Parag Khanna is a leading geo-strategist, world traveler and author of the international bestsellers, How to Run the World: Charting a Course to the Next Renaissance and The Second World: Empires and Influence in the New Global Order. He is currently a Senior Research Fellow at the New America Foundation. Stephen J. Kobrin, Wharton management professor and publisher of Wharton Digital Press, recently spoke with Khanna about his latest book, How to Run the World, the emergence of a postmodern Middle Ages, why mega-diplomacy is critical, and his views on the Middle East, including Gaddafi and the conflict in the Libya.

Below is an edited transcript of the conversation:

Stephen J. Kobrin: In How to Run the World, you talk about the fact that we are entering a “postmodern Middle Ages” and that 21st-century diplomacy is going to be very complex. Technology and money, rather than sovereignty, [will] determine who has authority and who calls the shots. And you talk about “mega-diplomats.” Who are these mega-diplomats?

Parag Khanna: Well, let’s go back to the “postmodern Middle Ages.” This is a very important analogy — it’s not just a clever historical reference. The Middle Ages was that period a thousand years ago when East and West were simultaneously powerful — when China was the world’s most advanced civilization under the Song Dynasty, when the Chola Dynasty of India was a great naval power, and when the Arab and Islamic Caliphates ruled all the way from North Africa to Central Asia. Europe was weak and divided between the Byzantine Empire and the Holy Roman Empire. The fact that it was a multipolar landscape around the world is a very important attribute of the Middle Ages. As I spent a lot of time arguing in my first book, The Second World, the world is already very multipolar. We need to appreciate that it is not the first time in history.

Secondly, that was a time when not just states, but also cities, companies, mercenary armies, humanitarians and churches were very important actors in the diplomatic landscape. So, too, is that the case again today. For those two reasons, we are seeing this emergence of a postmodern Middle Ages. Now, technology and money and identity are all very much factors that also help to shape who has power and who calls the shots. The truth is that we have had a very static understanding of what identity is.

It’s either your ethnic identity or your religious identity or your national, state identity — or what’s on your passport. That’s not a very creative way of understanding how identity can take shape in a technological environment and an environment where money talks as much as it does. I meet a lot of young people who subscribe to a generational identity. They identify with certain causes that they are either members of physically or financially or through technology communities in the clouds — like Facebook and various other groups and causes. Corporate identities are also extremely important today. When I meet young people who work for multinationals, but who have citizenship from Brazil or India or China or Russia, they realize that, in fact, their national identity will not allow visa-free access to the West or other parts of the world for years and years to come. The corporate identity is what allows them that access — and the visas that their corporation gets for them.

Now, mega-diplomacy is this realization that all of these different players — corporations, NGOs, governments, international organizations and entrepreneurs — are coming together into one common collective diplomatic arena, that everyone is negotiating with everyone all the time and that the solutions to our problems — whether it is arms control, poverty [or] climate change — do not lie simply in top-down centralized solutions of inter-government organization. They rely much more in coalitions that bring together the corporate world, the civic world, the governmental world and even the religious sphere as well. What I see around the world are examples of this mega-diplomacy, such that I find that theory actually needs to catch up with practice. That’s part of why I wrote this book.

Kobrin: In this world of mega-diplomacy, multiple actors and multipolarity, will the role of multinational corporations change? Will their responsibilities change?

Khanna: You have been writing about international political-economy and international trade, so you know that it is really since the 1960s and 1970s that we have seen this transformation in the global system away from just states alone to what Susan Strange called this “triangular diplomacy,” in which firms were almost equal participants. Corporations have been a major driver in bringing about this new system, so they are obviously going to play a very prominent role in it. The question is, “From where?”

First, you can tackle the issue of multinationals from the standpoint of, “What is their financial power and their control over certain supply chains and resources?” That obviously is something that’s tremendous. That applies to corporations such as energy companies and otherwise — and banks [also]. It applies as well to state-owned corporations. But taken together, you can view corporations from the standpoint of the resources they control, the number of employees they have, the sort of loyalty that they generate.

A new point of view that has emerged on multinationals is, of course, their country of origin. Because as much as many of them may appear to be state-led mobile networks, there is a particular new understanding of how multinationals from emerging markets operate — whether it is Brazil, India or other places. Are they changing the landscape? Are they adapting to certain kinds of norms? Or are they acting strictly in a mercantile kind of fashion? That’s an interesting aspect of this debate about the role of multinational corporations as well. But if you look at all the different examples across these different frames, it’s very hard to generalize, right? We know that some multinational corporations are huge providers of public goods. We know that others really shy away from those kinds of responsibilities. The spectrum is very, very wide. What I try and do in this book is not to generalize about that. I try to highlight some of the best and worst actors in both cases.

Kobrin: You talk a lot about the need for a “new Colonialism.” You talk about — at least in my interpretation — how sovereignty and sovereign territoriality are just so 20th century and about the need to re-map large parts of Africa and the Middle East. That’s interesting in the context of what’s going on in North Africa and the Middle East at this point. How does that all apply to the Arab Spring and to the disruption and instability that we see — the popular uprisings?

Khanna: I finished this book a year ago. But as you probably saw, right in the first chapter, in the first couple of pages, I say that Generation Y is getting its hands on social media technologies and making autocrats nervous. It is something that I have been observing for years and years traveling in the Middle East. That absolutely plays a major role in this Arab Spring: satellite media, social media, networking technologies and so on.

Now where the new Colonialism comes in, I wasn’t really referring to the Arab countries that are undergoing these convulsions today, other than when I talk about the need to re-map certain territories. I could imagine that Libya is not going to sustain itself in its present geographic form. As I and other political geographers like to say, “You should always be suspicious of straight lines on a map.” I was thinking of African conflicts, South Asia and the entire post-Colonial world. Most of the 200 countries in the world are, of course, post-Colonial countries, meaning they were really born in these waves of decolonization since the 1950s and subsequently. A lot of them are failed or failing states. They are experiencing this entropy that I talk about with over-population, poor economic health, large youth unemployment, massive corruption and all these kinds of factors coming together. At some point, this decay tips over into regime collapse and potentially state collapse.

That’s kind of what we are seeing in the Middle East right now. Now they have to be rebuilt. They have to be reconstituted. States, the governments within them and the societies need a new sort of purpose. And this is where this notion of a new Colonialism comes in. I don’t argue that we should aggressively be pursuing a new form of Colonialism like the old. I specifically call it “new” for a very important reason. The multitude of actors that are involved in this new Colonialism are not necessarily mercantile exploitative powers, such as in the old Colonialism. Here we are talking about a set of actors that can exercise the necessary leverage to get certain states and markets to behave or to evolve in a more accelerated fashion than would otherwise be the case. When you look at a country like Egypt, fine. Hosni Mubarak is gone but the military is still very much in power. What is the mechanism by which you don’t have to wait 25 years — as we did in the case of Turkey — for the military to be gradually extracted from the political and economic sphere? Or a place like Pakistan, where it is still very much the case today that the military colonizes the economy much to the detriment of the people. We know that these are public policy obstacles. Everyone knows that. The new Colonialism is a force that helps to accelerate what are inevitable, necessary and positive changes.

Kobrin: Do you think we should have gotten involved in Libya? Do you think that is somewhere the United States and NATO forces should have intervened?

Khanna: Absolutely. But the question is, how? First of all … no Arab leader likes Gaddafi. So if there was an opportunity to test out the ability of NATO to, hopefully, conduct a much cleaner, quicker intervention than the Balkans or Afghanistan, this would have been the case. That even applies to the possibility of having assassinated Gaddafi, which is, quite frankly, something that I was a very early advocate of, one or two days into this when the rebels in the eastern part of the country had taken Benghazi.

I said, “You will have to assassinate.” I have actually spent time in Libya. I wrote a chapter of my last book on the country. So I know very, very well what Gaddafi is and isn’t. I knew that he was going to hang on and not take a golden parachute and move to the south of France. So I said very clearly that this is a case where — and there is a chapter on assassinations in this book — this could be very well justified. There are legal instruments, political instruments and a moral case to justify it. None of those three have been used in an efficient manner. The military intervention in the traditional approach, such as a no-fly zone –whether it’s Kosovo or the Iraq model — has not been executed well. They followed on far too slowly.

So, should the West have intervened in Libya in some way? Yes. Should we have been clear as to what that is? Yes. I was very clear on day two of this what we should have done. Have we done anything correctly in Libya? Not much at all, other than to say that regional organizations have been very involved, whether it is the African Union or the Arab League that I’ve endorsed in this book, strengthening regional organizations and regional security mechanisms rather than global, centralized ones. I think it’s very important that they remain in charge of their own things. But where we can provide the resources to bring about certain changes that they have ratified,  I think that is a good embodiment of the principle that I’m going after here, which is using global resources to support local actors.

Kobrin: Now you talk in the book, as you just mentioned, about the need at times to remove heads of state who are often the roots of problems. Who are the bad guys? How do we decide which heads of state to remove (that’s a euphemism)? Who removes them? Is it done through an international organization? Does the U.S. do it unilaterally? Does NATO decide? You mention that it’s easier to sort out leaders who are civilized from those who are barbarians. How do you make that decision? Who makes it?

Khanna: Right. So, the first question [concerns the word] “we.” Because you said, “How do we make decisions?” I don’t think “we” is always the White House, right? It doesn’t have to be. The French government in this case decided to recognize the Transitional Council very early. Arab League states told us, “We don’t want Gaddafi there any more.” So Arabs have decided or made a judgment about the state of a fellow Arab and have effectively endorsed his removal from power. That, to me, is more important an endorsement than say waiting months and months for an International Criminal Court procedure, although such a procedure has been launched. Now we know very well what his human rights violations have been. We will certainly make a case that humanitarian atrocities have been conducted since this conflict has unfolded. Now, certainly if not earlier, such a measure could be immediately justified.

You have the participation of the Arab League, you have the participation of international legal institutions that are passing judgment on this man, and you have outside powers that have the military means to hopefully conduct this as a swift exercise. Whether or not an assassination should be conducted also depends to some extent on what the consequences might be of such an action. If you take the responsibility to protect doctrine, you have to go through a set of questions that you answer. Is an intervention justified in terms of the cause? Is there imminent threat or danger of there being mass casualties if you do not undertake this intervention? And is there an assessment that it would work and not lead to a worse situation afterwards?

There are certain countries where you just don’t know what would come next. If you were to take out Kim Jong-il in North Korea, we don’t know exactly what would come next. Most certainly there would be a hostile response. We know that any intervention in Iran [has the] potential to provoke nationalism among the people because they don’t want that kind of intrusion, even if they don’t like their government.

But in the case of Libya, we can be fairly certain from all the knowledge that we do have about the country, and its society and tribes and people we have contact with there, that this would not necessarily lead to mass anarchy or chaos — such as what we have now, which is a civil war. In fact, if we had acted early, I think that Gaddafi’s allies would have been in a state of shock having lost their leader and having already lost the eastern part of the country, and you would have had immediate negotiation over the country’s future. So I think that it would have been much better to have acted swiftly and to have taken him out.

Kobrin: Let me shift gears, Parag, to the section of the book you call “Democracy Über Alles.” As you note — and I think note well — in today’s world, we face competing political and economic models. But you argue that the attractiveness of one over the other is judged by the ability to provide material benefits and not how democratic it is. That’s interesting. It runs counter to the traditional argument that democracy and free market capitalism go together and that, with economic liberalization, we’re going to see demands for democracy. Let me move to China, which is clearly a state-dominated, very authoritarian market economy. We’re seeing increased restrictions on political freedom, free expression. Ai Weiwei, the artist, was just arrested for economic crimes. [Ai was released from detention on June 22]. Question: Can China continue along this road? It’s doing well economically. Will continued development result in pressures for democracy? Or is authoritarian state-dominated capitalism viable into the long run?

Khanna: I think the case that I make is that democracy requires capitalism. Capitalism doesn’t necessarily require democracy. I’ve been putting together some data on the top 10 performing non-democratic states in the world and the top 10 democratic states in the world, looking at their growth figures, per capita GDP and other sorts of metrics.

There is a genuine debate out there about what constitutes good governance and how to go about achieving it. Increasingly, there is this meme of good governance which includes — or involves — accepting a set of metrics around public service delivery, accountability of rule, access to information, access to technology, and economic indicators that don’t necessarily hinge on whether or not a state is democratic. We have to understand this is a broader meme that is out there. China’s rise is part of the reason why that is the case. The fact that many people speak about a “China model” and potentially want to emulate it — in other words, economic reform and growth first, with political reform second, if at all — is part of the reason why people are having this conversation about good governance instead of democracy. I think it is a healthy debate to have because the competition of ideas, the competition for delivery and the competition of models is inherently a good thing. It makes us shine a mirror on ourselves.

Now when it comes to China, it is absolutely true that it is an authoritarian capitalist market economy. It is a very valid question as to whether it can be sustained. But to pretend that there is necessarily this rigid black or white situation in which it is all authoritarian now and will eventually hit a giant bump in the road and be required to become democratic — I think that is a fallacious approach to the situation. For those who study China, we know very well that there’s a tremendous amount of experimentation going on with entrepreneurship, with innovation, with trying to get an edge in different sectors — both from a state investment perspective and private investment. We know that there is also a very healthy debate actually in the country at many levels about their political form. Democracy is not necessarily a four-letter word in China, believe it or not. There are many people who talk about how to transform from the present one party–dominated state towards some kind of meritocratic, parliamentary system.

As you know, they have village elections as well, in many cases. They are experimenting with all kinds of ways to modernize, reform and evolve their system without me going into that scenario that so many people simply project onto the country — which is that it’s all or nothing. Either you have the party or you have collapse. That is, quite frankly, not giving them nearly enough credit for the amount of thought they are currently putting into it and the amount of experimentation they are willing to put into reforming their political system. Is it going to work? I don’t know. But Chinese people have a tremendous amount of economic freedom, and they are willing to sacrifice some extant political freedoms. We have to remember that China is inherently a fairly conservative society. It is, after all, an aging society. That means that many people actually lived through the Great Leap Forward and the Cultural Revolution, and therefore, don’t necessarily want to torpedo or sink the progress that they have experienced in the last several decades just in order to have more political rights. They would probably prefer evolution to revolution. And I don’t blame them.

Kobrin: Parag, that’s really interesting and helpful. I want to thank you for taking the time to talk to us.

Khanna: Thanks so much, Steve.