GLOBAL CORPORATE CONSTITUENCY
In the apparent shifts of power from nation-state political institutions to global corporations, the question arises as to how the bases of power and their rights and responsibilities will shift.
In the traditional law of nations the nation-state was sovereign with a defined territory and population over which it had exclusive jurisdiction. The corporation was constituted as a legal person within the nation-state and was assumed to submit to its exclusive jurisdiction while drawing on and catering to the nation-state’s territory and population in order to do business and make a profit. Nation-state and Business Corporation are apparently two different but symbiotic species of human social organization. The objectives and responsibilities of nation-states and global corporations do not always coincide. The dynamics between the two in the flux of globalization is the subject matter of this essay.
In a nutshell, this inquiry is about the evolution of the political powers’ objectives from taxation to creation of jobs for their populations and the overall growth of wealth in their territories. Globally, as nation-states disengage from certain social programs in order to reduce taxes on job-providing businesses, which would otherwise move to better tax-havens, the question arises as to where the burden and responsibility for certain social programs which cannot be run for-profit -- such as taking care of handicapped and poor children -- should lie?
We shall begin by identifying the components and constituencies of the global corporation as the system, then proceed to examine their convolution in the broader complex and finally consider their contemporary evolution in the flux.
I. THE SYSTEM:
Foremost among the “constituencies” of a corporation is its management. By management I mean those stakeholders in the corporation whose decisions affect the policies and the course of the corporation. It can, depending on the nature and structure of the corporation, include the executive management, the board of directors – which could even include representatives of the workers incorporated into the management – and advisory, consultative and legal bodies given decision-making prerogatives by the corporation's charter and bylaws.
The management's main concern would be the survival of the corporation. The corporation is the source of its livelihood. The corporation gives the management the sense of purpose. The pyramid of power within the management will have a perceived mission such as “providing transportation” for the car manufacturers, “producing medication” for the pharmaceutical companies, etc. The real mission, of course, is having a healthy bottom line without which the corporation will not survive.
Traditionally, the management used to be interested in the stability of the corporation. Now, it is growth: to increase the market and gain ever bigger share of that market for its products and services (to accomplish its mission) and find ways of streamlining its operations and innovate to remain at the cutting edge. As a constituency, the management is, of course, sensitive to these positive aspects of the corporation. But when the bottom line, the stability and the growth of the corporation are not satisfactory, the management may attempt to alter the nature of the corporation, to sell, to merge and/or dilute it in a more dynamic business – and those members of the management who cease to remain the constituents of the corporation will seek appropriate corporate indemnifications and “golden parachutes” to part company. In cases of failure the management would declare bankruptcy and bail out. Captains of the industry do not sink with their ships if they can help it.
Capital -- Shareholders and Financiers:
The management's interest in growth and bigger market shares is also aimed at attracting capital and, in the last analysis, catering to the shareholders. Shareholders can be allured by the impression of growth, market potentials, cutting-edge technology, plausible strategies and appropriate financial returns and dividends.
As constituents, shareholders can have different degrees of input in the corporation. The relationship between management and shareholders is a complex process which depends on the composition of the shareholders, the concentration of the shares, the control of the board of directors and the nature of the corporation. Shareholders may be passive or active. There are those who anticipate dividends, those who speculate on growth; and those who initiate class action suites against the corporation if they perceive that the management and the board of directors are not looking after the interests of the shareholders. Boards of directors may have outside independent, non-executive members who would look after the interests of the shareholders. In the last decade, with the prevalence of market economy and globalization, new adepts have joined the shareholders fold. Even labor-union mutuals have become active corporate shareholders.
Access to capital also implies access to financial markets. Financial institutions and banks involved will have vested interests. Commercial banks and investment banks holding shares, providing loans, and evaluating the corporation, while influencing the stock market and the shareholders are also stakeholders in the corporation. Indeed, they are the ultimate global corporations. As lenders borrowing in the international financial markets, as creators and sellers of currency hedges, as movers of liquidity across borders, abiding by complex regulatory reporting requirements, the financial institutions have angles of vision which the corporation should take into account.
Customers amd Consumers:
The customer makes the transaction to procure
the products and services of the corporation. It may, or may not
be the final user: the consumer. The customer may be a commercial
enterprise, in which case its willingness to market the products and services
of the corporation becomes crucial. From the wholesaler-importer
in a country, to the customer who walks into a store to buy a present for
Demands may be of different nature:
Needs: Needs are essentials for survival, such as food, clothing and shelter. They are relative depending on cultures and the environment. Some cultures consider healthcare, transportation and communication as essential needs. As we shall see later, providing for some needs may not be cost-effective in terms of bottom line profitability.
Wants: Wants relate to items whose absence is not life threatening. They too are relative. Sao Paolo businessmen need helicopters to travel between their offices and their residential compounds to reduce the danger of being kidnapped. Wants are social phenomena: the want of a Rolex watch (a real Rolex, not just any watch) or a sportscar. Wants can be created by trends within a culture or astute marketing by a producing corporation.
Consumption of its products and services is the ultimate goal of a corporation. To secure that the corporation will either need to promote customer loyalty or reduce the choice potentials of its customers by seeking monopoly or, where monopolizing the market is not possible, to enter into cartels and inter-corporate price and marketshare fixing.
Customer constituencies may have potentials to retaliate. If the product or the service is not essential the market can resort to boycott, not to mention the extremes of protests leading to mass riots and looting. Government may intervene to control monopolies, cartels and price and market share fixing (but the point of our present debate is that the potentials of governments to do that are being reduced.)
At any level of activity and whatever its "mission" the corporation will depend on suppliers. Even a financial corporation depends on the suppliers of the funds! Of course, the degree of dependence varies depending on the nature of the enterprise. Just like a customer, when the suppliers compete for the corporation's business, the latter can pick and choose, although the compatibility of the suppliers' products may limit the corporation's choices. A corporation may, in fact, out-source the components of its products to the point of reducing itself to a brand with nothing but intangible assets.
At the other end of the spectrum, a corporation, through cartel arrangements and mergers and acquisitions, may end up becoming the sole client of the suppliers and impose on them its conditions and prices. Thus for example, the merger of Continental Grain and Cargill reduced the potentials of farmers to make grain companies compete on price for the supply of grains and other agricultural products.
Depending on the “mission” of the corporation – the nature of its products and services – the workers, or parts of them, may become an important constituency of the corporation. In a labor-intensive enterprise, the work force may become the major factor in deciding the location of a corporation.
Depending on the level of skill required for the specific goal, mission, product or service of the corporation, and the availability of the labor force, the corporation may aim at transient exploitation (employment of labor) where the skill requirements are minimal and the supply is abundant – with as little as possible implication of “constituency”, i.e., workers as tools.
Where the level of skill required is high and the labor market is tight, the corporation will have interest in creating conditions to retain the worker and secure their loyalty. Those conditions can range from non-transferable knowledge, attractive salary and benefits (stakeholders) which would attach the workers to the corporation and secure their loyalty, to giving vesting options to the workers to become “shareholders”. The workers can organize themselves into labor unions in order to be well paid as "tools", negotiating their own "maintenance" in the form of workers' compensation, healthcare, layoff compensation and retirement. The unions can also either resist co-option into the corporation in order not to lose the edge of adversarial negotiations with the management for better conditions or accept and become stakeholders in the corporation.
We have here a spectrum of relationships between
the corporation and the workers going from exploitation (which in some
cases could turn into indenture in the form of owing to “ the company store”)
to creating loyalty (as a subject to a monarch) and further along to shareholding
(giving the impression of ownership and being part of the corporation).
The relationship between the media and global corporations is ambiguous. A newspaper, a radio or a TV station, or an internet site may carry a corporation’s commercials and at the same time publish criticisms of that corporation or its products and services; and may carry commercials of the corporation’s competitors.
The media may range from being a local business to being a global corporation. A community newspaper run by a local publisher is just as much of a business as a local grocery store, granted, occasionally with more clout. At the other end of the spectrum, Murdoch’s News Corporation is a global corporation like any other. All media are not businesses in the classical sense driven by the bottom line. Political and communal powers may create and run media as a public service, as a means of control or as channels of communication for specific policies and viewpoints. The global corporation will need to cope with these variations.
The corporation will need the media for marketing and for imparting the right image. As businesses, media become the global corporation’s constituency where they are financed by the corporation’s commercials and public relations. As for imparting the right image, especially when the media are controlled by ideologies, issues and political power and are financed by means other than commercial-bases such as membership fees or taxation, the corporation may have to cater to their point-of-view, be it environmental concerns, human rights, animal protection or a political party line. It may be true that in certain cases the corporation may be better off in terms of appeal to its other constituencies if it were criticized by media of certain points of view.
The most ambivalent is the relationship of the
corporation and the “government” as its constituency. The political
power – the government – can be an operational constituent: it can
be the manager, the shareholder, the supplier or the client of a corporation.
It can constitute a global corporation as was the East India Company or
British Petroleum. At the national level the political power may
The corporation will have the political power as its constituency for paying taxes -- so that the political power can control and cater to its population (its constituency). The political power may waive taxes of the corporation for a time in order to induce the corporation to start business in its territory and under its jurisdiction to create jobs permitting the population to earn income and pay taxes to the government – and also to provide livelihood and occupation for the population.
The social context could be considered a constituent
of global corporation to the extent it becomes interested in the affairs
of the corporation and gets involved in it without being one of its operational
constituents. The general public may become sensitized to the existence
of the corporation and its doings by the media or the political power.
The segment of public opinion sensitized and activated by
The term non-governmental organizations is broad. It can cover trade unions, charitable foundations, professional associations, associations created to promote a cause or an issue or it could even be a mutual fund. NGOs are lobbies, interest and pressure groups. They do not represent public opinion per se, but could collectively be the expression – often contradictory – of the views of certain vocal segments of the population.
The case of NGOs as a constituency of global corporations
is of particular interest. In the last analysis, a global corporation
is itself an NGO. The issue-oriented non-profit organizations depend
on handouts of their adepts for action while a global corporation is a
for-profit organization fulfilling its “mission” to provide the market
with its products and services.
II. THE COMPLEX
Looking at our systematic identification of global corporate constituencies we find that the corporation and its virtual constituencies are intertwined: management, shareholders, customers, workers and suppliers of the corporation are taxpayers -- nationals, tributaries or subjects -- of the political power. They are the audience of the media and part of the general public which holds the grass-roots of NGOs. The public at large is the corporation's potential market, but to realize that potential the corporation will have to reach it through the media, lobby and influence the government for favorable laws and conditions, and cajole and appease the NGOs.
To examine the dynamics of the global corporations and their constituencies we will need to review, asbriefly as possible, the evolution of the socio-political controlling powers whose rights and responsibilities are presently diluting and could devolve to the global corporations. Constituency implies the satisfaction of certain needs and demands of the constituents in order to have their support. Having a constituency implies duties and responsibilities. In the case of “nation-states” their constituents evolved from being the subjects of the sovereign – “l’Etat, c’est moi” – to becoming “the sovereign” democratically voting the politician into office.
Indeed, “constituency” was not always “the sovereign” and still is not in many parts of the world. The House of Saud is not ruling Saudi Arabia on the basis of popular elections; nor is the Sultan of Brunei ruling according to a democratic constitution. And many countries hold elections to rubber-stamp the oligarchy in power. So, while applying the concept of constituency to global corporations, we are doing so with a bias toward contemporary Western political philosophy. Indeed it would be appropriate to put the Western contemporary understanding of the rights, claims and responsibilities of a “constituency” in its historical perspective. Governments and states have not always taken charge of the social needs of their population, nor do a number of them today.
Historically, the political power's first task was – and still is – the survival of the political power. The tax-collecting empires used the goods and services extracted from their subjects to perpetuate themselves and for that created social structures which also indirectly benefited their subjects: roads were built for the movement of the empires’ messengers and armies but were also used by the subjects. The imperial, royal and feudal powers maintained law and order for control of their domains and the subjects indirectly benefited from the established order, e.g., because the imperial and royal and feudal administrations had the power of enforcement, the subjects brought their grievances against each other to them for justice. Along the line, as empires and kingdoms settled, political power would contribute to the development of the economy -- exploit mines, build canals and dams, for example -- to extract more from their domain for their ultimate aggrandizement and well-being. The tendency to cater to the needs and the well-being of the population arose as a cost-effective way to control and pease. In the long run, it was more efficient to rule by acquiescence than by force. And, of course, the human propensity to fear the unknown by believing in the supernatural, and to pity the poor by extrapolating their fate to oneself, contributed to the trickling down of wealth. Telegraphically put, it is the process which moves from alms to entitlements.
Two intertwining socio-political patterns provided
the context: The over-arching macro-organizations such as tax-collecting
or colonial empires, kingdoms and religious orders and, at the base, the
micro-organizations such as tribal and communal fabrics. The two
engender different aspects of social relations in terms of critical mass,
economies of scale, distance and proximity, and the development of
The process of involvement of the political power in the public services did not take place evenly around the globe. In the West, the political evolution brought about the fiction of sovereignty and nation-state. A major part of the Western socio-political evolution was due to the course entrepreneurship took in the West. Great enterprises were developed in the Chinese, Indian and Persian empires; but in the West, because of the particular historical circumstances and conjunctures, entrepreneurship led to the emergence of a conscious bourgeois class, which in combination with Christianity and scientific discoveries, formulated ideologies of socialism and capitalism and shaped Western political culture. We need not go into the Greco-Roman philosophies and administrative structures inspiring it, the Crusades, Reformation, Renaissance, Industrial Revolution and all that. What we need to retain here is that as of the seventeenth century, socialist and capitalist ideologies inspired political powers to adopt different combinations of the two, leaning either more towards social justice or to social Darwinism; culminating in the extremes of Soviet totalitarianism's claim to socialism and America’s claim to private enterprise and free trade.
In the past two centuries socialism and capitalism were applied in the national context as an economic unit. Bourgeois capitalism claimed the nation as its market -- "buy American." The nation-state instilled Patriotism in its population with the media, whether privately held or government run, joining in; and eventually realized, with at times its NGOs nudging it, that a healthy and educated population provided an efficient work force. The pride of national identity inspired the development of a national culture beyond tribal, communal and provincial boundaries enhanced by new means of communication.
In the last part of the twentieth century, with the expansion of industrial capacity, further developments in communication technology and new approaches to the movement of capital, bourgeois capitalism turned more and more into global corporate networks bursting out of nation-state confines. The impact of the Western transformations in the last half-century created new global realities. There are certain factors in this flux which we cannot go into in details but need to be kept in mind to better grasp the evolution of global corporate constituencies.
Briefly, the scenario drawn up at the creation of the United Nations, which conceived of a world evolving towards the lofty Western models of higher standards of living, full employment, social progress, development and human rights were soon aberrated by the Cold War. International aid, at first mostly modest and administered through governments and international organizations, became an ideological tool. With the Vietnam War, the ending of the dollar-gold parity standard by Nixon and the arrival of petro-dollars on the international financial markets, the potentials for freewheeling economic expansion and corruption increased. They gave rise to regimes like those in Zaire, Indonesia or Nigeria. Western affluence and the media’s indulgence in mass sensations created expanded markets for international drug traffickers whose revenues – to the tune of over $500 billion a year – could be easily laundered through the growing networks of international financial channels. The East-West ideological rivalry led to conflicts such as those in Afghanistan, Angola, Aden, Columbia etc. initiating the emergence of militant factions within non-Western countries. The collapse of the Soviet Union pushed the arms dealers to look for new markets, notably among the militant factions. Those who picked up arms did not all do so for ideological and national causes, but to take control of resources which the Western global corporations were exploiting – sometimes combined with drugs as in Columbia or Burma, sometimes for minerals as in the Congo and Sierra Leone trafficking “conflict diamonds” through Taylor in Liberia. These are phenomena which, as we shall see later, global corporations have to contend with.
With the demise of the Soviet Union and the pre-eminence of the American idea of capitalism, globalization took on a new élan. Governments now compete to reduce corporate taxes in order to attract international capital to create employment. Political powers' move towards relinquishing their grip on the economy, thus reducing their potentials to take responsibility for public services and benefits to their citizens on the precepts of social justice: responsibilities which the nation-state had assumed when the tribal and communal patterns were absorbed and incorporated into the civic society of the nation-state.
A reversion solely to the pre-nation-state tribal and communal arrangements to cover the social needs of the population is no longer realistic because the basics have changed. A re-enactment of the affectional ties which constituted the fabric of tribal and communal arrangements will not be easy. The needs and wants of individuals have expanded beyond the potentials of most communities. This observation does not only apply to the Western societies but is also true in the non-Western cultures which, exposed to the Western media, have expectations beyond what their community can offer: The mine-workers of Bolivia, the herdsmen of Kenya, and the boatmen on the Yangtze are all exposed to "Dallas" and "Dynasty"! And have had some exposure to Marxism. Any hypothetical contraction into tribal and communal self-sufficiency would be also thwarted by the global corporations' thrust to expand their operational constituencies and to create new needs and wants in line with the prevailing doctrines of consumerism. Indeed, consumerism is also adopted and promoted by governments as a source of revenue to compensate for the reduction in direct taxes on corporations.
All this leaves the people unprotected and shifts the burden of care for the population of a defined area from its political institutions and structures to the population itself. It assumes that people will be able to manage their own earnings in such a way as to pay for their social and personal needs like the education of their children, their health care and retirement. What it requires is an alert and educated population which understands the premises of free enterprise and is inclined towards it and knows how to moderate relations between the job-givers and the workers. This process will be flawed where the population is not given the opportunity by general public schooling to grasp the basic ideas of social rights and responsibilities.
Corporations will pick up some of the services which advance their own interests. But corporate interests do not always tally with the security and social needs of the population. The constraints of a global corporation’s operational constituencies do not render them fit for public service at all levels.
The dilution of the nation-state’s sovereignty into the global economy has also taken the edge off the bourgeois national consciousness. It is no longer easy to establish what a “national product” is. The consumer is more and more sensitive to the “brand” rather than the national origin of the products. The shareholders look at the growth value of the corporation and its bottom line globally. Financial institutions hedge their exposure to the corporation and readily move their capital across frontiers to attractive investment alternatives. Thus, even the corporation with the best of intentions for public service has to watch its bottom line. Besides, Western standards of public service are not globally prevalent and corporations are not bound by them. They can readily move their operations to areas with lower social service expectations.
Corporations will get involved in public service and social care for their own ends. They will build roads either to facilitate the movement of their supplies and products or to collect a toll for a profit. Roads which were not cost-effective but nation-states built to control their territory and to create cohesion and identity among their population will not be built by corporations for their own account. They’ll build them on contract! Corporations will engage in artistic and cultural programs either to promote themselves or for commercial gain. In order to sell space to corporations for commercials, media will seek to boost its ratings by appealing to the largest and lowest common denominator.
In matters of education and health, corporations
would either get involved in projects such as training schools and corporate
universities or health care and hospitals for their own operational constituencies,
or as an enterprise for profit. The educational institutions created
and financed by the job-givers and
Health-care also at a certain point of investment in training doctors and investing in equipment will ceases to be cost-effective. A corporation may find it to its interest to provide for the health of its work force – although the employee may lose the benefits when laid off or changing jobs. And, of course, there are corporations tht engage in the health-care business for those who can pay for it. Free enterprise may do charity for public image, but it cannot perpetually run health-care as a business at a loss. Care for handicapped children would be anathema to social Darwinism. The scenario of private health care provision will inevitably be lopsided. While billions of the world population may not receive adequate medical care, those who can pay are incited to become willful consumers, if not hypochondriacs. Expensive and sophisticated scanning machines should bring in reasonable returns and enough patients should be found to justify their production.
Of course, a generally healthy and educated public is good for business. But global corporations do not have to pay for it. They can tap the reservoir of manpower globally, from programmers to migrant workers. The dynamics of global human movement, however, warps the transition from national to global economy.
III. THE FLUX:
1.2 billion human beings make less than a dollar a day (in fact over half of humanity makes less than two dollars a day). These are garland sellers of Bangkok, the caddie kids of Buenos Aires, the janitors of Cairo, the mineworkers of Peru, the farm-hands of Africa etc. In the pre-electronic days they may have heard of better worlds, cities paved in gold, but had to have the capacity to imagine, and have the stamina to endure the hardships of long arduous journeys. Today the TV images of Western opulence broadcasted in their local teashops replace imagination. They can see the “paradise” of Western affluence. And the available means of transportation (even the hazards of clandestine cargo boats and trucks) will make the wave of dispossessed masses reaching the West ever greater. The road was opened to them after W.W.II by the Western countries importing cheap labor, Gastarbeiters, for the lower jobs the Western workforce was not available, or inclined to do. But the floodgates were opened with globalization. Today, more than 150 million people live in a foreign country.
As global corporations’ constituencies and components of means of production, workers and management are becoming increasingly mobile. Global mobility of workers is creating political and cultural problems.
The question is how fluid the migration from the underdeveloped regions of the world toward affluent areas notably Europe and North America, should be. With the dilution of the nation-state, the idea of interdicting access of non-nationals to the national territory becomes problematic. The unskilled migrant labor fills the bottom rung of the labor force: cleaners, porters, miners, and sweatshop workers. The bourgeoisie is interested in the maids, gardeners and launderers. In the case of Western countries which have not invested properly in their education, global corporations will want the educated people of the non-Western countries too. But workers’ unions in well established industries in the West demand restrictions on immigration and so will “nationalists” on grounds of cultural integrity and national identity.
Should the mass of people be let move freely across the globe? After all, as Rousseau said: “the land belongs to no one and the fruits thereof to all”. But then what happens to the “Western” culture. Will there be “European” culture when at dusk the call of muezzin fills the air from the top of the local minaret equipped with loudspeakers? Some will object while others will see in it the enriching diversity of cultures and respect for other peoples’ beliefs.
The corporation in its labor policy can move its production to non-Western countries where the labor is cheaper and change the culture and social fabric of the area it penetrates. Or, the corporation can incite the cheap labor to come to the Western developed country where its productive machinery, management and markets are, and influence the culture of the host country. By doing so and by changing cultures it may also modify it’s own “mission” and its products and services. A global beverage company may at some point cease its alcoholic products and just produce soft drinks to exploit the more profitable market of the growing Muslim population.
Can the West absorb ever-greater numbers of non-Western workers? What will the cultural consequences be? What are the alternatives? Segregate and control their movements? Reduce their access to the sources of Western information and transport?! Or let them develop their own economies, prosper and live within their own traditional cultures and sense of social justice.
The problem is that some in the West believe that it is not in the West’s self-interest to let non-Western people develop without Western control, while others think that it is only with Western input that non-Western people can emancipate into entrepreneurship and industrial capitalism. The defenders of Western social standards argue that the West cannot permit the non-Western entrepreneurs’ cheap labor and low-cost products invade the Western markets and create unemployment and unrest. Most of non-Western enterprises do not have to – or don’t – pay 30 to 50% of their income to the government for social programs.
Beside the sheer fact of a dominant power’s inclination to perpetuate its dominant position, the West is also entangled in a pattern which has been that of Western-controlled global corporations penetrating non-Western markets through capital and transfer of technology, producing goods there using cheap labor and subsequently marketing the products world-wide. Western governments and international financial institutions have provided aid and loans to the non-Western regimes which have yielded to this scenario and have periodically restructured their aid and debts and made taxpayers in the West – mostly middle class – pay for the favorable adjustments made to these debts. As for the rich non-Western countries, usually those with abundant natural resources such as Kuwait, Saudi Arabia, Nigeria or Indonesia, the West has maintained its eminence in most of them by sustaining a dominant class of rulers.
Of course, development in the non-Western societies need not follow the Western patterns. Protestantethics is not a universal precept. Nor is the social concept of entitlement. In many cultures around the world work is either engaged in for survival and attaining a certain level of comfort and security – without being a drive for fame and fortune – or imposed by a ruling class. The worker who can manage would rather squat in the shade than till the land in the blazing sun. There is surely the human propensity for leisure, play and sloth. There is no harm in that. And the poor should not be confounded with “socialists” and “communists”. They are not all for “entitlement” and handouts. Many – I would say the majority – of those who suffer from poverty and do not make more than a dollar a day have the potentials of being entrepreneurs. They belong to societies that do not necessarily have Western style entitlement and “social justice” traditions. They want to be given the opportunity to make a buck. It is true that many of them belong to cultures of commercial rather than industrial capitalist traditions: cultures of dealers and traders. But there is no dictum that they should be infused with foreign investment to turn into modern Western style industrial societies and be exposed to global speculative capital which can disrupt their traditional culture and economy, as it did in Southeast Asia in 1997.
In our discussion of the flux so far we have talked about “some” and “others” with different opinions, beliefs and points of view. They are the sensitized and activated segments of the population we referred to earlier. They are the NGOs – we are using the term NGO generically to cover the non-governmental organization which cover both national and international issues – NGOs and INGOs. NGOs’ provide the counterbalancing act to the convolutions of global corporations and their other virtual constituencies.
But NGOs are disparate and have diverging interests and values. As we saw, there are those that want to bring the Western ideas and practices of human rights to the non-Western cultures. There are those opposing the global corporations’ exploitation of the non-Western cultures and are for the development of local enterprise in the developing countries and opening of the Western markets to their goods permitting them to get off the hook of Western aid and debts. And then there are the trade unions in the West which want to keep the developing countries’ goods out of their national markets and call for the development of social justice programs in developing countries to make wages higher there and their labor less competitive. They are joined by nationalists in their own country who are against the penetration of foreign goods, peoples and cultures into their country. And by “anarchists” – not of a Proudhon vintage but the soccer hooligan variety – who muddle the social issues, but add a militancy factor to the more reasonable opponents to globalization: The Seattle syndrome. Attac (Association pour la taxation des transactions financières pour l’aide aux citoyens) militates for the application of James Tobin’s tax on international financial transactions and speculation. The British Jubilee 2000 Coalition advocates writing off the world’s poorest countries' debts – debts contracted by Mobutu types during the cold war. While the American Jubilee 2000 proposes a Radical Agenda for Global Social Transformation.
All together, NGOs probably cover the gamut of global concerns. But they do not represent a coherent body and are not issue of popular votes. They are pressure groups which take upon themselves to observe and challenge global corporations to align with the causes and interests which the NGOs uphold. There is no popular participation in the democratic sense, no popular mandate and often no clear popular political consciousness in this process. The closest popular concern remains at the level of labor unions and consumer coops.
The legitimacy of NGOs comes from the fact that they represent the concerned segments of the species. In general the masses put up with exploitation and harmful enterprises within the path of least resistance. There are also those who are conscious of the problems and social injustices but don’t do anything about them. NGOs are generally spearheaded by those who identify the problems and are not in a political position to remedy them directly. They start a movement to attract the attention of the people and the political powers to the problems; and put pressure on those who cause the problem for remedy and solution – sometimes at the risk of their lives, such as the Greenpeace Warriors.
When we look at the organizational charts of the NGOs such as Greenpeace or Amnesty International, we will notice that their grass-root organizations are based on the local activists in different parts of the world. They reflect the concerns and interests of particular segments of the population, at times broader, at other times selective and exclusive. Within the NGO components there are variations in the understanding of the common cause and ways of upholding it. The national associations of NGOs are usually accredited by a global control center, itself controlled by an oligarchy of connected and controlling activists co-opting dynamic and/or influential persons into their fold. There is danger, in the nature of the NGOs, to become fiefdoms of their own oligarchic hierarchy, asking and clamoring for support from their believers but often without sufficient transparency and accountability. To some extent, contributions to an NGO can turn into “taxation without representation”.
But NGOs fill the vacuum of the global general public and act as its proxy. And, in a way, their oligarchic process is a more effective way for creating a network of global social institutions counter-balancing global corporate power than the democratic popular voting system. Because in the oligarchic system the pyramid of power starts at the socially engaged level which is a more alert counter-balance to the global corporations than popularly voted institutions which the global corporations can manipulate through financing and pressure. Greenpeace succeeded in making Shell clean up its offshore rigs. They blacklisted food makers who used genetically altered products and received assurances from Nestlé, Bestfoods, Danone and others that they would no longer use those products.
While NGOs represent a growing global public awareness that global corporations have to cope with, the latter are also getting further entangled with global elements which are not as public as NGOs.
By “rogue” we refer to elements which do not fit
squarely in the global legal frameworks, such as insurgents, warlords,
corrupt officials, drug dealers, arms dealers, smugglers or speculators.
Their activities may affect those of global corporations, compete with
them, and at times be used by corporations. Illegal migrants smuggled
into a job market can reduce the cost of labor. Smugglers
The term corporation covers a wide spectrum going from a “brand” corporation –producing virtually nothing and outsourcing everything – to a mine-extracting company with few marketing components but huge tangible assets in equipment and mines like Anaconda, Rio Tinto, and more diversified corporations like telecommunications or utilities companies. The corporations, depending on the nature of their operations, will have different degrees and kinds of interface with their constituencies. A mining company which has its main part of investments in heavy-extracting machines and natural resources in politically unstable developing countries will be more exposed to the rogue controlling powers.
The rogue element is a component of a political structure. In its variations it can be the mob lynching a convict, the redneck with car stickers saying “love it or leave it”, the hooligans turning a student demonstration sour by breaking shop windows and looting, permitting the police force to intervene etc. Political powers use vigilantes and thugs or are kept in check by them – because an attempt by a political power to eliminate them may backfire. In the past, global corporations have benefited indirectly from the thug factors through actions of their “home” government to change conditions unfavorable to them. Examples are the overthrow of Mossaddeq in Iran for the oil companies, Arbenz in Guatemala for the United Fruit Company and Allende in Chile for ITT.
In their global expansion, corporations are now
increasingly becoming involved directly with segments of populations which
are experiencing reduced control of a larger political power and affirming
their autonomy. Corporations have to deal with these independence
minded entities, controlled by ethnic chieftains, warlords, or liberation-front
varieties. Corporations may have to submit to these elements in
To secure law and order in their area of operation, global corporations need the presence of military and police forces. Historically, some like the Hanseatic League, the East India Company, or the Dutch Indies Company created their own military forces. Later, nation-states' military power supported the corporations. But today with the more democratic control and awareness about the military budget and the value of human life in the West, the national political power has to justify the “national interest” aspects of a military operation. The constituency of the political power in the West is, by and large, aware of the link between its prosperity and the interests of its national corporations – Desert Storm’s underlying mission was to maintain the primacy of Western oil concerns in the Gulf. But there are areas now where – partly because of the “global public opinion” and the role media plays in mobilizing it – the nation-state’s military can no longer intervene. The lumber companies in New Guinea and Borneo or the diamond extraction companies in the Congo and Sierra Leone have to finance other means of protection. The other alternative would be intervention by forces created by intergovernmental organizations. So far, the peacekeeping activities of the UN have been mainly directed at creating buffer zones between warring states. But that is changing.
There was a time when a corporation’s sole advocate on the international scene was the government which had exclusive jurisdiction over it. Today, the lobbyists of global corporations are major visitors to the corridors of the European Union or the World Trade Organization. In their involvement with international governmental organizations (IGOs) corporations have multifaceted interests. They want to influence governments, including their “own”; they want to make sure that IGOs do not encroach on their turf, rights and freedom of action; and they want to enlist the potentials of IGOs for their business.
IGOs are also the major forums for the interface between NGOs and global corporations. Indeed IGOs, notably through their NGO consultative status, presently provide some sense of cohesion and platforms for the NGOs.
The extent of global corporate involvement with IGOs depends on the IGOs’ mandate, jurisdiction and areas of activity: whether the IGO is universal or regional, general or specialized, full IGO or quasi-governmental. But above all, how much clout an IGO has to make a difference. That depends on the extent of power the member states have transferred to the IGO and the effectiveness of its organization to take advantage of it. The European Union has had the opportunity to expand from a small but coherent nucleus of countries – although its expansion may eventually render it less efficient – creating a strong administrative machinery and has had focused leaders who have not shied from enforcing their jurisdiction. European anti-trust laws have grown sharp teeth as AOL and Time Warner realized recently.
In contrast, the UN was conceived as a universal organization and had a wide range of possibilities which were thwarted by the Cold War and eventually suffered from lack of funds and a cumbersome bureaucracy. But with the dilution of nation-states, the universalization of concepts of human rights and democracy, the increasing ethnic conflicts and the need to make the world safer for Globalization, the UN and other emerging IGOs will have ever-growing areas of responsibility.
Blueprints for the future course of human evolution are bound to be contradicted by history, because those whose future is going to be negatively impacted by the predictions of the blueprints will resist and fight the realization of those predictions. The only idea one may attempt to advance should project the flow of past and present currents and see where they may go on the path of least resistance. The ideas which would be more willingly followed and would be more realistic are those which follow the line of progression of what is actually happening. We can foresee what is emerging and let those affected by it work it out and make it go where it may.
So what do we have here? The main actors are the corporations, the nation-state governments, the NGOs and the IGOs – and don’t forget the rogue elements. The areas of their power, responsibility, and activities are shifting. As global corporations are spilling over beyond nation-states, governments are delegating more power to IGOs so that the latters’ controls and prerogatives could correspond to the activities of global corporations.
At the same time, as the nation-states’ tax/GNP ratio reduces, they are and will transfer some of the responsibilities of dealing with public service to their “regions” – I would rather call these “regions” states in the US sense: states of Scotland, Brittany, Catalonia, Bavaria, etc. In some parts of non-Western areas turmoils aiming at the creation of new states along the same patterns will continue: Irian will want autonomy from Indonesia, Moslems from Christians in the Philippines, Christians from Moslems in Sudan, Kosovo from Yugoslavia, etc. Western governments and IGOs will eventually have to scrap their Westphalian vision of world organization and help these currents. For example, for some projects the World Bank has been promoting the spreading of power from central governments to local authorities in the “emerging markets”. Whether these trends will contribute to peace and development or not depends on the dynamics of the relationship between the central national governments and local power centers. It is important to bear in mind that in the context of modern communications and technology the coalescing of these states will be a reasonable reversion to communal and tribal identity and affectional ties. They will have historical, ethnic, linguistic, religious or cultural cohesive fabrics.
On the over-arching side of global evolution nation-states are and will transfer some of their powers and prerogatives to regional IGOs such as the European Union. Here, the term “region” refers to entities which encompass a number of nation-states but are not universal. Regional organizations will move at different speeds of integration. They will overlap and have different degrees and areas of competence and expertise. EU, Asean, or OAU will each evolve, and control and supervise corporations and NGOs according to their regional realities and interaction with other regions.
Regional IGOs are in turn over-arched by universal IGOs, with general or specialized fields of activities. As we noted, some of them went adrift due to the Cold War. But there are areas where they can and are rendering service. Among the evolutions that are taking place are the ongoing efforts to put in place the International Court of Criminal Justice, which would be the corollary to the state and region evolutions mentioned above. Also changing is the peacekeeping mandate and structure of the UN forces. As the Western public becomes more concerned about intervention and loss of human lives, as Western armed forces become more electronic, and as the formation of states leads to further conflicts, the UN is and will get involved in more policing around the globe and will increasingly depend on non-Western personnel.
Global corporations and NGOs will be increasingly involved with IGOs. The Seattle syndrome is likely to spread and evolve into diverse structures. The Tobin tax on financial transactions and speculation may not be realistic. But it is possible for international financial organizations to regulate currency markets. Instantaneous electronic collection and analysis of economic indicators can allow global financial institutions to collectively establish the “real” exchange rate of the currencies and apply them in their transactions. Those rates, while fluctuating over time on the basis of economic indicators, will no longer be subject to the whims of speculators. What I have in mind is similar to the European currencies Super Snake of the nineteen-eighties.
IGOs, whether regional or universal, specialized or general, are and will further impose accountability and transparency on NGOs and global corporations. As NGOs transform their consultative status with IGOs into militant platforms, they will have more attention focused on their agenda, policies and structures. Beyond consultative status, IGOs will have to develop NGO surveillance mechanisms.
The transfer of power from nation-states to IGOs gives the latter the prerogative to regulate the activities of global corporations. The EU is already doing so and imposes European anti-trust laws and environmental, economic, and financial decrees on global corporations. Global corporations have long been apt at combining, cooperating and compromising with each other. The Hanseatic League held sway over northern and a good part of Western Europe for four centuries (13th to 17th century). It is plausible that as corporations become increasingly enmeshed, they will coordinate their different components beyond their business operations. We could conceive of corporate diets along the Hanseatic League’s firma confederatio. IGOs could in fact encourage the development of such diets which the IGOs -- and NGOs – could then hold accountable for self-censor and transparency.
As we continue our review of the flux, we may note that the passage of power from nation-states to IGOs renders the latter less and less IGOs and more and more “quasi-IGOs”. More and more forums such as the Davos World Economic Forum encompass global corporations, governments and NGOs. A whole body of international jurisprudence is developing based on extra-national tribunals dealing with cases involving governments and global corporations. IGOs may also have to adapt to market economy. It is already being done on a limited scale by some IGOs such as the UNICEF.
But of course, nation-states will not whither away. Marx and Engels were right in qualifying the executive of the modern state as the committee for managing the affairs of bourgeois capitalism, but they were wrong in predicting that it will whither away. Governing a nation-state seems to correspond to a certain psychological dimension of power and human ego. Whether it is the presidence or premiership of a republic – depending on its constitution – dictatorship or kingship, when it encompasses a “nation-state” it seems to satisfy the reach for power – neither too little like being the chief of a tribe, the governor of a state or the prefect of a province, nor too abstract, shifty or overwhelming like being an emperor or director-general of an international organization. The notion of nation-state has seeped into the masses’ identity and culture and is a polital reality which the power seekers will not easily cease to exploit. Governments are adapting their public economic activities to market mechanisms in order to have a finger in the pie of global corporate economy, to finance the social needs of their population and preserve some of their national culture, character and ethos. Hence, the transformation of national public industries into corporations with global potentials. In different cultures, different mechanisms are at work to preserve the national character and the social fabric. The governments of France and Germany, for example, with strong social justice and distribution of wealth traditions and their Socialist parties in power, are doing a balancing act of privatizing their nationally-owned industries and services and creating social programs for health and retirement based on stock market operations.
On the for-profit corporate side some businesses are engaging in productive activities aimed at social programs and community development. While some of these amount to charity as in the case of Ben and Jerry’s (ice cream manufacturer) other activities actually bring the benefits of market economy to economically depressed areas such as The Body Shop or Patagonia (outdoors clothing manufacturers) production units developed with their help by non-Western communities. The Seattle Syndrome has already resulted in cooperation programs between the global corporations and NGOs for humanitarian programs. It is good for image and business. Working together are Reebok and Amnesty International on promoting human rights, Visa and Reading is Fundamental on literacy, MCI and National Geographic on geography education, Starbucks and Care for international development, etc.
It is useful to keep in mind that historically there has been an evolutionary process in the convolution of the bodies we are examining. NGOs ask for handouts to provide social services that governments provide through taxation. Governments have emerged out of what may have been non-governmental or corporate, while governments have turned into corporations. By issuing treasury bonds and incurring debts governments have initiated public services generating income supporting them without recourse to taxation.
We will thus see public services provided at different levels: Education, health care, social security, leisure, workmen’s compensation or retirement, at state, regional and global levels. While at the state and regional levels programs will have communal, social and political operational dimensions, the global level will become increasingly the domain of the corporations monitored by NGOs and IGOs.
For education the people will have access to state schools, charter schools, corporate training schools, private schools financed by religious establishments and possibly NGOs and pay out of pocket to for-profit private institutions, or directly recruit teachers. Health care will be provided by the state through HMOs (Health Maintenance Organizations), and by corporations and regional organization for their employees through HMOs or global insurance companies like AIG or AXA. Individuals may, otherwise, have to pay out of pocket for their insurance policies. Roads and communications will be financed and controlled by states and regions at their respective level. To connect larger expanses public powers will contract global communication and construction corporations to do the job if the project is not profitable, and corporations will build where the enterprise in profitable. NGOs, IGOs and corporate self-censor will compromise on the use of natural resources and the protection of the environment.
In this process, the effects of new technologies and channels of communication will be double-edged. Internet will contribute to the transparency and fluidity of global structures but it will also serve as an instrument of control. The media, the business and the religious bodies will use the new technologies of mass communication to propagate the banal and the superstitious. A critical scenario would be that of an oligarchy of global media corporations run by ambitious individuals bent on power and control.
In the spirit of the opening paragraph of the conclusion we have to recognize that not all will be served. For those who want to buck the process let us remind ourselves that globalization has the flaws of social Darwinism magnified. The survival of the fittest does not always mean the survival of the worthiest, the more pleasant, or the best – granted these are subjective terms. But in nature, the survival of the fittest species refers only to the environmental conditions. The garden, unattended ends up covered with weeds and thistles. The “higher” quality personalities need tending to – they need care and education that take time. In social Darwinism the fittest could be the unscrupulous, violent and conniving elements. If social Darwinism took complete hold of the global economy, we risk seeing humanity fall intellectually and culturally to the lowest common denominator. Caveat emptor!
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