Tuesday, March 20, 2012

Power, Inc.: The Epic Rivalry Between Big Business And Government--And The Reckoning That Lies Ahead By David Rothkopf

Power, Inc.: The Epic Rivalry Between Big Business and Government--and the Reckoning That Lies Ahead

Power, Inc.: The Epic Rivalry Between Big Business And Government--And The Reckoning That Lies Ahead By David Rothkopf

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Product Description

The world's largest company, Wal-Mart Stores, has revenues higher than the GDP of all but twenty-five of the world's countries. Its employees outnumber the populations of almost a hundred nations. The world's largest asset manager, a secretive New York company called Black Rock, controls assets greater than the national reserves of any country on the planet. A private philanthropy, the Bill and Melinda Gates Foundation, spends as much worldwide on health care as the World Health Organization.  

The rise of private power may be the most important and least understood trend of our time. David Rothkopf provides a fresh, timely look at how we have reached a point where thousands of companies have greater power than all but a handful of states. Beginning with the story of an inquisitive Swedish goat wandering off from his master and inadvertently triggering the birth of the oldest company still in existence, Power, Inc. follows the rise and fall of kings and empires, the making of great fortunes, and the chaos of bloody revolutions. A fast-paced tale in which champions of liberty are revealed to be paid pamphleteers of moneyed interests and greedy scoundrels trigger changes that lift billions from deprivation, Power, Inc. traces the bruising jockeying for influence right up to today's financial crises, growing inequality, broken international system, and battles over the proper role of government and markets.

Rothkopf argues that these recent developments, coupled with the rise of powers like China and India, may not lead to the triumph of American capitalism that was celebrated just a few years ago. Instead, he considers an unexpected scenario, a contest among competing capitalisms offering different visions for how the world should work, a global ideological struggle in which European and Asian models may have advantages. An important look at the power struggle that is defining our times, Power, Inc. also offers critical insights into how to navigate the tumultous years ahead.

Product Details
  • Amazon Sales Rank: #1421 in Books
  • Published on: 2012-02-28
  • Released on: 2012-02-28
  • Original language: English
  • Number of items: 1
  • Dimensions: .0" h x .0" w x .0" l, .0 pounds
  • Binding: Hardcover
  • 448 pages
Editorial Reviews


"Rothkopf is an energetic storyteller. . . The most eye-popping sections of Power, Inc., detail how decolonization, globalization and financial deregulation have subverted the prerogatives states have traditionally reserved for themselves—like controlling their own currencies, regulating companies operating inside their borders, and providing a basic safety net for their citizens."—Romesh Ratnesar, Bloomberg Businessweek

"This should be read by serious students of politics, economics, or business and will be of interest to anyone invested in our country's economic history and, especially, future."—Bonnie A. Tollefson, Library Journal

"As David Rothkopf points out in his incisive and timely new book, Power Inc, the pendulum has swung sharply from public to corporate in the last generation. That has changed the character of the US economy. 'In the past there was a tight connection between economic growth leading to jobs creation, which in turn led to broad wealth creation,' Mr Rothkopf says. 'Those links no longer seem to work.'" —Edward Luce, Financial Times

"It would be hard to find a timelier book than Power, Inc. Where we draw the line between public and private power will shape the twenty-first century as the divide between communism and capitalism shaped the twentieth. The full dimensions of that struggle are just beginning to emerge, but David Rothkopf, as usual, is ahead of the curve with a provocative, insightful book that is easy to read and hard to put down." —Anne-Marie Slaughter, Bert G. Kerstetter '66 University Professor of Politics and International Affairs. Princeton University

"Power and money make the world go around. Eras are defined by how they are intertwined. David Rothkopf's important book chronicles the history of the power money nexus and defines where we are and where we may be going. This book deserves much discussion in both the world's national and financial capitals." —Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, and former U.S. Secretary of the Treasury

"The frontier between governments and markets is constantly shifting. Focusing on this contested border, David Rothkopf vividly describes the parallel rise of the modern nation-state and the modern corporation. In an age of globalization, Rothkopf argues, this frontier urgently needs to be redrawn.  Readers, whatever their views on this important debate, will be compelled to rethink today's economic travails and reassess expectations for tomorrow." —Daniel Yergin, author of The Quest: Energy, Security, and the Remaking of the Modern World

"David Rothkopf is a deep thinker and a fine writer. We now know that he is also an astute and creative historian. Power, Inc. tells an important story: how once-weak corporations have evolved into the muscular institutions that are now stronger than many countries—and have been grotesquely enabled in the United States by Citizens United. It's also chock full of fascinating historical tidbits. Who knew that the copper industry may have begun with a goat? Read it to be informed and delighted." —Alan S. Blinder, former Vice Chairman, U.S. Federal Reserve, and Gordon S. Rentschler Memorial Professor of Economics and Public Affairs, Princeton University

"At a time when our political debate lacks clarity and our economic model is floundering, David Rothkopf brings a compelling vision to the table, both about the challenges that we face and about what the future might look like. It is based on his own experience in business and government and on a remarkably detailed sense of history. He describes how the complex relationship between private and public interest has evolved since the time of Sweden's first king, and how that relationship at least in part explains our current malaise. Rothkopf employs a brilliant use of history to identify the channels that could, in the end, lead to a better way forward." —Carol Graham, Senior Fellow and Charles Robinson Chair, The Brookings Institution, and author of The Pursuit of Happiness: An Economy of Well-Being

About the Author
David Rothkopf is the internationally acclaimed author of Superclass: The Global Power Elite and the World They Are Making and Running the World: The Inside Story of the National Security Council and the Architects of American Power. He is the president and chief executive of Garten Rothkopf, an international advisory firm, and a visiting scholar at the Carnegie Endowment for International Peace and CEO and Editor-at-Large of the FP Group, publishers of Foreign Policy Magazine.

Excerpt. © Reprinted by permission. All rights reserved.

1     The Goat with the Red Horns
In the abyss itself lie in wild confusion—pell-mell—stones, slag and scoria, and an eternal, stupefying sulphurous vapour rises from the depths, as if the hell-broth, whose reek poisons and kills all the green gladsomeness of nature, were being brewed down below. One would think this was where Dante went down and saw the Inferno, with all its horror and immitigable pain.
—E.T.A. Hoffmann, "The Mines of Falun"
The Past, Present, and Future of the Power Struggle That Defines Our Times
Throughout the writing of this book, I have had an image in my mind. It is of one of those charts showing the evolution of mankind. You know the type: they begin with an ape, heavy-browed, bent over, walking on all fours. They end with us, Homo sapiens, walking upright and looking somewhat brighter. The chart in my imagination however, illustrates another side of the story of human evolution. Rather than presenting us from a purely biological perspective—from the point of view of where, for example, in our family trees we picked up those useful opposable thumbs or the ability to digest frozen yogurt—it is describing a much more recent, still-unfolding aspect of our collective development. The imagined diagram, like this book, focuses on stages of our social evolution. More specifically, it describes the evolution of some of the most important organizations by which we bring order and productivity to our societies. As it happens, these are also the mechanisms by which power is distributed and wielded, by which rules are formulated and enforced, by which human collaborations and conflicts are facilitated.

Studying these organizations closely, you begin to wonder whether they themselves are actually the alpha organisms on the planet, the life forms that rule here on earth and of which we individuals make up only the temporary and replaceable working parts—much like the giant interconnected families of Armillaria ostoyae, also known as honey mushrooms, can grow to cover thousands of acres and live for millennia. A mushroom here or there gets lopped off, tossed into a salad, or eaten by some charming woodland critter, but the rest of the organism goes on about its business, sucking the water and nutrients out of great forests of trees that tower above the largely unseen fungus but that ultimately succumb to Armillaria's superior organization.

After all, we individual human beings are fragile, small, and—at least for the moment—not even capable of reproducing while acting alone. Our time here is limited, and unsurprisingly, this unfortunate twist in the rules of nature has weighed heavily on us. Almost all human societies have cooked up higher powers that we define as higher first and foremost because they are immortal. And one of the things that distinguish us from the organizations we have created to live within is that they too are designed to be immortal, to outlast us and thus in some important respects to be above us like the gods themselves … or like large, enduring fungal networks.

In my imagined chart, the great-ape phase of evolution is the family, the basic social building block of every stage of human civilization. Then comes the tribe, and then the village. After that we see the development of ever larger, stronger, more complex products of organizational evolution until we reach one of those forks in the road, a little bit like the one that occurred during the period during which Neanderthals and Homo sapiens lived simultaneously. Grappling with the choice we face at that crossroads is where we have been these past few hundred years. On the one hand, there is an organizational approach that often seems to have much in common with the Neanderthals, better suited to the past but still strong and with much to recommend it. At the same time, we can see the irreversible rise of another one, not fully formed perhaps, suggesting several evolutionary steps to come, but clearly better suited to the global environment that is developing and changing around it.

On this timeline, however, the Neanderthals are national governments (this illustration was not created, I should hasten to say, because governments are on the verge of extinction, but rather because they are not as well suited to thrive in their current environment as some of their contemporaries on the organizational evolutionary chart), and the Homo sapiens, the ones that seem to have the evolutionary edge, are corporations—or at least global structures that are a lot more like multinational companies than they are like the traditional images of countries that we have today. No doubt some might say this is comparing humans to apes—apples and oranges as primates go—evolutionary cousins but clearly not the same species. But tell that to the companies and the governments. They have been locked in a power struggle with each other since the earliest days that companies were ushered into being by sovereigns who used them for economic purposes. They are different, but they are often compelled to occupy the same space. They are different, but in order to survive, it may well be that each must become more like the other. They are different, but they are both facing major evolutionary hurdles that must be addressed if they are to continue to exist in a rapidly changing international environment.

Also, as with the story of human evolution, this one is not without controversy. Just as the idea that men descended from the same ancient grandma as lemurs and chimps is offensive to those who take the Bible as literal truth, so too is the idea that somehow corporations are usurping the traditional place of countries on the international stage, thus upsetting some deeply ingrained, very nearly theological intellectual conventions. For example, to that group of political scientists who call themselves "realists," this idea undercuts a central tenet of their worldview. Of course, one must always be skeptical of groups that give themselves a name that implies that only their adherents "get it" and that everyone else is by definition out of touch with "reality." And in this instance, the skepticism is warranted despite the fact that "realists" trace their intellectual origins back thousands of years to venerable characters whose names are now inscribed on library friezes, such as Thucydides. Because while realism is purportedly built around the study of power, "realist" theory suggests that international power is solely concentrated in the hands of states. Private actors don't really have a role in the realist cosmology. This despite the fact that today private organizations often and obviously wield power in ways that once only countries could, and in some cases in ways that many countries no longer can.

Many companies have greater economic resources at their disposal than many countries. Countries once derived power from their ability to print money, but now most can't or don't or have ceded the power to set the value of their currencies to markets. In fact, most of the value-bearing instruments in today's financial markets are actually created by private organizations, traded in private markets, and only very lightly if at all regulated or understood by governments. And recently governments have concluded that the fate of private financial institutions is so important to the well-being of society that when those institutions falter—even as a result of greed and, in some cases, malfeasance—it is incumbent upon states to prop up the private entities even as private entities have from time to time propped up states.

Countries once controlled borders, but now borders are no longer the effective barriers to commerce or cultural exchange they once were, and while states are weakened by this, global private actors are strengthened. Multinational corporations effortlessly move capital, products, services, and production facilities across borders that are far more porous now than they were in the past. As has been the case almost since their very inception, private actors also have the ability to project force and influence political outcomes, and many have far more developed mechanisms of international persuasion than do the vast majority of countries. Think about the private military companies that the U.S. government employs to fight in the Middle East, or the influence that corporate lobbyists wield in democratic legislatures, or the success that some major energy companies have had in forestalling action on climate change and other environmental issues.
To be fair, even more recently developed theories of international relations such as liberalism (which is similar to realism but stresses the pacifying effects of free trade, democracy, and international institutions) and constructivism (a theory that focuses on cultural factors and asserts that the international system is a social construct) mention private actors only in passing despite their growing influence and role in the global era. In short, most theories of how international society works—the supposed focus of the academic discipline of international relations—are state-centric. Which, as I suggest, is either to miss or to grossly undervalue an important part of what is shaping today's world and will shape tomorrow's.

Such intellectual blind spots lead, not surprisingly, to some pretty important flaws in theories on which some pretty important decision making is based. For example, they lead to the thought that the central work involved in advancing national interests involves diplomacy between states. They also assume that national borders define sovereign bubbles in which there is considerably more unity of purpose among resident actors than there actually is. Yet as we all can see from recent headlines, nonstate actors from giant corporations to terrorist groups ...
Customer Reviews

Most helpful customer reviews

38 of 39 people found the following review helpful.
By Loyd E. Eskildson
Appropriate balancing of public and private power is a central issue that helps determine the success of societies. About 15 years ago Americans celebrated the triumph of American capitalism and the defeat of state power by the focus of the marketplace - we'd shown that our balancing of the two was superior, if not optimum. Today, it is clear that our celebrating was premature. The freewheeling market model promoted by America is now reeling from self-inflicted wounds, while new models developed elsewhere (eg. China, Brazil, Israel, Singapore, the UAE) are providing better outcomes.

Author Rothkopf also points out this battle between Main Street and Wall Street is not unique to recent years, nor even to the U.S. - it has both raged years ago (Standard Oil vs. the trust-busters, Upton Sinclair/government vs. the filth, in-humaneness, and dangers of slaughterhouses, etc.) and across both oceans (England - 'Britain has the best democracy that money can buy;' China - moving from Mao's revolutions against businessmen to today's 'socialism with Chinese characteristics).

Unfortunately, since 1980 any semblance of proper balance between big government and big business has been lost - undermining our economy, politics, and international legitimacy. What drives this ongoing conflict? Markets find and exploit scale economies; scale economies, in turn, ease access to political and economic power. Another factor - confusing efforts to reign in alleged overreaching government power with supporting personal freedom. Reality, is that instead these 'victories' simply allow power to accrue to even less accountable private institutions whose interests do not align with those of most people. (Eg. Higher auto manufacturers' profits via emphasizing poor-mileage SUVs.) Thus, in the name of 'freedom,' we've opened the door to financial innovation that has brought excessive speculation. And pursuing the wrong overall economic goal (GDP) has led to loss of millions of jobs through off-shoring (eg. Asia), outsourcing (eg. Mexico), and hiring illegal aliens within our own borders. The former tight connection between economic growth and jobs creation is no more.

Rothkopf also expresses serious concerns over how voting rights have evolved in the U.S. We've gone from denying the right to vote to blacks, women, and while males who did not own land, to allowing each of the preceding to vote, again limiting suffrage via poll taxes (then overturning that practice), to now granting an enormous advantage to non-human corporations with cash. No other country claiming to be a democracy has granted corporations such a privileged role.

Originally corporations were state-sponsored entities whose existence were predicated on advancing the needs of the state. That no longer is the case in the Western world, and our corporations can now undermine society via off-shoring (Asia) and outsourcing (Mexico) millions of jobs, as well as hiring illegals within our borders by the millions. Interestingly, China avoids this problem via its heavy utilization of of state-owned-enterprises. (You probably also won't find any Chinese corporations emulating G.M. (helping Opel/Germany arm itself prior to WWII, assisting the management of Nazi death camps (IBM), or supporting Saddam (Haliburton).

The result - America has become greatly weakened, nearing or perhaps already a 'semi-state.' (A 'semi-state,' per Rothkopf, is one that cannot accomplish any of the four basic functions of a state. These are to manage its finances, project force or at least effectively defend itself, control its borders, and make and enforce its laws.) During the same time-frame, private actors have grown to the point where roughly their richest 2,000 are more influential than 70 - 80% of the world's nations. WalMart has revenues higher than the GDP of all but 25 nations. And the not-so-invisible hands of these mega-players now prevent addressing Global Warming, growing economic inequality, embracing new forms of energy, the need for regulating derivatives, etc. And they've helped shift the spotlight to Tea Partiers, instead of the fact that during the last three decades the gap between the bottom fifth and the top grew larger than it had at any time in history, and continues to grow worse.

Also turns out Adam Smith's support for businesses isn't all it's been claimed to be. 'To prohibit a great people from making all that they can of every part of their own produce, or from employing their stock and industry in the way they judge most advantageous to themselves is a manifest violation of the most sacred rights of mankind.' Rothkopf' take on Smith's 'invisible hand' - "too often we've found Smith's invisible hand to be an iron fist wrapped in an invisible glove."

The 'good news' from Rothkopf is that the 'Chicken Littles' are also premature. Rothkopf tells us there was just as much bickering, conniving, and stupidity in President Washington's time. And the Great Recession did not become a depression.

Bottom-Line: 'Power, Inc' is an excellent synthesis of today's conflict between government by voters vs. by influence-buyers.

4 of 5 people found the following review helpful.
5Wish Rothkopf would've run in 2012, then there'd be at least ONE candidate worth voting for.
By Mark Holechek
A MUST READ. The author is a master of explaining complex and important global policies and "plans" that affect us all, in a way that are both entertaining and enlightening. Frankly, if I hadn't read "Running The World" or "Superclass", I wouldn't have anticipated this next book with the same zeal. Fact is, I was looking forward to this (his) latest effort because there's always a tremendous amount of timely and vital information that is interspersed with humor--sometimes, even in a layman's lingo -- that hits home to the core of the issues and to the soul of the reader. That may sound corny, but it's very effective as a way of communicating the thoughts and concepts, and something I need in a book like this to keep me engaged. The author Pulls-No-Punches and shows no ambiguity whatsoever in his descriptions of the subject matter. Some of the scenarios I've already shared with colleagues and friends include the bankruptcy of GM and Saab, and the revelations I garnered from Rothkopf's evaluations of the way things happen differently between governments and businesses here in the US and in Sweden (and other stories from around the world, some approaching time immemorial). There are a lot of real, and dynamic perceptions that make you want to say, "HUH?"... information that will keep you hooked. From human rights issues to corporate hocus-pocus and everything in between, historically documented. Funny? Maybe. Scary? Potentially. Accurate? I think, absolutely. Take it from this guy who was Director of Kissinger Associates in NYC, to the Commerce Department of the US Government during the Clinton Administration, as a Professor at Columbia University, as a visiting Scholar of The Carnegie Endowment for International Peace, to the CEO of both the Foreign Policy Magazine Group and his own International Advisory Firm, Garten Rothkopf. (just Google him) Sounds like I'm stumping his book, and I guess I am, it was a great read and thoroughly enjoyable, because without spoiling the ending, it gave me hope.

14 of 36 people found the following review helpful.
2Slick Apologist for the Power Elite
By Mevashir
This book pretends to be for the common man.

It is well written to be sure and has much dazzling historical perspective.

But don't be misled. Rothkopf is no friend of the masses. He enjoys name dropping throughout this tome and telling us not only whom he met but where they met: The Four Seasons, The White House, etc.

His agenda seems to be to help soften the public up for the necessity of coming One World Government. Indeed in his credits he thanks a colleague who has written a book called New World Order.

His book closes too with a shockingly suggestive innuendo regarding his wife.

Here is a letter I have sent to him:

Dear David Rothkopf,

I read your new book, Power, Inc.: The Epic Rivalry Between Big Business and Government--and the Reckoning That Lies Ahead by David J. Rothkopf, and found it fascinating, generally well written, with great historical depth. Thanks for helping illuminate what clearly is a growing crisis of American national identity.

I have the following questions for you:

1. You write that the status of corporations in the early days of the US was ambiguous. I don't understand how this could be so since almost all the colonies were founded as projects for corporate sponsors in the UK. Can you clarify? It seems to me that the US essentially was founded as a giant polyglot British corporate entity.

2. I don't think Singapore, UAE and Israel can serve as useful role models for the US because the former are closely knit largely homogenous societies with a strong ethic of social solidarity, mutual support, and a safety net. The US, however, consists of a multiplicity of ethnicities and religions who live in tension with each other. As our social safety net rapidly is unraveling. I don't think the example of these small nations is amenable to our American social circumstances.

3. You also paint perhaps an unrealistically positive picture of Israeli society, which over the summer experienced historically unprecedented protest movements against the large disparity in distribution of income and national wealth. I think both here and in your discussion of this problem in the US you should have invoked the concept of the genie-coefficient to more clearly demonstrate the shocking income inequality that characterizes our society today. Here are some links about the Israeli protests, if you are not aware of them:


4. On page 250 you devote hardly more than one paragraph to the extremely important creation of the Federal Reserve system. You also imply that it is a branch of the Federal Government, when today most everyone knows that the Fed is a private banking entity, with secret shareholders, that has only token oversight by the US government. It hardly seems possible that a person with your connections would be ignorant of this, so I must assume that you are intentionally obfuscating. See these links for more information:


5. I found annoying your tendency not only to name drop but to mention the venue where you would meet the high and mighty, such as Larry Summers at the Four Seasons, a certain official at the White House, etc. Usually it is a sign of profound insecurity for someone to engage in such idle boasting. I pray you will learn your own inner worth so you do not have to seek to bask in the (presumed) reflected glory of others.

6. In your final acknowledgement to your wife at the end of the book, you appear to make a very suggestive innuendo regarding your eagerness to alleviate her inability to fall asleep at night.... Forgive me if I am reading too much into this, but I think this is a pretty tactless thing to write. But if this really is your intent, at least it manages to come full circle with the book's opening theme of the goat with the horns dripping red.

Menachem Korn



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