The New Contemporary Republic and Mr. Donald Trump

Herbert George Wells (1866-1946)—who devoted himself to writing books on history, politics, social themes, novels, utopias, dystopias and science fiction—was a visionary of the future, had great success, and lived with the intellectual and political elite both in Great Britain and internationally. He had the benefit of a scientific background in biology, given to him in part by Thomas Henry Huxley (1825-1895), a militant Darwinist and grandfather to the famous brothers Aldous (1894-1963) and Julian Huxley (1887-1975).

Revisiting and reflecting on what others have written about “the future,” which is really our present day, allows us to assess the human capacity to predict, revealing the deeper contours of the human condition. Wells is a striking example of the desire we all share, in varying degrees, to unveil the future through analysis and reason.

In the book “Anticipations of the Reaction of Mechanical and Scientific Progress upon Human Life and Thought,” originally published in 1901 in a series of articles in “The Fortnightly Review,” which carried the subtitle “An Experiment in Prophecy,” Wells was one of the first writers who attempted to directly predict the future in the context of the scientific and technological progress that would dominate the 20th century and beyond. This phenomenon was relatively easy to predict in the late 19th century. It was not a vision of utopia, but an intentional exercise in anticipating the future.

It is important to note that the transition from the 19th century to the 20th century was a moment of great hope for the future, due to a period of intense development grounded in the science and technology of the time. On Jan. 1, 1901, The New York Times published an article that stated, “The world is optimistic enough to believe that the twentieth century … will meet and overcome all perils and prove to be the best that this steadily improving planet has ever seen.” Although some writers and philosophers saw disturbing signs during the late 19th century, none were able to imagine the horrors of World War I and World War II.

In “Anticipations,” Wells prophesies the gradual end of nation-states, which he terms “ostensible states,” and the emergence of a “World State” with a single system of laws and English as a universal language. The World State would emerge slowly and would be run by a somewhat enigmatic entity called a “New Republic.” This is introduced in the text with the following sentence: “I have sought to show that in peace and war alike a process has been and is at work, a process with all the inevitableness and all the patience of a natural force, whereby the great swollen, shapeless, hypertrophied social mass of today must give birth at last to a naturally and informally organized, educated class, an unprecedented sort of people, a New Republic dominating the world.” A little later in the same text he writes, “The men of the New Republic will be intelligently critical men, and they will have the courage of their critical conclusions,” and in “all sorts of ways they will be influencing and controlling the apparatus of the ostensible governments.” The rise of the New Republic would take place around the year 2000, and in its rule “the final peace of the world may be assured for ever.” As for the details, Wells acknowledges that he cannot say much but states that, “I seem to see the New Republic as (if I may use an expressive bull) a sort of outspoken Secret Society, with which even the prominent men of the ostensible state may be openly affiliated.” The New Republic would be accompanied by social policies that deal with the “people of the Abyss” and lead to a “reconstructed ethical system” and finally to a “new ethics.”

Many of the ideas that Wells left to us in “Anticipations” did not materialize, but some echo clearly in today’s world. It is extraordinary that in very different and far subtler ways than Wells imagined, mankind has created an entity resembling the New Republic, recognizable as the global business elite that controls large multinational corporations and financial institutions. I will call this fluid, imprecise entity the New Contemporary Republic or NCR. It controls—as subliminally as possible—the social, economic and political development of a large part of our world, as well as crucial aspects of our shared environmental future. Its strength lies in the abilities, shrewdness and ambition of its members, as well as in the support of the millions of shareholders of the companies they manage as profitably as possible.

Multinational NCR corporations and banks compete with their governments in terms of economic, financial and political power, challenging and transforming the concepts of state sovereignty, governance and democracy. The causes of this situation stem in part from their ability to lobby alongside governments, parliaments, politicians and central government officials; to influence international trade agreements; to choose the countries in which they invest based on their assessment of policies; and to obtain ownership of the vital technologies they use. This sharing of power between governments and large corporations has the capacity to subvert democracy. The symbiosis has been especially intense in the U.S. through the mechanisms of lobbying, recently described by author Lee Drutman. But there are some domains of human activity where the direct responsibilities of the NCR and the “ostensible governments” are separate. This is the case with civil wars and wars between states, which become the responsibility of the “ostensible governments.” However, because of the enormous cost in terms of resources and manpower, the NCR makes every effort to influence decisions regarding military intervention.

In the last 40 years, there has been a notable proliferation of multinational corporations associated with the globalization process. According to Held and McGrew, their numbers went from about 7,000 in the early 1970s to 60,000 in 1999.* Most have their headquarters in countries with advanced economies and also control more than 500,000 branches abroad. The current trend is the formation of “metanational” companies whose interests, operations and assets are spread across dozens of countries, such that they no longer have a special or privileged relationship with any of them, becoming almost denationalized entities. However, the members of the NCR who control them are very active in seeking to influence the “ostensible governments” to support and defend their interests. The selection criteria for the countries in which they operate are favorable laws, regulations and tax incentives, abundant resources at low prices, loose and changeable environmental laws and regulations, and a reliable, robust and continuous connectivity.

The United Nations Conference on Trade and Development estimated that in 2012, large corporations and multinational banks managed 80 percent of $20 trillion worth of worldwide commercial productivity. The volume of sales of large multinational corporations is much higher than the gross domestic product of most countries in the world. The power is concentrated in a small group of about 150 large companies and banks whose members are strongly linked and quite interdependent. This is potentially unstable for the group and for the world when one of its members is affected or collapses, as was the case with Lehman Brothers on Sept. 15, 2008. The concentration of economic power is an organic process aimed at optimizing the profit-power binomial that benefits the group. This is why the leaders (or in other words the NCR) defend the power structure unwaveringly.

The NCR is not a secret society, as Wells supposed in the early 20th century, although the transparency of its activities is limited, for example, with respect to transactions and the payment of taxes in the countries where it operates. Large corporations and multinational banks systematically use direct foreign investment to reduce taxes and increase profits through complex networks of holding companies set up in tax havens or in countries with more favorable tax systems.

These strategies are used not only institutionally by businesses and banks but also at the individual level by NCR members. A recent study by James Henry for the Tax Justice Network found that private members of the elite in 139 countries have held between $7.3 trillion and $9.3 trillion worth of assets in tax havens since the 1970s to evade taxes in their own countries. These assets do not include real estate, gold, yachts, racehorses, works of art, etc. The same study estimates that there are between $21 trillion and $32 trillion in tax havens, representing a loss of around $280 billion of tax revenue for the countries of residence. To get a more objective notion of what those values mean, it should be noted that the U.S. GDP in 2015 was about $18 trillion.

The “prominent men of the ostensible state” do not affiliate themselves with the New Republic as Wells imagined. Instead, they easily jump from one group to another, often in ways that are cleverly disguised. Each year, members of both groups meet in Davos at the World Economic Forum to assess the state of the world and discuss its future. The NCR considers itself an almost ideal system and views the alternatives as far worse and far more dangerous, capable of hindering or impeding economic, scientific and technological progress and leading to chaos.

Globalization has been an extraordinarily efficient process for reducing poverty and increasing the well-being and quality of life of hundreds of millions of people throughout the world, especially in less-developed countries and countries with emerging economies. It is one of the factors that has contributed most to economic convergence between countries with advanced economies and the rest of the world. At the same time, however, it has served to increase inequality on a global scale. There have been winners and losers. A recent World Bank study by Branko Milanovic on global income distribution reveals that between 1988 and 2008, the incomes of the emerging “global middle class” between the 15th and 65th percentiles rose by more than 55 percent. On the other hand, the incomes of the lower middle class in the world’s advanced economies between the 75th and 90th percentiles have stagnated or declined. It was the American voters of this group that contributed decisively to the election of Donald Trump. The same groups of voters played a key role in Brexit and also support the so-called populist policies now proliferating in Europe. We have yet to address the tail and the trunk of Milanovic’s “Elephant Chart,” which is going viral. The tail corresponds to the globe’s poorest 5 percent, who remained locked in deep and inhuman poverty during the 20 years Milanovic has analyzed. They are Wells’ “people of the Abyss.” The raised trunk of the beast is the 99th percentile of the richest 1 percent, whose yield grew 60 percent from 1988 to 2008.

Voters in the Midwest of the United States voted for Trump, hurt by the loss of local industries and the replacement of many jobs with new technologies. However, Trump will not be able to revive an obsolete industrial past. There will be a bit more protectionism, but he will avoid damaging the NCR. In fact, Trump will fully indulge it with reforms that will make the tax system less progressive (thereby favoring the 1 percent) and the deregulation of banks and financial markets. This will, in effect, reverse all that Obama initiated after the financial and economic crisis of 2008-2009.

More troubling is the geopolitical and military sphere, where the powers of the NCR and the “ostensible governments” are more separated. Here Trump’s political unpreparedness, volatility and impulsiveness make the future even more unclear. I believe one cannot rule out the possibility of war in the evolving tensions between the U.S. and Iran and the U.S. and China.

As to the question of the environment and the climate in particular: the Paris Agreement will continue even if Trump decides that the U.S. will no longer do its part. But it will be harder to accomplish, and China will probably come to lead the world in the fight against climate change.

*Editor’s note: This reference is to globalization authors David Held and Anthony McGrew.