Supper Class

What Power Looks Like

Do 6,000 people control the destinies of 6,000 million?

Money, power and politics. Is there a global super class rooted in business, finance and the media that is reshaping the modern world?

They ride on Gulfstream private jets, arrange the global agenda, and manage the credit crisis of nations. They have more in common with each other than with their countrymen. They are the Superclass.

Who are they?

Are Bill Clinton, Rupert Murdoch, the Pope and Osama bin Laden part of a new global power elite, asks Laura Miller.

How can we call them a class? Would they not need a shared identity and a shared ideology? A class means people who share a number of traits – a lot of power, wealth, the culture they participate in, the places they frequent. Usually they come from well known families, are well connected, are notably rich, often form part of government. They belong to self-serving clusters or clubs, they have huge influence, and they constantly network with each other. They need not share the same views, and they can move in and out of the super class. They gather regularly at conferences like Davos, go to the same schools, serve together on corporate and nonprofit boards, and above all constantly do business with each other - to the point that they have become a kind of culture in themselves, a "class without a country”. These people are "the new leadership class for our era."

"Davos man" is a term coined by the scholar Samuel Huntington to describe the type of person who attends the Davos conference in Switzerland. These are people who "have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the global operation of the elite.”

Is it not alarming that a small group should set up rules and self-regulating procedures and have enough influence to have them accepted by governments? The power structure in the world is not what we think it is. It is an unjust structure which has led to an inequitable situation, pain and death. This is because of the absence of adequate international institutions to provide regulation, guarantees and transparencies. These norms are in force in national markets, but they are lacking at the international level.

· Power and Decision Making in a Core Group

To get an idea of how the elite of the world acts at a time of global crisis, it's instructive to watch Timothy Geithner at work. He is the President of the New York Federal Reserve Bank. He has been at the center of frantic behind-the-scenes efforts to stop the spread of the U.S. credit collapse. He handles the phones within the offices of the Fed with a deftness that makes him suited to the job of one of the most powerful men in the financial world. He has to be in constant contact with other financiers around the world. Because interest-rate changes and cash infusions have less impact on markets than in the past, the power of central banks is effectively more limited today, so that no one institution, not even the U.S. Fed, has the power to deal with a financial crisis alone. Being a successful central banker now depends on what Geithner calls "a convening power” that is separate from the formal authority of the Federal Reserve.

Speaking to Geithner while I was researching my book, he sketched in fascinating detail how the world's power elite rallies when the markets are in trouble. Recalling an earlier crisis in the global securities markets, Geithner said the Fed brought together the leaders of the world's 14 major financial firms, from five countries, representing 95 percent of all the activity in global markets. The Swiss, the British, the Germans were there. Interestingly, no Asians were there, not even the Japanese. The Chairman of Goldman Sachs "jokingly called them ' the 14 families,' similar to those in 'The Godfather'." "And we said to them, "You men have got to fix this problem. Tell us how you are going to fix it and we will work out the regime. You know that if you move as individuals, everybody else will move with you."

There was nothing in writing, no rules and no formal process. No one asked the Fed to act, but the Fed let everyone in the markets know it was acting. The beauty of the process was its absolute efficiency, seeing what a tight circle of large firms with "some global reach" could get done, fast—with an executive committee of only four running the weekly conference. "There is no formal mechanism we could have used to force this on anybody, so we had to invent it. I think the recipe for going forward is that you have to have a borderless, collaborative process. It does not mean it has to be universal,” said Geithner. "You just need a critical mass of the right players. It is a more concentrated world."

Geithner's description of the financial elite in crisis mode came many months before the recent collapse of Bear Stearns, yet foreshadowed in an uncanny way how Treasury boss Henry Paulson, Fed boss Ben Bernanke, JPMorgan boss James Dimon and other bank heads came to an agreement regarding Bear Stearns which it could not refuse. The conversations were limited to the central players, the big decision makers whose influence would make the most difference on Wall Street and worldwide. Fast action was needed.

The Fed's evolving crisis-management underscores not only the move toward more public-private collaboration on big global issues, but also the concentration of power among a very select group of players—in this case, the heads of the world's biggest financial institutions.

· Many Forms of Power

There are a few thousand people worldwide like those invited by Geithner. They are not only in business and finance, but also in politics, the arts, the nonprofit world and other fields. They are part of a new global elite that has emerged over the past several decades. I call it the "superclass." They have vastly more power than any other group on the planet. Each of the members is set apart by his ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and often amplifies it through relationships with other superclass members. This new class of elites is both more permeable, and more transient, than elites in the past. The age of inherent lifelong power (like the royalty) is largely behind us. To be a member of this superclass one has to hold on to power just long enough to make an impact, either by leading a revolution or launching a revolutionary Web site.

The pope is a member of the superclass, as is Osama bin Laden, who can undoubtedly claim influence over current international affairs, even if he sometimes lives in a cave. The Russian illegal arms dealer Viktor "Merchant of Death" Bout is a member, as are Rupert Murdoch and Bill Clinton, who, while no longer President nevertheless heads the Clinton Global Intiative, a new form of international philanthropy.

· How does one become a member

So how does one become a member? As always, being rich certainly helps. Many superclass members are wealthy, wealthier than any elite has ever been. The top 10 percent of all people, for example, now control 85 percent of all wealth on the planet. But wealth is only part of the equation. Power is the other factor in any true elite, and if we want to understand the superclass, we need to look at those who have influence that crosses borders. The influence of most of the elites in history was predominantly national or even local in nature. Exxon Mobil CEO Rex Tillerson runs operations in 180 countries worldwide, a far cry from the Pennsylvania oil field and U.S. kerosene market of the man who founded his company—John D. Rockefeller.

The superclass include heads of state and religious and military leaders - even the occasional pop star, like Bono, but the core membership is businessmen: hedge fund managers, technology entrepreneurs and private equity investors.

That such a group exists is indisputable. It includes the heads of the biggest financial institutions, the top 50 control almost $50 trillion in assets. The heads of the world's biggest corporations are also members; the top 2,000 support perhaps 500 million people, generate almost $30 trillion in sales and have well over $100 trillion in assets - the list also includes top government officials with real cross-border influence: heads of state, leading diplomats and military chiefs, but also central bankers like Geithner and Bernanke, and their counterparts like Chinese Central Bank Gov. Zhou Xiaochuan, reappointed this week, and the other top economic officials responsible for the world's fastest-growing economy and its nearly $1.5 trillion in reserves.

They are joined by media barons like Rupert Murdoch, whose global network of newspapers, Web products, movie studios and TV stations reach hundreds of millions of people every day. They include tech entrepreneurs like Facebook wunderkind, 23-year-old Mark Zuckerberg, whose company is redefining what global community means. Alongside them you'll also find those who have different forms of power - religious leaders from the Pope to Iran's Ayatollah Khamenei, perhaps the most powerful man in the Middle East today; clerics who have taken to a media pulpit and reach millions. Cultural icons who use their celebrity platforms for activism like Bono and Angelina Jolie would certainly make the list, as would terrorist leaders and others who form a kind of shadow elite, like Osama bin Laden or the recently arrested arms dealer, Russia's Viktor Bout.

A growing number of tycoons from the emerging markets would make the mark like several Indians - like steel titan Lakshmi Mittal, feuding billionaire brothers Mukesh and Anil Ambani, and global auto magnate Ratan Tata. Russian oligarch Roman Abramovich, Saudi oil investor Prince Alwaleed bin Talal, and Chinese real-estate billionaire Yang Huiyan would be part of the superclass, among others.

· 6,000 people control the destiny of 6,000 million

One can debate endlessly who is in and who is out. Indeed, given that so much power today is institutional or job related (and thus fleeting), any ranked list is out of date almost as soon as it's finished. Yet I and my researchers have ended up with a core group of somewhere between 6,000 and 7,000 people—meaning that each one is "one in a million."

A glance at this high-powered class illuminates several key trends. Political elites may be the primary powers where national governments remain dominant—in places like China, Russia and much of the Middle East—yet overall, the list reveals a marked shift from public to private power. Globalization and, to a large extent, privatization, has fueled the superclass. In the 1960s, the average international company had 100 subsidiaries; today many number their subsidiaries in the 10,000s. In the 1950s, the big postwar U.S. defense establishment had a budget that was larger than the revenues of all major U.S. companies put together. Today, even though the defense budget is larger in real dollar terms, the sales of two major U.S.-based global corporations—Exxon and Wal-Mart—outstrip it by more than 50 percent.

This concentration of wealth and economic influence has translated into a concentration of power, a trend helped by the fact that the power of national governments is on the wane in many parts of the world. The rise of transnational activities (both public and private), a broad move away from state intervention in national markets and the effective reduction in the state's ability to use force due to the high price of modern warfare, have all contributed to the declining power of the individual nation-state. In turn, those whose organizations are built for global activity, like multinational companies or financial institutions (or terrorist networks or NGOs), have gained a relative advantage over individual governments and governmental organizations.

· Everyone knows everyone

"When we were walking through the Davos party we knew more people than when we were walking across the village green in the town we live in?" said Mark Malloch-Brown, former Deputy Secretary General at the United Nations and now a senior official in the British Foreign Ministry. In fact, Davos is a village green for the superclass.

In these conclaves, priorities are not only for their own constituencies, but for entire regions and the world at large. Possibly the premier gathering in Latin America is the "Fathers and Sons" event held annually by the world's richest man, Mexican telecom magnate Carlos Slim, who presides over groups of Latin American corporate giants. The Slim event illustrates the importance to the heirs of Latin America's traditional elite culture of connecting across borders, of forging international alliances within the global superclass with whom they have the most in common.

Thanks to this kind of social interaction, large portions of the global superclass are well acquainted with each other. Says Stephen Schwarzman, CEO of Wall Street's Blackstone Group, "The world is pretty small. In almost every one of the areas in which I am dealing you find it is just 20, 30 or 50 people worldwide who drive the industry or the sector." You'll find they also serve on the boards of an additional 140 other major companies and 22 universities. To Schwarzman, being a member of the superclass means being able to "get to anybody in the world with one phone call."

In general, the power players on the other side of the dinner table will still be white, male and from either the United States or Europe. But even as the group is narrow, it is still more permeable and global than the elites of preceding centuries. As noted earlier, fewer members have inherited wealth or power. Talk to the superclass and they themselves will discuss how important luck has been in determining their membership in the group.

Rational as it may seem to set up such systems, they aren't directly answerable to the people at large - they're undemocratic. Of course, as several of the superclass complain, most of the officials who are democratically selected by the masses don't really understand - and perhaps aren't even capable of understanding - the complex global issues that need to be dealt with. American congressmen, senators and even presidents know how to get elected by capitalizing on fears of gay marriage and illegal immigrants, but they understand little of high-level economics or science.

Nevertheless, the likelihood of forming a world government to handle the situation is remote. International institutions - the U.N., the IMF and the World Bank - are weak. The answer is not global government, but good "governance," writes David Rothkopf.

· Is there a remedy for Inequality?

U.S. presidential candidates like Barack Obama and Hillary Clinton have questioned the growing inequality in the United States. But the statistics in China are far worse. The salaries of major multinational CEOs now average more than 350 times that of the average employee— a tenfold increase over the disparities of the 1970s— so there is growing anger among Chinese workers.

How are we to insulate the public from these special interest groups? We need to create institutions that effectively represent the people at large. We need to move away from the four hundred year old system devised during the Thirty Years War when the nation-state was made the absolute entity. We have to come up with regulatory and enforcement mechanisms. We have to create other forms of balance to these concentrations of power. The media could be one form of balance.

In his book, Superclass: The Global Power Elite and the World They Are Making, (2008) David Rothkopf argues that geography, pedigree, networking and luck have created the superclass. He examines the nexus between money, power and politics, so his book is about power, not about wisdom. When there is an absence of wisdom, its place is taken up by influence and political pressure When a super class of 6,000 people control the destinies of 6,000 million people on the planet, it is the vast majority who suffer.

Rothkopf insists that elites ought to look out for the disadvantaged. "If global decisions serve only the powerful," he writes, “it won't just be unfair, it will produce a backlash." One such "backlash" is the administration of Venezuela's Hugo Chavez, a leader who is part of "the global network of antiglobalists," who taunt and thwart the global elite. No wonder one of the book's chapter sections is titled "Is a Crisis Inevitable?"

Rothkopf's idea is that the superclass ought to be smart enough to foresee such crises and head them off. It should recognize that "order and legitimacy are the allies of both business and those who seek social stability." This is not easy.

Of course, the power elite are not entirely indifferent to the world's problems. The Davos conference often spotlights issues like poverty in Africa and global warming, and high-profile charities such as the Bill and Melinda Gates Foundation and the Clinton Global Initiative suggest that at least some of the superclass feel obliged to step in where national governments have failed.

This article draws on three sources:

1. David Rothkopf, What Power Looks Like, 2008.

Rothkppf himself was a former undersecretary of commerce in the Clinton administration and an officer in an assortment of "advisory" firms, so he is an insider of sorts. He is a visiting scholar at the Carnegie Endowment for International Peace, and the positions he holds require some restraint in his views. As a result, "Superclass" isn't as condemnatory as Naomi Klein's anti-globalization manifesto "No Logo," let alone the conspiracy theorizing of "The Iron Triangle" by Dan Briody. But Rothkopf doesn't fawn over his subjects either. He does not publish his list of 6,000 names. “because the day after it was published, the list would be obsolete.”

2. Laura Miller: The rise of the Superclass, 2008, senior writer for Salon.

3. Stephen Sackur interviewing David Rothkopf, BBC, Hard Talk, 29-10-08.

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