If brands have the power, wealth and impact of nation-states, should they not, like countries be held to account for what they really are: equals, allies, competitors and threats, Ben Schott asks
It’s getting harder to distinguish brands from nation-states.
The resemblance is not simply semiotics: logos (flags), anthems (jingles), taglines (mottoes), mission statements (constitutions), founder stories (official histories), terms and conditions (legal codes)
… structures: customers (citizens), shareholders (legislators), boards of directors (executives), chairmen (monarchs), CEOs (presidents), and oversight boards (judges)
… or even size, though the comparisons are startling: Walmart employs roughly the population of Botswana; Microsoft's market cap is greater than Brazil’s GDP; FedEx has five times more planes than Air India. The more substantial resemblance derives from the breadth of brand ambition, and the depth of our brand dependence.
Take the current global chip crisis. Nowadays, ever-increasing tracts of the world economy rely on the pure wafer foundry market, of which 55% is controlled by the Taiwan Semiconductor Manufacturing Co (TSMC). Not only does TSMC pick which businesses get the chips they need, and which countries get its new "fab" factories, the company’s leadership has warned nation-states against competitive onshoring, and advised China not to invade.
"As to an invasion by China [said TSMC’s chairman, Mark Liu] let me tell you everybody wants to have a peaceful Taiwan Strait. Because it is to every country’s benefit, but also because of the semiconductor supply chain in Taiwan — no one wants to disrupt it."
If this all sounds a tad whimsical — comparing gadflies to goliaths — it may be because of the cultural dominance of the "Westphalian system," under which the global balance of power has been envisioned, since 1648, as a mosaic of centrally controlled and culturally unified nation-states, each wielding a monopoly of force inside mutually recognized borders.
In reality, of course, these Westphalian axioms have always been more or less fluid: State sovereignty is regularly pooled militarily, legally and economically; central control has repeatedly yielded to demands for democracy and regional autonomy; cultural unity has been fragmented by religious freedom, mass migration and globalization; the monopoly of force is increasingly challenged by stateless terror and non-state cyber attacks; and the sanctity of state borders has been violated by the miasmas of pollution, climate change, invasive species and infectious diseases.
That said, for all its limitations, the Westphalian vision of sovereignty remains a useful lens through which to assess the emergence of brands as global players in their own right.
Defense and the Realm
External defense and internal assistance have historically been the province — the raison d’être — of developed nation-states. Earthquakes, outbreaks, hurricanes, heatwaves, floods, fires, insurrections and invasions demand a scale of command and control typically available only to state military and civil agencies.
Covid-19 tested this truism, even in the most advanced nations, both because of the pandemic’s unprecedented global impact, and because the highly specialized responses it required could often only be provided expeditiously by brands.
In many ways the initial scramble for personal protective equipment, and the subsequent jostling for tests and vaccines, respected conventional (if questionable) public/private supply chains — even if the pandemic’s severity meant deploying emergency powers (the 1950 Defense Production Act); seeking legal coercion (the European Union sued AstraZeneca Plc); and providing liability shields (invoking the 2005 PREP Act to protect vaccine manufacturers from prosecution).
More novel was how nation-states turned to private companies to solve the unprecedented challenge of contact-tracing entire populations.
In May 2020, Apple and Alphabet’s Google set aside their rivalry to launch an "exposure notification" API, available to official public health bodies via iOS and Android. By September 2021, more than 40 countries (and 25 U.S. states) had plugged into this API — including initially resistant nations like England, Finland, Germany and Norway. Significantly, many of the independent state-led solutions — notably Singapore’s BlueTrace, Israel’s HaMagen and France’s TousAntiCovid — were still obliged to interact with Google and Apple, if only to use their app store protocols to get their technology onto their citizen’s phones.
Such embedded reliance helps explain why, even in the depths of Covid’s first winter, Edelman’s Trust Barometer indicated that:
- CEOs were more trusted than government leaders, religious leaders and journalists
- Business was more trusted than government in 18 of 27 countries
- 68% thought CEOs should step in when governments fail to fix societal problems
The international dependence on far-from-neutral brands did not go unnoticed, as one anonymous German official told Politico: "We need to have a discussion on how Silicon Valley is increasingly taking over the job of a nation-state … But we don’t need to have it amid a pandemic."
If this unnamed German is right about the discussion, she’s wrong about the timing. As history teaches us, a Pandora’s box of profit-seeking seldom fails to open for the apocalyptic horsemen: whether it’s Coca-Cola achieving a global presence on the coattails of World War Two, or the explosion of mercenary groups during the Global War on Terror. (In 2006, the Private Security Company Association of Iraq estimated there were more than 48,000 mercenaries inside Iraq, a combined force greater than three U.S. Army divisions.)
And, lest we forget, the flag of McDonald’s Corp. still flutters proudly over Gitmo.
The revolving door between politics and business has spun for generations. On one side of the transom are commercial companies, snapping up the power, prestige and phone books of former heads of state (John Major to Carlyle Group, Nicolas Sarkozy to Accor SA, Malcolm Turnbull to KKR & Co.). On the other side, are global statesmen eager to build own-branded ventures, with more and less charitable aims (Kissinger Associates, the Clinton Foundation, Tony Blair Associates).
Such second acts are seldom subtle — from the announcement that former Canadian Prime Minister Brian Mulroney would join the U.S. cannabis company Acreage Holdings Inc. on the day Canada legalized pot, to David Cameron’s cack-handed (if lucrative) shilling for Greensill Capital. And while the term "brand ambassador" may be little more than a title bump from "celebrity endorser," it takes on a darker meaning when the CEO of ExxonMobil becomes Donald Trump’s secretary of state, or when the owner of the New York Jets is appointed America’s ambassador to the U.K.
But even by these low standards, something seems to have slipped.
When in 2018 Facebook hired the former UK deputy prime minister, Nick Clegg, as its vice president of global affairs, the appointment was widely viewed not as an old-school sinecure but as something more sinister: a political "heat shield” for a behemoth accused of enabling evils from fraud to genocide — to say nothing of its anti-democratic impact on elections across the globe. However, if it’s true that in January Mark Zuckerberg deferred to Nick Clegg on whether to allow Donald Trump back onto Facebook and Instagram, it would mark a pivotal spin of the revolving door: the CEO of the world’s sixth largest company delegating to a former British deputy PM the power to influence the political future of a one-term American president.
So much for Clegg’s pre-election preening: “Would it be acceptable to society at large to have a private company in effect become a self-appointed referee for everything that politicians say? I don’t believe it would be.”
Change is also afoot on the freelance side of K Street. On leaving office, Barack Obama followed well-worn convention by establishing the Obama Foundation (“Our mission is to inspire, empower, and connect people to change their world”). More unexpected was his decision to create Higher Ground — an independent production company that immediately struck multi-year deals with Netflix Inc. and Spotify Technology SA, and executive-produced “American Factory,” the very on-brand Oscar-winning documentary exploring labor relations and trade with China.
The Obama playbook of a branded-content second act (beyond books and speeches) will inevitably attract a new cohort of youthful former statesmen keen to wield soft power (and earn small fortunes) unfettered by orthodox gatekeepers. On quitting the royal family, Prince Harry and Meghan Markle lost no time in establishing their own indie shop — Archewell Productions — inking copycat deals with Netflix and Spotify, and collaborating on an Apple TV+ series with the brand powerhouse Oprah Winfrey.
"In a world where everyone has an opinion about people they don’t know, the duke and duchess have compassion for the people they don’t know. They don’t just opine. They run toward the struggle," writes @chefjoseandres #TIME100 https://t.co/2Cg39BKj1B pic.twitter.com/FhFmAW9UH1— TIME (@TIME) September 15, 2021
Naturally, such stellar brands don’t twinkle alone. Off they rocket to a galaxy of VIP constellations — Aspen, Alfalfa, Davos, Jackson Hole, Munich, Milken, Sicily and Sun Valley (to say nothing of Bohemian Grove and Bilderberg) — where they signal-boost alongside the new “nomenkooltura” of Bono, Bill (x2), Blair and Bezos (to name just some of the B’s).
Move Fast and Break Laws
Although the ability to enact and enforce legislation is a defining characteristic of the nation-state, private companies have long been powerful enough to shape public laws to their liking behind closed doors. Now, however, brands have also become far more willing — eager, even —to take overt positions on specific laws. In April, hundreds of companies (including Amazon, Google, Netflix and Starbucks Corp.) protested against restrictive voting laws in Georgia, Texas and other states. And in September, Lyft Inc. and Uber Technologies Inc. pledged to pay the legal fees of any of their drivers sued under Texas’s draconian new abortion legislation. The “women-founded and women-led” dating app of Bumble Inc. went further, creating a “relief fund” for anyone seeking an abortion in Texas — a move that suggests a novel form of corporate jury nullification.
Starting today, Bumble has created a relief fund supporting the reproductive rights of women and people across the gender spectrum who seek abortions in Texas.— Bumble (@bumble) September 1, 2021
Of course, brands wield their greatest legal power at the tabula rasa stage of innovation — before relevant rules and regulations are even envisaged. Lumbering legislators in dozens of nation-states are confronting the consequences of a disruption culture that has learned it’s better to sue for forgiveness than petition for permission.
Many of our buzziest brands have blitzscaled to vast market caps by leapfrogging their industry’s rules and regulations and embedding themselves into society’s fabric before elected politicians have uncapped their pens.
As we see from legal challenges across the globe, the most brazen examples are to be found in the sphere of peer-to-peer platforms, where accommodation companies sidestep the taxes paid by estate agents, renters and hoteliers; and ride-sharing brands circumvent the norms of employment and qualification. (It takes London’s licensed cabbies three to four years to acquire “the Knowledge.”)
However innovation is outpacing legislation across a swathe of new industries — not least vaping, virtual reality, fintech, foodtech, drones and 3D-printing. As the U.S. Transportation Secretary Pete Buttigieg admitted to Axios, the technology powering self-driving vehicles has left Model T regulation in the dust:
“We’ve got a lot of very detailed authorities for regulating where a mirror ought to go. They don’t even contemplate a scenario where we’re talking about sensors doing the work that mirrors or human beings used to.”
Finally, because taxation is just legislation with its hand out, multinationals have eagerly exploited global gaps and mismatches in nation-state tax codes to pay low or no corporate tax. According to the Organization for Economic Cooperation and Development, such “base erosion and profit shifting” strategies cost nation-states between $100 and $240 billion a year in lost revenue, or 4-10% of the global corporate income tax take.
Space exploration was once the strategic preserve, technical province and patriotic pride of nation-states. Even if brands like IBM, Whirlpool and Hasselblad were central to the 1969 Apollo 11 mission, there was no question that the Moon’s first flag would be that of the United States — and not the then-Grumman Corporation, which made the lunar module.
Fast-forward 50 years, and the answer is not so obvious.
Today’s space race has been joined by Blue Origin, Space X and Virgin Orbit — the competitive brand-children of billionaire businessmen who are motivated less by romantic stargazing than rapacious freebooting.
As the Earth floods, burns, chokes and shakes, so Atlas shrugs — and the world’s richest brandleaders set a course for Planet B as a place to dump heavy industry, lure tourists and escape the thin air of tax and regulation. The mission statement of Google’s Lunar XPRIZE could hardly be blunter:
“Space exploration had been in the exclusive domain of governments. Commercial exploration had not been a viable option, restricting creativity and resources of private markets.”
In our gilded age of cosmo-capitalism, the “final frontier” offers a libertarian terra nova beyond the wildest dreams of “seasteading,” onto which cashtronauts can project their commercial cupidity unfettered by hidebound laws, dead-handed bureaucracy, parochial ideologies, arts-degree intellects and GAAP accounting.
Fast-forward another 50 years, and private brands may well be planting extraterrestrial territorial logos alongside the flags of nation-states. Elon Musk is already there: The terms and conditions of his satellite internet service Starlink boldly state:
“For Services provided on Mars, or in transit to Mars via Starship or other colonization spacecraft, the parties recognize Mars as a free planet and that no Earth-based government has authority or sovereignty over Martian activities. Accordingly, Disputes will be settled through self-governing principles, established in good faith, at the time of Martian settlement.”
Truly, the ego has landed.
The United Nations currently grants "observer status" to some 120 intergovernmental organizations and specialized agencies — from the Sovereign Order of Malta to the International Seabed Authority. Doubtless, these bodies do admirable work, but is the Parliamentary Assembly of the Mediterranean vastly more vital to global democracy than Twitter Inc.? Or the International Telecommunication Union more unifying of international telecoms than Google?
And, if such brands might be granted observer status, why not full membership?
In 2011, the Republic of South Sudan became the latest country to join the UN after its people voted overwhelmingly to secede from the north. Last year, South Sudan’s GDP was $4 billion — roughly equivalent to 2% of Jeff Bezos’s current net worth, or 0.2% of Amazon’s market cap. (A pandemic that made countries poorer made CEOs richer). Of course, such comparisons are not simply about relative sums of money, but power. If Amazon decided to follow Ben & Jerry’s lead and pull its products from the Israeli-occupied territories — or indeed from any of the 188 countries with which Amazon does business — what might the impact be, and who would be able to stop it?
No third-party has seriously impeded Facebook’s growth, influence or toxicity — certainly not its much-vaunted Oversight Board, nor even Congress, which regularly beclowns itself in the presence of disruptive CEOs/
This is not to say that South Sudan shouldn’t be the UN’s 193rd member — but why not make Amazon the 194th?
Of course, in some ways, it already is.
Despite the UN Secretary-General’s rabble-rousing condemnation of "billionaires joyriding to space while millions go hungry on Earth," Antonio Guterres would doubtless jump at a meeting with Jeff Bezos with at least the same alacrity as he’d sit down with South Sudan’s President Salva Kiir. Equally, if President Kiir could address either the General Assembly or Sun Valley, is it obvious which he would choose?
We are so used to brands leaning toward liberalism, or at least paying lip-service to it, we risk mistaking cynical head-fakes for genuine conviction, especially as our apparent reliance on them grows. What does it tell us that Samsung Electronics Co. promises, “everything we do is guided by a moral compass”? Or that Royal Dutch Shell Plc feels obliged to state “we empower our staff and business partners to say ‘No’”? And what happens if such liberal masks slip, or are abandoned altogether?
If brands have the power, wealth and impact of nation-states, and increasingly act like nation-states, should they not be brought into the nation-state community, and held to account for what they really are: equals, allies, competitors and threats?
-With assistance from Lara Williams.