What Power Looks Like

To get a sense of how the world's elite acts in a moment of global crisis, a moment like the one we are in now, it's instructive to watch a player like Timothy Geithner at work. The New York Federal Reserve Bank president has been at the center of frantic behind-the-scenes efforts to stem the spread of the U.S. credit collapse, to manage the bank run that brought down Bear Stearns, and many crises before it. Slim and youthful Geithner can seem out of place working the phones within the monumental offices of the Fed, done in a style that might be characterized as late-middle mausoleum. Yet it is his very will-o'-the-wisp quality, his deftness, that makes him suited to the modern job of one of the most powerful men in the financial world. Because interest-rate changes and cash infusions have less lasting impact on markets than in the past, the power of central banks is effectively more limited. In today's world, no one institution, not even the U.S. Fed, has the power to contain a crisis. Being a successful central banker now depends on what Geithner calls "a convening power … that is separate from the formal authority of our institution and which can be a very powerful tool."

Speaking to Geithner while I was doing the research for my recently published book "Superclass," he sketched in fascinating detail how the world's power elite rallies when the markets quake. Recalling an earlier crisis in global securities markets that he helped to manage, Geithner said the Fed brought together the leaders of the world's 14 major financial firms, from five countries, representing 95 percent of all the activity in global markets. The Swiss were there, the Germans were there, the British were there. Interestingly, no Asians were there, not even the Japanese. Goldman Sachs chairman and CEO Lloyd Blankfein "jokingly called them 'the 14 families,' like in 'The Godfather'," says Geithner. "And we said to them, "You guys have got to fix this problem. Tell us how you are going to fix it and we will work out some basic regime to make sure there are no free riders to give you comfort; you know that if you move individually everybody else will move with you."

There was nothing in writing, no rules, no formal process, and while no one asked the Fed to act, the Fed let everyone in the markets know it was acting. The beauty of the process was its absolute efficiency, seeing what a tight circle of large firms with "some global reach" could get done, fast—with an executive committee of only four running the weekly conference call until the crisis was past. "There is no formal mechanism we could have used to force this on anybody, so we had to invent it. I think the premise going forward is that you have to have a borderless, collaborative process. It does not mean it has to be universal, every jurisdiction or every institution," said Geithner. "You just need a critical mass of the right players. It is a much more concentrated world."

Geithner's description of the financial elite in crisis mode came many months before the recent meltdown of Bear Stearns, yet foreshadowed in an uncanny way how Treasury boss Henry Paulson, Fed boss Ben Bernanke, JPMorgan boss James Dimon and other bank heads powwowed over the course of a weekend to make a deal Bear Stearns could not refuse and to shore up markets. By necessity, the conversations were limited to the central players, the big decision makers whose clout would make the most difference on Wall Street and worldwide. Fast action was needed, and it was taken.

The Fed's evolving crisis-management playbook underscores not only the move toward more public-private collaboration on big global issues, but also the concentration of power among a very select and insular group of players—in this case, the heads of the world's biggest financial institutions, as well as gatekeepers like Bernanke and Paulsen.

The people on the recent calls like those described by Geithner, plus a few thousand more like them, not only in business and finance, but also politics, the arts, the nonprofit world and other realms, are part of a new global elite that has emerged over the past several decades. I call it the "superclass." They have vastly more power than any other group on the planet. Each of the members is set apart by his ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and often amplifies it through the development of relationships with other superclass members. This new class of elites is both more permeable, and more transient, than elites of the past. The age of inherent lifelong power is largely behind us—to be a member of this superclass one has to hold on to power just long enough to make an impact, be it by leading a revolution or launching a revolutionary Web site.