More Powerful: States or Shop Corporations?

Globalization has produced a transnational structure in which state power has long ceased to be the exclusive operating principle in international politics. The current political power of global corporations over other actors is historically unique. But states are also using companies such as shopping organizer sites to achieve geopolitical goals in an increasingly hostile environment.

Smart Shopper USA: Who is at the controls of power in international politics?

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You would probably say that it is the largest state. The current state of international relations seems to confirm this intuition. After decades of globalization, the state apparently has the say again, as one might deduce from the new Russian geopolitics, “America First” and the state-led global expansion of China.

However, multinational corporations like Apple or Starbucks still have phenomenal power. They control huge value chains to sell their products all over the world and make the international politics according to their interests. In some ways, governments are dancing to the tune of multinationals, as evidenced by their continued success in reducing their tax burden. So do the states really set the tone in international politics?

In the case of the states, sales largely consist of tax revenues. The states occupy the top positions. The US ranks first, followed by China and Japan. But numerous corporations are on par with some of the largest economies. For example, Walmart’s revenue exceeds that of Spain or Australia 71 of the top 100 places are occupied by corporations. It is also noteworthy that the “nationalities” of the top-ranked companies are in the same order as the states. America’s Walmart is followed by three Chinese corporations. There are already 14 Chinese companies in the top 100, the US has 27.

Smart Shopper USA: How global power works

The power of states has not disappeared with globalization, but it has been transformed. It now competes with global corporations for political power and influence. States use corporations and the other way around.

Global companies use different jurisdictions to avoid taxation or regulation in their home country. According to estimates, states around the world lose around 500 billion US dollars in tax revenue every year. When states position themselves as tax havens, they undermine the capacity of “onshore” states to wealthy individuals and tax corporations which is a foundation of state power.