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Who has more power, States or Multinational Corporations?
Academic literature in International Relations suggests that States are no longer the most important players. With the emergence of NGO's, Intern-Governmental Organizations and multinational corporations , it may seem that the State has become just another player of International Politics in the competition for power in the international arena and to a certain extent even for ruling its own territory free from the influence of other international players.
It is hard to dispute the reality that Multinational Corporations have considerable power in affecting the course of policy world-wide. Some Multinational Corporations have more wealth than some developing countries ( http://news.mongabay.com/2005/0718-worlds_largest.html ) With such powerful playwers in the international arena, have they displaced governments as the sole desicion-makers and agenda setters? If they haven't, will they do so in the future?
States, because they make the laws and have control of the military which can enforce those laws.
Corporations exist because the public wants them to exist. The public wants them because they are the most efficient way of turning raw materials into consumer goods.
Though states make the laws, they are run by corrupt politicians who are in the pockets of the corporations, so this effectively doesn't matter. Theoretically states ought to be more powerful, but in reality they are not.
Corporations were created for the public, but that is no longer the model. They originally were given end dates by which time they were forced to absolve, but now can exist forever.
I will argue only on the nation of America, because to generalize is too difficult. America is supposed to be a government of the people, but the people have no rights/control of corporations. They work for their shareholders only, and never the stakeholders.
they are run by corrupt politicians who are in the pockets of the corporations
I don't buy this. America is a Democracy. If there's proof of corruption a politician is going to have a very hard time staying in office. Just look at Nixon. Look at Blagojevich.
the people have no rights/control of corporations
Yes we do. We've got the EPA and the FDA among many other regulatory agencies. We've got legal authority demonstrated by the antitrust laws that broke up Microsoft.
I don't agree that corrupt politicians have difficulty staying in office. Dick Cheney was given a second term as George W's VP, and he was terribly corrupt. The problem with politicians is they look after their money-makers, who are far more important to them than their constituents.
Politicians may run the country, but lobbyists run politicians. There are 65,000 in Capitol Hill! Everything is motivated by money, and as such, the little guys get no fighting chance.
The FDA is a joke. They recently decided that high fructose corn syrup was natural. They slap health claims on Cocoa Puffs and Lucky Charms, leaving potatoes and carrots alone in the dust. They also approved bovine growth hormone as safe for human consumption, when it was anything but. This organization is a piece of crap that does nothing to look out for the consumer.
I know of no evidence that shows Cheney was corrupt. See FactCheck for a debunking of common misconceptions.
There are a number of regulations to prevent lobbyists from having excessive influence. Also, not all lobbyists work for corporations, some are working for the public. Lobbyists are a necessary part of the political process because there is simply not enough time for lawmakers to chat with everyone who wants to talk to them.
The FDA is a joke, huh? Seizing animal feed, discovering bacteria in teethers, examining Xolair for links to heart attacks... these are all things they've done in just the last few days. That doesn't sound to me like a corrupt agency. You've just offered a couple of cherry-picked, unsourced examples and damned the whole organization.
Not to mention that corporations are ultimately beholden to their customers. The best way to hurt a company is to not buy what they're selling, but normally what they're selling is valuable to us and thus it's easier to bloviate.
You're absolutely right. The best way to destroy a company is by not purchasing what they sell. But alas, nobody cares enough to do so. If this were true, Chevron, Coca-Cola, Dow Chemical, Halliburton, Monsanto, and Nestle would all be out of business. Convenience and price come way above values in determining where to shop.
I agree with you, convenience and price are things we cannot just ignore nowadays. Unfortunately, even if we care, we don't have that many options in life... I wish I could live without giving a penny to big corporations, but this means I wouldn't be able to enjoy all the things technology and science have given us so far: I'd have to leave my computer, my shoes, my shampoo, my books...
I don't think we should be thankful to corporations for giving us so many nice goods, I think we should be mad that we cannot have access to technology without having to go through awfully rich intermediaries who just want to become richer no matter what.
I can't agree with you on the second point. Especially the FDA, which a few years ago was proven to be entirely broken, understaffed, and couldn't handle the load they were being given. Not to mention the contributions of millions of dollars from pharma companies to get their products pushed out with little to no oversight. You are in a dream world if you really think the FDA and other regulatory agencies are not in the pockets of corporations. Just follow the money trail and look at the oversight of so many products that harm the safety and well being of Americans everyday.
States make laws that favor the interests of economic elites. Therefore laws are made in benefit and service of corporations.
Speaking for developing countries the issue is even more alarming. These countries do not have sufficient leverage to stand up to the demands of corporations (cheap labor, tax exemptions, lax environmental laws...) .
The role of the state has been undermined by economic giants.
In regards to labor conditions in developing countries, it's not merely a matter of leverage. The average wages of a particular country are a reflection on that countries total wealth; and in 99% of the cases working in a sweatshop environment - though deplorable by our standards - beats the alternative of roaming garbage heaps. Furthermore it creates employment that pays on average 30% better than pre-existing jobs. Development is like a ladder. When the shittiest economies climb to the second rung of the developmental ladder they may still be covered in shit, but its 30% less shit. We can feel bad about it but in the context we are witnessing slow improvements that our own western countries had to go through before prospering in a relatively short and painless amount of time. Look at South Korea. In relatively recent memory it use to be filled with sweat shops in the same way Vietnam, China, India and Bangladesh have now. Now though its boasts living standards comparable to our own.
in 99% of the cases working in a sweatshop environment - though deplorable by our standards - beats the alternative of roaming garbage heaps
There are certain rights all people ought to be entitled to. I don't think it's ok for kids to work 14 hour days six or seven days a week just because it is better than the alternative. These jobs attract people because they are desperate. And as soon as a corporation has used up all the desperation that group has, they will move on to a more desperate area and exploit their people. The point of all this is that corporations make RIDICULOUS profits. They could easily afford to pay a livable wage to third world countries just like they could afford to protect the environment, but money is the bottomline so they do not. The most dangerous thing about a corporation is that regardless of what values the people who run them may have, they are literally required to put their shareholders first, which means making lots of money regardless of who or what gets hurt in the process.
I am not arguing against the notion that third world labor conditions are morally unacceptable. I think minimum wage laws here in Canada are very important just on the basis of human dignity. However, you aren't considering the context and historical evidence. These labor conditions, horrible as they may be, are in fact increases in living standards. Every single industrial country in the world has been through the same stage, including Britain. But in Britain's case, as in the more recent example of South Korea, China, and Taiwan, these stages are temporary and are surmounted usually in a generation.
And no, it's not as simple as saying "corporations can just pay them more." In Honduras, where almost half the working population lives on $2/day, sweatshops pay $13.10/day. Sweatshop wages are more than double the national average in Cambodia, Haiti, Nicaragua, and Honduras. Economist Benjamin Powell, who published the report that I got the above figures from, explains how wages are determined in third-world countries:
"The amount a worker is paid is less than or equal to the amount he contributes to a firm's net revenue and more than or equal to the value of the worker's next best alternative. In any particular situation the actual compensation falls somewhere between those two bounds.
Wages are low in the third world because worker productivity is low (upper bound) and workers' alternatives are lousy (lower bound). To get sustained improvements in overall compensation, policies must raise worker productivity and/or increase alternatives available to workers. Policies that try to raise compensation but fail to move these two bounds risk raising compensation above a worker's upper bound resulting in his losing his job and moving to a less-desirable alternative. "
Third World workers will only be lifted out of poverty if people buy what they produce. We should encourage companies into setting up shop in areas of cheap labour, because the more firms in business the more employment and the more competition based on wages. Slowly wages will rise just as they have in the aforementioned countries.
----
It's become a sort of fallacy on the left that companies are always beholden to their shareholders. It's based on a very simplistic view of capitalism that was ironically made popular by one of capitalism's best cheerleaders, Milton Friedman. However the Chicago School view of capitalism doesn't correspond to the way corporations actually function; as Joesph Heath has written in his excellent new book "Filthy Lucre: Economics for people who hate capitalism" profit is often the last thing on corporations minds. And its fairly easy to understand why. Corporations are bound to hundreds of contract agreements that by law they must honor. Further money goes to additional research and related costs.
Moreover, Corporations are run by a management class that usually is basically apathetic to profit maximization. Consider your first job at McDonald's or the grocery store. Did you care about maximizing profits? Probably not, and the majority of people who run corporations have more or less the same mind-set of varying degrees.
In this sense shareholders are often the most expendable part of the equation. Microsoft, for example, didn't pay any shareholder dividends for nearly two decades. The best lesson from this is that things are complicated, and I highly recommend you read Heaths book.
The whole issue on leverage is not so simple. When you cite Honduras I will cite its neighboring country, El Salvador. Picture the same wages, except that El Salvador's economy has been dollarized, so those 13$/day that you mention, are not sufficient to cope with the inflated prices. Why was the economy dollarized? because it benefits the investors. Anyway those figures look fantastic on paper, but when you go to the country, talk to the people and witness the conditions yourself, and see the incredible gap between rich and poor, you start to wonder if 13$/day is really what will make a difference in the long run. Have you ever visited a developing country?
We need long term solutions for these countries. Allowing corporations to do as they like is NOT the solution, whether the companies like it or not, they shouldn't be allowed to have so much influence in government policies. El Salvador's economy now is dependent on the U.S. monetary policy. El Salvador welcomes new investors at the price of their own independence.
Why would it be so hard to raise the average wage? Companies pay more in their home countries.... why should developing countries continue bending their backs for corporations? In the end, I think corporations would pay the higher wage anyway, if they see no alternative to it. After all, they have the capital to do it. Nevertheless, we are just continuing with the idea that one day wages will go up, instead of doing something about it now.
t's become a sort of fallacy on the left that companies are always beholden to their shareholders. ... Are you sure about this? try telling that to the shareholders. . . . Most college finance books state in their first chapter that the goal of the corporation is profit maximization for the shareholders.
I also see your point that the management class is not consistently behaving in the profit motives of the company, but the management class also has little leverage in determining the course and the policies the company takes. Anyway if an employee or a manager is not acting in the best interest of the company they just get fired, so that the profit maximization goal is actually reached.
I agree with you that people take the jobs because it is what is available, not because it is the most desirable.
As a contrast, many women in developing countries would much rather work for much less than the 13$/day mentioned above, in conditions that are safer and more comfortable: as maids or servants. Maids can be paid as little as 4$/day but they get to work in a more comfortable environment. The family provides food, sometimes even a place to sleep. Im sure these women would rather be allowed to go to school or pursue other kinds of jobs, but unfortunately this choice is not available to them because of lack of education.
The point is that in a setting where 13$/day does not make that much difference in the long run about your quality of life (third world wages in countries with first world prices), some people have the intuition that instead of killing themselves on a sweat shop for a wage that is not enough anyway, they would rather work for less but in better conditions. Those great wages paid by the sweatshops are doing nothing for the quality of life of the people, especially in the long run.
Regarding developing countries... it is a matter of leverage. It is quite lazy of the leaders of these countries to not provide alternatives for their people. What you are saying is that it is ok for them to say "it is either the garbage heap or the sweat shop". True solutions for those populations require long term planning and leverage against corporations. For example they require taxing those companies and enforcement of working conditions. However, things do not work that way because the corporation with power and money, threatens to move elsewhere and the lazy politicos would rather get the easy investment from the un-ethical company, than let them go free and thus carve their own pathway for development. If we think it is only "the trash heap or the sweat shop" then of course we choose the sweat shop, but this form of thinking is always on the side of the corporation... never on the side of the developing country.
Development is NOT like a ladder. This is also another paradigm that is unfounded and supportive of the corporations. Corporations and the free market laws that they require, have been in developing countries for a long time and all we can see is that the gap between rich and poor gets wider. Development is not a goal in itself but a continuos way of doing things.
Also, when you compare development of the western countries v.s. the "third world", you are making a mistake in assuming that the conditions were the same. Developing countries now cannot follow the same pathway that the western countries did because the conditions were completely different. Developing countries should not be forced to follow some model that worked for completely different times and in different conditions.
In the developing world, having no leverage is a harsh condition that governments have to face.
There is no doubt that Multinational corporations are more powerful. Otherwise, we wouldn't have wars in
1. Iraq (for oil & weapons sale),
2. Afghanistan (weapons sale & heroin trade). How is it possible that the amount of heroin production "quadrupled" since the fall of Taliban? Interesting how no one seems to notice that it was the US which gave muslim terrorists advanced RPG's & similiar in the 1980's to defeat the Soviets there and now it has come back to haunt us in a big way.
3. Ex-Yugoslavia which has natural ores, especially in Bosnia & so-called Kosovo which since the early 2000's has been the main trade route for illegal heroin trade from Afghanistan.
4. Central & South America (fruits & vegetables, not to forget investments coming from cocaine sale to drug lords who use that money and invest into US stock exchange, which as we all know are controlled by corporations.
It is really a sad day when a Multinational Corporations have more power and are able to easily impose their greedy ideas on various world governments, especially in the west. Reforms that make sense, rather than revolution is what it's needed.
There is something extremely stupid with the idea that opening trade routes is necessarily a conspiracy by multinational corporations merely because they are one beneficiary, yet it is a persistent truism on the left that when someone profits everyone else must lose. This is simply not the case. The Countries that trade the various resources also benefit, and yet this is not a conclusive argument that states hold more power. It boggles my mind that left wingers can both decry economic sanctions imposed on an impoverished country (like Iraq had) and the lifting of those sanctions (ie. opening trade) in the same breath. Of course if you open up trade people are going to profit, but the profit isn't at any ones expense because the relationships are inherently non-zero!
Multinationals in my view are a very appropriate mechanism for doing these transactions, and if you want we can debate that separately.
"1. Iraq (for oil & weapons sale)"
These issues are normally way more nuanced and complicated then people like yourself usually make them out to be. Disregarding all the other reasons for invading Iraq, oil isn't necessarily a bad one -- nor do I doubt that it was central in the decision to invade. The fact that Saddam, a genocidal dictator, had control of the third, if not second largest oil reserves in the world is insane. That such a mad man would possess so much power is very destabilizing, and that's part of what made Iraq such a lynchpin in the region.
That oligopolist oil companies should see to extracting, refining, and selling it while making a something for themselves (oil profit margins are notoriously slim) seems dandy to me compared to the prior circumstances -- And Iraq's hydrocarbon law (a distribution of oil revenue to Iraqis that would be in proportion to the population of each province) seems to clash with your perception of foreigners exploiting what isn't theirs. Sure, the Exxon Mobils in the area profit, but so do average Iraqis.
Your other examples are all based on the fact that, yes, most countries have some sort of resource, and yes, companies (I won't say Multinational Corporations because they're not all multinational and they're not all incorporated) usually have control over various resources. What's the alternative? Having all resources nationalized? That's never worked out well, and while I can see justification for wanting to protect certain resources especially from monopoly, it doesn't follow that there should be no private ownership at all unless your invoking some dubious Marxist pretext.
