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Global Firms compete with Nation States

World's largest companies, like it or not , are becoming more powerful than some states. This is particularly the case for enterprises involved in information technologies or raw energy supplies. This may present a risk for democracy. But it is a valuable asset when it comes to maintaining or creating jobs. A private firm can effectively tackle, better than any public authority, the issue of unemployment. In this context, we can quote the case of the Swiss company Nestle which committed itself to recruiting and training 20.000 young people below 30 years of age. Worldwide firms will be increasingly important in this combat against unemployment, for at least 2 reasons. Many states are not geared to the challenges of globalization. And they are making swingeing cuts in their social budgets. Yet, the national health service in the UK employs around 1.4 Million people, as many as the Indian Railways. The national education system in France employs around 1.5 Million people. But the budgetary difficulties will compel many states to significantly reduce the number of their civil servants. Today, the trend shows that the economic balance of power has shifted. Here are a few examples: the turnover of Royal Dutch/Shell is close to Taiwan's GDP; That of Glencore to Algeria's GDP, and that of Volkswagen is close to Finland's GDP. A sign of the times: there are an increasing number of free trade agreements which include an arbitration clause in the event of a dispute between states and private firms. As it would concern a negotiation between 2 equal partners. Of course, states will try to take back control of the situation. This will be interesting to watch. There is no doubt that one of the great challenges of the 21st century will be the division of roles and responsibilities between the private sector and the state.

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