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Friday, May 20, 2005

Corporations & Reparations Part I

Let's not kid ourselves. This world's socio-economic engine runs on capitalism, and corporations are driving the bus. Ever since the end of the Second World War, the power of transnational corporations has been in the ascendancy while that of organised labour, civil society, and the State has declined.

This risethe spreading reach of financiers and businessmen into every corner of the globe, with no place free from a Coca-Cola sign and a marketing teamof corporate power in the latter half of the 20th Century has been well documented, starting with Dwight Eisenhower's prophetic warning in 1961 about the domination of America by an military-industrial complex. The fact that Eisenhower only warned the American people after serving as President hints at, even back then, the dark power of corporations to muzzle 'elected' politicians. Noam Chomsky, Gore Vidal and others have since charted the rise of the corporate (and branded) sun, an ascent yet to reach its apex.

The fall of Berlin Wall and the subsequent end of an alternative to Yankee-style capitalismknown for its neo-liberal, trickle-down theories of economic nirvana and pushed, punted and rammed home by IMF and World Bank bureaucratsmarked the beginning of a sustained process of hyper-consolidation of corporate power and the total integration of each local economy into one financial system. We've noted and tagged this process. We've given it a name, globalization.

And it is a process accountable only to a specific minority, the shareholders of the transnational corporations that are leading the global economy. Shareholders, it might be pointed out, are almost always interested in one thing, the maximisation of profit in the shortest period of time possible.

The 1990s saw not only the opening of virgin markets in Eastern Europe, Russia and elsewhere, but also the increasing use of stock options as an incentive for corporate management. Whether by design or by accident, stock options for management has resulted in an alignment of the interests of corporate brass and of shareholdersprofit. Neither God nor glory factors into today's equation. Gold and nothing but.

Like Horatio Alger, the days of the wise chairman of board, the old man who had built the company up from two pots and a piece of string, looking after the community that had spawned his company are lost in legend and myth. At most, modern transnational corporations have only the faintest of ties to geographical locations or people. They have become divorced from communities, economically, politically and ethically.

An ethical transnational corporation is an oxymoron. When risk analysts sit down at conference tables, the end result of any corporate action is assessed according to profitability factors. If it does not make a profit (or a small profit at high risk), an action is deemed unworthy of pursuit. The converse is also true; highly profitable actions at the lowest possible risk are extremely attractive. The ethical component of an action is not considered, and, if it is, it is usually weighed in as a risk factor (i.e. the bad press and damage to a brand that an unethical action (like using sweatshop labour) can cause). In all cases, the determining factor is profit.

Not all organisations or groups of human beings act in this manner. In fact, most don't. The ethical considerations of actions are at the fundamentals of a lot of decision-making. For example, societies often try to build legal codes on their moral codes. Aristotelian ethics and politics are quite explicit on this point; the reason behind legislation is to make men and women moral. At the very least, it is hoped that laws reflect society's morals (what those morals are is at the heart of most major disputes within communities), although this often subverted by the vested interests of politicians and their backers.

Philosophers and religious leaders for millennia have been promoting the primacy of morals; one should do A because A is the morally correct thing to do. While it is very hard to implement morally right actions all of the time, most people make an honest attempt at a near instinctive level.

Transnational corporations do not subscribe to this primacy of morals. They believe in the primacy of profits, and that is why we see, over and over again, transnational corporations working with immoral regimes and engaged in shady practises. From no-bid contracts in Iraq, to oil for the Burmese junta and its tanks, to sweatshops in Central America stitching branded sneakers together for First World teenagers, corporations are engaged in immoral activities, working in collusion with unethical parties. Why? Because it is profitable to do so.

The abolition of transnational corporations is not an achievable goal in the short or even medium-term. Not only will this not occur any time soon, the likely outcome of globalization is, ironically enough, the withering away of the State. The signs are in contracts and budgets across the world. Governments have been increasingly outsourcing their traditional activitiesthose actions which seek to achieve the public goodto corporations; social services, such as healthcare and rubbish collection, have been outsourced to private companies on the economic argument that the private sector is more efficient (read cost-effective) than the State. Even the core of the State (at least on a Weberian analysis), its monopoly on legitimate force, is slowly being outsourced. The cutting edge of penal theory deals with best how to outsource the prison system, in its entirety, to private firms that transport, house and discipline inmates. The world's most powerful military moves these days with a critical baggage train of private companies that do everything from transport and cooking of food, to maintenance of military equipment, to the provision of 'security consultants'.

Citizen pay taxes in return for protection and various social goods (healthcare, education, etc.) from the State. The State now pays the private sector to deliver these social goods and protective services. Sooner or later, someone will decide to cut the middleman out of this equation.

Further, governments are rapidly losing the ability to set their own economic policies, except within pre-determined limits. Economic policies that are unfriendly to corporations (living wage, perhaps) can provoke massive capital flight in the short-term and disinvestment in the longer-term. As many jobs have become tied (often through contractors and other such middlemen) to the activities of corporations, capital flight and disinvestment means job losses and, possibly, economic collapse. This economic threat has resulted in countries throughout the developing world scrambling over each other to provide the cheapest labour with the kindest corporate tax system. This is George Monbiot's infamous race to the bottom, and it is a direct result of the economic power that corporations hold over governments. In attempts to change the behaviour of corporations, civil society and organised labour are often lashed with a variant of this argument; if you don't stop criticising corporation X, it will leave these shores, the global business community will lose confidence, foreign investment will dry up, and the whole country will descend into an economic crisis of dust bowl proportions.

Corporations, on this analysis, are entities 1) with a overriding concern for the maximisation of profit in shortest possible time frame, 2) that do not believe in the primacy of morals, and 3) are so exceedingly powerful that it is possible to conceive of them replacing the State, let alone influencing government policy.



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