7 Consequences in:

Clement Guitton

Unlikely Allies, page 153 - 172

How Group Leadership Shapes International Afffairs in the 21st Century

1. Edition 2018, ISBN print: 978-3-8288-4278-6, ISBN online: 978-3-8288-7189-2, https://doi.org/10.5771/9783828871892-153

Tectum, Baden-Baden
Bibliographic information
Consequences Countering the idea of a world without leadership was relatively easy: we just needed to find examples of leadership – and there were plenty. The more difficult part consists of translating this idea into what it means for the future and for organisations. The manuscript has so far spent a great deal focusing on stories, and there is a reason for this that goes beyond merely finding counter-arguments to the current narrative of the world facing a leadership crisis: stories actually foster in and of themselves cooperation (no, the manuscript is not pretentious enough to think that it will influence the world order; it remains descriptive and not normative). In December 2017, an article published in Nature by a team of 13 scientists from British and Philippine universities teased the question of what has been the evolutionary advantage of storytelling, a ubiquitous activity they noted, from cavemen to today’s successes of Netflix and YouTube. They studied closely one of the still existing primal societies in the Philippines, the Agta, and came to the following conclusion: ‘one of the adaptive functions of storytelling among hunter gatherers may be to organise cooperation’. The conclusion came as the researchers noted that most stories focused on themes of ‘extol[ing] the virtues of egalitarianism and equality’ as opposed to ones about ‘maintaining the status quo and the leader’s authority’ to be found in other primal societies. Now, our society has evidently moved on substantially from the model of hunter gatherers. But the larger point, one well known of constructivist theorists, remains: the narrative that we choose influences our actions. By choosing to focus on a narrative that a leadership crisis drives the world events, we in turn reinforce these expectations and the trend that we think we’re discerning. On the other hand, by fleshing out another narrative, one can choose to reinforce cooperation, and use this cooperation to shape world events. The rest of the chapter will look at the consequences of group leadership theory in two different contexts: for politics itself first, and for businesses sec- 7 153 ond. Businesses can only influence the environment in which they operate to a certain extent, but they can try to maximise their impact if they correctly understand the non-market forces that shape this environment. Political consequences: a still stable world Group leadership theory has a much less negative message about the state of world affairs than a leaderless vision would suggest. It is more transactional, and critics will deplore that this means that states come together less based on values on than on sharing a mere objective. Yet, the most blatant consequence is hence to consider that the risk of conflicts of all types is not that high. Checks and balances built over years to keep the system resilient are working; there is no necessity to fight over a supposedly – but non-proven – power void; and competition has not overruled cooperation. Because states seek inclusion the world is less divisive, less prone to clashes or to domestic revolt. Regarding that changes can come about quickly (a recent example being that the thirty-three year reign of the Tunisian dictator Zine el-Abidine Ben Ali came to an end only ten days after a vegetable seller burnt himself in public in 2011), this is definitely a good thing. Checks and balances rely on rules and on institutions, which guard them. These multi-lateral institutions are doing fine. They are not dying. States have kept them alive by actively contributing to them. Earlier chapters have brought descriptions of this, but another much more comprehensive research is worth mentioning here. Julia Gray, associate professor at the University of Pennsylvania, published a review of international organisations in March 2018.40 Gray classified 171 international organisations according to three categories of vitality: those that are alive, those that are zombies, and those that are dead. She identified those organisations brought to life between 1950 and 2013, judged vitality as a function of activity (with regular meetings, for instance) and output, with vitality changing over the years. Her results? ‘Around 52 40 Julia Gray, 2018. ‘Life, Death, or Zombie? The Vitality of International Organizations’, International Studies Quarterly, 62 (1),1–13. 7 Consequences 154 percent of the organizations in the sample are alive and functioning, around 10 percent are essentially dead, and nearly 38 percent are zombies’. This is a comforting conclusion, with the bulk of international organisations still alive, multilateralism isn’t dead after all. In raw numbers, this represents roughly 40 organisations being alive in 2013. Discussions of multilateral institutions mean less focus on individual ‘large’ powers – the ones usually referred to by the Thucydides trap (a reference to Greek mythology, during which Sparta and Athens fought following the rise of the former). The trap referred to the fear that a war must take place when a new power emerges, displacing another one. One of the issues with such thinking – and one which group leadership theory largely circumvents – is that it ignores changes of balance and alliances between other states and takes as representative only what happens with great powers. Yet, the forces shaping great power relations can be vastly different from the ones shaping other, more numerous, states. For investors, this means that conclusions one might draw when looking at events occurring in the United States – withdrawal from cooperation on climate change, trade, and security policy – do not translate to other countries. Investments can, and should, still follow to other countries, given that other domestic conditions are met. Or, in other words, investors should not pull back on taking projects forward because of the fear of the geopolitics of a leaderless world. Political consequences: more stable societies? Group leadership may foster tribal instincts by exaggerating a sense of belonging to a group. If tribalism doesn’t sound like it would make society more stable, that’s because of an overemphasis of its negative aspects over its positive ones. Humans love belonging to groups, and can have recourse to extremes for their group. ‘They [humans] will seek to benefit members of their group even when they gain nothing personally. They will penalize outsiders, seemingly gratuitously’, writes the law professor Amy Chua in her 2018 book, Political Tribes. Even more dramatic, she goes on: ‘They [humans] will sacrifice, and even kill and die, for their group’. When China sends troops to Africa, its men are ar- Political consequences: more stable societies? 155 guably ready to die for this group. Although something similar could be seen with other groups within these pages, where outsiders may not enjoy the same extent of benefits as insiders (e.g., BRICS, the G20), these are arguably communities rather than tribes; no one would die for the group but the sense of belonging is still present. Also, regarding how group leadership theory has been set up here – especially with groups overlapping and with states not necessarily having a strong of sense of identity linked with the group – the downward risks of tribalism should not be overemphasised over its counterpart, cooperation. Cooperation stands in contrast to individualistic behaviours. The United States has had to learn a harsh lesson: no one is indispensable, no one is irreplaceable. Political analysts supporting the leadership crisis thesis are likely to suffer from a very high US-centric biased view when shunning evidence to the contrary. Jake Sullivan, a former National Security Advisor to Joe Biden, the then Vice President of the US, between 2013–2014, provides us with a good example of this deep UScentric view, as he wrote in Foreign Policy in March 2018: Who is going to make sure that countries increase their emissions reductions under the Paris accord when the next round of pledges comes in 2023? Who is going to pull the world powers together to execute a followon agreement to the Iran nuclear deal? American leadership is even more critical in emerging areas where the rules have not yet been developed or where previous solutions no longer work. Chapter 3 presented a few good candidates who would take over that role: the same many groupings that brought the Paris agreement together in the first place. Maybe paradoxically, the individualistic stance of the United States may have participated in bringing countries together. It has become clear that the US, especially under the Trump administration, has been battling to reaffirm US hegemony. The administration has sought to withdraw from multilateral institutions formerly built by the US but which now has been constraining it. It sees that in relative terms notably, these institutions have been benefiting others more than the US itself. However, this dismantlement cannot happen so easily. Alliances formed within these multilateral institutions are an important counterweight to the will of the Trump administration to re-assure that US power lives on. This counter-weight is a force to reckon with – as the 7 Consequences 156 book has shown, but not only. A reaction of allying, or uniting, is usually commonplace when individuals feel threatened, not listened to, or bullied into certain positions. That such feelings at the individual level would translate to state behaviour would not be entirely surprising. After all, individuals drive state affairs and their processes. The answer of Cecilia Malmstrom to US President Trump’s introduction of tariffs on steel in June 2018 would not have it otherwise: ‘When they say “America First”, we say “Europe United”’. It rings almost like a chant. A similar phenomenon has occurred with the European Union and Brexit. Right following the vote, there were fears of other exit referendums taking place and succeeding. It hasn’t been the case. As Brexit negotiations have unravelled, it has become clear that the UK will come out certainly humiliated from this process and certainly not as a ‘winner’, whichever the outcome will be, soft or hard Brexit. In turn, ‘Brexit has saved the EU’, as the Financial Times columnist Simon Kuper put it in a piece in Summer 2018 even more provocatively titled ‘Boris Johnson may have saved the EU’. When trying to bring a blow to groups already formed, the group may in fact become stronger, not weaker (what Nassim Taleb would then described as an ‘antifragile’ group – unlike only a robust group, it builds on the experience to become ‘better’). The point about cooperation and alliance may bring along a further positive development for societies, if we accept this assumption that state and individual behaviours are closely related. It may make societies more resilient to suicide. Stay with me, even if this sounds crazy at first. Underdeveloped countries have much lower suicide rates than economically developed ones. This is an oddity: with more welfare and higher security should not come higher suicide rates – these almost defeat the point of economic growth. The French sociologist Emil Durkheim reflected on this issue at the end of the 19th century and explained this phenomenon with how richer societies assign blame. Richer societies are usually more individualistic societies in which the individual is considered responsible for his fate. This means that individuals are also responsible for their own failure. Carrying this important burden leads people to suicide. One of the ways to counter this is either to go back to ancient beliefs, that part of people’s fate is in fact dictated by luck or by demons, or another way is to make societies Political consequences: more stable societies? 157 less individualistic, more open to cooperation, and to spread responsibility among a group. Sounds familiar? Group leadership theory could have a top-down effect of making societies more resilient by passing onto the individual level the assumption that states are stronger when acting in groups. Humans pick up and interpret subtle signals in sometimes surprising ways: from the baby stage, our evolutionary system learns to copy a form of authority. In our adult stage, the state embodies this form of authority (the state still has the monopoly of power – it can put you behind bars should you decide to go against its will, for instance). Most of us respect the institution of the state because of this power – and would probably, conscientiously or not, follow an example promoting cooperation amongst equal group members over individualistic behaviour. The worldwide average of suicide per 100,000 people has been decreasing in a straight line since 1995. It would be silly to explain this decrease with only one factor. Coincidentally though, the slope of this decrease changed in 2014, right after the turning point of 2012/2013 mentioned in this book.41 On a different note, but still trying to show how group theory can make societies stable, a shift from viewing the world as a leaderless chess board to one seen through the lenses of group leadership theory is in harmony with an approach recently popularised in management theory: ‘self-management for evolutionary purposes’. Its author is Fréderic Laloux, a 10-year employee at McKinsey, who sold, according to his own account, 350,000 copies of his book, Reinventing Organizations. According to the author, thousands of companies have already 41 Data from the Institute for Health Metrics and Evaluation, 2017: 7 Consequences 158 implemented this model, which is quite close to democratic leadership. Laloux sees an evolution in organisations’ structures – and self-management is, hence, one supplementary iteration of this evolutionary process. At the beginning were ‘impulsive’ organisations, Mafia like, with a constant fear of the boss, who was there to direct the organisation’s minions. Then came ‘conformist’ organisations, military like, hierarchical, control freaks. This was followed by ‘achiever’ organisations, as most multi-nationals are, oriented towards beating the competition. Next-to-last came pluralistic organisations, with a strong focus on culture and ‘empowerment to achieve extraordinary employee motivation’. Lastly is self-management, replacing hierarchies with distributed leadership and ‘purpose as primary motivator and yardstick’. The reader will see very quickly the traits that are similar to group leadership theory. Interesting for this chapter are the consequences that the author highlights for organisations that implement this type of structure: more trust emerges as people view organisations with the ‘assumption of positive intent’, ‘collective intelligence’ as meaning that everyone can chip in, providing a better flow of information, more accountability (as in more transparent), more equal and fairer. In a simplistic way, this would explain why there would be fewer conflicts within an organisation. And in a similar simplistic way, this would also apply to state relations. It is possible to view Laloux’s theory as a grassroots, bottom-up movement as he describes it. Or, it is an influence from how state relations have influenced the shape of organisations. Both ways show a shift in how societies operate. This is markedly different from what one can read in many media reports: populism, the breakdown of institutions and of multilateralism, lack of trust in organisations (public as much as private – see the 2008 financial crisis if you’re unsure), resentment of elites, and more. Bad news sells more than good news, and similarly, humans have a certain propensity to see headwind risks rather than opportunity (from an evolutionary perspective, this was always better for our chances of survival). This explains why theories bringing such negative factors to the front may find a larger audience than the ones with a more optimistic outlook. Group leadership theory would hence mark a change in societies that is firmly positive: less individualistic, making it easier for people Political consequences: more stable societies? 159 to find purpose, where unfair treatment is not only shunned but realistically acted against, and in which achievements are still on the daily menu. These consequences would not only be at the societal level, but can be used to inform how certain countries would behave in relations to their peers. Political consequences: country trajectories As mentioned, the G0 view emphasises downward risks; group leadership theory moves the pendulum in the other direction. Where there is a decline of US influence will come a realignment of alliances. Looking at the Middle East, and at the recent move in May 2018 of the US embassy from Tel Aviv, Israel’s capital, to Jerusalem, a city reclaimed by Palestinians because of its religious significance, one could see the decline in US influence. Many countries did not follow the US example but rather lambasted the country for the move. France said the move violated international law; Turkey condemned it on similar grounds and expelled the Israeli ambassador from Turkey; South Africa withdrew its ambassador from Israel; and the Irish and Dutch Foreign Ministers respectively considered it as ‘inflaming already a very tense situation’ and unwise. But beyond the decline of US influence, one can also see how other countries came together. While in this particular case, no formal alliance has been on the table, formality has not been here a core tenet of the group leadership theory. Instead of accentuating the decline of leadership, it is equally possible to emphasise the opposite, countries coming together on a position. What this tells us is that where there is a fracture with the status quo, there will be other allies willing to reorganise around the fracture. The US pulls out of the Iranian deal, the Joint Plan of Action, and Russia and Syria seize the opportunity. ‘Already, some Syrian tender offers stipulate they are only for Iranian firms’, wrote the journalist Borzou Daragahi in Foreign Policy in June 2018. An important consequence is hence not to see the world as being more fragmented – as a G0 world would have you believe – but as one with differently rearranged alignments. These rearranged alignments further imply that countries are not weaker and less coordinated. If they manage to align their views, 7 Consequences 160 this means that they do manage coordination. And as part of alliances, they hedge their bets, and are arguably stronger. Consequently, within such an environment, the G20 and G7 remain prominent; other multilateral venues are as much so as well. China does not seek to fill a vacuum but works closely with other Asian partners and the European Union. Transatlantic ties with the European Union and the rest of the Americas (excluding the US) flourish. Within Latin America, security, trade, and other common views (for instance on fighting corruption tainting democratic institutions, the whole against a backdrop of anti-establishment feeling) bring countries together. The European Union, still hit by populist forces, remains a Union. Members leaving shouldn’t give more credence to a leaderless world. Reshaped alliances can still function effectively. For anyone doubting it, it is hard to argue that the post-Brexit EU has lost its firing power when looking at its response to the trade threats from President Trump or at its concerted handling of Russia with denunciation, expulsion of Russian diplomats, and maintenance of sanctions over the poisoning of Sergei Skripal, a former spy for Russia, and of his daughter in the UK. In the end, as Western democracies pull their weight together, so do so-called ‘rogue states’. States the US regularly categorises as foes – Russia, Iran, North Korea, even China – come together, seeing their interests in doing so. Europe, the Middle East, Asia, Africa, and the Americas all have their own sets of issues: finding the correct balance with states seeking to secede (in Europe), the Syrian conflict as a proxy for Sunni-Shia confrontations and managing the energy turning point away from oil (in the Middle East), managing the debt (in Asia and in the Americas), ending ethnic conflicts and spurring economic growth (in Africa), and more. On none of these issues is there evidence that nothing is happening. The world is not a still place; it doesn’t need a clear individual leader to perform. The book cannot make the claim that states will win over Islamic terrorism, that (sovereign or commercial) debt will not blow up, that trade barriers will all fall to zero, or that fault lines around immigration will subside. It makes a claim that is a lot more modest: that countries will still look to implement policies that solve Political consequences: country trajectories 161 these issues. They will act. They will not stay idle, watching on the side, not willing to show any type of leadership. This should provide comfort to investors, especially those who would have unfortunately embraced the view of an alleged G0 world (that Bremmer has started a newsletter, a company, and a TV show called ‘GZERO Media’ seem to indicate that there are quite a few believers of this world view). For these, the crux of the matter probably comes down to a certain view of the world, either optimistic or pessimistic. Pessimists may have forgotten that events do sometimes turn out alright. Sometimes with a bit of luck too. Consequences: technologies fostering group leadership Upcoming technological changes are likely to further reinforce the trends indicated by group leadership theory. This will be the case with crypto-currencies, energy, standards (for new telecommunication channels, such as 5G), and artificial intelligence. These technological innovations are likely to transcend all industries, and will affect them in different ways. As with many new technologies though, they will beget ethical reconsiderations, political, and social changes. Businesses will find it hard to stay away from these changes. The next financial crisis could push for more adoption of cryptocurrencies. Many laypeople do not understand how reserve capital in banks functions, or how central banks’ quantifying easing programme and interest rate hikes work. Many blue-collar people see it as a nontransparent system of the bourgeoisie pulling the strings of the economy and making the weakest suffer, draining all the milk that they can. Crypto-currencies à la Bitcoin, on the other hand, are a lot more democratic – in popular representation, at the very least (in reality, a couple of individuals hold the big share of the pie). A new financial crisis, fuelled by debts and where central banks would have only very limiting firing power to react (regarding already ballooned balance sheets and still low interest rates), could trigger a wide political shift and support for a system that moves away from the traditional function of central banks. Crypto-currencies could be one of the solutions. And 7 Consequences 162 such a system could work a lot closer to group leadership theory than is actually the case for monetary policy. Another point leading to more widespread adoption of crypto-currencies could be the need to have an alternative to private companies such as Visa providing electronic payment possibilities. As cash falls into disuse, there may be a possibility to not rely exclusively on private companies to provide such a service, especially should they for any reasons become non-operational. The idea that Martin Sandbu, a columnist at the Financial Times proposes, is that central banks would propose a version of e-cash with full reserve banking, a version in which everyone could ‘open deposit accounts directly with the central bank’. In such a scenario, the central banks would retain much of their current power – unlike in the previous scenario – but the effect would still be similar: crypto-currencies, currently inherently more democratic in their setups, would become more widespread. Bitcoin, which made crypto-currencies famous, especially because of their high volatility and the gains they could bring (and losses as well) also brought to light another undesirable aspect of crypto-currencies: their energy consumption. Some analysts have claimed that Bitcoin annually consumes as much electricity as Switzerland needs for an entire year. That makes it a very power-hungry technology just to confirm transactions. But it highlights another major trend: our societies’ increasing reliance on electricity. The switch from oil to electricity as an energy source is also ripe for collaboration. ‘Because renewables are intermittent, regional grids are needed to ship electricity from where it’s plentiful to where it is not’, explained The Economist in March 2018. Electricity is better shared than thrown away; unlike oil and gas, it cannot be left in the ground once produced and needs to be sold off and used, even if that means doing so in another foreign market. Such a switch to a massive scale, especially for automobiles, should mean more integrated networks of physical infrastructures, regulations, markets, and politics. This point is valid for standards concerning new technologies in general. So far, there has been much noise about the new mobile standard, 5G, which would allow a faster internet and better data transfer. The competition has so far pitted the US against China. The US tried to restrict Huawei, ZTE, and Singapore-domiciled Qualcomm from Consequences: technologies fostering group leadership 163 defining the new standards, especially because of fears that communication networks controlled by China would pose a national security threat to the US. In a volte-face to the US attempt at restricting the reach of the companies, China managed to secure cooperation from Japan and South Korea to develop the new telecommunication standard. The Chinese companies partnered with mobile operators and equipment makers in many countries to try to develop and implement these standards. Such a tactic is likely to become common for any future technological standards (concerning upcoming technologies, for instance in the realm of artificial intelligence, too). Countries will still manage to come together to define international standards, even at the behest of others. A leaderless theory would have people believe otherwise. Consequences for businesses Looking at the consequences for businesses is warranted for a specific reason. A review in the New York Times of a book on Reinventing Capitalism in the Age of Big Data (the book is by Viktor Mayer-Schönberger and Thomas Ramge, the review by David Leonhardt), provides a crisp explanation for such a focus on businesses: Coordination allows communities to accomplish tasks that individuals working alone cannot. People can build on one another’s strengths and make up for one another’s weaknesses. Coordination made possible the library of Alexandria, the Great Wall of China, the Suez Canal and the moon landing. Coordination, in turn, depends on communication — the exchange of information that allows people to work together. In modern times, the most effective way to coordinate behavior, other than through government, has been through a company, also known as a firm. Firms tend to follow a top-down approach to coordination. In other words, businesses provide a conduit to implement many of the solutions to global problems, and a channel to foster cooperation (beyond mere coordination). It therefore makes sense to look at how such a worldview would affect their operations as well. With more transparency, trust, and credibility in institutions, what can follow for businesses? Organisations would be less likely to be victims of a public relations backlash; they could ensure that their busi- 7 Consequences 164 nesses minimise harm; and that the mission is genuinely the real driver for their stakeholders, not increased profits. Two examples of this have emerged recently. Mark Zuckerberg, prior to the Cambridge Analytica scandal, laid out his ambitions in a blog post in February 2017: In times like these, the most important thing we at Facebook can do is develop the social infrastructure to give people the power to build a global community that works for all of us. Zuckerberg repeated his claims during a Congressional hearing that followed the Cambridge Analytica scandal that the company ‘want[s] to build a service that helps connect everyone in the world’, and this for free. Similarly pushing this aspect of ‘corporate social responsibility’ is Lany Fink, the founder of BlackRock, the ‘world’s largest asset manager’, who urged in January 2018 that CEOs of companies might contribute more to society than only by focusing on making profit. He wrote: Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Such corporate social responsibility initiatives have existed before and will probably continue with or without group leadership. Due to its core traits (inclusiveness, equality), however, group leadership theory makes it even more likely that companies engage more with such thinking. And yet, not is all rosy with group leadership theory either. It is noteworthy that the business environment would not necessarily be more conducive to sustained growth. If we want to look at businesses, the research of two people can be beneficial here: Michael Porter – a man whose framework is probably the most known and taught in business schools – and Pankaj Ghemawat. Porter identified five forces, which shape industry profitability. His starting point is to note that there are large differences of profitability within industries and no matter how good a manager might be, he would not be able to move profitability much beyond the average industry profit margins. Porter explained these differences by identifying five constraints to profitability within an industry: threats of new entrants, threats of substitutes, the Consequences for businesses 165 bargaining power of suppliers, the bargaining power of buyers, and rivalry among existing competitors. This framework is useful here, because something becomes almost instantly clear: in a world of sustained and deeper cooperation, competition can become tougher. Threats of new entrants and of substitutes rise as barriers to entry go down (whether the leverage of buyers and suppliers changes is less clear cut). This means increased downward pressure on profitability for a few businesses. A global battle for skills can also follow, making it more difficult not only for businesses but for industries to attract people with the required set of skills to do the job. Now, group leadership theory doesn’t mean necessarily a more globalised world, per se. It just makes it more likely that as countries work as equals together on specific issues, it leads to increased understanding and increased crossborder exchanges between them. Here enters Ghemawat, somewhat less known than Porter, but not in any way less impressive: he entered Harvard at the age of 16, started his PhD there at 19, and graduated at 21, and then went on to being the youngest person ever to become a full professor at Harvard Business School, where he stayed for 25 years. Ghemawat is mostly famous for countering the idea of the New York Times’ columnist Thomas Friedman that the ‘world isn’t flat’. He sees that when looking at data, cross border integration is far from being complete; national borders still matter very much. This doesn’t hinge on the argument of world leadership, actually. Within group leadership theory, states still matter very much, as governments are still the ones making the calls about to what extent they want to work together with other countries on climate change, and economic and security challenges. Again, this doesn’t have to mean that they accept the challenge of bringing down barriers by integrating their economy or military forces together. As previous chapters have described, this can rather be in the form of accepting a specific agenda, lending money or security forces. Another of Ghemawat’s works can be useful to analyse the effects of group leadership theory on world affairs: the ‘ADDING’ framework. For companies doing business abroad, this is a framework focusing on looking at characteristics at the company level – not industry level anymore, as with Porter – to find out whether managers have taken decisions cognisant of the many ramifications that they would trigger. 7 Consequences 166 ADDING looks at the possibility of increasing profits (instead of focusing on threats, as Porter does) by analysing whether the globalisation strategy makes sense, based on whether it adds volume, decreases costs, differentiates (e.g., with brand building), improves the industry attractiveness, normalises risk (e.g., hedge price fluctuation or risk of price ‘wars’), or generates knowledge (e.g., with intellectual property rights transferred from one part of the world to another). Ghemawat’s framework tells us that group leadership in international affairs may make differentiating products more difficult, and that to ensure that any advantages will be sustainable in the long term will also be tougher. On the other hand, adding volume and optimising risks by hedging bets in different countries could become easier. Porter’s and Ghemawat’s tools are useful to highlight that group leadership theory does not point to a future where everything will be ‘better’ – as much as not everything becomes worse if the world faces a genuine leadership crisis. Some aspects will become better and others will not. In short, one must be ready for a change – being on the lookout for it is a good first step, so as not to trail behind. Ensuring that the company’s culture is not one in which novel ideas are being shot down because they might sound like crazy ideas is another one (remember the role of scenarios in order to do that). When delving into detailed industries, depending on the business, these consequences will also vary. This last chapter will not delve into the numerous industries that exist but will just briefly compare two (finance and agriculture) to give the reader an idea of how much this difference can matter. In the financial industry, banks and insurers operating globally have rising costs when they have to deal with vastly different regulatory requirements in different jurisdictions. This breakdown of the regulatory environment constitutes the current consensual view of the future in the industry. Group leadership theory promotes a different thesis though: via cooperation, the regulatory environment is more likely to become more coherent than when considered through the lens of a G0 world. This would mean costs down and profit margins up for these sectors. The changes highlighted above concerning the monetary cycle affected by technology would also mean that the industry could face being taken less as the scapegoat of the world’s problems – a view likely to raise eyebrows in a few current left-wing, anti-imperial- Consequences for businesses 167 ism circles. Inter-state cooperation also makes it less likely for states to impose transferability restrictions between a company’s parent and its daughters. Going one step further, this can lead to a rather uniform regime (for instance, for taxes, compliance, capital requirements), making cross-country administration easier. A much different sector is agriculture. It is different first and foremost because of regulations, which are not, arguably, as complex to implement as they are in the financial industry. Identifying products and their consequences is also more straightforward than within the finance industry. Two political challenges are currently topping the agenda: limitations to free trade in the form of quotas, tariffs, or subsidies; and the use of ‘transnational land’, by which is meant sovereign states buying (or renting) agricultural lands in other countries in order to ensure food security at home. The phenomenon of transnational land is by any measure not small. Land Matrix, a non-governmental organisational, keeps an inventory of such transactions. According to them, 1,865 deals have gone through, totalling 50 million hectares of land. Leading the pack in the origins of countries concluding deals are the US, Malaysia, the United Arab Emirates, the UK, India, Singapore, the Netherlands, Saudi Arabia, Brazil, and China. The countries are hence very varied. Partnerships between countries are also common, notably between the US, UK, and South Africa. One view would be that it accentuates the problem of food security. As commodity prices soar and certain countries suffer, these very countries export their staples to other countries instead of using them for their own population. Buying or renting countries rarely use the land to sell their products to the domestic population. Another view – one championed by group leadership theory – would be that if done right, this can represent a chance to rebalance inequalities of resource distribution around the globe. Certain countries are more favoured by climate and have much agricultural land; others enjoy stability and more economic comfort. There is therefore an opportunity to utilise the power of politics to solve the natural unfair repartition around the world for requirements for food. Fearing the wrong turns doesn’t have to be a necessity. Naturally, there is a need to ensure that no backlash occurs in the exporting countries by having transparent deals and by having countries handle transactions in a fairly equal way (buyers, 7 Consequences 168 generally richer than supplier countries, should not automatically have more leverage than suppliers, which still have the last word). But within a group leadership theory, countries would seek cooperation rather than confrontation. This may well not be the case all the time. Yet, so far, it is noticeable that conflicts have not arisen around this issue despite high profile articles in major media outlets – and despite Bremmer listing it in his G0 book as a major risk factor. Other industries will see their business plans transformed – and again, this may not be for the best. In the telecommunications industry, the European Union forcing the adoption of uniform rates within the union led to them losing a major income stream via roaming fees. Other industries relying on cross-border movements (retailers, for instance, seeking lower production costs abroad, commodities, or transport) could also face headwinds. But this should not be feared as much as if there were no world leadership either. While we cannot generalise about all industries, to avoid falling into too many traps, the theory should provide counter-arguments to a few commentators who fear going long on investments because of a leadership vacuum, all other things being equal (ceteris paribus, as economists like to say). The consequence of ignoring group leadership theory Believing that the world is currently facing a leadership crisis is not without negative risk, either. The most damaging consequence of the idea is that there could be a latent defeatism, where individuals are ready to accept that the world is ‘doomed’ anyway. The Swiss Germans have a brilliant expression for this: ‘ischäso’, which roughly translates without the cultural undertone as ‘it is as it is’. Such defeatism cannot be positive. Initiatives need to continue, engagements too. By overstating the case of a G0 world, the risk is therefore that it generates fear – it probably already does – and that it leads to investors, activists, or politicians withholding involvement. Or worse, it can lead to placing our focus and investments in the wrong place. While the analysis of a G0 world doesn’t mean to be normative and intends to be only descriptive, this doesn’t mean that it wouldn’t have any effect either, especially with stifling investments. Group leadership theory has The consequence of ignoring group leadership theory 169 the merit, at least, to avoid this trap and to offer motivation for going forward. This is not only theoretical. On June 6, 2018, UNCTAD, the United Nations agency for trade, published its annual ‘World Investment Report’. Its first line noted: ‘Global flows of foreign direct investment fell by 23 per cent in 2017’. A flood of factors can explain this. The Economist, reporting on it, attributed it to Chinese wages now being higher, tax regimes being more stringent in Europe and in the US, and to Trump. But the weekly also carried out some further analysis on the 500 biggest companies by market capitalisation. It remarked that the profits of multinationals had grown by 12% since 2015 – a good result – but definitely not as good as local firms, which saw their profits grow by 30%. It concluded that ‘bosses [of multinationals] are being more cautious, an impulse further amplified by trade tensions’. A pessimistic view of how the market will evolve certainly plays a role in this caution, and analysis probably influenced this pessimistic view in the first place. An analysis too overly relying on a leaderless world maybe? The End The core argument of the book has been that we need to think of leadership differently than in ranking-obsessed terms of who is at the head. But the book has made quite a few other claims in relatively few pages. Repeating them a last time is worth doing: the world does not face a leadership crisis; the focus on big powers isn’t warranted; to understand international relations and draw useful conclusions, changes of behaviours from all countries must be looked at; 2012/2013 has been a turning point; countries have started coming together in groups, deciding as equals to solve an issue – the structure of groups as formal/ informal, the extent of shared values, and the number of issues tackled varying; consequences of the analysis mean a more positive outlook than when considering a leaderless world; but in which direction the world will be moving is a prediction no one would get right – or almost certainly, only with luck – this book included. The structure of the international system evolves all the time and doesn’t have to follow a unique, uniformed, ‘theory’. As much as cer- 7 Consequences 170 tain parts of organisations may follow a slightly different leadership style (say because certain managers are more authoritarian than their colleagues), this doesn’t have to prevent the overall organisation from following an overarching distinct style. This book lays the ground for a theory: that this overarching style for world affairs has been group leadership – and not in a leaderless world – in the past couple of years, and will remain so for a while at least. One of the issues with structural changes is that they are slow to materialise and, arguably, that it is harder to prove them with quantitative data. Looking at flows (trade, foreign direct investment, sovereign bonds, migrations, students, arms, military troops) is not sufficient and may even be misleading. While governments may edge close to one another, parliaments and businesses may not (as the US has displayed prominently this year with Russia). Alliances go beyond such flows: think of governments’ promises with regard to climate change, or to security to intervene under specific conditions. A few readers will certainly feel frustrated at the qualitative methodology and will want to look beyond it. They will need either to reform much of how we currently look at international affairs, or they will need to accept that judgement – political judgement in the primary instance – is necessary, inherently subjective, and fallible. When the next crisis occurs, be it of a political, financial, or other nature, decision-makers and analysts will likely emphasise the feature of cooperation within the international system again. But this book goes a step beyond: even without times of crisis, there are many instances to be found where states cooperate to achieve common goals, in formal or informal alliances, and using a democratic system for decision making where the respective weights that they can pull are close to being the same. We all have the choice to emphasise one narrative over the other. Given the current propensity of many to emphasise the risks of our international system, we may want to embrace another rhetoric, a less misleading one. Humans do not only fight. They also strive for improvement, and for cooperation (aren’t we all ‘political animals’ looking for companionship?). Group leadership theory puts the accent on this. The world will surely remain an unfair place; group leadership theory suggests, however, that it may be a bit less so in the future. The End 171 This is in line with recent research – notably from Max Roser from the University of Oxford, who argued in 2018 that the world is getting better, even though surveys show that people hold different beliefs: ‘In Sweden 10% thought things are getting better, in the US they were only 6%, and in Germany only 4%’. Also along this line, a recent book from April 2018 from the Swedish writers, Hans Rosling, Anna Rosling Rönnlund and Ola Rosling, concludes that ‘the world, for all its imperfections, is in a much better state than we might think’, from the percentage of the population living in poverty, to the statistics of girls finishing school. As well as getting better, a few are already on the right path to promote cooperation, and this even in the US. John Kasich, governor of Ohio, wrote in Foreign Affairs in its July 2018 edition: On challenge after challenge, we are better off working together than going it alone. To secure our economic future, we must prepare our workers for the future rather than retreat into protectionism. To deal with global threats---from Russian aggression to nuclear proliferation to cyber attacks---we need to harden our defenses and reinvigorate our alliances. To fight terrorism, we must be more discerning about when to commit American power and insist that our allies bear more of the burden. To deal with the rise of China, we must strike the right balance between cooperation and confrontation. And the governor is also correct when he mentions that ‘the new environment demands leaner, more agile coalitions to solve such problems [security threats] swiftly’. The otherwise general negative bias highlights that the world can surely liven up with a few more positively axed analysts. Will you, reader, be part of spreading the word? 7 Consequences 172

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Abstract

The US withdrawing from the Paris Agreement, the Trans-Pacific Partnership, the ‘Iran deal’, UNESCO, as well as the UN Human Rights Councils: issues like these convey the impression that the world order has changed. Without US leadership, it may seem that we have entered into what Ian Bremmer, an oft-quoted political pundit, calls a G0 world, a world without any leadership. Clement Guitton argues against this world view, as it disregards evidence of global leadership around the world on matters ranging from climate change, to trade, to security. Going a step further, Guitton claims that there is even evidence of a new form of leadership in international affairs: group leadership.