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Book Review: Power, Inc. by David Rothkopf


Companies, Rothkopf argues, can adapt quicker than governments to changing circumstances

Illustration by Curt Merlo

Companies, Rothkopf argues, can adapt quicker than governments to changing circumstances

Editor's Rating: Stars_6

A sprawling new book makes the case that companies, not kings, now rule the world

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

By David Rothkopf
Farrar, Straus & Giroux
436pp; $30.00

In the beginning, there was the goat. Sometime during the Dark Ages, in a corner of present-day Sweden, a goat named Kare broke free from his herd and went frolicking in the woods near the town of Falun. When Kare returned home, his owner noticed the goat’s horns had turned red: the color of copper. The discovery of that valuable and versatile metal at the place Swedes call Great Copper Mountain would kick-start economic development in Northern Europe, sustain the ambitions of Sweden’s monarchs, and, for a time, turn a cold, remote kingdom into one of the world’s great powers.

The story of Kare the Goat also serves as a kind of creation myth for David Rothkopf’s sprawling new book, Power, Inc. Stora Kopparberg, the business established in 1288 to mine for copper in the hills above Falun, still exists, making it the “oldest continuously operating corporation in the world.” Except now it specializes in paper products instead of copper, has offices in 35 countries, and boasts “annual sales that are larger than the GDP of almost a hundred countries.” Rothkopf argues that the evolution of Stora from a scrappy, goat-founded outfit to a $20 billion multinational business is emblematic of a tectonic shift in international relations, in which global corporations today wield greater power than all but a handful of nation-states. In that sense, the book’s subtitle is misleading: The “epic rivalry” between Big Business and government isn’t a rivalry at all. It’s a rout.

A former deputy under secretary of Commerce in the Clinton administration, Rothkopf has written two previous books on the power elite and is a reliable source of sound bites about U.S. foreign policy. But readers expecting a campaign-season analysis of current affairs will be disappointed, at least for the first two-thirds of Power, Inc., as they realize that the story of Kare the Goat is only the beginning of a breathless account of the last 700 years of Western political history.

Rothkopf is an energetic storyteller with an eye for the grisly, if gratuitous, historical anecdote. (He includes, for example, an extended eyewitness account of the beheading of Thomas Becket, Archbishop of Canterbury, in 1170.) Yet despite the author’s best efforts, the narrative sputters. Rothkopf provides a refresher on stuff that you never could keep straight in AP History class, such as who was defenestrated in Prague, or what precedent was set by the Supreme Court in Trustees of Dartmouth College v. Woodward. But this book might also remind you why it was so hard to pay attention in the first place.

Fortunately, the story of Stora is fascinating enough on its own. Beginning in the 1500s, Sweden’s rulers used the hard currency generated from copper sales to expand the powers of the state and exert authority over the church. During the first half of the 17th century, Stora became a chief supplier of copper for the munitions used by Europe’s warring armies. The prime beneficiary was King Gustavus Adolphus, under whom Sweden reached “a zenith of international influence it would never again achieve.” By 1650 the mine was producing 3,000 tons of raw copper. Gustavus’s daughter, Christina, said, “Sweden stands or falls with Copper Mountain.”

Even after the Swedish empire receded, Stora was able to “change and adjust with a nimbleness that a country could hardly duplicate.” When demand for copper declined, the company started producing iron and selling timber and paper products. The miners developed technical skills that gradually gave them more control over the business. Stora established its independence from the state in the late 1800s, setting the stage for massive expansion. By 1988, its land holdings were as big as half of Belgium. In 1998, Stora merged with Finnish competitor Enso, renamed itself Stora Enso (STERV:FH), and moved its headquarters to Helsinki. “Today,” the author writes, “Stora either owns, manages, or leases land in Europe, Asia, and South America that is equivalent in acreage to Qatar.” If it were a country, its economy would be larger than Bolivia’s. Its reach is so extensive that when peasants in Brazil tried to stop the sale of land to Stora in 2008, the Brazilian army suppressed the protests on the company’s behalf.

Rothkopf’s lament is not that multinationals like Stora have grown so strong, but that the world’s governments have failed to keep pace. 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. Rothkopf asserts that as many as 160 of the 192 United Nations member countries are little more than “semi-states,” a “faded version of what a state used to be or was supposed to be.” Meanwhile, the world’s richest country, the U.S., has allowed deep-pocketed, well-connected “supercitizens” to distort the political process in ways that undermine the public interest.

What can be done? Rothkopf argues that the financial crisis has precipitated a “reckoning” that is causing much of the world to abandon America’s laissez-faire approach to economic policy. He identifies various “competing capitalisms” that are “growing faster,” “competing more tenaciously,” and “combating inequality more effectively” than the U.S.; all of these alternatives also call for a more robust government role in the economy. Still, whether the successor to the American model comes from China or Sweden or Singapore, it’s difficult to see the balance of power tilting away from global corporations any time soon. Rothkopf asks former U.S. Treasury Secretary Robert Rubin whether, in the wake of the 2008 meltdown, large financial institutions should have been broken up. “Don’t you see?” Rubin replies. “Too big to fail isn’t a problem with the system. It is the system.”

Ratnesar_190
Ratnesar is deputy editor of Bloomberg Businessweek.

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Companies Mentioned

  • STERV:FH
    (Stora Enso OYJ)
    • $6.58 EUR
    • -0.04
    • -0.68%
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