The war of state vs corporation

One World Trade Center View from New Jersey
I wish to repeat my claim that the regression towards authoritarian governments is a reaction to big corporations gaining influence on a global scale. The corporation fulfils the same role as the state, and so they find themselves in direct competition. In some cases this has lead to confrontations (Australia vs Coca-Cola for instance, and Apple and Samsung vs many different states). In many of these cases the companies find themselves ruled against by courts, but still find a way to win the confrontation.

States are immensely important when economies are based on manufacturing of products, mining and farming. These things require physical nearness and transportation. The transaction costs are lowered substantially by having a bordered country, wherein armies can defend the roads and keep internal transactions safe.

In a world where transactions are mostly online and costless. And transactions are distributed and non-local then the corporation has a strength in its purely symbolic nature. A corporation is not tied to a physical location, and thus do not provide safety for physical transactions, nor does it provide space and laws for how land may be utilised or products be transported. In return it gives the flexibility of sourcing workforces wherever they are needed, and where they are cheapest. They can also access the physical products required (copper, uranium, titanium, oil, silicon, silver, rubber etc.) where they are, instead of transporting them to a specific location.

Countries swing right in order to defend themselves against corporations. This is not completely obvious yet, but will become more and more obvious during the next twenty years. Corporations will move their profits and their work to where it is cheapest, thus slowly leeching the energy from the states, and retaining them in their structure. They gain in integrity as they drain countries of their inherent ownerships. Ownership is a key indicator for a countries strength, and integrity is a key indicator for a corporations strength. It is a bit like mass and energy, they can be translated to each other, but at a cost.

Countries seek to close borders, tax big corporations, focus on physical production, minimise workforce-travel, shutdown international trade as means to prolong their existence. Corporations fight to get around these rules and break through by strong-arming the countries.

Politicians seem to grow more and more inept, and the path for a good politician seems to be that from a period of governing countries and unions followed by a lifetime of governing corporations (sitting in board positions and director positions). Being a politician seems almost to be a trial period to be allowed into where real power resides. Meanwhile those who stay behind are those who do not support the shift from semi-static centralised government (democratic country) to dynamic decentralised control (international corporation).

The fluctuations in politics today are strictly speaking less important than we think. We should pay a great deal more attention to the fluctuations in corporations. Banks and investment firms can bring down nations and provoke wars, and so also inhibit them. It is in the corporations firm interest that inept easily pushed over politicians are put into positions of power.

Obviously we cannot do without the state, it is the basis of the corporation still. But the state is being subjugated by the corporation. It is being forced into a position of providing service and physical infrastructure to those who are important to the corporation. This usually means the big cities where the most workforce is located. This however may change with radical outsourcing and working from anywhere strategies are employed.

The biggest challenge the corporation faces currently is its own internal transaction cost. Currently a kind of kingdom/republic model is used to form hierarchies in corporations. This comes at a high cost and eventually inhibits the size of the corporation. It is old transaction cost wisdom that when the internal transaction cost goes above the external transaction cost then a corporation will stop growing. For the corporation to grow beyond its current size it will need to adopt radical ideas like self-organisation and decentralised leadership. Once companies do this however, they will easily outgrow the current cap that is artificially in play because of the default internal hierarchy.

Corporations are still based on ownership so we will still see a shift towards one corporations gradually becoming the owner of everything. This is not a bad thing. It is essentially the one-world-government many are looking for. It reflects the fact that we are one world, that we are working to create something and that we all want to make it better. The outcome has been states for a long time, since the personal barrier for travel was quite small. You’ll notice that where states began they are quite small, and where the idea of a state was implemented last they tend to be bigger – reflecting the ability of the individual to travel. But in the future as the individual has complete freedom to travel the world will become a one-world government. Though we will probably know it as the one world corporation. And I don’t see anything wrong in one world cooperating to create a better tomorrow.

I say adieu to the politicians today, and hello to the CEOs of tomorrow.