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Posted in the database on Friday, June 09th, 2006 @ 18:07:04 MST (4935 views)
by Tony Clark    Converge.org  

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The men who run global corporations are the first in history with the organisation, technology, money, and ideology to make a credible try at managing the world as an integrated economic unit.

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 seized 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 of 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.


Systems of Corporate Rule

The following are some of the global systems that have been effectively usurped by transnational corporations and banks.

1. Global Finance

The globalisation of finance markets has been nothing short of revolutionary. The days when national authorities could stabilise financial markets through banking regulations, reserve requirements, deposit insurance, limits on interest rates, and the separation of commercial and investment banking are all but gone. In country after country, there has been a massive deregulation of finance, as well as mergers between commercial and investment banking. Also, TNCs are now bypassing banks altogether to issue their own commercial paper. Information technology has transformed global banking to the point where 2 trillion dollars is transferred everyday around the world. Electronic transfer systems make more than 150,000 international transactions in a single day. The speed and frequency of these money transactions - from Maylasia to Toronto to New York to Miami to the Cayman Islands to the Bahamas to Switzerland - makes it difficult to trace, let alone regulate. Today, the global finance market is dominated by Japanese banks (ie. eight out of the world's top ten.) But this deregulated, global finance market has become fragile and unstable to the point where a financial shock in one country (eg. Mexico) can dramatically upset financial markets in other countries before national authorities have a chance to intervene. Unless radically new regulatory measures are introduced, the fiscal policies of national governments will not only be dictated but also threatened by a volatile, global finance system.

2. Global Industrial Production

As auto, electronics, textile and clothing industries have outgrown their home countries, shifting their production and supplier operations off shore to independent contractors, the "global factory" coupled with a radically new international division of labour has emerged. With the globalisation of production networks, transnational manufacturing firms can quickly move their operations around the world, chasing cheap labour, taking advantage of more profitable investment opportunities, and outflanking the demands of unionised workers. In the auto industry, Ford and GM have forged strategic alliances with Mazda and Toyota to produce for each other's markets while in the shoe industry, companies like Nike and Schwinn have begun to shift from manufacturing to designing, merchandising and distributing. This new global factory, in turn, has resulted in a dramatic loss of manufacturing jobs in the industrial North (ie. the U.S., Japan, Europe) as manufacturing companies have moved their production to low wage, tax free countries in the South. Increasingly, workers around the world find themselves lumped together in the same labour pool to the point where exploitation in Guatemala, Maylasia, or China is felt as wage competition by workers in London, New York, or Montreal. While the staggering wage gap between workers in the North and the South has begun to narrow, there is a very real danger that workers everywhere will be dragged down to low common wage standards by the forces of global competition.

3. Global Product Distribution

Richard Barnet and John Cavanagh, in Global Dreams, describe the "global supermarket" that is transforming agricultural production throughout the world but also undercutting the capacity of nations to ensure that the basic food needs of their populations are sufficiently met. Transnational food corporations are demanding an end to the system of agricultural subsidies, regulation, and protection that has maintained a relatively cheap food policy in the industrial North. At the same time, poor countries in the South who were once self-sufficient in food but are now desperate for foreign exchange to pay down their debts, are forced to turn over valuable agricultural lands to the transnational agribusiness and to convert to the production of cash crops while importing food products to feed their own peoples. "Export or Die" is the message. The introduction of bio-tech production methods - laboratory produced vanilla, bioengineered celery, freeze-resistant flowers and tomatoes, bovine growth hormones for cows, plus long distance food transportation - pose further threats not only to the livelihood of traditional farmers in poor countries but also to the quality and safety of food products in general. Meanwhile, the giant food corporations - General Foods, Kraft, Pilsbury, Philip Morris, Del Monte, President's Choice, Proctor & Gamble, Pepsico etc. - have merged their operations and expanded their marketing strategies on a global basis. National authorities are also finding it increasingly difficult to maintain adequate food inspection at the border, especially for the massive imports of fruits and vegetables that may have been grown in areas where sewage is rampant, leading to expanded use of such chemicals as methyl bromide, a potent threat to the ozone layer.

The corporate dream of turning the whole world into a kind of global shopping paradise is also near at hand. Not only have Coca Cola and Marlborough become universally recognised brand names through massive corporate advertising, but global retailers like Proctor & Gamble, Philip Morris, RJR Nabisco, Kellogg, General Motors, Sears, Unilever, Pepsico, Nestles, and MacDonalds have been spending billions of advertising and promotion dollars each year with the intent of creating a steadily expanding global market based on mass consumption. The strategy is to "sell the same things in the same way everywhere" with little or no regard for local customs, tastes, cultural or religious differences. Giant retailers like Wal-Mart have led the way with development of a chain of superstores designed to sell the largest range of retail consumer goods - food, clothing, hardware, furniture, pharmaceuticals etc. - in towns and cities throughout North America. Using a variety of tactics ranging from low-wage part-time employment, misleading advertising, predatory pricing, competition law violations, and coercive sourcing from suppliers, Wal-Mart has managed to force local merchants out of business and in some cases created ghost towns. Now the most aggressive giant retailer in the world, Wal-Mart has plans to expand its operations into parts of Latin America, Europe, and Asia.

4. Resource Control

Transnational resource giants like Exxon, Mitsubishi, Texas Gulf, Shell, Rio Tinto Zinc, Alcan and a host of energy, mining, forestry and hydro corporations have expanded their operations to the four corners of the earth, posing serious threats to the environment by causing massive oil spills, reversing water systems, flooding huge land tracts, depleting vast forest areas, eliminating fish stocks, and destroying vegetation and wildlife. The only thing new about this is the new atmosphere of deregulation in such areas as environmental protection. The resource and energy codes built into the free trade regimes (eg. NAFTA, GATT) are designed to accelerate the rapid development and export of natural resources. Moreover, the export-or-die demands of the IMF mean that poor countries with resource based economies have no choice but to open their doors to transnational resource companies without regulation or environmental protection. Rapid exports not only accelerate the depletion of non-renewable resources but greatly intensify the global supplies of fresh water that are now being targeted by TNCs. Add to this last persistent destruction of rainforests plus the continuous dumping of hazardous wastes into the ecosystem by companies like Union Carbide, Dow Chemical, and Dupont - there should be little wonder the world is on the verge of an ecological holocaust.

5. Banking, Insurance, Education

Transnational corporations are also rapidly moving in to take over control of basic services such as health care and education which has been the public responsibility of governments in most countries. Through a series of vertical and horizontal mergers, a system of large scale health care corporations is emerging. In the U.S., the major drug companies like Eli Lily are merging with the health insurance industries like PCS for the takeover of hospitals, pharmacies, freestanding clinics, nursing homes and doctors' practices. The world's largest profit oriented hospital companies, Columbia and Health Trust, have merged to form a giant health care corporation with sales exceeding that of Eastman Kodak or American Express. In a deregulated global economy, these new health care giants are poised to play a key role in swallowing up pieces of the public health care system in countries like Canada where there is enormous pressure to privatise. At the same time, transnationals are also invading the education system. In the U.S. organisations like the Business Higher Education Forum and the New American Schools Development Corporation (which funnels corporate finances into profit oriented elementary schools) are composed of TNCs like AT&T, Ford, Eastman Kodak, Pfizer, General Electric, Heinz, and many others. Household brand names like Coca Cola, Pepsico, MacDonalds, Burger King and Proctor & Gamble are also directly involved in developing curriculum for schools along with advertising promotions to help kids "grow up corporate."

6. Patenting of Life Forms

While government regulations over the operations of TNCs are being dismantled in countries all over the world, the monopoly rights of the transnationals over information and technology is now internationally protected under the intellectual property rights components of the GATT and the WTO. Moreover, this international patent right protection has been extended to genetic materials, including seeds and natural medicinals. The patenting of life forms allows transnational companies to secure widespread control over genetically engineered organisms, from microorganisms to plants and animals. Worse still, transnationals are now able to obtain monopoly rights over genetic research concerning an entire species plus any products derived from that research. The W.R. Grace corporation, for example, through its subsidiary Agracetus Inc. has secured a U.S. patent on all genetically engineered or "transgenic" cotton varieties (1992), a European patent on all transgenic soybeans (1994) and has applications pending in other countries to take control of 60 percent of the world's cotton crop, including India, China and Brazil.

Under these conditions, farmers who traditionally save seed from one harvest to replant for their next crop would find themselves in violation of international patent law. Unless they pay a royalty to the TNC that owns the patented seed, farmers around the world are now prohibited from growing their own seed stocks. Furthermore, there are moves to have these global monopoly rights and patent protection laws extended to include the cloning of human embryos.

7. Cultural Cloning

Armed with satellite communications, global entertainment corporations are selling their pop music cultural products all over the world. The target audience of this global entertainment industry is the two-fifths of the people on the planet who are under 20. Bertlesman's pop music empire presently dominates youth markets throughout Europe, North America, Latin America and is now moving into Asia. Sony, Philips and Matsushita have also been expanding into these markets. Sony's prime focus has been on the children's market promoting their toy-like radios [ie. the My First Sony range], kids' music label, and children's video library. The biggest technological leap in the global entertainment during the 1980s came with MTV. By 1993, MTV programs were reaching 210 million households in 71 countries throughout the world. Increasingly, the big six global entertainer corporations are focusing their energies on opening up markets in Latin America and Asia where the greatest growth potential exists. But this expansion is also being challenged as a new form of cultural imperialism. For the poor countries of Asia, Africa and Latin America the big six penetration of transnational sound will choke off traditional music of the local culture as well as restrict employment opportunities for local artists. At the same time, the global entertainment industry will increasingly generate a homogenised culture that reflects western corporate values and priorities.


New Bases for Social Action

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.

Popular Sovereignty

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 tyrant, 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.

New Nationalism

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, "protectionism 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.

Citizens Manifesto

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:

A. a declaration of the fundamental rights of people to determine their own economic, social, and ecological future;

B. the sovereign rights of peoples over that of transnational corporations and banks;

C. the demand that TNCs meet certain basic economic, social, and environmental conditions;

D. the insistence that governments develop and enact new regulatory measures for exercising democratic control over TNCs; and

E. the responsibility of social movements to take whatever forms of action are needed to see that people's basic rights are upheld and that democratic control over the operations of TNCs is maintained.

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.

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