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What started out as an interview with Rinaldo Brutoco by Nancy Roof turned into a full-scale article. Rinaldo was so articulate that after the first question he was able to carry the ball alone ending in 15 pages of valuable text. We have pared it down for this issue and will include more in future publications. What catapulted Rinaldo into action was the following question: Governments are losing as business and civil society are gaining global power and influence. Sovereign states arose with the Industrial Age and economic progress. In the 21st century they are no longer capable of furthering economic growth so people have begun to look to business and civil society for leadership. How do you see the relationship between these three global forces?
This is one of my favorite topics. You are asking about the relative strengths and weaknesses of the three sectors of global society. Sovereign nation states operate unilaterally, bilaterally and through multilateral institutions that they create such as the United Nations. Civil Society is equally diverse. Business encompasses both the local employee who makes coffee and donuts on the corner or serves a taco on the streets of Tijuana all the way up to the largest corporation in the world.
Let’s start with governments. They are the easiest to understand. From the late 1600s to 1700s all the way up through the 20th century you find a period of formation of national sovereign states. The concept of sovereignty is a post-medieval concept. It was the solution to social organizations at a time when society had very different interests, challenges and opportunities. As is the case with most if not all institutions they often survive long past their useful viability. They were created four hundred years ago, became the dominant political force and are now irrelevant.
Why? Because the concept of sovereign nation states has little legitimacy in a world that is inherently global. That vendor selling tacos in Tijuana is in global commerce. The cost of the meat he puts in the tacos and the cost of the corn tortilla are based on global commerce and international treaties. But we believe the fiction that somehow because he is doing this on one side of the Mexican-American border it is more relevant than if he did it on the other. You can play this fiction out through endless iterations. American trucking interests say that each Mexican truck illegally stopped within 50 miles of the border violates NAFTA. They do it because they have the power to do what they want, despite the fact that they have a treaty to the contrary. They are trying to resist the nature of global commerce even with their next-door neighbor. That silliness extends ad infinitum. Why? We don’t live in nation states anymore. We are global citizens.
About 25 years ago people started asking me where I was from. I had the good fortune to be born in Canada, raised in the U.S., and lived overseas for extended periods of time. I’ve often wished that some green skinned people would land in a saucer. It would be the best thing in the world because then we would realize that someone with brown, yellow or red skin would look very normal. We’d see the contrast so dramatically that we’d all come together.
Although it is humorous to mentally picture little green men from space, it is nonetheless an apt way to encounter a very serious subject. Obviously, we are all part of one global family. That is our primary allegiance — if you doubt that for a minute, ask an astronaut who has viewed our beautiful blue planet suspended in the vast void of outer space and they will validate this point. Hence, forces inherently larger than they can control affect sovereign states, which are historical and artificial divisions within our home planet. Worse yet, their attempt to control by utilizing these artificial separations is causing an acceleration of the breakdown of human society.
Air knows no borders. Acid rain knows no borders. Oceans know no borders. Coral reefs know no borders. In fact from 150 miles in space you can’t see any borders at all with the possible exception of the original Great Wall of China, which today is not a border. This shows the utter irrelevancy of borders. That we hang on to the national thing gets us into unlimited amounts of mischief.
A modern day example would be that the U.S. has gone to war with Iraq. Apart from questions of morality and complex geopolitical issues, it is obvious that national sovereignty is a major issue. Let’s forget that for a second and say: You know there was a guy in my little village of Ojai shooting at the police. The police are entitled to go take him out. That is a legitimate function of police power properly used. Therefore, if the world’s village chooses to pass rules and certain individuals choose not to follow them, they should be subject to the normal processes of law. This means arrest by an internationally appropriate police force and trial in an appropriate international forum.
The International Court is the proper place for international crimes to be tried. I regret to say that the U.S. refused to sign on to the International Court. Let’s get on with it and disband the armies of the world, which have no useful purpose, so that we can have a police force that is effective. Police issues include global terrorism, money laundering, illegal conduct of corporations and individuals all over the planet who are engaging in anti-social behavior beyond the reach of one sovereign state and clearly affecting the entire global community. Nation states that cling to their old sense of power create endless mischief.
The aggregate of individual sovereign states at the United Nations is equally as mischievous. It is not because the UN isn’t well intentioned. I have profound respect for Kofi Annan. At the end of the day he is trying to fix something with a broken system. What is beyond sovereign states and the United Nations? That is the most interesting question.
I’d like to make another observation. There was a widespread global belief that at the end of the Cold War there was only one superpower left. Russia was no longer able to go toe to toe with the United States. I think it’s fascinating that the policy that was at the core of the Cold War was called MAD, Mutually Assured Destruction. If the purpose of the military is to assure Mutually Assured Destruction on everything on the planet something is fundamentally flawed. People thought there was only one superpower left at the end of the war. We now know that was incorrect.
There are two superpowers. Of the two, the United States is the least strong. There is a more powerful force in the world today. That is world public opinion. So the end of sovereign states is when you are the only armed titan left. But you still aren’t in charge because the entire game is a broken game and no longer has merit or value. World public opinion has more power.
How do we know that? Because in the face of world public opinion the U.S. has been forced to change its ways and will be forced increasingly every time it sees itself as a renegade, because the rest of the world perceives that that is what it is. That to me is a fundamental observation. So while we thought we had three legs on this milking stool, it turns out they aren’t the three we thought they were. It isn’t sovereign states, civil society and the business world. It is actually only two because civil society has the ability to form and reflect public opinion. The world business community is there too. What happens to a three-legged stool when we remove one leg? Unless the person sitting on it exercises independent balance it will collapse. Does it look like it’s collapsing? It is up to us, civil society, who are sitting on that stool to exercise independent balance.
There is only one question to ask. How can I serve? The balance is in knowing that the spiritual dimension is the force that runs through all of these items and it is that which gives us our balance.
Civil society is rising at the end of an era of sovereign nation states where all power was descended from Deus Rex, the King, by God’s will or some other hierarchical system (typically patriarchal). However denominated, that system became incorporated, developed into nation states, ran its course and is no longer effective. A new force called civil society is arising in the vacuum. Fortunately there is a powerful tool which society has created without realizing it; it transcends all the power blocks currently known on the planet by several magnitudes. That tool is the Internet.
Because we are becoming independently viable it is giving us the opportunity to create, act, and function like a global brain. In the process we are developing the resources for civil society to achieve a level of effectiveness that would have been impossible in a sovereign nation state system and would have been highly unlikely without the interconnectivity the Internet provides.
The metaphor of global brain is powerful (see Sidebar 1). If you take the impact on human society of radio, magazines, newspapers, televisions and motion pictures, combine them all, and multiply by 100, you still don’t equal the emerging impact of the Internet. It is not just a means of communication or a means to spread ideology or stories or culture. It is actually thought itself. It is collective global intelligence.
Every person sitting at a single personal computer anywhere in the world is performing the function of a single synapse in the human brain. Which is to say that, every single synapse in the global brain is potentially firing to any or every other synapse. The fascinating thing about the way neuron science understands the pattern of the brain is that there is no physical place in your brain or mine where memory is stored, where logic occurs or solutions are found. They are apparently created in the space between — the gaps between the synapses. Somehow magically one synapse fires in a myriad of directions to other synapses, which appear to be random but are actually highly ordered. Synapses work together through the space in between where memory, logic, thought and human intellect reside. To me that is exactly what has happened. Collective Intelligence is emerging because the Internet gave us the ability to connect the synapses.
What does that mean for civil society? World public opinion begins to become more mature as a fetus becomes more mature with age (see Sidebar 2). It grows, learns, adapts and changes. So will world public opinion. Nothing is more powerful than an idea whose time has come. That idea is that “we the people” are capable of taking back society. We will be doing it not just through institutions. Civil society will take direct responsibility for many aspects of global society.
Society is going through a turbulent period that I analogize to human birth. Think what it is like for a human fetus to come down through the birth canal. A fetus in the womb develops the electrical systems, the biomechanical systems, the musculature, the neurons to be viable, but doesn’t achieve it until it exits the birth canal. It is dark. It is messy. It is cramped. It is painful to both mother and child. Yet with a plan that has been in place for at least 3 1/2 to 4 million years, magically the child is born. The instant the child comes out in a normal healthy situation it is dependent on its mother and father for every necessity of life, but it becomes its own unique thinking personalized package of divine reception capable of listening to the encoded messages of the universe. The pain is over. The child loses most of the memory of the passage. What is left is a viable human being. To me the earth is now in the final stages of exiting the birth canal. Human society is becoming independently viable. The Internet is what is permitting that to happen.
My hope and my expectation is that business is going to help us solve global problems. Why? With the exception of very few businesses, military contracting being one of them, most businesses don’t win when there is a war going on. Also most have morality about what they do every day. They realize that you can’t sell anything during Armageddon. There is no room for a taco stand next to a suicide bomber. War is very bad for business with the exception of the guy making the bombs. It is in the enlightened self interest of the business community to be engaged in global peace initiatives.
The truth is that what is good for business is what is good for people and the planet. Even if you can get away with a little bit of greed for a period of time it will catch up with you and the smarter people get, the quicker it will catch up.
We started with a scandal, Enron. You notice how fast it started cascading? It took a few more months before Anderson, then it wasn’t long before MCI, Adelphi, then the Tyco revelations and now it’s the entire mutual fund industry collapsing. The New York Stock Exchange had to take down and rebuild its entire governing structure. No one individual will ever again be both Chairman of the Board and CEO of the New York Stock Exchange. No one will ever again have the power of unlimited personal greed at the expense of that most powerful of capitalist institutions.
I gave a speech in February 2003 to Corporate Directors called The Demise of the Imperial CEO. It was about tribal leadership. What is the legitimate and appropriate role of the Board versus the CEO? Shared power, not monolithic power, is consistent with the new paradigm. Sovereign nation states as well as corporations have gone past the imperial CEO time of the Caesars to a time when all the stakeholders of the corporation need to be heard. The companies that embrace that approach will be the most successful. They will not only treat their employees and vendors better, but also their customers and shareholders. The shareholders will get a better return and they will treat the community they operate in better. Next will be concern for planet Earth. That’s what’s coming. I was unsure of what the reaction would be of the 300 Directors because I was actually calling on them to rise to a higher level and a higher role. The result was a standing ovation. They understood we had a huge opportunity for everyone to win.
Does that mean that every Director has come around? No. But it is becoming the dominant paradigm. When you have negative restraints like Sarbanes- Oxley combined with these positive forces, the likelihood is that this is an irreversible trend. When we walk away from the imperial CEO and embrace the tribal model that gives us the ability to facilitate the bigger change particularly since business has an amazing amount of power.
The first thing we are going to do is to encourage more connection with civil society. I see the business community leading and being supported by and in turn supporting civil society. Demonstrations in the streets against the World Trade Organization, the IMF, the World Bank, and against globalization are a result of the old paradigm utilizing latent forces to divide and conquer. This will not succeed in the end.
We believe in the World Business Academy that our job in the business world is to be of service. There are interesting corollaries if you accept that. Think of what that does to redefine profit. Think of what that does to redefine what you do in the world and how you do it. Think of how it changes the economic system. Our job is to try to understand what works on the material plane of reality. If it is true that business is the dominant institution on the planet, that very belief implies a special obligation that no other institution has.
Willis Harman, my co-founder of the World Business Academy, used to use the analogy of the Holy Roman Empire. It was the dominant institution in Europe in the Middle Ages. Therefore it had the responsibility to think about how the whole system would work. Because businesses have enormous power today it is incumbent on them to have not only a normal level of commitment to service to the planet, but to have the level of responsibility that comes from being the dominant player.
Why do I say business is the dominant player? First of all, statistics: Of the 100 largest economies in the world over half of them are businesses and that number is going up dramatically every day. So we are not far from a time when the 70 largest economies in the world will all be corporations. These corporations operate beyond any international law. They operate beyond political and environmental constraints. They are huge entities that stride across the globe with all the power of ancient Rome. They have the ability to retract from one area of the world and appear quickly in another as they choose, usually causing havoc in their wake. There are some companies, not many, that seem to be trying to learn how to exercise this extraordinary power in a benign way. Those companies need to be encouraged.
Secondly, does anyone in the world today really believe that the political system in every advanced nation in the world isn’t being funded and run by business? You couldn’t have a better example than the United States. Basically four or five industries put up almost 100% of the money for George W. Bush’s nomination and election. Who are those industries? Look how pharmaceuticals are 30 to 40% more expensive in the U.S. than in any foreign country even though they are made in the U.S. The military procurement industry? Look at what’s happened to the military arms budget in the U.S. The Insurance Industry? Look what’s happened to protect insurance companies from their own remarkable manipulations of financial markets and the public has been forced to pay. The number one donor was military arms, two, military procurement, three, pharmaceuticals, four, insurance. These are the big winners. Everyone else is losing because they put up $250 million dollars and are reaping tens of billions in return. They made a bet and won.
Unfortunately the American public permits its coverage of election issues to be just like a horserace. Instead of looking at the interesting questions and causes and having a vibrant dialogue they have permitted the media to trivialize the entire electoral process preferring entertainment to information. I am not singling out Bush more than others, because historically there was far too much buying of influence in the prior administration as well. However, the current administration is particularly egregious in this regard and has gone beyond all prior precedents.
Political interests around the globe are much too influenced by the short- term economic interests of business. Business is inordinately powerful in politics and they are major funders of academic institutions as well. In science they can basically write the contract so the research comes out the way they want. So you wonder who is in charge globally? “Follow the money” and you will find out who is calling the shots. Where does the money come from? Business.
For every dollar that is circulating in the global economic system, how much do you think is spent on goods and services? Less than 2%. So 98% of the money circulating is just money chasing money. We are running a global casino. And when you run a casino who wins? The house can’t lose because the house makes the rules. People must get clear about what is happening.
The World Business Academy started 17 years ago with three objectives. One, to change the perception of people in business as to what their responsibilities are to all their stakeholders — which includes the public first and foremost. Two, to change the perception of young people as to what business’ appropriate role in society is so that they will go into business with higher expectations of how they can be of service rather than avoiding business because they feel it is too dirty, egregious, rapacious or destructive. Three, to change the perception of society at large as to what standards are minimally acceptable in business for the well-being of society.
If people will put their money where their values are, business will turn on a dime. I loved a quote in your Journal last month and have used it several times since. Peter Senge, a fellow of the Academy said, If you want to know how to get a car that will run on 100 miles a gallon — all China has to say is ‘yes, we want your cars as long as they get 100 miles per gallon’. When the marketplace speaks like that, business will listen.
We wrote the first piece on Spirit in Business 12 or 13 years ago. When we first wrote it we thought we had to be very careful not to threaten people. But we put it out there before anyone had used the concept. Today it is actually quite common. People are beginning to think about what it means. We have gone through the early wave of misunderstanding so people no longer mistake it for religion. Now spirit is commonly being invoked in all the best ways. That we are having the conversation at all is extraordinarily positive.
We started writing articles about the environment more than a decade ago although it was not perceived by most as a real global issue. It wasn’t a legitimate concern of business. It was something that non-profit organizations should focus on and then as only one of many voices for balancing our social needs. Today I don’t think there is a serious business voice in any of the developing world that doesn’t fundamentally agree with the premise that we have to conduct business in a way that is sustainable for society and the planet. This is quite a shift in less than two decades.
The Academy now has 15-16 years of cutting edge materials in their archives. It is the best-kept secret. People say how come I didn’t know about these new perspectives? The answer is that people were not ready to hear.
The good news is that these conversations are beginning to be heard and felt and the implications are beginning to work themselves out in the marketplace.
A leading international executive, writer and keynote speaker, Rinaldo Brutoco is widely recognized as a practical visionary, change agent and futurist. He is Co-founder and President of the World Business Academy, a collaborative network, publishing pre-eminent new paradigm business literature.