Almost 370 years ago a coalition of over 100 representatives arrived in northwestern Germany and penned the treaties that would become the fundamental framework for our political world, the Peace of Westphalia. As a result of the labor of these parties, now-forsaken concepts like sovereignty, borders, self-determination, and independent statehood are bedrocks for our idea of what makes a nation real.
In the interim time the premise of Westphalia has become fundamental to western political thought and as a result, the modern world order. Alliances have been forged and dissolved, suns set on empires, and throughout nation-states have dictated the direction of resources and trade coming into or leaving their borders.
However, since Bretton Woods post World War II, a new school of disruptive actors has emerged and quietly subverted the very premise of Westphalia and called into question its premise. It took little time for the modern MNC to bring itself from small domestic purveyors to being globalized influencers of politics, economics, and our shared environment.
The MNC, an individual in name only, exists within the amorphous realms of economics, trade, and finance that allowed it to have the ear of domestic leaders as pressure foreign countries to oblige their expansive wishes. In the 1990s Bill Clinton observed that globalization is the inexorable recognition of interconnectedness. More famously he found that “[what matters] is the economy, stupid.” Individually these two statements comport with the Westphalian model as we have observed. , however, it speaks to the state of global governance that took root when the president was a mere college student.
Unlike most every other resource in history, MNCs have for the most part dodged regulation. From the conclusion of WW2, MNCs were seen as a sort of economic interconnectedness that would prevent the atrocities of the previous war from recurring with the added benefit of profiting the victors of said war. Thus politicians and presidents kowtowed to the requests and propositions of MNCs whether deregulating an industry, adjusting sanctions, or discouraging foreign competition. It was this MNC-State interdependence that transformed our global economy into a giant beast laden with tax havens, exploitative labor, and dubious math that allowed the MNCs to profit and the nation-state to see added economic allure and therefore greater political prestige.
In the past decade or so this sort of free-market approach has itself come under scrutiny just as Westphalia has been skewed under the MNC itself. Russian oligopolies are effectively slush funds for Vladimir Putin and his ilk to obfuscate their wealth and use economic influence as a private arm of the Russian state. China, under an authoritarian-capitalist model, has state-run MNCs that increasingly exert themselves globally while serving the state-ends for intelligence, propaganda, or otherwise. Recently, North Korea as well has begun to come from out of its shell and can be found in parts of Africa and Russia operating wholly-state run enterprises whose labor and profits benefit only the nation-state.
And the MNC isn’t only putting free markets into question, since the findings of Citizens United in the United States and the advent of social media, MNCs are able to funnel their wealth and resources into astroturf and/or grassroots campaigns towards whatever ends they are seeking. Social media companies, MNCs in and of themselves, are not only profiting from surveillance of whole countries but also putting a thumb to the scale of elections across the world.
In the United States, just in the past weeks, President Donald Trump announced in spite of the extradition request to Canada that he would singularly drop all charges against Huawei CFO Meng Wanzhou if China (NOT Huawei) would capitulate to trade deals with his administration. Make no mistake, by framing profit and economic growth as the end all be all of the success, MNCs have subverted the Westphalian model and become the Iago to the Othello of whoever welcomed them inside.
When those hundreds of royals and statesmen coalesced in Germany to end the war they created borders as a result. The MNC dissolved those borders and advanced an idea of non-state actors into the world politics in all the messy, violent complication that followed. To stifle foreign influence and defend national security perhaps, governments should reexamine the core premises of what Westphalian sovereignty means in a globalized world. Otherwise, we’re liable to regress to what preceded that peace.