http://www.foreignpolicy.com/story/cms.php?story_id=3476
Megaplayers Vs. Micropowers
By Moisés Naím
July/August 2006
Rising instability is good news for the little guy-and bad for everyone
else.
Royal Dutch Shell is one of the world's largest and most powerful
corporations. Bolivia is one of the planet's poorest countries; its economy is
a mere 3 percent of Shell's annual revenues. Recently, Shell CEO Jeroen van der
Veer noted, somewhat meekly, that his company was resigned to accept Bolivia's
decision to break the contracts it had signed.
Further, he said, it was no longer a good idea for oil companies to put
up a legal fight against the nationalistic policies of countries like Bolivia.
Once upon a time, giant multinational corporations did not bend to the will of
tiny governments. The behemoths of industry did not just stand by as their oil,
gas, or mining fields were seized under a national banner. They fought back,
and not just rhetorically.
In another part of the world, a ragtag militia equipped with small arms
and improvised explosive devices is denying the most powerful military in
history control of the territory it swiftly conquered. This same pattern, in
which small "micropowers" are successfully contesting the dominion of
traditional "megaplayers," is also in evidence in a far more cerebral market:
encyclopedias. The survival of the world's oldest and most respected source of
information, The Encyclopaedia Britannica, is threatened by strange newcomers.
One of them, Wikipedia, though just five years old, is already 12 times larger
than the Britannica that sits on your bookshelf. Wikipedia is free, exists only
on the Web, can be read in 229 languages, and is expanded daily by unpaid
volunteers. A recent study published in Nature magazine found in a random
sample of entries that, despite its far larger size, Wikipedia had 162 errors,
whereas Britannica had 123.
Britannica is not, of course, the only business whose survival has been
threatened by improbable new rivals. The New York Times, founded in 1851, now
thinks of eight-year-old Google as one of its most serious competitors. All
large companies are under pressure, and the trend is accelerating. According to
professors Diego Comin and Thomas Philippon of New York University, a company
in the top 20 percent of its industry in 1980 faced only a 10 percent chance of
no longer being an industry leader five years later. By 1998, that risk had
more than doubled. In fact, 39 of the top Fortune 100 companies in the United
States were not on that list last year. A high turnover of industry leaders
means a high turnover of CEOs, too. Of the world's 2,500 largest companies, 383
lost their CEOs in 2005; almost half of them were fired. According to the
consulting firm Booz Allen Hamilton, the turnover last year was the highest
since it began keeping track in 1995, and the number of CEOs dismissed because
of poor performance quadrupled. Surprisingly, CEO turnover was highest among
Japan's largest companies, once considered safe havens for mediocre performance.
Shorter tenures at the top, unexpected new challengers, and tighter
margins to maneuver also describe political life today. For starters, landslide
electoral victories, though still occurring-Jacques Chirac's in 2002 or
Junichiro Koizumi's in 2005-have become the exception rather than the rule. The
trend instead is for presidents and prime ministers to win national elections
with smaller margins. Razor-thin victories such as Germany's Angela Merkel,
Italy's Romano Prodi, or Costa Rica's Óscar Arias epitomize a pattern whereby
leaders elected with weak popular mandates are forced to govern by cobbling
together fragile coalitions. These political partnerships are easily upended by
microplayers who can use their ability to veto, stall decisions, or apply
popular pressure on more powerful actors. Naturally, this trend has also
shortened the tenures of cabinet ministers, which in most countries are now
more accurately measured in months than in years.
The proliferation of new microplayers capable of constraining their
mega-sized rivals is a rising trend everywhere. The United States is
constrained by Islamist terrorists. Central banks are threatened by hedge
funds. Control of large swaths of territory, critical government agencies, or
the nation's most lucrative business activities rests in the hands of criminal
organizations that are part of sprawling global networks. Gigantic media
companies are besieged, exposed, and sometimes crippled by the daily postings
of 40 million bloggers whose ranks double every five months. Latin American
governments have been overthrown by indigenous groups that only a few years
earlier were politically insignificant. Even the Vatican is facing stiffer
competition. Fifty years ago, 90 percent of Latin Americans were Catholic.
Today, 20 percent of people in the region identify themselves as Evangelical or
Pentecostal Christians.
This trend, where players can rapidly accumulate immense power, where the
power of traditional megaplayers is successfully challenged, and where power is
both ephemeral and harder to exercise, is evident in every facet of human life.
In fact, it is one of the defining and not yet fully understood characteristics
of our time. Today, scholars are arguing whether the international system, once
divided in half by the Cold War, is transitioning into a unipolar one where the
United States is the sole superpower, or whether we may be moving toward a
multipolar system centered on the United States, China, and other powerful
nations. It may be neither. What may be coming-and in some ways is already
here-is a hyper-polar world where many large, powerful actors coexist with
myriad smaller powers (not all of which are nation-states) that greatly limit
the dominance of any single nation or institution. Such a world opens many new
attractive opportunities for the little guy, whether a small country, a new
company, or a talented individual. But those opportunities must come at the
expense of something-and, in this case, that is stability. Whether you prefer
cheering for David or Goliath, the complex interplay of megaplayers and
micropowers portends a more volatile, fractious world.
Moisés Naím is editor in chief of FOREIGN POLICY.
[Non-text portions of this message have been removed]
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