What are we to make of the extraordinary scenes in Seattle that brought the 20th century to a close? A New York Times reporter observed that this vibrant mass movement opposed to unregulated globalisation had materialised "seemingly overnight". On television, the reliable experts who explain everything couldn't sort out whether the protesters were right-wing nationalists or Marxist globalists. Even the American left seemed surprised to learn that, contrary to previous reports, it did, in fact, still exist.

Despite the seemingly unconnected causes that converged in Seattle that week, there was a common target: the multinational corporation in general and McDonald's, The Gap, Microsoft and Starbucks in particular. And what has given the movement against them a new energy and a new urgency is a profound shift in corporate priorities. That shift centres on the idea of corporate branding and the quest to build the most powerful brand image. It will, I believe, be one of the issues that shapes the first decade of the 21st century.

Branding seems like a fairly innocuous idea. It is slapping a logo on a product and saying it's the best. And when brands first emerged, that was all it was. At the start of the industrial revolution, the market was flooded with nearly identical mass-produced products. Along came Aunt Jemima and Quaker Oats with their happy comforting logos to say: our mass-produced product is of the highest quality.

But the role of branding has been changing, particularly in the past fifteen years: rather than serving as a guarantee of value on a product, the brand itself has increasingly become the product, a free-standing idea pasted on to innumerable surfaces. The actual product bearing the brand-name has become a medium, like radio or a billboard, to transmit the real message. The message is: It's Nike. It's Disney. It's Microsoft. It's Diesel. It's Caterpillar. The late graphic designer, Tibor Kalman, said that a brand used to be a mark of quality; now, it is "a stylistic badge of courage".

This shift in the role of the brand is related to a new corporate consensus, which emerged in the late 1980s. It held that corporations were too bloated: they were oversized, they owned too much, they employed too many people, they were weighed down with too many things. Where once the primary concern of every corporation was the production of goods, now production itself - running one's own factories, being responsible for tens of thousands of full-time, permanent employees - began to seem like a clunky liability.

The Nikes and Microsofts, and later the Tommy Hilfigers and Intels, made the bold claim that production was only an incidental part of their operations. What these companies produced primarily were not things, they said, but ideas and images for their brands, and their real work lay not in manufacturing, but in building up their brands. Savvy ad agencies began to think of themselves as brand factories, hammering out what is of true value: the idea, the lifestyle, the attitude. Out of this heady time, we learnt that Nike was about "Sport", not shoes; Microsoft about "Communications", not software; Starbucks about "Community", not coffee; Virgin about a "Fun-loving Attitude", not an airline, a record label, a cola, a bridal gown line, a train - or any of the other brand extensions the company has launched. My favourite is Diesel, whose chief executive says he has "created a movement", not a line of clothes.

The formula for these brand-driven companies is pretty much the same: get rid of your unionised factories in the west and buy your products from Asian or Central American contractors and sub-contractors. Then, take the money you save and spend it on branding - on advertising, superstores, sponsorships. Based on the overwhelming success of this formula, virtue in the corporate world has become a sort of race towards weightlessness: the companies which own the least, keep the fewest employees on the payroll and produce the coolest ideas (as opposed to products) win the race.

I have come to think of such companies as transcendent brands because their goal is to escape almost all that is earthbound and to become pure idea, like a spirit ascending. This is a goal that is available not only to companies, but also to people. We have human brands as well as company brands and they, too, are cutting ties with what might be broadly described as "doing things". Bill Gates has quit as chief executive of Microsoft so that he can tend to his true mission: being Bill Gates. Michael Jordan has stopped playing basketball and has become a pure brand-identity machine. And not only does he now have his own "Jordan" superstores, he is the first celebrity endorser to get other celebrities endorsing his label. Michael Jordan is no longer an athlete, he is an attitude.

It wasn't until the Internet stock explosion that the extent of this shift became apparent. It marks the complete triumph of branding: the ascent of companies, most of which have yet to make a profit, that exist almost purely as ideas of themselves, leaving no real-world trace at all. What they are selling to Wall Street is unadulterated brand.

This shift to branding explains many of the most fundamental economic and cultural shifts of the past decade. Power, for a brand-driven company, is attained not by collecting assets per se, but by projecting one's brand idea on to as many surfaces of the culture as possible: the wall of a college, a billboard the size of a skyscraper, an ad campaign that waxes philosophic about the humane future of our global village. Where a previous generation of corporate giants used drills, hammers and cranes to build their empires, these companies need an endless parade of new ideas for brand extensions, continuously rejuvenated imagery for marketing and, most of all, fresh new spaces to disseminate their brand's idea of itself.

In this way, these corporate phantoms become real. If we think of a brand-driven company as an ever-expanding balloon, then public space, new political ideas and avant-garde imagery are the gases that inflate it: it needs to consume cultural space in order to stave off its own deflation. This is a major change. Marketing, in the classic sense, is about association: beautiful girl drinks soda, uses shampoo, drives car; soda/shampoo/car become associated with our aspiration to be beautiful like her.

Branding mania has changed all that: association is no longer good enough. The goal now is for the brands to animate their marketing identities, to become real-world, living manifestations of their myths. Brands are about "meaning", not product attributes. So companies provide their consumers with opportunities not merely to shop but to experience fully the meaning of their brand. The brand-name superstore, for instance, stands as a full expression of the brand's lifestyle in miniature. Many of these stores are so palatial, so interactive, so hi-tech that they lose money hand over fist. But that doesn't mean they aren't working. Their real goal, since they are never the company's only source of sales, is to act as a 3D manifestation of the brand, so grand that their rather mundane products will carry that grandeur with them like a homing device.

But this is only the beginning. Nike, which used just to sponsor athletes, has taken to buying sporting events outright. Disney, which through its movies and theme parks has sold a bygone version of small-town America, now owns and operates its very own small town, Celebration Florida.

In these branded creations, we see the building blocks of a fully privatised social and cultural infrastructure. These companies are stretching the fabric of their brands in so many directions that they are transformed into tent-like enclosures large enough to house any number of core activities, from shopping to entertainment to holidays. This is the true meaning of a lifestyle brand: living your life inside a brand. Brand-based companies are no longer satisfied with having a fling with their consumers, they want to move in together.

These companies are forever on the prowl for new and creative ways to build and strengthen their brand images. This thirsty quest for meaning and virgin space takes its toll on public institutions such as schools, where, in North America, corporate interests are transforming education, seeking not only to advertise in cafeterias and washrooms but to make brands the uncritical subjects of study. Maths textbooks urge students to calculate the circumference of an Oreo cookie, Channel One broadcasts Burger King ads into 12,000 US schools and a student from Georgia was suspended last year for wearing a Pepsi T-shirt on his school's official "Coke Day".

Another effect is to restrict choice. Brands, at the core, are selfish creatures, driven by the need to eliminate competitors and create self-enclosed branded systems. So Reebok, once it lands a deal to sponsor campus athletics, wants to exclude not only competing brands but also, as was the case at the University of Wisconsin, all disparaging remarks made about Reebok by officials of the university. Such "non-disparagement" clauses are standard in campus sponsorship deals. Disney, after it bought ABC, decided that it would rather ABC News no longer covered Disney's scandals, and focused instead on promoting its movies in various feats of "synergy". We can look forward to more of the same, no doubt, from this month's merger of AOL and Time Warner.

There is another, more tangible, effect of the shift from products to brands: the devaluation of production itself. The belief that economic success lies in branding - production is a distant second - is changing the face of global employment. Building a superbrand is extraordinarily costly. A brand needs constant managing, tending, replenishing, stretching. The necessity for lavish spending on marketing creates intense resistance to investment in production facilities and labour. Companies that were traditionally satisfied with a 100 per cent mark-up from the cost of factory production to the retail price have spent the decade scouring the globe for factories that can make their products so inexpensively that the mark-up is closer to 400 per cent.

That's where the developing world's "free-trade zones" (free, that is, of taxes and wage or other labour regulations) come in. In Indonesia, China, Mexico, Vietnam, the Philippines and elsewhere, the export-processing zones (as these areas are also called) are emerging as leading producers of garments, toys, shoes, electronics and cars. There are almost 1,000 zones around the world, spread through 70 countries and employing approximately 27 million workers.

Inside the gates of the zones, workers assemble the finished products of our branded world: Nike running shoes, Gap pyjamas, IBM computer screens, Old Navy jeans, or VW Bugs. Yet the zones appear to be the only places left on earth where the superbrands actually keep a low profile. Indeed, they are positively demure. Their names and logos aren't splashed on the facades of the factories. In fact, where a particular branded product is made is often kept secret. And unlike in the brand-segregated superstores, competing labels are often produced side by side in the same factories; glued by the same workers, stitched and soldered on the same machines.

Regardless of where the zones are located, the hours will be long - 14-hour days in Sri Lanka, 12 in Indonesia, 16 in southern China, 12 in the Philippines. The workers are mostly young women; the management, military-style; the wages, sub-subsistence; the work, low-skill and tedious. The factories are owned by contractors or subcontractors from Korea, Taiwan or Hong Kong; the contractors meet orders for companies based in the US, Britain, Japan, Germany and Canada.

These pockets of pure industry are cloaked in a haze of transience: the contracts come and go with little notice (in Guatemala the factories are called "swallows" because they might take flight at any time); the workers are predominantly migrants, far from home with little connection to the place in which they find themselves; the work itself is short-term, often not renewed. Many factory workers in the Philippines are hired through an employment agency inside the zone walls which collects their cheques and takes a cut - a temp agency for factory workers, in other words.

We tend to think that globalisation moves jobs from one country to another. But in a brand-based economy, the value of the work itself moves to a drastically degraded rung of the corporate hierarchy. What is being abandoned in the relentless quest to reduce the costs of production is the Fordist principle: that labour not only creates products but, by paying workers a decent wage, creates the consumer market for that product and others like it. In Indonesia, the young women factory workers making Nike shoes and Gap jeans live a notch above famine victims and landless peasants. And though it may seem indecent to compare them with the relatively privileged retail workers in the western shopping malls, the same pattern is at work. In developed countries, too, jobs are increasingly temporary, part-time, contract-based. Just as factory jobs that once supported families in the west have been reconfigured in the developing world as jobs for teenagers, so have the brand-name clothing companies and restaurant chains - Wal-Mart, Starbucks, The Gap - pioneered the idea that fast-food and retail-sector jobs are disposable and unfit for adults.

And so we are left with an odd duality: brands have never been more omnipresent in our lives, nor have they ever generated as much wealth. All around us we see these new branded creations replacing our cultural institutions and our public spaces. And yet, at the same time, these same companies are oddly absent from our lives in the most immediate of ways: as steady employers. Multinationals that once identified strongly with their role as engines of job growth - and used it as leverage to extract all kinds of government support - now prefer to identify themselves as engines of "economic growth".

The extent of this shift cannot be overstated. Among the total number of working-age adults in the USA, Canada and the UK, those with full-time, permanent jobs working for someone other than themselves are in the minority. Temps, part-timers, the unemployed and those who have opted out of the labour force entirely - some because they don't want to work but many more because they have given up looking for jobs - now make up more than half of the working-age population.

We know that this formula reaps record profits in the short term. It may, however, prove to be a strategic miscalculation. When corporations are perceived as functioning vehicles of wealth distribution - trickling down jobs and tax revenue - they get deep civic loyalty in return. In exchange for steady pay cheques and stable communities, citizens attach themselves to the priorities and fortunes of the local corporate sector and don't ask too many questions about, say, water pollution. In other words, dependable job creation served as a kind of corporate suit of armour, shielding companies from the wrath that might otherwise have been directed their way. Only now, without realising it, brand-driven multinationals have gradually been shedding that armour: first came their inability to respect public space, next came their betrayal of the central promise of the information age - the promise of increased choice - and, finally, they severed the bond between employer and employee. They may be big, they may be rich, but suddenly there is nothing to protect them from public rage.

And that is the true significance of Seattle. All around us we are witnessing the early expressions of this anger, of the first, often crudely constructed lines of defence against the rule of the brands. We have, for example, the growth of "culture-jamming" which adapts a corporation's own advertising to send a message starkly at odds with the one that was intended. So, for example, Apple Computers' "Think Different" campaign acquires a photograph of Stalin with the slogan "Think Really Different". The process forces the company to foot the bill for its own subversion, either literally, because the company is the one that bought the billboard being altered, or figuratively, because whenever anyone messes with a logo, they are tapping into the vast resources spent to make that logo meaningful.

I've never been thoroughly convinced by the powers of culture-jamming: in a war fought strictly with images, surely the one with the most images will win? But the principles of culture-jamming - using the power of brand-names against themselves in a kind of brand boomerang - are being imported to much more direct and immediate political struggles. People are beginning to fight the big global economic battles by focusing on one or two brand-name corporations and turning them into large-scale political metaphors. They are having more luck with this strategy than they had with decades of fighting these battles on a policy level with governments.

Think of the campaigns that trace the journeys of brand-name goods back to their unbranded points of origin: Nike sneakers back to the sweatshops of Vietnam; Starbucks lattes back to the sun-scorched coffee fields of Guatemala and now East Timor; and virtually every ingredient of a McDonald's hamburger dissected into its bio-engineered beginnings.

There is a clear difference between these campaigns and the corporate boycotts of the past, whether against Nestle for its baby formula, or against Union Carbide for its infamous toxic accident in Bhopal, India. In those cases, activists had targeted a specific corporation engaged in an anomalously harmful practice. Today's anti-corporate campaigns simply piggyback on the high profile of their brand-name targets as a tactical means of highlighting difficult, even arcane issues. The companies being targeted - Disney, Mattel, The Gap and so on - may not always be the worst offenders, but they do tend to be the ones who flash their logos in bright lights on the global marquee. It may seem unfair to single such companies out for their "success", as some have argued, but it is precisely this success which is becoming an odd sort of liability.

Take McDonald's. In opening more than 23,000 outlets worldwide, the company has done more than spread the gospel of fast, uniform food. It has also, inadvertently, become equated in the public imagination with the "McJob", "McDonaldisation" and "McWorld". So when activists build a movement around McDonald's, as they did around the McLibel Trial, they are not really going after a fast-food chain, but harnessing the branding might behind the chain as a way to crack open a discussion on the otherwise impenetrable global economy: about labour, the environment and cultural imperialism.

Many superbrands are feeling the backlash. With typical understatement, Shell Oil's chief executive, Mark Moody, states: "Previously, if you went to your golf club or church and said, 'I work for Shell', you'd get a warm glow. In some parts of the world, that has changed a bit." That change flowed directly from the anti- corporate campaign launched against Shell after the hanging of the Nigerian author and activist Ken Saro-Wiwa, who was fighting to get Shell to clean up the environmental devastation left behind when it pumped oil out of the Niger Delta. Had the campaigners focused on the dictatorship alone, the death of the activist could well have been yet another anonymous atrocity in Africa. But because they dared to name names - to name Shell as the economic interest behind the violence - it became an instantly globalised campaign, with protests at petrol stations around the world. The brand was the campaign's best asset. Something similar happened in the campaign against the brutal regime in Burma; almost all the major brand-name companies have now pulled out. The campaign against Monsanto - which has abandoned its plans for "terminator" seeds, genetically altered so as to yield only one crop - worked because the pressure was put on the heavily branded supermarkets and packaged food companies.

At the heart of this shift in focus is the recognition that corporations are much more than purveyors of the products we all want; they are also the most powerful political forces of our time, the driving forces behind bodies such as the World Trade Organisation. By now, we've all heard the statistics: how corporations such as Shell and Wal-Mart bask in budgets bigger than the gross domestic products of most nations; how, of the top 100 economies, 51 are multinationals and only 49 are countries. So, although the media often describe campaigns like the one against Nike as "consumer boycotts", that tells only part of the story. It is more accurate to describe them as political campaigns that use consumer goods as readily accessible targets, as public-relations levers and as popular education tools.

I doubt this current surge of anti-corporate activism would have been possible without the mania for branding. Branding, as we have seen, has taken a fairly straightforward relationship between buyer and seller and - through the quest to turn brands into media providers, art producers, town squares and social philosophers - transformed it into something much more intimate. But the more successful this project is, the more vulnerable these companies become to the brand boomerang. If brands are indeed intimately entangled with our culture and identity, then, when they do wrong, their crimes are not easily dismissed as another corporation trying to make a buck. Instead, many of the people who inhabit these branded worlds feel complicit in their wrongs, both guilty and connected. And this connection is a volatile one, akin to the relationship of fan and celebrity: emotionally intense but shallow enough to turn on a dime.

Branding, as I have stated, is a balloon economy: it inflates with astonishing rapidity but it is full of hot air. It shouldn't be surprising that this formula has bred armies of pin-wielding critics, anxious to pop the corporate balloon and watch it fall to the ground.

Behind the protests outside Nike Town, behind the pie in Bill Gates's face, behind the shattering of a McDonald's window in Paris, behind the protests in Seattle, there is something too visceral for most conventional measures to track - a bad mood rising. And the corporate hijacking of political power is as responsible for this mood as the brands' cultural looting of public and mental spaces.

All around the world, activists are making liberal use of the tool that has so thoroughly captured the imagination of the corporate world: branding. Brand image, the source of so much corporate wealth, is also, it turns out, the corporate Achilles' heel.

Naomi Klein is a freelance journalist based in Canada. This article is based on her book "No Logo", just published by HarperCollins, £14.99