THE BETRAYAL OF ADAM SMITH. Excerpt from. When Corporations Rule the World by David C. Korten. It is ironic that corporate libertarians regularly pay. When Corporations Rule the World explains how economic globalization has to govern in global corporations and financial markets and detached them from. When Corporations Rule the World. Group S. Presenters: Michael Martin and Matt Morrison. Researchers: Jeff Lee, Sammy Au, Lu Yu, Tony Wang. Agenda.
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WHEN CORPORATIONS RULE THE. WORLD by Ed O'Rourke. Something is wrong with the world economy. Two billion people live on $2 per day or less. When Corporations Rule the World. David C Korten. London: Earthscan, , pp., £ (hardback), ISBN 1 4. William Buckley once sent. When Corporations Rule the World, by David C. Korten. (). West Han- ford, CT: Kumarian Press. pp., $ cloth. The Master sat in.
It is within our means, however, to reclaim the power that we have yielded to the institutions of money and recreate societies that nurture cultural and biological diversity. Millions of people throughout the world are already acting to reclaim this power.
When Corporations Rule the World outlines a citizen's agenda to enhance these efforts by getting corporations out of politics and creating localized economies that empower communities.
Having reached the limits of the materialistic vision of the scientific and industrial era ushered in by the Copernican Revolution, we are now on the threshold of an ecological era called into being by an Ecological Revolution grounded in a more holistic view of the spiritual and material aspects of our nature The last half of the twentieth century has been perhaps the most remarkable period in human history.
Yet the things that most of us really want. We find a profound and growing suspicion among thoughtful people the world over that something has gone very wrong. In rich and poor countries, as competition for land and natural resources grows those people who have supported themselves with small-scale farming, fishing, and other resource-based livelihoods find their resources are being expropriated to serve the few while they are left to fend for themselves.
Small scale producers--farmers and artisans--who were once the backbone of poor but stable communities are being uprooted and transformed into landless migrant laborers..
Korten gives statistical evidence from many aspects of our lives to show how bad things have gotten. Taken together these manifestations of institutional systems failure constitute a threefold global crisis of deepening poverty, social disintegration, and environmental 2 destruction. Most elements of the crisis share an important characteristic: solutions require local action.
Action can be taken only when local resources are in local hands. Ch 2 "End of the Open Frontier" The problems we face because population is growing too large for our resource base.
We ought, he says, to act as if we were astronauts on a spaceship rather than like cowboys in an environment where there is no need to limit what we do. Because of the more than fivefold expansion since the environmental demands of our economic system now fill the available environmental space of the planet. Most environmental stress is a direct function of human consumption. Economic globalization has greatly expanded opportunities for the rich to pass their environmental burdens to the poor by exporting both wastes and polluting factories.
Japan has reduced its domestic aluminum smelting capacity from 1. Korten cites three studies about earth's carrying capacity. The Cornell research team concluded that the earth can sustain a population of one to two billion people consuming at a level roughly equivalent to the current per capita standard of Europe.
To highlight the trade-off involved they posed a fundamental question: "Does human society want 10 to 15 billion humans living in poverty and malnourishment or one to two billions living with abundant resources and a quality environment?
Ch 3 "The Growth Illusion" Attacks the view that growth is the answer.
Perhaps no single idea is more deeply embedded in modern political culture than the belief that economic growth is the key to meeting most important human needs, including alleviating poverty and protecting the environment. Korten cites the Irish economist Richard Douthwaite's study in which, after trying to use growth to solve problems, he reluctantly realized "the unquestioning quest for growth has been an unmitigated social and environmental disaster.
Almost all of the extra resources the process had created had been used to keep the system functioning in an increasingly inefficient way. The new wealth had been squandered on producing pallets and corrugated cardboard, non-returnable bottles.
The ratio of the share of the world's income going to the richest 20 percent to that going to the bottom 20 percent poor has doubled. And indicators of social and environmental disintegration have risen sharply nearly everywhere. Although economic growth did not necessarily create these problems, it certainly has not solved them. A major portion of what shows up as growth in the GDP is a result of. In contrast to their experience during this early period of economic expansion, conditions for ordinary people in Britain improved from , the year World War I began, through the end of World War II.
As explained by Douthwaite, the wars made it politically necessary to control the forces of capitalism. The government introduced heavy taxes on top incomes and controlled wages. The overall result was a massive shift toward equity. Following World War I a reduction of the workweek from fifty-four hours to forty-six or forty-eight hours to absorb the influx of returning military personnel kept unemployment low and wages high.
Those without jobs were protected by the national employment insurance scheme introduced in Paid for by substantial taxes on high incomes, it systematically transferred income from wealthier taxpayers to those most in need.
World War II resulted in the same consequence for the poor. Similar patterns were experienced in the United States The imperatives of the depression of the 's and World War II galvanized political action behind measures that resulted in a significant redistribution of income and built the strong middle class that came to be seen as the hallmark of America's economic strength and prosperity. The resulting structure of relative equity and shared economic prosperity remained more or less intact until the s, when a combination of economic competition from East Asia, labor unrest, inflation, and a rebellious youth culture mobilized conservative forces to reassert themselves.
An all-out attack on labor unions, social safety nets, market regulations, and trade barriers realigned the institutional forces of American society behind big money interests. In the s and s the percentage of working Americans whose wages placed them below the poverty line increased sharply and society became increasingly polarized between haves and have-nots.
Korten points out that an increasing economy combined with these measures does make for real improvement in the lot of ordinary people but Without concurrent redistribution, an expanding pie brings far greater benefit to the already wealthy than to the poor.
Less widely recognized is the tendency of individual corporations, as they grow in size and power, to develop their own institutional agendas aligned with imperatives inherent in their nature and structure that are not wholly under the control even of the people who own and manage them. These agendas center on increasing their own profits and protecting themselves from the uncertainty of the market.
Much of America's history has been shaped by a long and continuing struggle for sovereignty between people and corporations. Korten traces this history especially the courts' changing approaches to corporations. He notes that from the civil war to the Roosevelt period Corporations were in the ascendancy.
With Roosevelt they were kept under control, but with Nixon they gained back much of their power. Korten sees part of the reason for the drive of corporations to gain more power as a reaction against the hippie movement: Perhaps most threatening of all was that the young were dropping out of the consumer culture.
The election of Ronald Reagan as president in ushered in a concerted and highly successful effort to roll back the clock on the social and economic reforms that. The success of the corporations in gaining more power rests in large part on their successful effort to identify corporate freedom with democracy in general.
Another is that by their very nature corporations have very large financial resources.
Ch 5 "Assault of the Corporate Libertarians" Identifies the ideology behind the problem In the quest for economic growth, free-market ideology has been embraced around the world with a near-religious fervor..
The economics profession serves as its priesthood. And it restructures our institutions of governance in ways that make our most urgent problems more difficult to solve. Yet to question its doctrine has become heresy, invoking risk of professional censure and damage to ones career in most institutions of business, government, and academia.
These beliefs are based on a number of explicit underlying assumptions. Korten responds: A number of valid ideas and insights about markets have become twisted into an extremist ideology that raises the baser instincts of human nature to a self justifying ideal.
Ultimately the 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. Since the corporate libertarian ideology allegedly rests on the neo-classical economics of Adam Smith, Korten points out: It is ironic that corporate libertarians regularly pay homage to Adam Smith as their intellectual patron saint, since it is obvious to even the most casual reader of his epic work The Wealth of Nations that Smith would have vigorously opposed most of their claims and policy positions.
For example, corporate libertarians fervently oppose any restraint on corporate size or power. Smith, on the other hand, opposed any form of economic concentration on the ground that it distorts the market's natural ability to establish a price that provides a fair return on land, labor, and capital: to produce a satisfactory outcome for both buyers and sellers: and to optimally allocate society's resources.
Adam Smith warned about the drive to monopoly, which is what globalization is largely about. True classical economics also specifies that for a market to allocate efficiently the full costs of each product must be born by the producer and be included in the selling price. Economists call it cost internalization. Externalizing some part of a product's cost to others not a party to the transaction is a form of subsidy that encourages excess production and otherwise interferes with the market mechanism as Smith envisioned it.
Korten concludes this chapter: Millions of thoughtful, intelligent people who are properly suspicious of big government, believe in honest and hard work, have deep religious values, and are committed to family and community are being deceived by the false information and distorted. Ch 6 "Decline of Democratic Pluralism" How our balanced system was replaced by one that favors money power. However, it is no more accurate to attribute the West's economic and political triumph to the unfettered marketplace that it is to blame the USSR's failure on an activist state.
Contrary to the boastful claims of corporate libertarians, the West did not prosper in the post-World War II period by rejecting the state in favor of the market. Rather, it prospered by rejecting extremist ideologies of both Right and Left in favor of democratic pluralism: a system of governance based on a pragmatic, institutional balance among the forces of government, market, and civil society.
Driven by the imperatives of depression and war, America emerged from World War II with government, market and civil society working together in a healthier, more dynamic, and more creative balance than at any time since the pre-Civil War years. A relatively egalitarian income distribution created an enormous mass market, which in turn drove aggressive industrial expansion.
America was far from socialist, but neither was it truly capitalist. We might more accurately call it pluralist. The America of democratic pluralism and equality defeated communism, not "free" market America. This chapter points out some similarities of Communism and Big corporation rule and lists the six conditions that markets need for them to operate freely.
The market produces socially optimal results only when government and civil society are empowered to act to maintain these six conditions. A healthy society is built on. An active civic sector is the conscience of the society. Government's distinctive competence is in reallocating wealth, not in creating it.
The economic sector specializes in producing goods and services. Markets are, however, ill equipped to set society's larger priorities. Contrary to popular myth, capitalist economies and market economies operate by different rules to different ends The former designed to concentrate control of the means of production in the hands of the few.
The latter as envisioned by Adam Smith and described by market theory are intended to facilitate the self- organizing processes by which people engage in production and exchange of goods and services. A description of the fate of the Swedish system is found on pages Ch 7 "Illusions of the Cloud Minders" Identifies the group behind this movement.
Ch 8 "Dreaming of Global Empires" The international scope of the problem In a study by DeAnne Julius, Shell International's chief economist stressed the importance of trade agreements that would assure capital the same freedom of movement as goods. One aspect of the global economy is that countries and regions compete to induce the large corporations to settle in their area by providing "favors"; this often turns out badly for the locality that attracted the company.
Moore County, South Carolina, won a competitiveness bid in the s and s when it lured a number of large manufacturers from the industrialized regions of the northeastern United States with promises of tax breaks, lax environmental regulations, and compliant labor. Proctor Silex was one of the companies attracted.. Then in , the company decided that Mexico offered more competitive terms and moved again. It left behind unemployed Moore County workers, drums of buried toxic waste, and the public debts that the county had incurred to finance public facilities in the company's behalf.
Ch 9 "Building Elite Consensus" How the movement is organized. The aims of the global corporations are not achieved through secret plots but through alliances which achieve the same results. In this chapter, we take a look at each of three major forums that have served the consensus-building process in support of economic globalization: the Council on Foreign Relations, the Bilderberg, and the Trilateral Commission representing Western Europe, the U.
It is important to note that these forums bring together heads of competing corporations and leaders of competing national political parties for closed-door discussions and consensus-building processes that the public never sees.
The publications of the Trilateral Commission. The benefits of economic integration and a harmonization of the tax, regulatory, and other policies of the Trilateral countries--and ultimately of all countries--are assumed as an article of faith.
Ch 10 "Buying Out Democracy" Manipulation of the public. In response to the environmentalism, youth culture, and competition from Asia in the s the large corporations mobilized their collective political resources to regain control of the political and cultural agenda. Their methods included a combination of sophisticated marketing techniques, old-fashioned vote buying, funding for ideologically aligned intellectuals, legislative action, and many of the same grassroots mobilization techniques that environmental and consumer activists had used against the corporations during the s and s.
Their major goals were deregulation, economic globalization, and the limitation of corporate liability. Washington D. In the United States, the , public-relations employees engaged in manipulating news, public opinion and public policy to serve the interests of paying clients now outnumber actual news reporters by about 40, These firms will organize citizen letter-writing campaigns, provide paid operatives posing as "housewives" to present corporate views in public meetings and place favorable news items and op-ed pieces in the press.
A study found that almost 40 percent of the news content in a typical US newspaper originates from public-relations press releases story memos, and suggestions.
The work of this modern propaganda machine is one element of a larger campaign to globalize markets, and to embed corporate libertarianism and consumerism as defining values of a homogenized global culture. Ch 11 "Marketing the World" More on manipulation In modern societies, television has arguably become our most important institution of cultural reproduction.
Television has already been wholly colonized by corporate interests, which are now laying claim to our schools. The goal is not simply to sell products and strengthen the consumer culture.
It is also to create a political culture that equates the corporate interests with the human interest in the public mind. To explain how TV affects people. Korten quotes from Jerry Mander's In the Absence of the Sacred: "By its ability to implant images into the minds of millions of people, TV can homogenize perspectives, knowledge, tastes, and desires, to make them resemble the tastes and interests of the people who transmit the imagery.
In our world the transmitters of the images are corporations whose ideal of life is technologically oriented, commodity oriented, materialistic and hostile to nature.
These agencies, unlike the UN, operate secretly. The original purpose of the World Bank was to finance European reconstruction but it shifted over to making loans to Third World countries. We may infer from the programs and policies of the World Bank and the IMF that they favor a world in which all goods or domestic consumption are imported from abroad and paid for with money borrowed from foreign banks. All domestic productive assets and natural resources are owned by foreign corporations and devoted to export production to repay the foreign loans.
And all public services are operated by foreign corporations on a for-profit basis. It makes no sense if the goal is to help the poor.
One of the institutions called for by the Bretton Woods meeting did not materialize. Korten gives a full explanation of this organization's power.
The key provision in the 2, page agreement creating the WTO is buried in paragraph 4 of Article XVI: "Each member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements. Tools Request permission Export citation Add to favorites Track citation. Share Give access Share full text access.
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