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.
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.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
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