QuestionsWeb LinksClass OutlineClass notes

Question for Discussion: What role do TNCS
(Transnational Corporations) play in this emerging
global economy? Do TNCs have more economic and
political power and influence than they should have?

Readings: Cavanagh, pp. 271-280; Dobbs, "Globalization";
Dobbs, Lobbying Against America ; ; Korten, "Assault of the Corporate Libertarians" ;

Video: Export Jobs, Enron Crimes

Response Paper: According to the Friedman and Korten, what is globalization and what are the major problems it is creating? Do you agree with Korten that globalization isn't working? (1-2 page paper due on
Friday, Sept. 16.)
See Debating Globalization: Friedman vs. Korten

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Global Corporations and Political Power

The Enron Scandal in 2002

Exporting American Jobs

The Global Economy and the Environment

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  1. How is your Ipad Made?

  2. World Economy's Unchartered Territory

  3. Use Cavanagh, pp. 19-30 as a model to frame the
    debate for your paper on Friedman vs. Korten.

  4. Global Corporations and Political Power

  5. Corporations buying Political Influence

  6. The Enron Scandal

  7. Exporting American Jobs

  8. The Global Economy and the Environment

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Korten, Corporate Libertarians

"Reminiscent of twentieth-century Marxist ideologues, advocates of this extremist ["free market"] ideology seek to cut off debate by proclaiming the inevitability of the historical forces advancing their cause. They tell us that a globalized free market that leaves resource allocation decisions in the hands of giant corporations is inevitable, and we had best concentrate on learning how to adapt to the new rules of the game. They warn that those who hold back and fail to get on board will be swept aside; the rewards will go only to those who acquiesce."

"The extremist quality of their position is revealed in the stark choices they pose between a "free" market unencumbered by any form of governmental restraint or a Soviet-style, centrally planned, state-controlled economy in which government makes all economic decisions. They countenance no middle ground, such as a market that functions within a framework of democratically determined rules that assure cross border exchanges are fair and balanced to the mutual benefit of people on both sides.

In its various guises, this ideology is known by different names--neoclassical, neoliberal, or libertarian economics."

"The more descriptive label for those of this ideological persuasion, however, is corporate libertarian , because whatever they call themselves, the "free" market,"free" trade policies they advocate do not free trade, markets, or people. Rather they free global corporations to plan and organize the world's economic affairs to the benefit of their bottom line, without regard to public consequences. "

"Most of the economics profession embraces two first principles as fundamental articles of faith. One is that individuals are motivated solely by self-interest. The other is that individual choice based on the unrestrained pursuit of self-interest leads to socially optimal outcomes. It is immediately evident to most anyone without advanced training in economics that both principles are demonstrably false. "

"Mainstream economists also treat corporations the same as individual people and presume that maximizing the freedom of corporations is the same as maximizing the freedom of real people--ignoring the reality that the corporate charter is a vehicle for creating massive concentrations of authoritarian power, and that more freedom for corporations inevitably means less freedom for most people."

"In the eyes of a market liberal, the only responsibility attached to the rights of property are to respect the same rights of others, obey the law, and honor contractual agreements. Those without property have no rights that the market liberal is bound to respect."

"Like the neoclassical economists, market liberals make little distinction between individuals and corporations. Corporations are presumed to have the sane right as an individual to use their property in any way that suits their self-interest. Market liberals give corporate libertarianism its cast of moral legitimacy."

"The contemporary corporation increasingly exists as an entity apart---even from the people who work for it. Every member of the corporate class, no matter how powerful his or her position within the corporation, has become expendable, as many top executives have learned. As corporations gain in autonomous institutional power and become more detached from people and place, the human interest and the corporate interest increasingly diverge. It is like being invaded by alien beings intent on colonizing our planet, reducing us to serfs, and then eliminating those of us they don't need."

Dobbs, Globalization

"Today many American multinational corporations seem to try to transcend their place of origin. They act as though they've grown so large as not to require a home country­ they are "multinational" in every sense of the word.
And the very term seems to mean they care little about the needs of the nation. In fact, their scale and size make them almost sovereign states unto themselves, and too many of them behave as though there were no na tional or community obligations."

 "As their power and financial strength have risen, U.S. multinationals have increasingly used their sheer mass to affect the political agenda. In my opinion, the multinational companies are now far too influential in American politics. These companies pay out hundreds of millions of dollars a year to lobby our elected officials. And they aren't paying those high-priced lobbyists to make sure your interests and mine are well considered by Congress."

"Multinationals and their lobbyists have pushed through trade agreements that have contributed not only to the exporting of American jobs but also to the tremendous trade deficits we've run up for almost three decades. The Bush and Clinton administrations defined "free trade" as "give the multinational corporations whatever they want.” Most pro-free trade organizations are funded by corporations, business or industry associations, or private donors with an interest in making sure that free trade--the kind we're engaged in now--continues to provide unimpeded benefit to multinational companies. "

"As it stands, well-financed, powerful lobbying efforts have rendered Washington content to let multinationals have their way, all in the name of globalization. Corporations have overwhelmed governments in the borderless global economy. And corporate logos in many cases have more powerful symbolic importance than national flags. In part, that's because more than half of the 100 largest economies in the entire world are corporations. That 's right, there are now more companies than countries on the list of the world's top 100 economies."

"These mammoth multinational corporations will likely grow even larger. Why you ask? In order to be competitive in our global marketplace. Global competitiveness is the rationale for corporations whose scale would at one time have been unthinkable in the context of our anti-trust laws. But these are not only American companies--they're U.S. multinationals. Yes, they are incorporated in the United States , where they enjoy the benefits of our capital markets and exchanges, and an increasingly unfettered capitalism-free of government interference-not found in any other developed nation."

Dobbs, Lobbying Against America

"Let's be clear about this: Calling these greedy people "lobbyists" simply because they convene in the hallowed lobbies of Washington is akin to calling parasites "bodyists" or viruses "blood-streamers." What they're really doing is selling out American workers and hastening the decline in our nation's standard of living and quality of life.

"Corporations, entire industries, and other special interest groups spent a record $2.14 billion on lobbying members of Congress and 220 other federal agencies last year, according to Political Money Line, a nonpartisan research service that tracks campaign contributions. That figure represents a 7 percent increase over 2003 and an astonishing 34 percent jump from the amount of money spent on lobbying in 2001."

"Interestingly, while many major news stories tend to focus on campaign finance reform, twice as much money has been spent on lobbying Congress than on federal elections since 1998. All told, corporations and special interests have spent more than $12 billion on lobbying efforts over that time, according to the Center for Public Integrity. "

"The corporate lobby has become more effective recently because it's hiring more experienced players, in effect creating a "revolving door" between Capitol Hill and K Street . In fact, 43 percent of the eligible Congressional members who departed government during that time have become lobbyists, while half of all eligible departing Senators have become lobbyists. Nearly 250 former members of Congress and federal agency chiefs have become lobbyists since 1998, while more than 2,200 former federal employees have registered as federal lobbyists. "

"Alex Knott, Lobby Watch project manager at the Center for Public Integrity, calls this process buying a consensus. "I think where a lot of people find problems is that a special interest...has a greater ability to influence members of Congress and agencies than average American citizens do," he says. "They will send them on these huge golf trips and these expensive dinners, and they will have their ear right before they go and vote because they will catch them in the hallways just before a major vote happens. And this makes it almost impossible for the individual's voice to penetrate the loud buzz that comes from lobbyists."

"Lobbyists aren't the only ones to blame for the current business-first environment in Washington , but they're enabling those corporate interests to cozy up to our nation's elected officials. We must take action to return Congress to the business of the American citizenry, not the business of the corporate supremacists."

Cavanagh, Corporate Structure and Power

"At the dawn of the twentieth-first century, the global corporation stands as the dominant institutional force at the center of human activity and the planet itself." (272)

"Corporations have become the primary organizing instrument for economic, political, and social activity on the planet."(273)

"In the United States, corporations gain their existence through the laws of state governments, augmented by federal regulation. Corporations are direct legal creations of state corporate charters...." (276)

"Under the distorted system by which corporations are chartered today, it is not in their structure or nature to operate with altruism, idealism, or community or environmental values." (278)

"For corporations today, the only principles that have meaning are these:

  • The absolute imperative to make a profit
  • The imperative to continuously grow and expand territorially and functionally
  • The need to control the regulatory, investment, and political climates--locally and globally--to remain as unrestricted as possible in behavior, geographical reach, and access to markets, resources, and labor. "

Reich, How Capitalism is Killing Democracy

"Conventional wisdom holds that where either capitalism or democracy flourishes, the other must soon follow. Yet today, their fortunes are beginning to diverge. Capitalism, long sold as the yin to democracy's yang, is thriving, while democracy is struggling to keep up. China, poised to become the world's third largest capitalist nation this year after the United States and Japan, has embraced market freedom, but not political freedom. Many economically successful nations—from Russia to Mexico—are democracies in name only. They are encumbered by the same problems that have hobbled American democracy in recent years, allowing corporations and elites buoyed by
runaway economic success to undermine the government's capacity to respond to citizens' concerns."

"But though free markets have brought unprecedented prosperity to many, they have been accompanied by widening inequalities of income and wealth, heightened job insecurity, and environmental hazards such as global warming. Democracy is designed to allow citizens to address these very issues in constructive ways. And yet a sense of political powerlessness is on the rise among citizens in Europe, Japan, and the United States, even as consumers and investors feel more empowered. In short, no democratic nation is effectively coping with capitalism's negative side effects. "

"Most people are of two minds: As consumers and investors, we want the bargains and high returns that the global economy provides. As citizens, we don't like many of the social consequences that flow from these transactions. We like to blame corporations for the ills that follow, but in truth we've made this compact with ourselves. After all, we know the roots of the great economic deals we're getting. They come from workers forced to settle for lower wages and benefits. They come from companies that shed their loyalties to communities and morph into global supply chains. They come from CEOs who take home exorbitant paychecks. And they come from industries that often wreak havoc on the environment."

"But citizens living in democratic nations aren't similarly constrained. They have the ability to alter the rules of the game so that the cost to society need not be so great. And yet, we've increasingly left those responsibilities to the private sector—to the companies themselves and their squadrons of lobbyists and public-relations experts—pretending as if some inherent morality or corporate good citizenship will compel them to look out for the greater good. But they have no responsibility to address inequality or protect the environment on their own. We forget that they are simply duty bound to protect the bottom line."

"Why has capitalism succeeded while democracy has steadily weakened? Democracy has become enfeebled largely because companies, in intensifying competition for global consumers and investors, have invested ever greater sums in lobbying, public relations, and even bribes and kickbacks, seeking laws that give them a competitive advantage over their rivals. The result is an arms race for political influence that is drowning out the voices of average citizens. In the United States, for example, the fights that preoccupy Congress, those that consume weeks or months of congressional staff time, are typically contests between competing companies or industries."

"Let us be clear: The purpose of democracy is to accomplish ends we cannot achieve as individuals. But democracy cannot fulfill this role when companies use politics to advance or maintain their competitive standing, or when they appear to take on social responsibilities that they have no real capacity or authority to fulfill. That leaves societies unable to address the tradeoffs between economic growth and social problems such as job insecurity, widening inequality, and climate change. As a result, consumer and investor interests almost invariably trump common concerns."

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Sewall Academic Program; University of Colorado at Boulder
Created 1 June 2000:  Last Modified: 6 February, 2012