In this series on Global power & influence in 2018 and beyond, previous instalments examined The U.S. in a multipolar world, China, the rise of a global power, An evolving European Union and Confirmed and emerging powers.
This final instalment examines how non-state global actors are shaping the world due to a combination of what has been described as the Fourth Industrial Revolution (4IR), small government, shrinking state monopolies, the continued influence of religions and ideologies, and an upheaval in education, information and communication. To match the speed and scope of these changes, bold and efficient forms of governance are urgently needed.
In our present age, technology and the push for innovation are dominant trends, while legislative and regulatory frameworks lag behind. When steam, electricity and the internal combustion engine each boosted productivity by orders of magnitude, legislators were far slower in adapting labour laws or “industrial relations” as advocated, among others, by Pierre-Jospeh Proudhon in What is Property? Or, an Inquiry into the Principle of Right and of Government. The ubiquitous intermodal container, designed for interchangeable road, rail and sea transport, transformed international trade beyond recognition since the 19th century, while the necessary harmonisation of commercial laws among countries, in say matters of jurisdiction and arbitration, was left trailing behind (for example, the World Trade Organisation was set up in 1955).
Over the past three decades, one innovation has brought about change on an unprecedented scale: as “the first truly universal infrastructure in history” (a phrase I coined in a collective letter to President Obama in 2016), the Internet has become the indispensable multi-purpose tool of industry, finance, government, education, research, defence, security, trade, civil society and of course social intercourse, the latter further amplified by social networks.
Many of today’s most successful businesses are household names, several having achieved this enviable status in less than a decade: the so-called GAFAM (Google, Apple, Facebook, Amazon, Microsoft) but also the so-called NATU (Netflix, AirBnB, Tesla, Uber) as well as the group of large Chinese firms known as BATX (Baidu, Alibaba, Tencent, Xiaomi).
Just to get a sense of their global significance, here’s the market capitalisation of GAFAM companies (in US News & World Report, as of 7 February 2018):
- Alphabet (Google’s parent): US$ 736 billion (bn)
- Amazon: US$ 690bn
- Apple: US$ 819bn
- Facebook: US$ 517bn
- Microsoft: US$ 690bn
Their aggregate market capitalisation amounts to US$ 3.45 trillion. For the sake of comparison, here are the nominal Gross Domestic Product (GDP) figures of the three largest economies in the European Union (in US$ trillion equivalent):
- Germany, 3.65 tn (population 82.2m)
- France, 2.57 tn (population 67.2)
- United Kingdom, 2.56 tn (population 65.6m)
In the past, power and wealth were largely linked to the possession of territory. Since the first Industrial Revolution, capital has played a growing role alongside traditional state powers. Conscious that their wealth enables them to consolidate their economic model, corporations are increasingly acting as substitutes for public funds, with a growing number of entrepreneurs, endowments, funds and foundations focus on providing medical care, vocational training, education, social organisation, expertise in agriculture and small business.
Financial advisors point out that, in addition to their charitable purpose, such private initiatives provide fiscal and other tangible advantages, as laid out in Top 10 advantages of a private foundation. A list of the wealthiest charitable foundations in the world suggests that there is indeed some link between US fiscal policy and the prominence of US foundations on a global scale. According to Foundation Center, in 2014 there were more than 86,000 foundations in the US alone, with assets totalling $865bn, of which $60bn were handed out for projects.
Business Insider lists the 21 largest endowments and foundations: among these, the President and Fellows of Harvard College Endowment comprises 12,000 funds with assets of $56bn, and about a third of its operating revenue is redistributed. According to the same list, the Bill & Melinda Gates Foundation has assets of about $41bn. The Open Society Foundations aim at building ‘’vibrant and tolerant democracies whose governments are accountable and open to the participation of all people’’ and founder George Soros has donated $32bn to his Foundations since they were launched in 1979. Historically, capital reinvested its profits in modernising its productive tools, or in property, but the current trend, while continuing to invest in modernisation, seeks a wider influence through lobbying, social involvement, as well as influence in public policies.
An example of this new trend, the Chan Zuckerberg Initiative (CZI) seeks to “advance human potential and promote equality in areas such as health, education, scientific research and energy”. Interestingly, it is set up as a limited liability company which, according to Forbes, will receive no tax benefit from transferring the owners’ shares to the new entity, but will provide greater flexibility to execute their mission: ‘’in addition to funding nonprofits, Zuckerberg claims that the LLC structure enables him and Priscilla Chan to invest in private (including for profit) companies as well as to engage in policy debates—also known as lobbying’’. Some criticism, though not specifically aimed at CZI, questions the structure and operating methods of LLCs (Limited Liability Companies), as analysed by Le Monde.
The Omidyar Network created by eBay founder Pierre Omidyar, is structuring itself along similar lines, as a ‘’philanthropic investment firm’’.
In addition to industry and trade, innovation is also changing economic, social and even diplomatic patterns. Increasingly, global players in any line of business are also busy mining or farming the data of individuals, now considered the most widespread and inexpensive resource. But can tech companies be said to wield real power and influence? Apple products have hundreds of millions of users for work, communication or online entertainment.
Google, and especially the search function based on its PageRank algorithm has brought about a revolution in the way people access information, while a host of other products from Alphabet Inc. allow them to be interconnected in ubiquitous mode (Google maps, Android system on smartphones…). Facebook, the fastest-growing high-tech company during the past few years, has beome such a major means of social intercourse, that questions arise about its purpose and strategy: speaking in Davos in January 2018, Jimmy Wales, founder of Wikipedia and WikiTribune, questioned the validity of Facebook as ‘’an arbiter of public views’’. Competition is also growing in the video segment of social media, as underlined by the CEO of YouTube who recently suggested that Facebook should ”get back to baby pictures”.
While GAFAM and other large companies are admired for their profitability, some features of their business model have been criticised for building huge wealth on free community input (analysed by Le Monde), or building major businesses on some common cultural heritage, as analysed in Google et le nouveau monde, a 2010 book by Bruno Racine who was then the President of the French National Library. Tax avoidance by a number of corporations has been widely criticised, brought to court, and in some cases sanctioned, for instance by the European Commission against Microsoft (€860m), against Google (€2.42bn fine) or an investigation into the practices of Amazon.
Non-state global actors have also engaged in other forms of action and influence. Since the first industrial revolution in the 19th century, there has been a discrepancy between the throbbing pace of technical and commercial innovation, and the slow rate of legal, regulatory and social change to deal with that challenge. With time, the growing needs of developing countries could not be met only by government expenditure, so that gradually churches and secular organisations tried to contribute. After decolonisation and the call for Official development assistance (ODA), financial outlays by donor countries reached a peak in 2016 with the equivalent of about $146bn from the 28 members of the Development Assistance Committee (OECD/DAC) and other donors (mainly the European Union). But non-profit organisations (NPOs) and Non-government organisations (NGOs) play an increasing role alongside governments in alleviating poverty, promoting rights, procuring public health and caring for our Planet, as implemented by Amnesty International, Oxfam, Médecins Sans Frontières, International Federation for Human Rights, World Wide Fund for Nature, Greenpeace and many others.
One striking example of the global influence of some actors of the Fourth Industrial Revolution is the initiative taken by Denmark in 2017 to appoint a “Tech Ambassador” who has “a global mandate’’ and whose office has “a physical presence across three time zones in Silicon Valley, Copenhagen and Beijing – transcending borders and regions and rethinking diplomacy’’. For Ambassador Casper Klynge, “TechPlomacy is an acknowledgement of the key role tech plays and will increasingly play in the future for individuals and societies alike.” But although the notion of equating tech giants with sovereign states seems modern and appealing, it has come under criticism, as in an article by Emma Woollacott in Forbes.
Space exploration, a striking example of private initiative operating alongside state monopolies, sometimes even overtaking them. Since Sputnik 1 became the Earth’s first artificial satellite in 1957, the exploration and use of extra-terrestial space for military or civilian purposes has arguably been an activity where sovereign states were keen to take all the decisions, from planning to launch. By accumulating great wealth in a few short years, new captains of industry and commerce such as Jeff Bezos and Elon Musk have been able to set up and finance private initiatives, now filling in some of the gaps left by reduced state subsidies.
Interestingly, the implosion of the Soviet Union gave rise to oligarchs in Russia, but much of their wealth is based on the exploitation and sale of natural resources, with little value added. In the case of the U.S., diminished federal resources for space programmes has led to several major companies taking up some the slack. In 2000 Bezos, the founder of Amazon, set up the Blue Origin programme, into which he is said to be putting 1 bn US$ per year from his personal gains (New York Times). On some projects, Blue Origin is cooperating with official U.S. agencies (NASA, DARPA).
As for Musk, of PayPal and Tesla fame, he set up Space X in 2002, with the colonisation of planet Mars as an objective. In early 2018, Space X stunned world opinion with the launch of Falcon Heavy, the world’s most powerful rocket system, carrying a mock payload (his own used Tesla car). There are other examples of companies (e.g. Boeing) involved in space programmes, but the bold initiatives and the results achieved by both Bezos and Musk show the extent to which private enterprise now have power and wield influence in what was a state monopoly.
Religious institutions, state power and wealth have long been objective allies. Monarchs considered hereditary rule as the most durable form of power, and to achieve their goal they claimed that authority was bestowed upon them by some transcendental power. The pharaohs claimed to be the appointed mediators between gods and humans, responsible for maintaining Ma’at, the overall balance of the kingdom, which included powers of war to gain access to more resources.
The Qin (秦) and all subsequent Chinese dynasties claimed to hold absolute power from a heavenly mandate (天命 tian ming), with the abstract term Sky (天 tian) serving as the ultimate arbiter, rather than some personal god. Most religions claim that their founders had received a direct message from their god: the Torah handed to Moses from the heavens, Muhammad (محمد) receiving an ayah (ية) or revelation, Joseph Smith Jr. having a vision upon which he founded Mormonism.
As the prophets or messengers of their respective gods, these figures were elevated above any possible human challenge or scientific inquiry, and as a result religious doctrines retain a huge influence among their “faithful” for whom their “faith” or belief is placed above all else.
Today, religious denominations continue to develop their wealth and influence. In countries such as the United States, fiscal policy has favoured religious and charitable organisations through local property tax exemption. The Church of Jesus-Christ of Latter-Day Saints (LDS) holds assets in the tens of billions of US$; according to Public Broadcasting Service, LDS also holds copies of birth or death registers of two billion humans, in a unique privately-owned database which is apparently not subjected to parliamentary or judicial control.
As for the Unification Church, launched in Korea in 1954 by MUN Seon-myeong (문선명), it has become a sprawling empire with churches, mass weddings, hotels, restaurants, The Washington Times, and even a stake in the global football business. The Vatican is an example of a religious entity with the powers of a sovereign city-state with full diplomatic status, its own bank, as well as incalculable real estate assets in many parts of the world, with more than 17,000 churches in the U.S. alone (interestingly, a Catholic publication does not deny the extent of these possessions).
More than ever, education, information and communication are tools of power and influence. Since the earliest kingdoms and empires, authority controlled access to knowledge and education. Single-party regimes such as the Soviet Union yesterday, Russia, China, Cuba or Vietnam today, still implement a comprehensive system of censorship and control. Today, including in robust democracies, there is a disturbing trend for some outlets to cater to specific segments of public opinion by feeding their convictions, instead of providing reliable information for an informed general public. It is against this background that evidence-based journalism is developing, for example as advocated by the founder of WikiTribune.
The importance of education cannot be overstated in nurturing curiosity and the ability to innovate, whether in technology, law or civil society. Much has been written, and rightly so, about the best universities in the world. But education for young children is equally important: in February 2018, a Swiss newspaper carried a story entitled “In der Schule der Genies’’ In the school of geniuses (the article may be behind a paywall). It refers to the educational system set up by Maria Montessori (1870-1952) and which operates schools in many countries, such as the one in Zurich which the journalist visited. In other locations, some of these schools had pupils such as Jeff Bezos (founder of Amazon), Sergey Brin (co-founder of Google), Bill Gates (founder of Microsoft), Larry Page (co-founder of Google), Jimmy Wales (founder of Wikipedia and WikiTribune) and Mark Zuckerberg (founder of Facebook). If this is just a coincidence, it’s an interesting one!
There is a need for global standards among today’s actors, not only in business and trade terms, but for the wider public interest. Sovereign states should exercise their authority to better regulate, investigate and correct. Governments often consult the private sector, but mainly on business aspects. A few months after his election, President Trump set up an advisory council of top US business leaders, which was disbanded less than a year later: its purpose was limited to making the US economy more competitive, and had no broader remit.
The World Economic Forum (WEF) brings together in Davos leaders from finance, industry, government, civil society and the media, providing a platform on a wide range of subjects, but as a forum it is not prescriptive, nor is it accountable. Now is an appropriate time for global corporations like Google and Tencent, Facebook and Alibaba, to set up a comprehensive list of best practices for the new era. Some sort of structured, transparent, accountable and global Advisory council, with an opting-in mechanism for corporations, governments and civil society entities, could provide useful advice in setting up global ethical standards across its membership. Social media have come under closer scrutiny because of the way their networks may be used by terrorist organisations, or by foreign powers to influence local politics as in the 2016 U.S. presidential election or the U.K. referendum on Brexit.
A first task for such a council would be to identify areas where there are widespread problems and malpractices (e.g. on privacy, on data protection), and to promote best practices, whatever their origin. In the 21st century, the strategies of state and non-state actors alike need to take into account, more than ever, the global public interest.