The End of Power Read online

  THE END OF POWER

  THE END OF

  POWER

  FROM BOARDROOMS

  TO BATTLEFIELDS

  AND CHURCHES

  TO STATES,

  WHY BEING

  IN CHARGE

  ISN’T WHAT IT

  USED TO BE

  MOISÉS NAÍM

  BASIC BOOKS

  A MEMBER OF THE PERSEUS BOOKS GROUP

  New York

  Copyright © 2013 by Moisés Naím

  Published by Basic Books,

  A Member of the Perseus Books Group

  All rights reserved. Printed in the United States of America. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information, address Basic Books, 250 West 57th Street, 15th floor, New York, NY 10107.

  Books published by Basic Books are available at special discounts for bulk purchases in the United States by corporations, institutions, and other organizations. For more information, please contact the Special Markets Department at the Perseus Books Group, 2300 Chestnut Street, Suite 200, Philadelphia, PA 19103, or call (800) 810–4145, ext. 5000, or e-mail [email protected].

  Designed by Trish Wilkinson

  Set in 11.5 point Minion Pro

  Library of Congress Cataloging–in–Publication Data

  Naím, Moisés.

  The end of power: from boardrooms to battlefields and churches to states, why being in charge isn’t what it used to be / Moisés Naím.

  pages cm

  Includes bibliographical references and index.

  ISBN: 978-0-465-03156-6 (hardcover: alk. paper)—ISBN: 978-0-465-03781-0 (e-book)

  1. Power (Social sciences) 2. Organization. I. Title.

  HN49.P6N35 2013

  303.3–dc23

  2012049642

  10 9 8 7 6 5 4 3 2 1

  To Susana, Adriana, Claudia, Andres, Jonathan, and Andrew

  CONTENTS

  Preface: How This Book Came About

  CHAPTER ONE

  THE DECAY OF POWER

  Have You Heard of James Black Jr.?

  From the Chess Board . . . to Everything Around Us

  What Changed?

  The Decay of Power: Is It New? Is It True? So What?

  But What Is Power?

  The Decay of Power: What’s at Stake?

  CHAPTER TWO

  MAKING SENSE OF POWER: HOW IT WORKS AND HOW TO KEEP IT

  How to Talk About Power

  How Power Works

  Why Power Shifts—or Stays Steady

  The Importance of Barriers to Power

  The Blueprint: Explaining Market Power

  Barriers to Entry: A Key to Market Power

  From Barriers to Entry to Barriers to Power

  CHAPTER THREE

  HOW POWER GOT BIG: AN ASSUMPTION’S UNQUESTIONED RISE

  Max Weber, or Why Size Made Sense

  How the World Went Weberian

  The Myth of the Power Elite?

  CHAPTER FOUR

  HOW POWER LOST ITS EDGE: THE MORE, MOBILITY, AND MENTALITY REVOLUTIONS

  So What Has Changed?

  The More Revolution: Overwhelming the Means of Control

  The Mobility Revolution: The End of Captive Audiences

  The Mentality Revolution: Taking Nothing for Granted Anymore

  How Does It Work?

  Revolutionary Consequences: Undermining the Barriers to Power

  Barriers Down: The Opportunity for Micropowers

  CHAPTER FIVE

  WHY ARE LANDSLIDES, MAJORITIES, AND MANDATES ENDANGERED SPECIES? THE DECAY OF POWER IN NATIONAL POLITICS

  From Empires to States: The More Revolution and the Proliferation of Countries

  From Despots to Democrats

  From Majorities to Minorities

  From Parties to Factions

  From Capitals to Regions

  From Governors to Lawyers

  From Leaders to Laymen

  Hedge Funds and Hacktivists

  The Political Centrifuge

  CHAPTER SIX

  PENTAGONS VERSUS PIRATES: THE DECAYING POWER OF LARGE ARMIES

  The Big Rise of Small Forces

  The End of the Ultimate Monopoly: The Use of Violence

  A Tsunami of Weapons

  The Decay of Power and the New Rules of War

  CHAPTER SEVEN

  WHOSE WORLD WILL IT BE? VETOES, RESISTANCE, AND LEAKS—OR WHY GEOPOLITICS IS TURNING UPSIDE DOWN

  The Stakes of Hegemony

  The New Ingredients

  If Not Hegemony, Then What?

  Who’s Afraid of the Big Bad Wolf? Traditional Power at Bay

  Soft Power for All

  The New Rules of Geopolitics

  Just Say No

  From Ambassadors to Gongos: The New Emissaries

  Alliances of the Few

  Anyone in Charge Here?

  CHAPTER EIGHT

  BUSINESS AS UNUSUAL: CORPORATE DOMINANCE UNDER SIEGE

  In the Land of Bosses, Authority, and Hierarchy

  What Is Globalization Doing to Business Concentration?

  The Power and Peril of Brands

  Market Power: The Antidote to Business Insecurity

  Barriers Are Down, Competition Is Up

  New Entrants and New Opportunities

  What Does All This Mean?

  CHAPTER NINE

  HYPER-COMPETITION FOR YOUR SOUL, HEART, AND BRAIN

  Religion: The Nine Billion Names of God

  Labor: New Unions and Nonunions

  Philanthropy: Putting the Bono in Pro Bono

  Media: Everyone Reports, Everyone Decides

  CHAPTER TEN

  THE DECAY OF POWER: IS THE GLASS HALF-FULL OR HALF-EMPTY?

  Celebrating the Decay of Power

  What’s Not to Like? The Dangers of Decay

  Political Paralysis as Collateral Damage of the Decay of Power

  Ruinous Competition

  Be Careful What You Wish For: Overdosing on Checks and Balances

  Five Risks

  CHAPTER ELEVEN

  POWER IS DECAYING: SO WHAT? WHAT TO DO?

  Get Off the Elevator

  Make Life Harder for the “Terrible Simplifiers”

  Bring Trust Back

  Strengthen Political Parties: The Lessons from Occupy Wall Street and Al Qaeda

  Increase Political Participation

  The Coming Surge of Political Innovations

  Appendix: Democracy and Political Power

  Acknowledgments

  Notes

  Bibliography

  Index

  PREFACE

  How This Book Came About: A Personal Note

  POWER MAY FEEL ABSTRACT, BUT FOR THOSE WHO ARE MOST ATTUNED TO it—namely, the powerful themselves—its flow and ebb can have a visceral edge. After all, those in positions of great power are best positioned to spot limits on their effectiveness and to feel frustration over the gap between the power they expect their rank to convey and the power they actually have. In my own small way, I experienced such constraints back in February 1989. At the time I had been named, at age thirty-six, the minister of development in the then-democratic government of my home country, Venezuela. Soon after we took office in a landslide election victory, we faced riots in Caracas—triggered by the anxiety over our plans to cut subsidies and raise fuel prices—that paralyzed the city with violence, fear, and chaos. Suddenly, and despite our victory and apparent mandate, the economic reform program that we had championed acquired a very different meaning. Instead of symbolizing hope and prosperity, it was now seen as the source of street violence, increased poverty, and deeper inequality.
r />   But the most profound insight I had at that time was one I would not

  fully comprehend until years later. It dwelt in the enormous gap between the perception and the reality of my power. In principle, as one of the main economic ministers, I wielded tremendous power. But in practice, I had only a limited ability to deploy resources, to mobilize individuals and organizations, and, more generally, to make things happen. My colleagues and even the president had the same feeling, though we were loath to acknowledge that our government was a hobbled giant. I was tempted to chalk this up to Venezuela itself: surely our sense of powerlessness had to do with our country’s notoriously weak and malfunctioning institutions. Such weakness could not be universal.

  Yet later I would appreciate that it was universal indeed, or nearly so, among those with the experience of power. Fernando Henrique Cardoso—the respected former president of Brazil and founding father of that country’s success—summed it up for me. “I was always surprised at how powerful people thought I was,” he told me when I interviewed him for this book. “Even well-informed, politically sophisticated individuals would come to my office and ask me to do things that showed they assumed I had far more power than I really did. I always thought to myself, if only they knew how limited the power of any president is nowadays. When I meet with other heads of state, we often share very similar recollections in this respect. The gap between our real power and what people expect from us is the source of the most difficult pressure any head of state has to manage.”

  I heard something similar from Joschka Fischer, one of Germany’s most popular politicians and a former vice chancellor and foreign minister. “Since I was young, I was fascinated and allured by power,” Fischer told me. “One of my biggest shocks was the discovery that all the imposing government palaces and other trappings of government were in fact empty places. The imperial architecture of governmental palaces masks how limited the power of those who work there really is.”

  Over time, I would glean similar observations not just from heads of state and government ministers but also from business leaders and the heads of foundations and major organizations in many fields. And it soon became clear that something more was going on—that it wasn’t simply that the powerful were bemoaning the gap between their perceived and actual power. Power itself was coming under attack in an unprecedented way. Every year since 1990, I have attended the World Economic Forum’s annual meeting in Davos, frequented by the world’s most powerful people in business, government, politics, the media, nongovernmental organizations, science, religion, and culture. In fact, I have been lucky enough to attend and speak at almost all of the most exclusive power-fests in the world, including the Bilderberg Conference, the annual meeting of media and entertainment tycoons in Sun Valley, and the annual meetings of the International Monetary Fund. My conversations each year with fellow participants confirmed my hunch: the powerful are experiencing increasingly greater limits on their power. The reactions to my probing always pointed in the same direction: power is becoming more feeble, transient, and constrained.

  But this is not a call to feel sorry for those in power. Powerful people bemoaning their powerlessness is certainly no reason for hand-wringing in our winner-take-all world. Rather, my aim is to delineate the impact of the decay of power. In the pages ahead I explore this process of decay—its causes, manifestations, and consequences—in terms of the ways it affects not just the 1 percent at the top but, more importantly, the vast and growing middle class as well as those who seek merely to make it through another day.

  Moisés Naím

  March 2013

  CHAPTER ONE

  THE DECAY OF POWER

  THIS IS A BOOK ABOUT POWER.

  Specifically it is about how power—the capacity to get others to do, or to stop doing, something—is undergoing a historic and world-changing transformation.

  Power is spreading, and long-established, big players are increasingly being challenged by newer and smaller ones. And those who have power are more constrained in the ways they can use it.

  We often misunderstand or altogether overlook the magnitude, nature, and consequences of this transformation. It is tempting to focus exclusively on the impact of the Internet and other new technologies, on the direction of power shifts from one player to another, or on the question of whether the “soft” power of culture is displacing the “hard” power of armies. But those perspectives are incomplete. Indeed, they can obscure our understanding of the fundamental forces that are changing how power is acquired, used, kept, and lost.

  We know that power is shifting from brawn to brains, from north to south and west to east, from old corporate behemoths to agile start-ups, from entrenched dictators to people in town squares and cyberspace. But to say that power is shifting from one continent or country to another, or that it is dispersing among many new players, is not enough. Power is undergoing a far more fundamental mutation that has not been sufficiently recognized and understood. Even as rival states, companies, political parties, social movements, and institutions or individual leaders fight for power as they have done throughout the ages, power itself—what they are fighting so desperately to get and keep—is slipping away.

  Power is decaying.

  To put it simply, power no longer buys as much as it did in the past. In the twenty-first century, power is easier to get, harder to use—and easier to lose. From boardrooms and combat zones to cyberspace, battles for power are as intense as ever, but they are yielding diminishing returns. Their fierceness masks the increasingly evanescent nature of power itself. Understanding how power is losing its value—and facing up to the hard challenges this poses—is the key to making sense of one of the most important trends reshaping the world in the twenty-first century.

  This is not to say that power has disappeared or that there aren’t still people who possess it in abundance. The president of the United States or China, the CEO of J. P. Morgan or Shell Oil, the executive editor of the New York Times, the head of the International Monetary Fund, and the pope continue to wield immense power. But less so than their predecessors. The previous holders of these jobs not only dealt with fewer challengers and competitors, but they also had fewer constraints—in the form of citizen activism, global markets, and media scrutiny—on using the power they had. As a result, today’s power players often pay a steeper and more immediate price for their mistakes than did their predecessors. Their response to that new reality, in turn, is reshaping the behavior of those over whom they have power, setting in motion a chain reaction that touches every aspect of human interaction.

  The decay of power is changing the world.

  The goal of this book is to prove these bold assertions.

  HAVE YOU HEARD OF JAMES BLACK JR.?

  The forces driving the decay of power are manifold, intertwined, and unprecedented. To see why, turn your mind from Clausewitz, the Fortune 500 rankings, and the top 1 percent of the US population that accounts for a disproportionately large chunk of the nation’s income and consider the case of James Black Jr., a chess player from a working-class family in the Bedford-Stuyvesant neighborhood of Brooklyn, New York.

  By the time he was twelve, Black had become a Master at chess, a ranking achieved by fewer than 2 percent of the 77,000 members of the United States Chess Federation—and only 13 of those Masters were under fourteen.1 The year was 2011, and Black has a good shot at becoming a Grandmaster—a ranking awarded by the World Chess Federation based on the player’s performance in tournaments with titled players. Grandmaster is the highest title a chess player can attain. Once obtained, the title is held for life.2

  When Black became a Master, he was following in the footsteps of America’s youngest Grandmaster ever: Ray Robson of Florida, who attained that status in October 2009, two weeks before his fifteenth birthday.3

  Black taught himself the game on a cheap plastic set he bought at Kmart and quickly moved on to chess books and computer programs. His idol is Mikhail Tal, a Ru
ssian world chess champion of the 1950s. What motivates Black, in addition to his enjoyment of the game, is the way it lets him wield power. As he told a reporter: “I like to dictate what the other player has to do”—as clear a statement of the innate urge for power as one can find.4

  But the achievements of James Black and Ray Robson are no longer exceptional. They are part of a global trend, a new phenomenon that has swept through the long-closed world of competitive chess. Players are learning the game and achieving mastery at much younger ages. There are more Grandmasters now than ever before: 1,200-plus today versus 88 in 1972. And as newcomers defeat established champions with increasing frequency, the average tenure of the world’s top players is trending down. Moreover, today’s Grandmasters hail from far more diverse backgrounds than did their predecessors. As the writer D. T. Max observed: “In 1991, the year the Soviet Union broke up, the top nine players in the world were from the U.S.S.R. By then, Soviet-trained players had held the world championship for all but three of the past forty-three years.”5

  Not anymore. More competitors are now capable of climbing to the top of the chess leagues, and they come from a wide variety of nations and neighborhoods. But once they reach the top, they have a hard time staying there. As Mig Greengard, a chess blogger, observed: “You’ve got two hundred guys walking the planet who, with a little tailwind, are playing strongly enough to beat the world champion.”6 In other words, among today’s Grandmasters, power itself is no longer what it used to be.

  What explains these changes in the world’s chess hierarchy? In part (but only in part): the digital revolution.

  For some time now, chess players have had access to computer programs that enable them to simulate millions of games played by the world’s best players. They can also use the software to work out the implications of every possible move; for instance, competitors can replay any game, examine moves under various scenarios, and study specific players’ tendencies. Thus the Internet has both broadened the horizons of chess players around the world and—as James Black’s story attests—opened new possibilities for players of any age and socioeconomic background. Countless chess sites deliver data and competitive game opportunities to anyone with a Web connection.7