In Davos this week, the resounding theme was for new leadership from business as the power of the nation state continues to decline. Individuals, business groupings and communities of interest are shaping the social and economic structures of the day.

Even the United Nations has lost its ability to regulate global affairs, in the face of a lack of moral authority within the clique of permanent Security Council members. NGOs, social networks and even digital ‘tribes’, which transcend national and ethnic boundaries, have become the force du jour in geopolitics.

Europe and the United States have felt the tide turning against them most of all. China and Russia have always had their critics and their own way of doing business – realpolitik.

Since 2009, the rise of India and Latin America on the economic front have changed the balance of power; but more important is the rejection of national mores and conformity to the established order. It’s like a new 70s style liberation of the individual, except this time it’s not confined to student uprisings.

The factions and tribal networks that have sprung up around the ‘net and mobile connectedness give the smart mob far more power to control global events than ever before – be it green, religious, idealistic, materialistic or just plain rebellious.

Perhaps even business feels they are losing control; which is why leaders at Davos are calling for more intervention by commercial entities. The nation state, and its confederations, are fast becoming extinct.

ANALYSIS >> SYNTHESIS: How this scenario came to be

The Shifting Power Equation
This extract is from the International Herald Tribune in January 2007:
“Executives gathered in Davos this week to consider what forum organizers have labeled ‘The Shifting Power Equation,’ wherein lies perhaps the greatest challenge: How to engineer collective action in a world where America is too weak to dominate but too strong to be disregarded; where old and new powers compete for influence and resources; and where a technological revolution has empowered ordinary citizens and those who want to influence them.

The International Monetary Fund and the World Bank have struggled to impose their policy prescriptions on developing countries since other sources of financing have popped up. China, for one, has undermined their authority by using its currency reserves to offer loans to African countries that do not always adhere to the international standards designed to address corruption in the region.”

2006: Losing moral leadership
Traditional western leadership in global affairs is on the decline. Europe is economically weak and divided on issues such as the EU constitution. The US and UK in particular are facing a lack of respect and stature. By insisting on an invasion of Iraq to curtail ‘weapons of mass destruction’, which were never found, the coalition has lost the moral high ground, and the authority to insist on good governance elsewhere, which was already in question in opposition states.

2008: Rise of China, India and Russia
The rise of China and India as powerful trading nations has upset the balance of economic power. The old school of western business and state-sponsored commercial entities’ dominance of economic growth and socio-political direction has been usurped by the emerging nations’ success in embracing globalization.
Now world trends are being set by China and India, as they leverage their markets and productive power. Together with the major oil producers and other resource-rich countries such as Russia, the rest of the world has the West in a dependent situation.

2010: Smart mobs rule
The social and business networking phenomenon of the internet and smartphones has created communities of interest that span national and ethnic boundaries. Just as cell phone saturation has positive correlation to GDP growth in developing economies, so have the web networks – from Friendster and MySpace to Skype and YouTube – created access to knowledge and tech participation for people all over the world, often spurring innovation and entrepreneurial growth.
Digital ‘tribes’ have emerged in cyberspace and on the mobile networks. Virtual congregations of people who share an interest in a product, belief system, entertainment values, or just like the way they think and communicate. The smart mob.

2012: Who is in control?
There’s a crisis out there. Global natural disasters, extremist attacks, rampant foreign currency fluctuations, businesses that are created and killed on rumor and fashion. And no-one is in control. Or are the people finally in control of their own chosen destiny?
One thing is certain: looking to the superpowers of yesteryear to control and stabilize the situation, or even expecting the nation states to significantly influence world events, is an outmoded paradigm.
It’s the end of the world as we knew it, and in Davos they are just waking up to that fact!