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Book Review: Power, Inc. by David Rothkopf

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In his new book, Power, Inc., David Rothkopf -- an editor at large at Foreign Policy and a former Clinton under-secretary of Commerce -- sounds an alarm. He argues that thousands of private actors who he calls "super citizens" now hold greater power than most of the countries in the world. He notes, for instance, that corporations have grown to the point where roughly the richest two thousand are more influential than 70 - 80 percent of the world's nations. Walmart, for example, has revenues higher than the GDP of all but 25 nations. He correctly notes that these gargantuan players now prevent us from dealing with the pressing issues of our day such as global warming, growing economic inequality, and embracing cleaner forms of energy.

He examines watershed years of yore, such as 1288, when the world's first stock certificate was issued to Sweden's Stora, the world's oldest corporation, now a huge multinational. The point he is making is that the struggle between private and corporate power is hardly a new phenomenon. Originally, corporations were state-sponsored entities whose existence was predicated on advancing the needs of the state. Obviously, that no longer is the case. The ancient roots of this struggle eat up more than one-half the book's 436 pages and the result is a meandering and sputtering narrative. History buffs may like it, but many others (myself included) will find themselves skimming these pages.

One other complaint I have is that Rothkopf has a tendency to generalize. One sentence, in particular, sums up this criticism: "At the same time that professional American athletes were using steroids to pump themselves up to cartoonish dimensions, American business-people were blazing new trails in excess and using their unprecedented wealth to gain new license to behave ever more excessively." Clearly, not all athletes or all business-people were ill-behaving. And most of the excesses were limited to the admittedly overgrown financial sector.

Still, the story comes to life when he hones in on events which took place in the United States starting at the end of the 19th century. He recounts the time when J.P. Morgan literally rescued the United States government from bankruptcy in 1896. He also tells the sorry story of how corporations gained legal protections and rights in the Supreme Court starting in 1886 and ending most recently with the infamous Citizens United case in 2010.

In Rothkopf's view, the world has shifted 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 role and responsibilities of public and private sectors." The extremes of both Soviet communism and free-market financial excesses have been discredited. American capitalism initially triumphed, but has since receded; and competition between different capitalisms will continue.

And what will take its place? Rothkopf seems to prefer the German/Scandinavian model which calls for greater regulation of the economy and the markets. But the United States doesn't share the collective spirit of Western Europe. Ours is a more individualistic society where a president can say that "government isn't the solution to our problems; it's the problem," as Ronald Reagan did in 1980.

So it came to pass that Republican administrations from Reagan to Bush hobbled financial regulatory agencies by appointing anti-government ideologues as regulators. Two that come to mind are Christopher Cox at the SEC and Alan Greenspan at the Fed.

One might think that the world financial meltdown of 2008 would have led to a new approach and a rethinking of our ways, but it hasn't, at least not here. Any suggestion of adopting the German model here would be branded by its critics as an industrial policy at best or socialism at worst. In this sense, it's difficult to see the balance of power tilting away from global corporations any time soon. In this sense, the book's subtitle -- "The Epic Rivalry Between Big Business and Government: And the Reckoning that Lies Ahead" -- is misleading. There is no rivalry. The battle has been won.