Like in the Middle Ages, Cities of the Future Will Be More Important Than Nations

China, Hong Kong, apartment blocks, at night, elevated view.
China, Hong Kong, apartment blocks, at night, elevated view.
the european

Power is still largely thought to be the currency of world politics. But the concept of power -- static and fixed as it is -- is no longer able to explain the multilayered and multipolar world we inhabit.

Today, power is exercised through leverage. The military capacities of a country might be the most obvious source of power, but we know that such power does not necessarily achieve its intended objectives when used. The experiences in Iraq and Afghanistan have painfully proven this. We can no longer expect that a fixed amount of power -- military, political or economic -- can really be the decisive factor in global politics or economics.

Leverage is about contextual power and your degree of leverage is shifting perpetually.

But we can analyze leverage: how power is applied to attain influence. Leverage, unlike power, is not static because it can only exist in relation to something else. You cannot own leverage in the way you own power. Leverage is about contextual power and your degree of leverage is shifting perpetually. Take, for example, the leverage the private sector has over the public sector in matters of financial regulation: there was the belief, after the financial crisis, that the leverage of the public sector would be restored because of the private sector's fall from grace. But that clearly hasn't happened. The private sector cleverly used its leverage to regain autonomy in the field of financial regulation.

Hong Kong is more important than Mexico

It logically flows from this, that the question "Who possesses power?" is of little importance today. We should rather ask: "Who has leverage?" For most of the 20th century, the nation-state has been the only game in town. But today, it finds itself competing with three other actors: cities, companies and communities. Systemic factors like capital and technology have become the tools of these key players, but it is far from clear who's controlling these instruments and who's in the driver's seat.

The financial capabilities of many companies or cities outweigh those of countries. If we look at the G-20, the world's 20 most important economies, then we can't shake the fact that some of those nations like Italy and Argentina are no longer systemically relevant. As a financial hub and economical locus, the city of Hong Kong is far more important than Mexico. If Mexico would disappear from the map, the financial repercussions for the rest of the world would be less severe than if Hong Kong would vanish. This is, of course, only a hypothetical example but nonetheless a very telling one.

mexico city city

El Angel de Independencia landmark in Mexico City. via Getty Images.

Of course some states like the U.S., China or Germany are still highly influential, but we must remember that this is so because they harbor the actors with the most leverage. But it would also be erroneous to assume that America's government has the most leverage because it is home to the actors with the most leverage. Only if the U.S. government coordinates those key players that inhabit its territory, then it could be said to have the greatest leverage. To the extent that its companies take government funds and offshore capital and don't pay taxes, their contribution to America's national leverage is less than it appears.

Last century's state-dominated balance of power has been tipped. We are witnessing a period in which nations depend on cities or companies and not the other way around. Most countries have one major city on which they depend for their economic activity and well-being. If that city were to fall, the rest of the country would be soon to follow. Take a moment and try to name one successful country that does not have a successful city. You will ponder in vain. The effects of this development are becoming increasingly visible. People in London are half-jokingly discussing how they could secede from the U.K.. They are well aware that the relationship between their city and the rest of the country is a very unequal one. Most of the U.K.'s tax revenues and GDP spring from the City of London, and are then equally distributed across the country. If the Londoners could control these revenues, the rest of the country would wither.

We are witnessing a period in which nations depend on cities or companies and not the other way around.

But this new period of global politics in which various actors are competing for influence is actually not so new at all. I prefer the term "Neomedievalism" because it is an adequate portrayal of the current global balance of power. The period between the 11th and the 15th century bears a striking resemblance to our modern-day period. The Middle Ages were a multi-polar and multi-civilizational period, underpinned by a multi-layered system. The modern nation-state was not yet born and empires, religious powers, cities, corporations, families and all sorts of other actors competed for power and influence -- just like today. So, historically speaking, exclusive state dominance is the exception, not the norm.

The problem with legitimacy

And yet, the state is still widely worshipped because it holds one crucial advantage over its competitors: democratic legitimacy. But the problem with democratic legitimacy as the only source of legitimacy is that it only applies to states and thus exempts all other actors. If we want to embed other actors into legitimate systems, then we should embrace other forms of accountability that are suited to non-state actors such as peer surveillance and monitoring and market reputation. Democratic legitimacy is an incomplete measurement of the accountability of a given system. Even a political system in which you have democratic accountability and legitimacy -- a Western democracy, for example -- is still not a completely legitimate system if the market accountability is not working. Ignoring this is missing so much of the picture.

The issues and problems facing us today are too complex to be governed by a few nation-states. Advocates of the state system cling to the exclusive power of the latter but forget that complexity is a more fundamental reality than the state system itself. The state system doesn't control complexity; complexity underpins the state system.

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