In the face-off between companies and countries, don't underestimate the growing power of the state.
- By Allison Good<p> Allison Good is an editorial researcher at Foreign Policy. </p>
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.
Ben Pauker is executive editor at Foreign Policy. Ben came to FP in May 2010 from World Policy Journal, where he was managing editor from 2007-2010. A native of New York, he grew up in Brazil, Australia, and Thailand and has written for Harper's, the Economist, and the Chicago Tribune, among other publications. He is the co-founder of the Gastronauts, the world’s largest adventurous-eating club, and, in the course of reporting but mainly to see if it was possible, has smuggled small arms out of Central Africa.| Interview |