Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

The collapse of communism on the heels of this wide deployment of neoliberal ideas suddenly presented a vast new expanse for the employment of neoliberal narratives and policies in the 1990s. Not surprisingly, many a privatization adviser sent by an international development institution or Big Six accounting firm hailed from the United States or the United Kingdom and pushed many of the same reforms as elsewhere, this time into overbureaucratized, inflexible command systems that had lost their command. Rather than helping construct effective state apparatuses, the state was often berated and bureaucracy bypassed by creating quasi-government entities to go around government while doing its work. As the movement advanced with little resistance, privatization exploded around the globe; by 1998, its rate was practically doubling every year. There was power in positive thinking. As two political analysts assessed it, “if economic policy could lay claim to popularity, at least among the world’s elites, it would certainly be privatization.” This “privatization revolution” encouraged the melding of state and private power. Here again, while the narratives of neoliberalism were at work, including that of neutrality, institutions and policymaking processes were established that distanced citizens from the democratic input and the checks and balances for which they had been clamoring. 21

Whatever their merits, neoliberal policies could not help but facilitate the blurring of state and private relationships and authority. They could not help but make local environments friendlier to flex activity: When walls separating functions and ensuring balance of power are weak, those functions and power balances are able to be concentrated—enabling intensified influence. This does not mean, of course, that government bureaucracy has been put out of commission. Rather, forces are afoot to reinvent it, to make it more informal, improvised, and more dependent on personalistic networks. Bureaucracy has, as a result, become “multilayered and more diffuse,” as one analyst put it. Of course, all this eases the fusion of state and private power and provides a hospitable habitat for all manner of nonstate actors, with flexians and flex nets most in tune with it. 22

Delivering New World Orders

The end of the Cold War —the second transformational development—both intensified and expanded the changes earlier set in motion by the redesign of governing and by globalization. With the dissolution of bipolar authority, George H. W. Bush proclaimed a “new world order.” Obstacles, it seemed, had vanished. The End of History , touting the triumph of market democracy, told a compelling story and became a popular book—and mantra. Everywhere, it appeared, democracy, civil society, and free markets were on the march. 23

But the narratives of the era masked new forms of power in the making as private operators, be they transnational networks promoting policies and practices, international financial acrobats, or traffickers in drugs, humans, or nuclear materials, seemingly cooperated or colluded with officials and sometimes even stood in for the state. This point was aptly made by an illustrator who lampooned the “new world order” in a 1990s cartoon depicting an arms trader enlisting rogue suppliers to fill “new world orders.” The new order indeed presented myriad opportunities for another kind of “order.” That is because the fragmentation of authority brought about by the end of the Cold War opened up new, sparsely governed arenas ranging from borders controlled by smugglers and corrupt officials; to the economic reforms of states directed by self-appointed transnational actors, regional policies determined by cross-national industry associations, or human rights or environmental politics set by advocacy networks; to commerce regulated by money launderers and financial sectors organized by wizards of finance. The new and reconfigured arenas offered profitable targets for all manner of players who could not have enjoyed the same, relatively unfettered license or influence during the Cold War. 24

The unfettered financial arena is huge and growing. Money laundering, for instance, increased at least tenfold between 1990 and 2005, to an estimated $1 to $1.5 trillion, while legitimate global trade merely doubled during the same period, according to economist Moisés Naím. Moreover, as Naím explains: “The Moroccan human trafficker who doubles as a real-estate mogul in Spain, or the Russian arms smuggler who owns a bank in Cyprus—blurs the line that traditionally differentiates legal and illegal business activities.” Such players, through their criminal activities, help mesh official and private power as they develop close relations with politicians and bureaucrats wherever they operate. Naím contends that, “in many instances, the relationships are so close that government officials replace the national interest with that of the criminal enterprise.” Much of this unmonitored and untaxed activity not only eludes the controls of states and international organizations, but “is taboo in business and government circles,” as another expert on the subject observes. 25

While many more actors have been able to perform roles that matter since the close of the Cold War, means of transparency and accountability have not kept up. Whether doing good works, as many are, or operating on the “dark side” of civil society, the players in these arenas are generally not accountable through traditional means, as corporations supposedly are to shareholders (though not necessarily to anyone else) or democracies to voters. That is, they can powerfully influence the lives of people with little transparency and little established means to recognize this influence and hence hold it in check. 26

With the end of the Cold War, as with the redesign of governing, organizations and publics have become more reliant on players’ performances because lines of authority are often unclear or nonexistent. The rearranging of authority has rendered the track records of many players less visible and made it more difficult, in the absence of clear authorities, to recognize who represents whom and who is doing what. A key reason is because players themselves, not established authorities, are now often the ones with access to information. They can closely guard it while performing for the public, divulging only what is in the players’ interest for the public to believe. This has made it easier for today’s influencers to create the illusion of expertise at the expense of the real thing, to play roles off against each other, or simply to cover up for themselves. It has made it easier for these players to represent themselves as acting on behalf of the public while in fact acting on behalf of themselves. Thus many an arms trader and transnational organized crime figure has made compelling self-presentations that convinced publics of their civic-mindedness. Many a financial guru endowed with boundless legitimacy has done exactly the same.

In all this, the potential for the privatization of power, the melding of state and private power, and the players to replace the national interest with their own interests is enormous.

Adding Technology to the Mix

The third transformational development—the advent of evermore complex technologies —has added a new dimension, one unique in human history, to the redesign of governing and reconfiguration of authority engendered by the end of the Cold War. That is because complex technologies bring along with them new forms of organizing and means of interacting with the world. They lend themselves to new forms of power and influence that are neither bureaucratic nor centralized in traditional ways, nor are they generally responsive to traditional means of accountability. Take complex information technologies, for instance. The grand narrative of such technologies is that they are democratizing, egalitarian, and transparency promoting. And while there is truth to this, and certainly also illusion (I and millions of others receive regular e-mails from “Barack Obama” and “Joe Biden,” as if we are personally in touch with the president and vice president), these technologies also usher in new forms of governing that can lie far beyond transparency. For instance, advances in technology, while allowing the public unprecedented access to information, have also given government the tools to hide secrets and impede transparency, as several analysts have documented. 27