We all bow to the Superclass
Globalization has fostered an international group of about 6,000 individuals who call the shots. Should they?
We didn't elect them. We can't throw them out. And they're getting more powerful every day.
Call them the superclass.
At the moment, Americans are fixated on the political campaign. In the meantime, many are missing a reality of the global era that may matter much more than their presidential choice: On an ever-growing list of issues, the big decisions are being made or profoundly influenced by a little-understood international network of business, financial, government, cultural and military leaders who are beyond the reach of American voters.
In addition to top officials, these people include corporate executives, leading investors, top bankers, media moguls, heads of state, generals, religious leaders, heads of terrorist and criminal organizations and a handful of important cultural and scientific figures. Each of these roughly 6,000 individuals is set apart by their power and ability to regularly influence millions of lives across international borders. The group is not monolithic, but none is more globalized or has more influence over the direction in which the global era is heading.
Doubt it? Just look at the current financial crisis. As government regulators have sought to head off further market losses, they've found that perhaps the most effective tool at their disposal is what the president of the New York Federal Reserve Bank described to me as their "convening power" — their ability to get the big boys of Wall Street and world financial capitals into a room or on a conference call to collaborate on solving a problem. This has, in fact, become a central part of crisis management, both because national governments have limited regulatory authority over global markets and because financial flows have become so large that the real power lies with the biggest players — such as the top 50 financial institutions that control almost $50 trillion in assets, by one measure nearly a third of all assets worldwide.
Most major companies are both bigger and more global today, which effectively makes them able to pick and choose among various governments' regulatory regimes or investment incentive programs. They play officials in country X against those in country Y, gaining leverage that makes the old rules of trade obsolete. The world's biggest corporations, such as Exxon or Wal-Mart, have annual sales (and thus financial resources) that rival the gross domestic product of all but the 20 or so wealthiest nations. The top 250 companies in the world have sales equal to about a third of global GDP (these are very different measures, but they give a rough sense of relative size).
Major media organizations such as Rupert Murdoch's News Corp., which is effectively controlled by a single individual, touch far more people each day than any national government can. Just a few weeks ago, Italian media billionaire Silvio Berlusconi once again used his extraordinary resources to win election as prime minister, which will give him a seat at G-8 summits and other global conclaves. Even global terrorist organizations such as al-Qaida or Hezbollah have both the ability, through their international networks, and the will to project force more effectively on an international level than all but a handful of governments.
The people who run these big international organizations can have much more power over key aspects of your daily life and over global trends than most officials in Washington are likely to have, except in the most extreme circumstances. They can affect investments and job creation, shape culture and influence lawmakers. The Federal Reserve Bank has played a critical role in the financial crisis, but it couldn't have intervened successfully without a financial leader like Jamie Dimon, chief executive of J.P. Morgan Chase, which stepped in to purchase the failing investment bank Bear Stearns.
The rise of the global superclass signals the latest evolution in the age-old tale of the few who corner the market on power. There have always been elites. But this contemporary group is very different from those that preceded it. Study these 6,000 or so individuals, and you'll find that unlike past aristocrats who inherited their wealth, many — Bill Gates, for instance, or Warren Buffett — have built their fortunes over their lifetimes. Many more come from the worlds of business, finance and media than in the past.
In a world with only two kinds of international institutions — weak and dysfunctional — the members of this superclass are filling a power vacuum when it comes to influencing decisions about transnational issues such as financial-market regulation or climate change. (Many countries voted for the Kyoto accords on global warming, but it took just Exxon and a handful of other oil companies to successfully lobby the White House to opt out and undercut the entire initiative.) In so doing, they raise real questions about the future of global governance. Will the global era be more democratic or less so? Will inequality continue to grow, as it has for the past three decades of this group's rise, or recede? Will the few dominate because the government mechanisms that traditionally represent the views of the many are so underdeveloped on a global scale?
Once again, the meltdown in global financial markets brings this aspect of the story into focus. For years, financial elites have argued that markets should self-regulate even as instruments grew more complex and risks more opaque. Then, when a crisis came, they used their influence to get top government officials to come in and help cauterize their self-inflicted wounds, warning of a "systemic failure." But critics are already correctly charging that new regulations to rein in global markets are largely protecting the interests of the richest.
One distinguishing characteristic of the superclass is the concentration of extreme wealth in the hands of so few. Inequality has always existed in the world, but the international trend toward leave-it-to-the-market policies of the past 25 years has resulted both in great growth worldwide and in growing inequality. Today, the world's more than 1,100 billionaires have a net worth that's roughly double that of the bottom 2.5 billion people on the planet. The richest 10 percent of adults worldwide own 85 percent of global wealth, while the poorest half only barely 1 percent. The world's almost 10 million millionaires have seen their wealth double to nearly $37 trillion over the past 10 years.
Growth is taking place, but it is disproportionately benefiting the few. And there's a sense that the issue of class conflict, confined not too long ago to the ash heap by our (premature) celebration of the "end of history" after communism's fall, remains with us.
A backlash is inevitable. Are these elites especially talented? Hard-working? Lucky? Some are all of these things. But conspiracy theories don't hold water in a group whose members are so diverse and self-interested. Still, when their self-interests align to cause them to act together, they can be hard to resist. They often get their way — and thus often get much more than the rest of us. And that leads to angry reaction. "When a CEO is making more in 10 minutes than an ordinary worker's making in an entire year ... something is wrong, something has to change," Sen. Barack Obama declares on the stump. Sen. Hillary Rodham Clinton chimes in that "it is wrong that somebody who makes $50 million a year on Wall Street pays a lower tax rate than somebody who makes $50,000 a year."
The next U.S. president will still be the most powerful person in the world because of his or her control of the nation's unparalleled military might and influence over our economic and political resources. But that influence is on the wane, for a number of reasons: the relative decline in the power of national governments; the relative rise in the power of others in the world's fastest-growing places; U.S. trade and fiscal deficits; and a third, geopolitical deficit arising from both damaged national prestige and what might be characterized either as Iraq fatigue or as having learned from the mistakes of the past several years.
None of this makes the decision that U.S. voters will make in November less important. Government still offers the average citizen the best means of counterbalancing the superclass or redressing growing inequality. And governments will have to play a key role in shaping the new regulatory frameworks and governance mechanisms that will be essential to a more balanced distribution of power in the global era.
But what it does mean is that "change" isn't just a slogan in this year's campaign. It's a reality that will redefine the landscape of power worldwide for U.S. presidents of the future.
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