Shadow Elite : What's Behind Surging Executive Power? Globalization

06/15/2010 05:12 am ET Updated May 25, 2011

Last week, the "Shadow Elite" column began a look at executive power, its expansion over the decades and recent controversies involving President Obama's use of those powers. This week, sociologist Saskia Sassen examines how the growth of the globalized economy has led to a permanent expansion in executive authority, at the expense of legislatures in particular, and democracy in general. -Janine R. Wedel


In Shadow Elite, Janine Wedel looks at a new kind of power broker who takes on multiple roles in government, business, think tank, or NGO, to pursue their own interests, or those of their associates, and not necessarily the public's interest. One of the developments enabling these strategic players is what she calls a "redesign of governing", along with the rise of executive power.

She writes that "...implementing privatization and deregulation [a signature feature of the redesign of governing] often required an expanding executive ...." And that this can "crowd out checks and balances offered by legislatures and courts."

My research on corporate economic and financial globalization supports this finding, and goes a step further. The executive branch has long been the most powerful branch of government in democracies. But the rise of a global corporate and financial economy has added to this power in distinct ways. At its most extreme, it may be signaling a new phase in the long history of liberal democracies, one where the executive branch gains power partly through its increasingly international activities.

Over the last twenty years and more, this incipient internationalism has been deployed in support of developing a global economy and fighting the "War against Terrorism;" thus the big-bank bailout is not so much a "return of the strong nationalist state" as some would have it, but rather the use by the executive branch of national law and national taxpayers' money to rescue a global financial system. This is a kind of internationalism.

The critical shift that feeds this particular type of power for the executive branch has to do with a sort of systemic interaction between the work of making today's global economy and the institutional actors that played a critical role, including players and leaders within the executive branch. This is a trend that goes beyond party politics. It started with Reagan in the US, Thatcher in the UK, and Mitterrand, of the socialist party, in France. Nor does it take conspiracies. It is deeper than that, and hence more worrisome.In my research I identified at least four trends in the global economy that feed executive power (Territory, Authority, Rights, 2008: chs. 4 and 5); several of these can be seen as part of the political economy underlying Janine Wedel's analysis of the shadow elite. For brevity's sake, I take the case of the US as illustrative:

(1) Certain parts of the administration (in the case of the US, the Treasury, the Federal Reserve, the office of the Trade Representative, and a few others) have had a critical role in building a global corporate economy, including a global financial system. This pattern repeated itself across the world as states implemented deregulation and privatization as a condition for becoming part of the global economy. Deregulation and privatization remove various oversight functions from Congress. But they add functions to the executive branch. Thus the deregulating of finance and telecommunications, for example, brought about the loss of oversight functions in the legislature and, at the same time, the formation of special "regulatory" commissions on finance and on telecommunications within the executive branch.

(2) Intergovernmental networks centered largely in the executive branch have grown well beyond matters of global security and criminality. The participation by the state in the implementation of a global economic system has engendered a whole range of new types of cross-border collaborations among specialised government agencies focused on the globalization of capital markets, international standards of all sorts, and the new trade order.

(3) The major global regulators, notably the International Monetary Fund and World Trade Organization, as well as many lesser known ones, negotiate only with the executive branch. As the global corporate economy and the supranational system expanded beginning in the 1980s and onwards, executive power kept growing, even as these same global regulators often took away power/capabilities from other parts of the government.

(4) A critical component of economic deregulation beginning in the 1980s is the privatization of formerly public functions. In the US, privatizing prisons and outsourcing of particular welfare functions to private providers are probably the most familiar cases. Today we can add the outsourcing of soldiering to private contractors even in war theaters, as is the case in Iraq. This privatization has reduced the oversight role of Congress but added to the role of the executive through specialized commissions. One recent case that brings some of these issues to light is the extent to which Congress has been left in the dark as to the amount of taxpayers' money going to private contractors who now handle a growing range of military activities. The executive branch can actually handle private contractors with little if any oversight by Congress.

The particular kinds of executive power growth I describe here are not exceptions. They are structural developments within the liberal state that are part of the implementation of a global corporate economy, and need to be distinguished from the state of emergency or the state of exception - an anomalous condition that can return to 'normal' once the emergency is over. Much of the commentary on the rise of executive power (whether presidential or prime ministerial) today focuses on the state of emergency (e.g. the Patriot Act in the USA, or the new emergency anti-terrorist policies in the EU member states). Because of this focus it is easy to overlook the structural trend of greater executive power, one which is not anomalous, but rather the new norm of the liberal state.

And my findings go against a key argument in much of the globalization literature, to wit, that the rise of a global economy has weakened the state. As we can see, it has actually strengthened the power of the executive even as many other components of the state, notably the legislature, have lost authority.

What's the result? Even if a new president genuinely respected the balance of power and was willing to cancel the Patriot Act, that president will still be in a structural position of growing power in today's liberal state. And a hollowed-out Congress confined to domestic matters weakens the political capacity of citizens to demand accountability from an increasingly powerful and globally oriented executive. Today, the liberal state produces its own democratic deficit.

I am also particularly interested in how this expansion of executive power promotes actions by power brokers that lie within the law, not explicitly criminal, though they may be substantively so (for instance, no law may exist that can address some of this). "Within the law" is to some extent a matter of interpretation, and a matter of how the law was constructed or deconstructed. Wedel's analysis of the strategic players of the shadow elite also brings this to the fore; and so does the current debate about abuses in the financial sector - especially the so-called shadow-banking sector. All in all, much of this activity may be formally speaking within the law, but it does not strengthen democracy.

But if this is a new emergent phase of democratic and quasi democratic regimes, can this executive power linked to globalization be reoriented to better, noncommercial goals, like climate change, global hunger, or global poverty? There is an ironic possibility in all of this. Can a president intent on fighting for a better and juster democracy actually use that expanded executive power to do this? And could the emergent internationalism of the executive branch, now used to further the global corporate economy, be used for addressing some of our pressing global challenges?

Linda Keenan edits the Shadow Elite column.