Corporations and Democracy

CORPORATIONS AND DEMOCRACY

By Roland Watson

All of this may seem a bit extreme. Are the consequences of corporate behavior really so bad? For our answer, we can now make our review of the various publics and environments on which they have an impact. And, since we are on the subject, we will begin with the relationship between corporations and government. As to government, we've considered supranational institutions (e.g., the corporate agenda of the WTO) and, for nations, democracies, both formative and established, and autocracies.

Corporations have had very severe effects on the new democracies. This is because they have effectively taken control of them; there is no separation of power whatsoever. The corporations' interests have become the interests of the governments, which are no longer concerned with the interests of the people. Corporations, or rather the wealthy families that run businesses in these countries, have realized that with government support they are virtually omnipotent. To this end, they have followed two strategies. First, using their financial resources, they have bought positions of power: they have had themselves elected government leaders. Secondly, in situations where this option has not been available, they have used massive direct bribery of government officials. The consequence is that business is government, and both are completely corrupt. Democracies in name only, such countries are really kleptocracies. The businesses/governments function solely to exploit - to steal - the wealth of their nations, including their natural resources and the labor of their populations.

Also, since they direct their exploitation to obtaining profits as quickly as possible, they have concentrated on non-sustainable sales of natural resources, and on the development of foreign-exchange earning export industries, not on building a decent social infrastructure for their countries.

The situation is less dire in the established democracies, but the same tendencies are still present. Business wants to sway government to support its interests. To this end it conveys all manner of incentives, from bribes to campaign funding and advertising support, and it also engages in extensive direct lobbying. Without rigorous deterrence, business will inexorably seek to undermine government - in any democracy - to achieve its position in the kleptocracies.

Corporations are at their absolute worst in their relationships with dictators. To many companies, money is money, no matter how dirty, or bloodstained, it might be. Corporations, as we shall see, have a great affinity with dictatorships, since they effectively function with the same political structure. There is no such thing as democracy in a corporation; they are by all means social pyramids. Power is concentrated at the top, the Chief Executive Officer (CEO) is not elected, and there are no term limits. In addition, like empires and emperors, even the most exemplary corporation to-date can become highly unethical under its next CEO.

Also, a government dictatorship has much to commend itself to a corporation, through establishing a proper business environment. Corporations seek stability, and since dictatorial power commonly lasts for decades, to them it actually represents the best form of government. There are no periodic elections, and hence new administrations, with which they must deal, just regular bribes to pay, like the installments on a loan.

Then there is the issue of competition. In most markets, especially in democratic nations, there are many different competitors. A company, to make money, must perform (if only at customer brainwashing). Such is not the case in a country ruled by a dictatorship. With sufficient bribery, euphemistically referred to as infusions of foreign capital, corporations are granted their own little monopolies or fiefdoms, in whatever industrial or consumer sector they please. And as to costs, those pesky environmental and labor considerations, they can be ignored completely. The corporations can do whatever they want, and it is not as if they have to worry about litigation and courts, or unions. Indeed, regarding labor, they can even pay the dictator to grant them access to the military, for large-scale projects, or to end any business disputes that they might have, as with ethnic groups whose land the government has allowed them to steal. Corporations in bed with dictators: it is the perfect marriage.

For instance, western companies always talk about the importance of new market opportunities in China, and how any other considerations, such as human rights, cannot be allowed to obstruct their pursuit of commercial relationships there. They plead for constructive engagement, which is the idea that economic development some day, or some century, will lead to political reform.

Furthermore, they say that since China is the biggest market, they have to pursue it. But, for some reason, many of these same companies, if not most of them, are not active in India, which as a market is almost as large. The difference, of course, is that India is a democracy. The companies are attempting to deceive us. They are not interested in China because it is the largest market, but because it is the largest dictatorship.

This type of relationship, given a corporation's current basis of limited liability, represents its ideal. It really is only about the money. There is no consideration given to ethics whatsoever, except perhaps how to avoid them. And, if an autocracy will help them, by providing forced labor, or "security," even ethnic cleansing, so much the better. In their narrow-mindedness and greed, corporate executives have forgotten, or somehow "unlearned," that if you consort with criminals, in this case criminal regimes, if you conspire with them, or even if you only profit from their crimes, you are yourself a criminal. If such a government commits murder, as of dissidents, or of slave labor "employees," the companies and their executives are themselves also guilty of murder. The CEOs of these companies are scoundrels. They have great power, and could be ethical leaders: "corporate statesmen." Instead, they are rogues.

Such companies also do their best to combat any formative democracy movements. Corporations that do business with dictators actively work against the establishment of democracy, and this is because the foundation of a democracy could lead to the cancellation of their contracts. They have a critical vested interest in ensuring the perpetuation of dictatorship.

Lastly, such corporations regularly carry on the legacies of colonialism: in those places where colonialism has been transformed into a local dictatorship. For example, British companies are leading investors in Burma, and therefore supporters of the Burmese dictatorship. (Burma was formerly a British colony.)

We can see, then, that in this regard alone the modern corporate system has had a terrible social impact. It seeks to undermine and subvert established democracies; it controls formative democracies; and it works with and defends totalitarian states: it is their ally in perpetuating the repression of their people. And all of this is done for profit, and a larger paycheck at the end of the month.

And, with the current evolving shift in power from governments to corporations, it is only likely to get worse. It is already the case that the largest companies have more economic power than all but the largest nations. Indeed, we are approaching the day when the largest companies will have more power than even the largest nations. For instance, the Supreme Court's siding with the NFTC over the State of Massachusetts, and ignoring individual rights in the process, and its refusal to hear the expedited appeal of the Microsoft breakup ruling (and also the Appellate Court's subsequent reversal of that ruling), reflects an unwillingness to confront corporate power, and even an abdication to it. Government is conceding defeat. Furthermore, to the extent that corporations supplant nations, this will effectively reinstitute the inheritance principle for political power. Our previous success in defeating this principle in most nations, and in defining its absence as a basic structure for civil society, will have been reversed.

Through such trends, the democracies of the world, on closer inspection, begin to look like dictatorships themselves. One could even ask if there is one well-functioning democracy on the entire planet.

In nominally democratic countries, the individuals and institutions that have accumulated economic power have used it to gain political and judicial power. As the huge contributions in the 2000 United States presidential campaign illustrated, corruption is out in the open.

The Republican and Democratic campaign funds totaled approximately one-half billion dollars, and the vast majority of this was supplied by corporations. These corporations now expect a return on their investments. They were not stupid. Their contributions were bribes, for which they now expect favorable regulations and rulings. Indeed, that's why many corporations gave to both parties. They covered their bases - doubled their bribes - because even after doing so it was still a bargain relative to what they will receive in return.

A "monetary" democracy equals "no" democracy. Instead, it is fascism. Political and economic power is unified; the only remaining check - judicial power - has signed on as well (courts, of course, have almost always supported the interests of the economic and political elites, so they weren't much of a check anyway); and the entire structure is protected by the military and the police.

We saw earlier that at the governmental level democracy appears to be winning. Political dictatorships are on the decline. But at this deeper level, this is not the case. Corporate dictatorship is viewed as legitimate. It is accepted. Oppression of the many by the few, in this new form, is being institutionalized worldwide.

At this point, to take the view of devil's advocate, it is worth a look at the arguments that the corporations use to defend themselves. Many companies will admit that their sole goal is to earn profits, but they also argue that this is not driven by greed, but rather by fear. Corporations must compete in markets, and markets are ruthless. The weak do not survive. To the extent that they can avoid the costs of their actions, up to and including working with dictators, they must, since this improves their chances for survival. (Of course, they also say that working in such countries, where their investments are funneled through local subsidiaries directly to the dictators and their cronies, is not the same thing as working with them.)

This is a completely spurious argument; furthermore, it is also the common justification of criminal activity up to and including murder. Corporations are saying that the extreme competition to which they are exposed justifies anything. For them, the end justifies any means. And, by making this argument, they demonstrate just how shallow, and how divergent from the goal of social harmony, they really are.

In addition, in the last instance corporations fall back on the argument that they are large employers. They try to get us to feel sympathy, and fear (for our jobs). If they don't employ large numbers of people, who will?

This also is spurious. We saw earlier that institutions are necessary. That is not the issue. The issue is how to have, to get, institutions that serve and protect our interests. Corporations can and should fulfill an important social function. The fact that they are not doing this now, and that they have so many bad consequences, simply means that they must be reformed.

It is therefore up to us to reform them. They must be forced to behave ethically, they have admitted it themselves, and the best way to do this is to affect their ability to earn profits. They say they are driven by fear, fine, we will give them a new fear. We will, as individuals, and collectively, hold them accountable for their actions and force them to behave. There will be no more limited liability.