich"? Certainly such rhetoric will generate some high-fives around Kenny's think tanks, but the American people aren't taking the bait.

Occupy Wall Street press team
Ph.D. student in history, Rutgers University
New Brunswick, N.J.

Charles Kenny replies:

It is great to hear that the Occupy movement is concerned with global inequality, not just inequality within the United States. And it would be wonderful to see a global social protest that really did focus on the world's poorest. In that spirit, it might be worth clarifying two things.

First, it is wrong that anyone, anywhere, should get into tens of thousands of dollars of debt just to afford decent health care. But people in absolute poverty don't even have that option -- because nobody would ever lend them that much. The total lifetime income of someone on a dollar a day is likely to be around $20,000. They all too often die of conditions that can be cured for a few dollars' worth of antibiotics. And they don't usually own cars or generators either, so they benefit comparatively little from cheap fuel. General fuel subsidies in Nigeria paid out a lot more to the relatively rich than to the relatively poor.

Second, economist Branko Milanovic estimates that in the mid-19th century (the days of imperial officials telling people to stop whining), about half of global inequality could be accounted for by unequal incomes within countries and the other half by inequalities in average incomes across countries. Today, fully 80 percent of global inequality is due to differences in incomes across countries, which dwarf the gap between rich and poor within countries. So if there is a global class system, it is one where the upper class is made up of people in rich countries, and the working class of people in poor countries. Want to help the world's downtrodden? Tax the average American and send the money to the average Malawian.