Are Corporations Too Powerful and Presenting a Threat to Global Economies and the Environment - Case Study Example

Student Name: Student number: Tutor’s name: Title: Are Corporations too powerful and presenting a threat to global economies, civil societies and the environment? Course: Executive Summary This report explores the debate that is raging among academic commentators concerning the impact of neoliberalism and how it is distorting, threatening the global society in many ways. Corporations have become very powerful to the extent of posing a great threat to global economies, civil societies, as well as the environment. The report has used academic journals, quality websites, textbooks and other sources to review different arguments concerning neoliberalism and its impact in the society. The struggle between the community and the imperial state is never ending as each of them positions itself to gain from enhanced global development. The global civil society has come about as a result of growing influence of the multinational corporations and their cooperation with the government. Governments work to protect the interests of giant corporations within their jurisdictions. The report argues that the growing power of corporations has a great influence on the stability of the society as a whole. The social, environmental, economic and political systems have been influenced by corporations. A personal opinion in the conclusions supports the argument by scholars that corporations increasing power has caused instability to the global society, economy, environment and civil societies. Global Civil society has to be supported to play its role in mitigating the impact of corporations. Table of Contents Executive Summary 2 Introduction 4 Discussion 4 Conclusion 11 References 13 Introduction This report analyzes the power of corporations and evaluates whether corporations have become too perform to the level of being a threat to global economies, civil societies and the environment. The report begins by tracing the tension and struggle that has existed between the democratic rule represented by the global civil society and the imperial rule represented through institutions of elite globalization. It traces how the power of corporations has grown over time and the environmental impact that has been created by multinational corporations through their business activities. Emergence of the global civil society has been to counter corporation power. The report discusses the perpetuation of the neoliberalism ideology and why its practices are much alive in the current world. The role of government in protecting the interests of corporations has been extensively discussed. The worrying action of the government in working together in covering up environmental crime has also been discussed. The British Petroleum (BP) oil spillage in the Gulf of Mexico is illustrated as an example of environmental crime and the cover-up in its aftermath. The role of corporations in climate change has led to many ecological changes that are borderless. The free trade vision advanced by proponents of neoliberalism is seen as advancing the interests of corporations at the expanse of public welfare. The emergence of the global civil society has been propelled by increased power of corporations. The conclusion gives a final opinion on the impact of the increased corporation power to political, social, economic and environmental stability. Discussion Humanity has gotten into the final stage of a long struggle between the forces of the imperial rule represented by institutions of elite globalization and forces of democratic rule represented by the global civil society (Haynes 2013). The strain exerted on the social and environmental systems by empire’s exploitation of nature and people has gone far beyond the limits of environmental and social tolerance. Even the affluent in the society feel the impact from economic instability and environmental and social breakdown including terrorism. Korten (2015) explains that there is growing power of multinationals at the expense of the sovereignty of state. States depend on multinational corporations in integrating their economy into the global arena hence encouraging development. This reliance has been blamed as the biggest contribution of the power that Multinational companies enjoy. Multinational companies have a huge influence in the international system hence taking part in the majority of global economic growth and activity (Aalbers 2013). There are cases where some multinational companies have assets that exceed the national income of the host countries. There is evidence that some multinational corporations have paid bribes to government official with the aim of getting around obstacles that have put up against profitable operations of enterprises (Dobbs, Manyika & Woetzel 2015). In support of the growing power corporations, it is observed that big business and big government can be problematic since they can both lead to practices and policies that are inconsistent with the cultural values and economic and political reality (Castells 2011). Global environmental concerns were realized out of acknowledging that ecological processes do not usually respect national boundaries and environmental challenges have consequences beyond national borders (Korten 2015). Rapid global changes within the environment are complex and significantly impact the planet and the manner in which it functions. The concentration of power is socially challenging when influential groups believe that they are not being allocated their fair share of resources and commence to agitate for something big (Bradshaw 2014). Ninety percent of corporate partners have a presence their presence in at least one tax heaven and it is reported that tax avoidance by multinational corporations costs the developing countries about $100 billion annually. The corporate investment in tax havens quadrupled from 2000 to 2014 (Dobbs, Manyika & Woetzel 2015). Tax avoidance on their income by multinational corporations is a means through which companies’ executives boost their profits and lead to increase in their pay. Corporate tax avoidance greatly reduces the amount of money that can be allocated for public goods such as schools and roads (Castells 2011). Consequently, the economy has grown out of balance. Aalbers (2013) argues that the neoliberalism ideology is dead, but the practice of neoliberal is very much alive. The debate for perceived neoliberalism is viewed as false since there are no complete systems of neoliberalism. This perspective can be supported but it is also hollow since neo-liberalization has to be viewed as a process and not just a condition (Aalbers 2013). Furthermore, neoliberalism was now about complete withdraw of the state but qualitative restructuring of the state. Neoliberal practice was about redistribution not from the rich to the poor but from everyone else to the elites. Ideological project covers what is the intention of neoliberalism. Practices and policies of privatization are more inclined to neoliberalism as opposed to ideology of free markets (Aalbers 2013). States are central to neoliberalism since they have aided the growth of powerful corporations. Concentrating wealth and power in the hands of few people in the society creates an imbalance that has led to growth of the global civil society to agitate to the rights of the weak. The giant corporation is the model to which the market and government adapt (Aalbers 2013). Furthermore, market regulations are geared towards benefiting the giant corporation while the public sector is restructured in resemblance of the giant corporation. The 2007/08 global financial crisis demonstrates the failure of an economic system as well as an ideology (Korten 2015). . There is a growing resistance holding the view that free market models are neither objective nor free. The main pattern of the state response to the global financial crisis has been bailout of private companies as well as austerity measures for everyone else. The power of neoliberalism is manifested in its ability to further its agenda either in the course of economic busts and economic booms (Aalbers 2013). This has also been manifested in European country with strong welfare states. The crisis offers an opportunity to neoliberals to reduce money on state spending and support commodification of labour power like through changing labour agreements or compelling employees to choose between wage cuts for all or unemployment for some (Aalbers 2013). In this regard, corporations have become very powerful and presenting a real threat to stability of the global economy, civil societies as well as the environment. The world systems theory holds that the nations in the world have increasingly become interdependent and are now connected within a worldwide system whereby some nations possess more power as compared to others (Jenkins 2013). The network of nations includes peripheral nations, core nations, as well as semi-peripheral nations. Concentration of power brings about many problems to the society such a dip in economic competition, threats to democratic institutions, dominance of corporate profit-making objectives as opposed to societal objectives, abuse of government authority, dwindling of unions, worker unemployment and dislocation (Dobbs, Manyika & Woetzel 2015). Chomsky observed that while there are many things wrong with the government, it is the only defense that people have against the threat of corporate power (Jenkins, 2013). More power has been vested upon unaccountable corporations whose basic function is making profits for their shareholders as opposed to delivering public good. Corporations rely on powerful governments in protecting them against free markets. Free market capitalism is nonexistent but huge corporations that rely and are supported by governments. Transnational corporations and multinational corporations are the main actors in the global political economy (Werther Jr & Chandler 2010). They view the world as just a single entity. The corporations make their decisions without considering the good of the host or home countries but what is best for corporations in the global world. The corporations have instituted various mechanisms that they use in undermining labour unions. In some circumstances they use the threat of relocating of a plant to a non-union host country to coerce labour unions into calling off strikes (Korten 2015). They work with government officials in the host countries to discourage or ban unions’ activities or employ dubious legal means to get around the objectives of labour unions. Bradshaw (2014) has discussed the emerging concept of the state-corporate environmental crime. The corporate and government response to 2010 Gulf of Mexico oil spill shows that the US federal responders cooperated with BP and other response organizations to conceal systematically the damage caused by the spillage (Bradshaw 2014). State-corporate responders used unprecedented toxic dispersants with the objective of hiding the oil and blocked media and public access to response operations. The Deepwater Horizon oil rig exploded in the Gulf of Mexico on 20th April 2010 causing 11 deaths and injuring 17 others (Bradshaw 2014). Following the oil spill, limiting visibility of the oil was the first goal of the state-corporate war. Chemical dispersants were applied at the surface as well as directly at the wellhead were the primary means of preventing the oil from reaching the shore (Bradshaw 2014).When the level of toxic dispersants reached unprecedented amounts, the Environmental Protection Agency (EPA) tried unsuccessfully to compel BP to reduce the application of dispersants, but the United States Coast Guard permitted the company to proceed unabated. This coalition by the state and corporations to harm the environment shows the negative impact of the growing influence of corporation power in pursuit of its interests (Bradshaw 2014). Multinational corporations have worked with state agents to cover up environmental crime that will affect the future generations adversely. Following increase in the global temperatures, ecosystems are most likely to struggle hence resulting into major economic, social and ecological impacts. Receding coastlines, drought and bushfires, extinction of flora and fauna, flooding and ocean acidifications as some of the impacts of global warming that is a result of economic activities of some global multinational corporations (Dean 2008). Global warming is a political issue that creates uncertainty and conflict among many agents in the society. Civil society activists are concerned about the impact of climate change on the lives of people (Korten 2015). Climate change impacts directly on the lives of people. Carbon emissions as a result of industrialization have contributed to global warming. Multinationals have a role to play in finding a solution to increased global warming (Hirst 2012). Global civil society came up as a main social force in the final decade of the Second Millennium in order to counter an attack on democracy and life by institutions of corporate globalization. In the first instance the resistance revolved around the International Monetary Fund, the World Trade Organization and the World Bank as most powerful and visible institutional instruments in support of neoliberal policy agenda of deregulation, elimination of social safety nets and economic borders, and privatization of public assets (Klein 2014). Consequently, the global civil society focused their effort on global corporations as well as financial markets. The global civil society has shown its public face through massive demonstrations in countries across the world (Korten 2015). The police response to frequent demonstrations has become more violent and repressive. The degree of contemporary threat to democracy and freedom created by an alliance of military, economic, and police power was observed in the aftermath of the September 11, 2011 terrorists’ attacks in the United States (Klein 2014). The attack awakened the world to the degree of terrorist threat to security and peace and the capacity of terrorists to penetrate the world’s greatest military power and to use modern technologies into weapons of great destructions (Korten 2015). The United States government manipulated the feelings of patriotism and the need for national unity in response to the September 11 attack in advancing a policy agenda. The US has often played the role of an imperial power from its westward expansions in the North American continent and appropriating the lands of Native Americans and what was previously the Northwest Territory of Mexico. It further spread its power to Latin America and Philippines and came out of the Second World War with a global outreach (Jenkins 2013). These have happened in the wake of a strengthening alliance between the authority that controls US police power and military and the US corporations dominating the global economy. All are supported by a corporate press that is subservient and endorsed by an opposition party that supports corporate interests Hirst (2012) explains that the agenda include enhancing implementation of neoliberal economic policies comprising of tax cuts and subsidies that are designed to propel the global projection of United States corporate power as well as the concentration of wealth in the hands of few powerful hereditary ruling aristocracy in the country (Castells 2011). The struggle existing between forces of elite globalization and forces of global civil society can be observed in the tension between two conflicting world views. In the perspective of the community, the world represents a place of creative opportunity that can best be realized through cooperation as well as equitable sharing of control of resources and power (Korten 2015). The worldview by the community gives impetus to the democratic impulse. From the empire world view, the world represents an inherently competitive and hostile place. From the world perspective the choices offered by life is to be a loser or a winner, to be ruled or rule. Compassion, cooperation and compassion is for cowards and fools (Castells 2011). This worldview by the empire precipitates the authoritarian impulse. Centralization of wealth and power are important organizing ingredients of elite globalization that have given rise to powerful multinational corporations. Decentralization of power and equitable distribution are important ingredients of a global civil society (Dobbs, Manyika & Woetzel 2015). Fridell (2012) says that proponents of neoliberalism have been keen on advancing a free trade vision that is based on a specific understanding of the origin of highly industrialized countries like the United Kingdom and the United States. They are of the view that the main force behind the pattern of modern economic growth realized in these countries from the 18th and 19th Centuries was a commitment to the principles of free trade (Fridell 2012). According to the proponents, free trade results in competition that result into technological innovations as well as specialization as states looks for ways of enhancing their comparative advantage. The comparative advantage concept holds that every nation has an economic advantage relative to other nations with regard to production of certain goods (Fridell 2012). Neoliberals were vehemently opposed to state intervention in the economy which they expected to be inaccurate and inefficient owing to state officials’ constrained access to information as well as the likelihood to be biased towards a specific interest group’s demands (Werther Jr & Chandler 2010). The neoliberals were of the view that unregulated markets played the role of a ‘hidden hand’ that responded accurately and efficiently to the rational and self-interested actions of numerous individuals through the market signals of demand and supply (Jenkins 2013). Some proponents of free-market are less optimistic concerning the general benefits of free trade in the global world. Fair traders are of the view that it is important to make use of market regulation to protect the weak and to create an equal system of international trading (Bremmer 2010). The rich nations in the North together with newly industrialized countries in East Asia as well as Latin America have historically emerged behind a protective force of import controls, levies, tariffs, quotas as well as preferences geared towards protecting the domestic industry as well as enhancing the export industry (Vogel 2010). As previously observed, market regulations in make instances have been used by nations that are powerful route out potential domestic competition. Widely recognized blue jeans industry controlled by small producers in Ecuador have been destroyed in recent times through free trade reforms that opened domestic market to stiff competition from other producers of low-waged jeans (Dean 2008). Majority of Africa’s local textile industries have been collapsed by heavy competition from Asia and dumping of second hand clothes in the African markets. Whereas textile producers in Africa and Ecuador have lost out in the competitive environment, the low-waged Asian producers together with US retail stores such as Wal-Mart have immensely gained (Fridell 2012). Fair traders hit back at proponents of free trade for emphasizing very much on trade models that are abstract while ignoring the actual political circumstances where the battle for comparative advantage is executed and the human effect of the competitive struggle. Fridell (2012) observes that in many cases in the absence of active government support as well as protection, policies of free trade present southern producers with a sword that is double-edged. Dean (2008) looks at the fantasy of free trade through the promise of everyone winning and using losses to reconfirm the need to strengthen the system so that everyone wins and displaces thieves of enjoyment in the system as exceptions, warnings, and contingencies. Neoliberal ideology further functions through via the production of internalized discipline but having external control (Dean 2008).Neoliberalism is viewed as a philosophy that perceives market exchange as being a guide for human action. While redefining ethical and social life in line with economic expectations and criteria, neoliberalism postulates that human freedom is best attained through markets’ operation (Dean 2008). The basic mandate of the state is to offer an institutional structure for markets, developing rights of property as well as contract, for instance, and establishing markets in domains in areas that they may not have existed before. Neoliberalism gives the state the active role of securing markets in providing subjects and conditions for the markets (Dean 2008).The elections of Margaret Thatcher in 1979 in the UK and Ronald Reagan in 1980 in the US gave impetus to neoliberal ideology as a dominant economic policy. The subsequent decades were the peak of Keynesian policies whereby the obligation of state was guidance of the economy as well as the distribution of risk in order to shield inevitable losers within the capitalist market (Dean 2008). On the other hand, Evidence has shown that foreign direct investment by multinational corporations can assist in promoting and sustaining development in various countries (Werther Jr & Chandler 2010). Countries that are against foreign direct investment from the multinational corporations are usually less developed. Conclusion The idea of free markets through deregulations and less regulated financial markets aimed at promoting international trade. Seemingly the benefits of neoliberalism seek to benefit few players within the market with little regard to social cultural values, economic and social welfare of a community. The empire and the community are at loggerheads on the worldview precipitating an authoritarian and democratic impulse respectively. The increasing power of corporations poses a big challenge to global economies, civil societies and the environment. Despite the role of multinational corporations contributing to development, they have caused instability in many areas in the society in pursuit of their selfish interests. The activities of corporations have to be regulated to avoid harm to others and creating imbalance in the ecosystem. The role global civil society should not be ignored in monitoring activities of corporations and fighting for the interest of the public good. The developing countries have to be assisted in safeguarding their domestic industries against foreign inversion in the name of free trade. Developed nations have used free trade to dump their products in developing countries. References Aalbers, M. 2013. Neoliberalism is Dead … Long Live Neoliberalism! International Journal of Urban and Regional Research, vol.37, no.3, pp.1083-1090. 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