World Crisis Web Editorial
I need a drink! I?ve just arrived back from town, after another humiliating session with the employment agency. They wanted to know why I wouldn?t take a job making synthetic rubber at the local Dupont factory, and they weren?t being very discrete about suspecting the reasons I gave for turning it down. I could almost hear their thoughts - “He?s just a lazy get. Three hundred pounds a week, and real prospects for promotion, and he?s whingeing on about ethics and the poor”. From their perspective, they couldn?t understand why I find multinational corporations so morally objectionable. I only hope that, as I write this article, I can explain at least to myself, why the money and prospects alone can?t tempt me into taking this kind of employment.
“Dupont?s concern for people, and willing acceptance of social responsibility are evident in many ways”, proclaimed Dupont in a recent public statement. “One is the company’s deep commitment to fair and equitable treatment for employees. Another is the commitment to maintain its reputation as a pacesetter in safety, health, and environmental matters.” As anyone out of their teens will know, however, the fact that Dupont, or any other large company, feels the need to broadcast such platitudes, reflects to some extent the impact on business from what is dubbed ?green consumerism?. Despite the failure of Green political parties to grow in the dramatic way promised fifteen years ago, green consumerism has at least induced some of the largest companies to carry out in practice a few of the things they now admit they should have been doing all along.
In the wake of the scandal in the mid-1990?s showing that Nike shoes were made in Indonesian sweatshops, for instance, the new-found green ethics of this company can be seen in the way it now advertises whenever one of its affiliates increases the wages of workers making its shoes, or when it announces modest improvements in factory working conditions. In the same way, companies selling to the poor world?s farmers are keen to point out their plans to improve the efficiency, environmental safety, and profitability of the farming communities they operate in. Novartis, for instance, a producer of agricultural chemicals, claims that since 1992 it has pushed “several thousand farmers through training courses, field days, and group discussions”, to make sure that the “proper” levels of toxic chemicals are used on crops.
Companies also argue that, on top of this ?revolution? in social and environmental awareness, the poor communities hosting them enjoy the benefits of economic investment by ?world class? business. In the short term, they say, the location of a multinational operation in deprived areas raises living standards and earns the host country much needed fiscal revenue. In the medium term, the increased spending power of those employed will stimulate further knock-on economic activity. And in the long run, they claim that the infrastructure necessary to handle the companies’ operations helps to attract even more investment, building a virtuous circle of economic and social development within the host community.
However, a closer look at capitalists within the poor world shows that such investment is not the two-way street that the PR executives make it out to be. For a start, many multinationals are now larger in economic terms than many of the countries they operate in. In comparison, and due in part to decades of dependence on ex-colonial powers, the economic infrastructures of many poor world countries have no more productive capacity that they had fifty years ago. Whilst advanced capitalist countries have well trained workforces and modern transport systems (and, of course, more money for bribes), the greatest - often the only - asset that poor world countries can offer these new giants of the private economy, in their attempts to gain foreign investment, is labour. As a result, the more skilled (and better rewarded) part of the production cycle tends to be carried out inside the rich world. Host communities in the poor world, meanwhile, are far more useful to capitalists as fodder for factory and plantation labour.
Due to technology advances, and the ruthless exploitation of available resources, such work can often be carried out almost anywhere, and is usually contracted out to other companies, which themselves compete to find the lowest prices for labour supply. With poor countries competing against each other to attract inward investment, the wages and working conditions of their people are continually being undercut by other equally disadvantaged communities abroad. One consequence of this, according to the UN Conference on Trade & Development, is that “in almost all developing countries that have undertaken rapid trade liberalization, wage inequality has increased??to the order of 20-30 per cent in some countries”.
Despite evidence of this ?downward harmonisation? of poor world wages and working conditions, one might still be in favour of this state of affairs if one regarded it as an inevitable stage through which ?developing? economies need to pass on their way to economic ?maturity?. According to this view, the problems mentioned are structurally necessary short-term symptoms of the poor world?s readjustment to the globalised world marketplace. In the long run, societies that host multinationals are supposed eventually to develop into industrialised countries in their own right, and thus be more able to command a better deal for their people.
As things stand, however, the chances of this happening in the majority of cases are very bleak indeed. This is partly because, as already mentioned, the ground inside the global economic arena is so structurally uneven. Unfortunately, however, this is only half the story. Another reason is the habit of companies using their relative power and size to ensure that the greatest profit can be exploited from their weaker host communities. I won?t argue that there aren’t instances of help that some companies in some situations have been recently giving to some people within some communities. Instead, I will counter this propaganda with what amounts to a rudimentary typology of global corporate abuse: on the one hand, there are practices that are simply corrupt; on the other, there are those that are blatantly criminal - multinational companies do both. Let us start with the merely corrupt.
I have already mentioned that many companies are shedding themselves of direct ownership of factory-point production. Before technology had allowed the emergence of production on a world scale, the struggle between capitalists had been over who could remove the biggest slither off production costs. Nowadays, the greatest profit is made in the ideological arena, through advertising, public relations “events”, and the licensing of logos. Meanwhile, the millions who actually make the products have been reduced to disposable units of productive capacity, to be bought and sold by middlemen at the lowest possible price. As Naomi Klien has shown, in her excellent expose of global business practices, “after establishing the “soul” of their corporations, the superbrand companies have gone on to rid themselves of their cumbersome bodies, and there is nothing that seems more cumbersome, more loathsomely corporeal, than the factories that produce their products.”
Having thus officially placed themselves upwind of the people whose labour they exploit, multinationals take advantage of this false separation in order to absolve themselves of responsibility for their flagrant violations of human rights. For example, the International Confederation of Free Trade Unions has highlighted companies who, after the 1998 Asian stock market collapse, ?downsized? their operations in the region, and imposed subcontractor firms that compelled hundreds of thousands of workers to sign ?no union? agreements. As a variant on this technique, the Brazilian activities of Rh?ne Poulenc (which has “always held preservation of the environment as a priority”, and yet has managed to become the world’s fourth largest toxic chemicals producer) show that it?s always good to have a subsidiary to carry the can when things go wrong. When the factory that produced their toxins was found to have polluted the surrounding area with hidden dumps of poisons 7,000 to 15,000 times the legal level, Rh?ne Poulenc simply shut up shop and moved on, claiming that the activities of their subsidiaries didn’t reflect the company as a whole.
Even when sub-contractors are relatively benign, the tendency for multinationals to trade within their various subsidiary companies means that the promised spill-over of increased trade is often confined within the company?s labyrinthine sub-structure. Because of the widespread use of such intra-subsidiary trading, and its elevation to an art form by sharp accountants, this kind of colonial capitalism deserves a typology all of its own. Known as ?transfer pricing?, it involves falsely allocating highly variable prices for transfers of goods and services between the corporation’s complex substrata, to suit the requirements of the company at any one time. Thus, whilst governments and individuals alike have increasingly to live according to the harsh principles of free trade, multinational corporations manage to use artificially established and overpriced imports, or under priced exports, to avoid registering a profit, and thereby having to pay company taxes. With the emergence of information technology, such activities are becoming extremely difficult for the most advanced European and North American state agencies to control. In the unstable political and economic climate inhabited by many of the world?s weakest states, it is easy to see that such control is nigh on impossible.
A third type of corruption stems from the need to present to people in the rich world an image of probity and benevolence, in order to cash in on consumers? growing concerns about corporate practice. One way around the problem is to offer to the world an intention to abide by voluntary codes of conduct. No soon as British prime minister, John Major, released his “Citizens Charter” onto the streets in 1992, corporations of all shades and hue released their own sets of vague ?mission statements?, ?corporate codes of practice?, and ?environmental practice pledges?. But, as ever, “the key project is not to reform reality, but to manage our perceptions of it”, and because they are a form of self-regulation, most voluntary codes are not enforceable in courts of law. For this reason alone, voluntary codes of practice usually have no more reliability than the carefully devised sound bites with which the latest advertising slogans are released to the public. What?s more, considering the massive technical and legal, as well as financial, resources at the disposal of multinational corporations, neither the producer nor the consumer have a realistic chance of ever knowing whether such codes are being adhered to in the first place. As a result, one can understand how green consumerism has offered global businesses a further opportunity - not only to present to the world a perverse image of legitimacy - but to increase profits even further through the attachment of imaginary moral (and hence, monetary) value to the products they sell.
If voluntary codes of conduct are the insubstantial ?carrots? in the corporation?s technique of public persuasion, the ?sticks? that it uses are all too weighty. Like the use of state terrorism in the political oppression of communities, this second, more overtly criminal type of corporate abuse can range from mere harassment, to collusion with illegal paramilitary groups, right through to deadly attacks on those within the corporation?s ?jurisdiction? who might threaten the profit margin. BPAmoco?s website is another that has made a great deal out of its “environmental focus”. “Everywhere we work,” so they tell us, “we contribute to the development of civil society”. Clearly, this particular commitment was not in the minds of those BP representatives in Columbia, who in 1996 ?allegedly? passed on information to the Columbian military about local people protesting over BP?s destruction of the region?s legally protected rainforest. These local people were subsequently rounded up and killed by ?unknown? persons, but such human rights abuses shouldn?t trouble BPAmoco, since “for any grower, the bottom line is always yield”.
I see that the sun is rising over the stacks and chimneys of the distant Dupont factory. In a few short hours this essay will be in the hands of its readers. In the meantime, however, I?ve just got time to mention the final - and probably most effective - way that global business uses its power to play dirty with the poor world. This involves the power it exerts over the decisions taken by politicians throughout the world, but especially so, over those working within the advanced capitalist states.
To many within the green movement, biotechnology is seen as perilous tampering with the sacred, or at least vital, stuff of life. To others it offers an opening onto a new vista of potentially unlimited opportunities for social - even evolutionary - advantage. Whatever the strength of each of these arguments, it is undoubtedly true that, when the first patent was given to a private organisation for ownership of specific forms of life, capitalism entered a new phase of exploitation. Crucially, corporations are now utilising the fact that living genetic codes can be isolated and altered, to push their ownership of the means of production to a level not dreamt by the makers of national or international law. In the 1990?s, by exerting enormous pressure on poor member-states of the World Trade Organisation, and by calling in their extensive influence on politicians in the powerful advanced capitalist states, corporations managed to have passed certain laws that ensure what are known as ?Trade Related Aspects of Intellectual Property Rights? (TRIPS). Beforehand, corporations had to operate in the traditionally capitalist manner of extracting surplus value from workers? labour by paying them to produce commodities. Now, even without having to pay labourers to produce things, TRIPS give corporations absolute ownership of the world’s agricultural heritage, which they then sell back to the people at a profit.
From basmati rice, the rights to which throughout the western hemisphere were given to a USA corporation called Rice Tec, to Monsanto?s ?improved seeds?, which are genetically engineered to produce “Roundup” weed killer-resistant corn plants (also owned by Monsanto), the planet?s living nucleus is being sold off in a fire sale, before anyone even knows for sure what it is or does. To gear-up for this frenzied end game, pharmaceutical and chemistry corporations rapidly teamed up with agricultural corporations to create the new globally located ?life sciences? (sic) industry. With international political affairs the way they presently stand, the productive scope of such a global industry will eventually be limited only by the imagination of those who engineer the industry?s products.
Not surprisingly, inside the corridors of global power, many politicians who undertook to represent the people are arguing in favour of corporations like Monsanto ? claiming, as did USA Representative for Michigan, Nick Smith, that “biotechnology has incredible potential to enhance nutrition, feed a growing world population, open up new markets for farmers, and reduce the environmental impact of farming”. Similar figures are presently negotiating a replacement to the failed Multilateral Agreement on Investment, which was abandoned after worldwide protest a few years ago. The planned deal will place debilitating restrictions on the state?s ability to regulate the flow of investment through a country. Amongst other things, it would prevent states from demanding that corporations conform to the social and environmental standards of their home country. As a result, companies would be able to move into any region of the world, plunder its genetic wealth, exploit its local labour force, pollute its environment, and then force the population to buy back that wealth at substantial premiums, without ever paying taxes to the host country.
Many in the advanced capitalist states are only just beginning to realise it, but the opposition to such multinational parasite organisations has been firmly on the political agenda in the poor world for decades. This explains why Texaco are ?allegedly? forced to collaborate with the military dictatorship in Myanmar, paying it to establish “free-fire zones” in the forest near the Thai border, where soldiers have been authorized to shoot members of the Karen tribe, an indigenous ethnic minority group, whose homeland is near a Texaco oil pipeline. What is different now is that growing numbers of people - here at the home of advanced capitalism - are prepared to take direct action to highlight the injustices of such brutality. Perhaps, with that in mind, I might pop down to Dupont?s, and do a bit of my own kind of engineering??
The World Crisis Web is edited by Danny Dayus.