OF CORPORATE RULE
Richard J. Barnett and Ronald E. Mueller, Global Reach
In the twenty-odd years since these words were penned, transnational corporations (TNCs) have consolidated their power and control over the world. Today, 47 of the top 100 economies are actually transnational corporations, 70 percent of global trade is controlled by a just 500 corporations, and a mere one per cent of the TNCs on this planet own half the total stock of foreign direct investment. At the same time, the new free market and free trade regimes (eg. GATT, NAFTA) have created global conditions in which transnational corporations and banks can move their capital, technology, goods, services - freely throughout the world unfettered by the regulations of nation states or democratically elected governments.
In effect, what has taken place is a massive shift in power, out of the hands of nation states and democratic governments and into the hands of transnational corporations and banks. It is now the TNCs that effectively rule and govern the lives of the vast majority of the people on earth. Yet, these new world realities are seldom reflected in the strategies of citizen movements for democratic social change. All too often, strategies are primarily aimed at changing government policies while the real power being exercised by the TNCs behind the scenes is rarely challenged, let alone dismantled. And when the operations of TNCs become the prime target for citizen action campaigns, there is a tendency to employ a more or less piecemeal approach to what is a deeply systemic problem.
As we approach the 21st century, it is imperative that social movements in both the North and the South develop a new politics for challenging the dominant global rule of transnational enterprises.
The following are some of the salient ingredients of the new powers that now give corporations effective control over the lives of peoples and nations in this age of globalisation, and then some suggestions as to changing the situation.
Over the past three decades, as David Korten points out, the world's leading business and governmental elites have been gathering on a regular basis in elite fora such as the Council on Foreign Relations, Bilderberg, and especially the Trilateral Commission to develop a consensus on an agenda for globalisation.
Behind closed doors, these leaders have been able to agree on certain common approaches that include: global economic integration, the harmonisation of various trade, tax and regulatory measures, and an economic philosophy that should guide all nations, combined with political strategies to achieve such changes. With passage of the new free trade agreements to augment the Bretton Woods agreement, and establishment of the World Trade Organisation, this unelected and unaccountable global elite has effectively siezed important instruments of governance in the three dominant regions of the world.
Regardless of their nominal home bases, Japanese, American, and European corporate giants have increasingly become stateless, juggling multiple national identities and loyalties to achieve their global competitive interests. No matter where they are operating in the world, these transnational conglomerates can use their overseas subsidiaries, joint ventures, licensing agreements, and strategic alliances to assume foreign identities whenever it suits their purposes. In so doing, they develop chameleon-like abilities to change their identities to resemble insiders wherever they are operating. As one CEO put it: "When we go to Brussels, we're member states of the EEC and when we go to Washington we're an American company too." Whenever they need to, they will wrap themselves up in the national flag of their home governments to get support for tax breaks, research subsidies, or governmental representation in negotiations affecting their marketing plans. Through this process, stateless corporations are effectively transforming nation states to suit their interests.
In most of the industrialised countries, business councils composed of the CEOs of the largest corporations and banks, have formed new corporate state alliances. In the U.S., for example, the Business Round Table's 200 members include the heads of 42 of the 50 largest Fortune 500 corporations, 7 of the 8 largest U.S. commercial banks, 7 of the 10 largest insurance companies, 5 of the 7 largest retail chains, 7 of the 8 largest transportation companies, and 9 of the 11 largest utility companies. In countries like Canada, the Business Council on National Issues has organised itself into a shadow cabinet of the federal government with CEOs heading up task forces on major public policy issues. Once policy consensus is reached amongst the principal TNCs, massive lobbying and advertising campaigns are mounted around key policy issues. Armed with a network of policy research institutes and public relations firms, these business coalitions are able to mobilise facts, policy positions, expert analysis, and opinion polls as well as organise citizen front groups for their campaigns to change national governments and their policies. By campaigning for debt elimination, privatisation, and deregulation, business coalitions have effectively dismantled many of the powers and tools of national governments.
The fundamental purposes of the new free trade deals (eg. GATT, NAFTA) are to provide protection among national constitutions for the freedoms of transnational corporations and banks to act unhindered by national laws. As Carla Hills, chief U.S. negotiator for both NAFTA and the GATT, put it: "We want corporations to be able to make investment overseas without being required to take a local partner, to export a given percentage of their output, to use local parts, or to meet a dozen other restrictions." As a result, the "national treatment" clauses in NAFTA and GATT guarantee that foreign investors have the same rights and freedoms as domestic firms. The investment codes in the new free trade regimes ensure that various regulations of nation states are removed, including foreign investment requirements, export quotas, local procurement, job content, and technology specifications. Through this kind of consitiutional protection, the rights of TNCs take precedence over the rights of citizens in their respective nation states. In addition, the legislative authority of the GATT and the NAFTA supercedes the legislation of participating nation states when matters of conflict arise.
The creation of a globalised consumer culture is another key element of the new corporate tyranny. The transnationals want to be able to sell their products with the same basic advertising design in Bangkok and Santiago as in Paris, Tokyo, New York or London. The prime example is the way Coca-Cola has become a global symbol transcending all national and cultural boundaries. Through television images and satellite communications, a homogenous set of perspectives, tastes, and desires can be transmitted to all corners of the globe. It is now estimated that transnationals spend well over half as much money in advertising to create corporate friendly consumers as the nations of the world spend on public education. In turn, all this corporate advertising tends to forge a connection in people's mindsets between private interests (ie. of the TNCs) and the public interest. As a result, a global monoculture is emerging which not only disregards local tastes and cultural differences, but threatens to serve as a form of social control over the attitudes, expectations, and behaviour of people all over the world.
The two main Bretton Woods institutions, the World Bank and the International Monetary Fund, have become principal tools by which the new global managers maintain corporate control over nations and peoples, especially in countries of the South. Both the Bank and the Fund are directly linked to the transnational financial sector in terms of the borrowing and the lending ends pf their operations. Loan agreements are routinely negotiated in secret between banking and government officials who, for the most part, are not accountable to the people on whose behalf they are obligating the national treasury to foreign lenders. The Bank and the Fund must be regarded, as one observer puts it, "as governance institutions, exercising power through [their] financial leverage to legislate entire legal regimens and even to alter the constitutional structure of borrowing nations." Their own consultants often have the power to "rewrite a country's trade policy, fiscal policies, civil service requirements, labour laws, health care arrangements, environmental regulations, energy policy, resettlement requirements, procurement rules and budgetary policy."
In the 1980s, the World Bank and the IMF used debt renegotiations as a club to force the developing nations into making widespread structural adjustments (SAPs) in their economies. Each SAP package called for sweeping changes in economic and social policies design to channel the country's resources and productivity into debt repayments and enhanced transnational competition. The SAP measures included large scale deregulation, privatisation, currency devaluation, social spending cuts, lower corporate taxes, expanding exports of natural resources and agricultural products, and removal of foreign investment restrictions. In order to obtain the foreign exchange to pay down their debt loads, developing countries were compelled to become export oriented economies, selling off their natural resources and agricultural commodities on global markets while rapidly increasing their dependency on imported goods and services. In effect, the SAPs have become instruments for the recolonisation of many developing countries in the South in the interests of transnational corporations and banks.
The new World Trade Organisation established by the Uruguay Round of the GATT is designed, in effect, to serve as a global governing body for transnational corporate interests. The WTO will have legislative as well as judicial powers. It has a mandate to eliminate all barriers to international investment and global competition. Under the WTO, a group of unelected trade representatives will act like a global parliament with the power to override economic and social policy decisions of nation states and democratic legislatures around the world. At the same time, the world's major TNCs will have a powerful role to play in the new WTO through direct linkages with the trade representatives of participating countries. In the case of the U.S., for example, members of the Advisory Committee for Trade Policy and Negotiations include such corporate giants as IBM, AT&T, Bethlehem Steel, Time Warner, Corning, Bank America, American Express, Scott Paper, Dow Chemical, Boeing, Eastman Kodak, Mobil Oil, Amoco, Pfizer, Hewlett Packard, Weyerhauser, and General Motors - all of whom are members of the Business Round Table.
The following are some of the global systems that have been effectively usurped by transnational corporations and banks.
1. Global Finance
2. Global Industrial Production
3. Global Product Distribution
4. Resource Control
5. Banking, Insurance, Education
6. Patenting of Life Forms
7. Cultural Cloning
The best hope for countering growing corporate domination lies in the building of social movements whereby people reclaim their sovereign rights over transnational corporations and banks.
Most people now feel that they have lost control over their economic, social, and ecological future. This is not only true among the poor majority in the South, following the damage done by massive structural adjustments, but increasingly amongst the majority of working, middle class peoples in the North. For many, the dream of securing a full time job, a relatively stable, crime free community, in a clean environment with a bright future for their children, has been shattered. In this climate, the politics of fear and the politics of insecurity have become rampant in most of our countries expressing itself sometimes as ethnic violence or, more recently, right wing militias [in America]. As we move towards the 21st century, not only do the postwar engines of economic growth seem to be petering out in their reach for global markets, thereby undermining effective demand and confidence in the new global order and its institutions, but a new set of class divisions and tensions is emerging in our economies and societies, both North and South. Underlying the politics of fear and insecurity is the fundamental question of democracy itself. These conditions, in turn, could create new political opportunities and space for building social movements to take democratic control over transnational corporations that are dominating people's economic, social, and ecological future.
In the building of social movements today, emphasis must be placed on the notion of popular sovereignty as a common base for action. Throughout this country alone, peoples all over the world have fought for the recognition of fundamental democratic and human rights - the right to adequate food, clothing and shelter; the right to employment, education and health care; the right to clean environment, social equality, and public services; - and the right to self determination and the ability to effectively participate in decisions affecting these rights. Together, these basic communal rights, which constitute the core of popular sovereignty, have been reflected and enshrined in the Universal Declaration of Human Rights, the International Covenant on Economic, Social, and Cultural Rights, and the International Covenant on Civil and Political Rights. In the new age of corporate tyrannt, however, these fundamental human and democratic rights of people have been largely stolen or hijacked. Today, the rights and freedoms of transnational corporations are not only enshrined but take precedence over the democratic rights of peoples, nations, and citizens. The time has come for citizens, through social movements, to reclaim their sovereign rights over transnational corporations.
The emergence of the corporate state, wherein the reigns of democratic governance have been taken over by corporations and banks, has completely disfigured and distorted the responsibilities of the national governments. The moral and political obligations of nation states to intervene in the market economy in order to ensure that the entire national system - economic, fiscal, social, cultural, environmental, political - functions for the purpose of providing a profitable climate for transnational investment and competition in the new global economy. As the politics of insecurity unfold, however, a right-wing brand of nationalism is likely to arise with new forms of protectionism against immigration, cheap imports, as well as further protection for major TNCs. In other words, "portectionism for the powerful." In this climate, it is imperative that social movements focus their energies on the "corporate state" and resisting the rise of a new right-wing nationalism. People's energies need to be mobilised around a new social version of the nation state in an age of global interdependence, where governments reclaim the power and tools necessary to exercise democratic control over transnational corporations and banks. In effect, the nation state must be retooled to serve the rights of people (ie. popular sovereignty) to secure control over their economic, social, and ecological future. But this new nationalism must be simultaneously carried out in concert with social movements in other countries who are engaged in struggles for democratic control over transnationals.
In order to build social movements in the North and South who are committed to the task of taking democratic control over TNCs in this new age of corporate tyranny, a common platform and agenda needs to be developed. This could take the form of a common manifest for citizens of the world which would include:
The core of this citizen's manifesto would be the spirit and practice of popular sovereignty. Its prime purpose would be to provide social movements, both in the North and South, with a common platform for action in dismantling the corporate state and challenging the operations of transnational enterprises at local, national, regional, and international levels.
Social movements need to develop the capacities and tools for taking democratic control over TNCs. This calls for strategic planning on the part of social movements. The conventional strategies for addressing the behaviour of TNCs, however, are not adequate for the task of either dismantling the corporate state or effectively challenging transnational regimes. What is needed is a more systematic approach. To begin, it is important for social movements to identify major TNC targets within the main transnational regimes - finance, resources, distribution, services, patents, media etc. - which are a priority for democratic control for people in a given country or region. Connections can then be made between the particular TNC targets and the transnational regime in which they operate plus the way in which the corporate state functions in a given country or region. By drawing these connections, social movements can set the stage for developing strategic plans for exercising popular sovereignty and taking democratic control.
Reproduced with the permission of Edward Goldsmith, co-editor with Jerry Mander, of The Case Against the Global Economy and For a Turn Towards the Local - Sierra Club Books; fax 1-415-957-5793.