
If a defining story of the 20th century was the rise of the multi-national corporation, and it seemed power were insensibly shifting from the public to the private sphere, it now looks as if a defining story of the 21st century will be the reverse of this trend, and the rise of sovereign wealth.
Global Corporations by Market Value (bn):
state-owned corporations in bold
| PetroChina | $546 |
| ExxonMobile | $465 |
| GE | $330 |
| China Mobile | $308 |
| Gazprom | $306 |
| ICBC China | $289 |
| Microsoft | $253 |
| Petrobras | $236 |
| Royal Dutch Shell | $221 |
| Berkshire Hathaway | $216 |
According to the New York Times, state-owned
Gazprom is gunning to pass ExxonMobile in market value before 2014, a feat already performed last year by the state-owned PetroChina. Meanwhile sovereign wealth funds - investment funds controlled by governments - have grown become some of the largest blocks of money in the world.
The nature of government-controlled wealth differs from country to country. While the Chinese government holds a majority share in several large enterprises, yet retains independent control of the country, in Russia the reverse has happened, and Gazprom seems to have grabbed a majority share of the
government. The recent election of Gazprom chairman Dmitri Medvedev to the presidency of the Russian Federation hammers home how much influence the company, whose tax receipts accounts for %20 of the Russian federal budget, has attained.
Global Investment Funds by Assets (bn):
state-owned funds in bold
| Abu Dhabi (s) | $1,300 |
| Vanguard (m) | $1,155 |
| American Funds (m) | $1,124 |
| Fidelity (m) | $970 |
| Japan Government Pension (p) | $866 |
| Singapore (s) | $489 |
| Norway (s) | $350 |
| Stichting Pensioenfonds ABP (p) | $332 |
| Saudi Arabia (s) | $300 |
| Kuwait (s) | $250 |
(m) mutual fund, (p) pension, (s) sovereign wealth fund
Historical trends can be hard to read because there are so many overlapping vectors: culture, technology, belief, etc. One of those vectors is centralization. In the west, the fall of the Roman Empire was largely a story of decentralization; local commanders, the
dux, became sovereigns in miniature. This process was not uniform across region or scale - in fact power often became
more centralized on the small scale - but overall the power of the state was consumed by local leaders. The modern period tells the story of how the state reasserted control, culminating in the terrible Soviet and Nazi regimes of the 20th century. The great battles of the 20th century can be read in part as an attempt to balance the power of the state with the power of the individual.
Should we, as western liberals, be worried by a resurgence of state power? I think the answer is an equivocal yes. A private corporation or investment fund can be largely trusted to operate rationally in the pursuit of profit. While this may not always contribute to the greater good it is at least predictable, and nations that trade together are less likely to fight; outside of "small wars" like Iraq, peace is profitable. When the state controls the economy it is free to pursue interests other than profit, which can include belligerent behavior. I equivocate because I believe the state is a citizen's best protection against the power of the rich. Unfortunately the states that seem to be flexing their economic muscles are some of the least liberal governments in the world, and their citizens are unlikely to see any benefit from the shift in power.