Whose Economy Is It, Anyway?
Public-sector versus private-sector interests—it’s a power struggle that has been waged through history, only to enter a whole new stage in recent years, according to Carnegie Endowment for International Peace scholar David Rothkopf.
The earliest nation-states gave rise to commercial markets and then strove over centuries to nurture them while restraining entrepreneurial greed. Over the centuries since, Rothkopf notes, governments erred by going either too far or not far enough in their oversight of markets. By the same token, societies suffered when government and business leaders became too close and protected each other instead of the public good.
The stakes have been rising since the 1970s, Rothkopf argues. The power of private interests has grown while that of governments has shrunk to smaller than ever before. Corporations effectively shape lawmaking through lobbyists or evade national laws altogether by going multinational.
Meanwhile, major corporations hold bigger financial reserves than most countries’ GDPs. In fact, government-issued currencies now hold only marginal value: The combined value of all of the world’s currencies is only a small fraction of the cumulative value of the world’s securities and derivatives, market instruments that are scarcely regulated or even understood.
As the private sectors have gained clout, income inequalities have widened worldwide. Rothkopf expects that the disparities will grow, and that more social tensions and business–government squabbles will likely follow.
Businesses and governments must both evolve, he concludes. We will need new attitudes and ideas, ever-greater collaboration among nations, stronger mechanisms of global governance, and better business–government partnerships. The private and public sectors need each other, and a healthy society needs both.
Rothkopf extensively portrays where the world’s political and economic systems have come from and where they are going. Readers with an interest in the dynamics of public and private sector interactions will find Power, Inc. a worthy read.