Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a630465

Lord Ashdown: nation states are ceding power to multinationals

The era of monolithic nation states, led by the US as a clear global leader, is coming to an end, says former Liberal Democrat leader Lord Ashdown.

 
Lord Ashdown: nation states are ceding power to multinationals

The world is about to enter a protracted power struggle, with states gradually ceding power to multinational corporations, according to former Liberal Democrat leader Lord Ashdown.

Ashdown expects competing interests to jockey for their position in the global hierarchy. ‘We live through cycles of history when you have long periods of stability. The leaders are established, the powers are in control and we know the rules. The powerful remain the powerful throughout those periods,’ he said, speaking at a Citywire conference for wealth managers.

Although many historians see the 20th century as one of the bloodiest in history, Ashdown argued that it was in fact a period with clear power structures in place. The role of the US as global leader has long gone unchallenged, just as Europe’s role as the most powerful region in the world was accepted for more than 100 years prior to that.

‘To have a single nation so dominating the entire world as we have just seen, the period we are coming out of, is a very rare occasion. It happened at the height of the Roman Empire, arguably during the British empire and now for the last 50 years,’ he said.

But he warned: ‘If you think you have seen change, you ain’t seen nothing yet.’

The changes ahead

With unprecedented technological advancements making the world more interconnected than ever, power will now shift from nation states to corporations, institutions and treaty-based bodies. ‘The revelation of 9/11 is that you can be the most powerful nation in the world but it doesn’t stop the unregulated powers attacking you.’

The world will also be increasingly unregulated, as a freer flow of information chips away at traditional power structures. ‘Old powers of the nation, determined and constrained by their borders, are the ones that are declining,’ he said.

‘If you look at the powers that are now on the global stage, one unconstrained by national frontiers, those are the ones that are expanding,’ he said, adding that corporations with more money than nation states would be increasingly able to flex their muscles and influence governments.

US in gradual decline

Although he feels it is clear the US is slipping from its position as the world’s pre-eminent power, he emphasised this transition will be protracted, and he still expects the country to remain the global leader for several decades at least. ‘America is, relatively speaking, declining from its role of colossus, where it could do anything it liked in the world.

‘Any plans you are making on the world looking like it has looked for the last 50 years in a mono-polar world are likely to be undermined.’

However, investors expecting China to step in to fill America’s shoes should be wary, as Ashdown, who is fluent in Mandarin, said he believes the country will see a huge level of turmoil before it can rise to global leader. ‘I think China will have to go through a very considerable period of internal instability,’ he said.

He also cautioned those who perceive China as belligerent, arguing the state works in its own interest and would prefer peace to aggression.

Sign in / register to view full article on one page

9 comments so far. Why not have your say?

William Phillips

Oct 30, 2012 at 17:59

The USA only became global arbiter by accident in 1945, because the other powers had exhausted themselves in the Second World War: the victors (Britain, USSR, France) almost as much as the vanquished.

Ashdown is a Euromaniac who is still flogging the line that US corporations will conquer the planet unless-- wait for it-- we all join hands in a United States of Europe to resist what Jacques Servan-Schreiber was calling the 'defi americain' nearly half a century ago.

Like most politicians he is way out of date, extrapolating trends that have already decisively reversed. The reality of the modern world is that nation states have never been more numerous: over 200 sovereignties and more to come as old empires dissolve, such as Yugoslavia and the Soviet Union. The USA itself may fissure on racial lines within half a century as the demographic and economic strains of its extreme inequaliities become intolerable and its opinion-manipulators fail to convince the sheeple to huddle together against lame contrived bogeymen such as 'Islamofascism'.

The EU is more likely to fall to bits than coalesce. Catalonia and the Basque Country out of Spain, Scotland away from England, even the Sudan splitting up: more and more autonomy and devolution are the buzzwords, not Paddy's fantasies of unification. The internet has made people more aware of their impotence under state structures and how the media lie to them but it is also attacking the idea of monolithic, perpetual business empires-- not that the were ever as magisterial as paranoid lefties thought.

We live in a time when loyalty to an employer or a brand is at a discount. Like the mainstream media through which they struggle to keep our custom, the Fortune 500 are losing the plot. Technologies which encourage individualism in patterns of work and spending are not compatible with 'one size fits all' transnational capitalism.

The multinational (i.e. American) model of globalised business is giving way to autarky and protection, which technology makes more compatible with high living standards. China, which will have a bigger GDP than the US soon, is traditionally isolationist (as America used to be before it became a bully) and has no interest in running huge chunks of other countries' economies, engaging with cultures it despises-- only in investing in them. It has its hands full making its own people affluent.

Talking about who is to be the next world top dog is projecting a belligerent western mindset on to Asians. Like Stalin, the Chinese communists are far keener on dominating their own people than interfering with others in the name of windy abstractions such as 'liberty' and 'democracy'.

The USA's decline began as early as 1970 when Nixon decoupled the dollar from gold; it was impotent in the OPEC oil crisis, lost in Vietnam (and in most of its military meddling since Korea) and is now increasingly owned by the Chinese. America's relative weakening was disguised by the more rapid implosion of the USSR, but today it is all too obvious. The future is multipolar, but then so was most of the past between the Roman and British Empires.

report this

Mike via mobile

Oct 30, 2012 at 18:31

Interesting comments by Paddy Ashdown. He is right the massive multinationals are playing free and loose across national tax jurisdictions. Statbucks ebay facebook to name a few and do not paying their fair share of taxes. The nations of Europe must unite together and fight these business. They need tight tax laws and enforce them across Europe. The motto should be fair trading and fair taxes.

report this

Anonymous 1 needed this 'off the record'

Oct 30, 2012 at 20:08

This isn't new, historians and social scientists have been discussing the fall of the nation state for decades.

Modern governments have less control over events and are at the mercy of multinationals that can move about the planet at will. Overall multinationals are more efficient and innovative than government - just look at the NHS which is merely a user of products and inventions largely produced by multinationals.

report this

Mike R

Oct 30, 2012 at 21:23

It is not only multinationals that are gaining power and influence. But look a little closer to home and see French government holdings in their own multinationals And their holdings outside of France. Wake up UK, our politicians are asleep at the wheel.

And of course the big financial institutions eagerly look at the short term gains of handling such takeover involvement.

report this

tough enough

Oct 30, 2012 at 21:56

I think that the opposite of Ashdowns thoughts could be possible.

With the access to information and means of communication available I could envisage an inevitable shift to global people power.

The current democracies will have to adapt ...the non democratic states will collapse.

New political movements could evolve and grow ever more powerful as sources of popular ideology.... etc...etc

I think ( with respect ) that maybe Paddy cant see the future for the dinosaurs

report this

Graham Barlow

Oct 31, 2012 at 10:57

Polticians never seem to learn. If you over Tax Corporations who operate internationally they are adept of obeying the Economic Law that Capital flows to the lowest cost of production. Included in this cost is distribution Taxation in the market place. Clearly they will make sure they do not make a profit there, but in a jurisdiction of low, and lower Corporate Tax. The EU for instance is full of this. Take Luxembourg for instance and the way France manipulates it's VAT for advantage. The World's shipping has to be run out of Tax havens to make it viable. America has 1000s of companies in the West Indies, and even closer to home the State of Delaware has some positive Tax advantages making it a bit of a haven.. Included in this are the myriad Tax havens available here from the Channel Islands to the Isle of Man. The greedy Politicans are the creators of this system. Power that becomes absolute and despotic will kill off enterprise very quickly to the impoverishment of all. The upshot is the growth of companies and business going International for survival. Today lookl at Centamin in Egypt , what is that going to do to anyone thinking of starting a business in Egypt?

report this

Dennis .

Oct 31, 2012 at 12:05

Don't forget that the directors of a company have a fiduciary duty to their shareholders to minimise costs, this includes legal taxation avoidance. Governments are having less and less influence over economic issues as global issues drive the agenda now. This is why it makes little difference who you vote for , all parties are faced with the same issues and fewer ways of influencing events.

report this

Graham Barlow

Oct 31, 2012 at 14:20

You are right Dennis, Europe's Tax Payers are in full austerity, The British Nation is facing cuts in Government expenditure across many things from benefits to Transport. Our despotic Princes of the EU are demanding yet more money from the Tax Payer as they ride around in their Private executive Jets. I want somebody to finally put them out of business tout de suite If ever there was an abuse of despotic power , this is it. Any international corporate would try to deny these sinister people money.

report this

Kenpen2

Nov 04, 2012 at 12:00

William, interesting contribution as always. I agree that, in the name of local self-determination, the break-up of nation states is to be welcomed and should be accelerated. Why hasn't post-Saddam Iraq been split into its consituent parts ? Ditto Libya ? Why not Nigeria or many of the colonially-created African countries? Why not Syria ? Why not Israel ??

Closer to home I can't wait to wave goodbye to the Scotch as you memorably called them (why don't we English have a vote on that ?), and Wales and especially Ulster if they want to go.

But there has to be a limit and I'd be less sure about supporting independence for Cornwall or Yorkshire; or for London come to that, even though it feels pretty "foreign" and could conceivably make it as a city-state like Singapore.

Yet much less than two centuries ago the tide was running strongly the other way. There must be reasons why the Saxon kingdoms gave up (?) their independence to coalesce into Germany, or the Italian city-states amalgamated to become Italy.

It rmains an uncertain world with many threats to come from overpopulation, migration and competition for resources. There will always be strong reasons for small countries to hang together in some way for physical and economic security, for economic efficiency and to combat the worst excesses of capitalism; it's no coincidence that the US remains the only country / organisation big, powerful, determined enough to bring errant Corporations to book. I suppose I support the ideas behind the EU, it's just the actuality that's such an awful let-down.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

Fund managers from Standard Life Investments quizzed on investment trusts


What can SLI bring to the table for those who want to put their money into investment trusts?

More about this:

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet