It is getting harder to distinguish brands from nation-states.
The resemblance is not simply semiotics: logos and flags, anthems and jingles, taglines and mottoes, mission statements and constitutions, founder stories and official histories, terms and conditions and legal codes.
Nor is it just structures: customers and citizens, shareholders and legislators, boards of directors and executives, chairpeople and monarchs, CEOs and presidents, oversight boards and judges.
Illustration: Mountain People
It is not even just size, although the comparisons are startling:
Walmart employs about the population of Botswana; Microsoft’s market capitalization 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 percent is controlled by Taiwan Semiconductor Manufacturing Co (TSMC). Not only does TSMC pick which businesses get the chips they need, and which countries get its new fabs, the company’s leadership has warned nation-states against competitive onshoring and advised China not to invade.
TSMC chairman Mark Liu (劉德音) said: “As to an invasion by China, 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 might be because of the cultural dominance of the “Westphalian system,” under which the global balance of power has since 1648 been envisioned 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 cyberattacks; and the sanctity of state borders has been breached 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’etre— of developed nation-states. Earthquakes, disease outbreaks, hurricanes, heat waves, 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 — 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, such as the US’ Defense Production Act; seeking legal coercion, such as the EU suing AstraZeneca; and providing liability shields, such as invoking the US’ Public Readiness and Emergency Preparedness 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 last year, Apple and Google set aside their rivalry to launch an “exposure notification” app, available to official public health bodies via iOS and Android.
By last month, more than 40 countries, and 25 US states, had plugged into this app — including initially resistant governments in the UK, 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 smartphones.
Such embedded reliance helps explain why, even in the depths of the pandemic’s first winter, the Edelman Trust Barometer indicated that CEOs were more trusted than government leaders, religious leaders and journalists, and business was more trusted than government in 18 of 27 countries, with 68 percent of respondents saying that 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 is 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 is Coca-Cola achieving a global presence on the coattails of World War II, the explosion of mercenary groups during the global “war on terror” — in 2006 there were estimated more than 48,000 mercenaries in Iraq, a combined force greater than three US Army divisions — or, lest we forget, the flag of McDonald’s still fluttering proudly over Guantanamo Bay Naval Base.
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 telephone books of former heads of state — former British prime minister John Major to Carlyle Group, former French president Nicolas Sarkozy to Accor or former Australian prime minister Malcolm Turnbull to KKR & Co.
On the other side are global leaders 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 US cannabis company Acreage Holdings on the day Canada legalized marijuana, to former British prime minister David Cameron’s cack-handed, if lucrative, shilling for Greensill Capital.
While the term “brand ambassador” might be little more than a title bump from “celebrity endorser,” it takes on a darker meaning when the CEO of ExxonMobil becomes US secretary of state in the administration of then-US president Donald Trump or when the owner of the New York Jets is appointed US ambassador to the UK.
However, even by these low standards, something seems to have slipped.
When Facebook in 2018 hired former British 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 effects on elections across the globe.
However, if it is true that in January Facebook CEO Mark Zuckerberg deferred to Clegg on whether to allow 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 government official the power to influence the political future of a one-term US 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. When former US president Barack Obama left office, he 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 and Spotify, and executive-produced American Factory, a very on-brand Academy Award-winning documentary exploring labor relations and trade with China.
The Obama playbook of a branded-content second act — beyond books and speeches — would inevitably attract a new cohort of youthful former state leaders 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 independent shop — Archewell Productions — inking copycat deals with Netflix and Spotify, and collaborating on an Apple TV+ series with US TV personality Oprah Winfrey.
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. More recently, 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, protested against restrictive voting laws in Georgia, Texas and other US states. Last month, Lyft and Uber pledged to pay the legal fees of any of their drivers sued under Texas’ draconian new abortion legislation.
The “women-founded and women-led” dating app Bumble went further, creating a “relief fund” for anyone seeking an abortion in Texas — a move that suggests a novel form of corporate jury nullification.
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 that it is better to sue for forgiveness than petition for permission.
Many of the “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 seen 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.
Innovation is also outpacing legislation across a swathe of new industries — not least vaping, virtual reality, fintech, foodtech, drones and 3D printing.
As US Secretary of Transportation Pete Buttigieg told 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,” he said.
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 Organisation for Economic Co-operation and Development, such “base erosion and profit shifting” strategies cost nation-states between US$100 billion and US$240 billion a year in lost revenue, or 4 to 10 percent 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 US — and not the one of Grumman, the firm that made the lander.
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 brand leaders 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 cosmo-capitalism age, 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 accounting standards.
Fast-forward another 50 years, and private brands might well be planting extraterrestrial territorial logos alongside the flags of nation-states.
Tesla CEO 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 UN grants “observer status” to about 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? Or the International Telecommunication Union more unifying of international telecoms than Google?
If such brands might be granted observer status, why not full membership?
In 2011, South Sudan became the latest country to join the UN after its people voted overwhelmingly to secede from Sudan. Last year, South Sudan’s GDP was US$4 billion — equivalent to 2 percent of Amazon founder Jeff Bezos’ net worth, or 0.2 percent of Amazon’s market capitalization. The pandemic made countries poorer and CEOs richer.
Of course, such comparisons are not simply about relative sums of money, but about power. If Amazon decided to follow Ben & Jerry’s lead and pull its products from 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 the US Congress, which regularly beclowns itself in the presence of disruptive CEOs.
This is not to say that South Sudan should not be the UN’s 193rd member, but why not make Amazon the 194th?
Of course, in some ways, it already is.
Despite UN Secretary-General Antonio Guterres’ rabble-rousing condemnation of “billionaires joyriding to space while millions go hungry on Earth,” he would doubtless jump at a meeting with Bezos with at least the same alacrity as he would sit down with South Sudanese President Salva Kiir.
Equally, if Kiir could address either the UN 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 promises that “everything we do is guided by a moral compass”? Or that oil giant Shell feels obliged to state that “we empower our staff and business partners to say ‘No’”?
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.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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