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Corporate Globalization

Beet the System!

The world struggle today is not the classic big government vs. big business, communism vs. capitalism, but rather small against large- local communities, small businesses and family farms vs. the centralized power of big business in collusion with the federal government (Judy Wicks).

• + Free Trade
• + Failings of the Free Trade System
• + Money = Power
• + Role of the WTO
• + Globalization and Environmental Destruction
• + Globalization and the Food System
• + Globalization and Jobs
• + Globalization and Community Culture
• + Resistance to Corporate Globalization
• + Resources

When we think about sustainability, whether it's in regards to our personal lives, our communities, or the world, it's helpful to consider the context within which we are working. Today, much of the world is controlled by mental models (ways of thinking) and structures that support globalization where information can travel from one side of the world to the other in less than two seconds over the internet; an increasing number of people have the opportunity to visit different countries; and corporations have the flexibility to make their products in one part of the world and sell them in another at the expense of other living beings. All of these different aspects of globalization have their pros and cons- like anything, it is not a black and white issue.

Unfortunately, because corporations have established such a stronghold on global exchange, many aspects of globalization are corrupted by motivation for excessive profit. This motivation creates a system that functions at the expense of the well being of the earth and communities everywhere. Part of the foundation that supports corporate globalization is the 'free trade' economic system.

Free Trade

All over the world, governments are promoting 'free trade' with the belief that it will save their country's economy. Ideally, free trade creates an economic system in which "a government does not discriminate against imports or interfere with exports" and a "division of labor among countries [that] leads to specialization, greater efficiency, and higher aggregate production" (Encyclopedia Britannica). Another definition is that "[f]ree trade exists when the international exchange of goods is neither restricted nor encouraged by government imposed trade barriers. Subsequently, the determination of the distribution and level of international trade is left to the operation of market forces" (Spero).

Free trade depends on the idea of comparative advantage, where each country involved manufactures goods that it has relative efficiency in producing. (Economic efficiency is defined as how well an economy allocates scarce resources to meet the needs and wants of consumers). So whereas a country may not have absolute advantage in producing any goods (overall efficiency), within a free market economy it has a chance to participate in a system where everyone benefits from the exchange of efficiently produced goods.

Underlying the free trade economy lies capitalism, an "economic system in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets" (Merriam Webster). Most capitalists support free trade because they "believe that markets are efficient and should thus function without interference, and the role of the state is to regulate and protect" ("Money Words").

Failings of the Free Trade System

On the way to achieving the ideal of free trade with capitalist underpinnings, people are damaging the earth and our communities. One reason for this damage is that in capitalism, goods become commodities that are bought and sold solely to make profit. People's excessive desire for profit has led to continuously larger markets that are supported by free trade. With markets that extend well beyond local communities, consumers are separated from the producers, and for the most part are unaware of the environmental and social conditions under which commodities are produced. Due to this separation, people are able to get away with destructive behaviors such as dumping pollution into the soil, air, and water or providing horrible working conditions. In these circumstances, people are not being held accountable for their actions because consumers are either unaware or are not directly experiencing the impact of these actions in their communities and therefore aren't forced to respond.

These destructive behaviors are also tolerated because within the free trade capitalist system, people are encouraged to do whatever it takes to maintain the most 'efficient' level of productivity, even if it is at the cost of our home (and all the other beings that live here), our communities, and our selves. According to Wendell Berry,

Sentimental capitalism [capitalism that is dependent on total political faith, which is the foundation for free trade,] holds in effect that everything small, local, private, personal, natural, good, and beautiful must be sacrificed in the interest of the "free market" and the great corporations, which will bring unprecedented security and happiness to "the many"- in, of course, the future (Berry 14).

In working toward an economic ideal we are losing some of the most important things in life. We are coerced into believing that our consumptive lifestyles are creating growth, while in actuality, what takes place behind the scenes is insurmountable destruction. "We have before us the spectacle of unprecedented "prosperity" and "economic growth" in a land of degraded farms, forests, ecosystems, and watersheds, polluted air, failing families, and perishing communities" (Berry 16).

The free trade capitalist system that we have created ultimately comes down to capital; within the system, money is the underlying product traded worldwide. "Every day of the year, roughly $1.3 trillion dollars are gambled on the international currency markets. According to the World Bank, 95% of this involves pure speculation" (Page). The world we live in today is controlled by an economic system that is based on banking, borrowing, and debt, and as a result, "[t]he "free market" idea introduces into government a sanction of an inequality that is not implicit in any idea of democratic liberty: namely that the "free market" is freest to those who have the most money, and is not free at all to those with little or no money" (Berry 17). Within the free market, power lies in the hands of the players with the most money- aka large, multi-national corporations.

Money = Power

Technically defined, a corporation is "the most common form of organizing a business- the organization's total worth is divided into shares of stock, and each share represents a unit of ownership and is sold to stock holders. A corporation is considered a separate entity from the stockholders for legal and tax purposes" (The Mint). Another interpretation is that "[a] corporation, essentially, is a pile of money to which a number of persons have sold their moral allegiance" (Berry). This basically means that corporations are controlled by a group of people who are committed to doing whatever it takes to make as much profit as possible on a vast sum of investment money.

Within the free market, corporations may be given unlimited power. "The "right" of a corporation to exercise its economic power without restraint is construed, by the partisans of the "free market," as a form of freedom, a political liberty implied presumably by the right of individual citizens to own and use property" (Berry 17). This idea suggests that within the free market economy, where everything can be bought and sold, corporations have been given the opportunity to grow infinitely bigger to satisfy their insatiable desires for profit.

As the corporations grow bigger, smaller companies have to continuously merge into larger conglomerations in order to even begin to compete, ultimately creating a system dominated by monopolies. Many of these monopolies eventually turn into transnational corporations and gain so much economic power, that "[o]f the 100 largest economies in the world today, 51 are corporations, 49 are nation-states" (Page 1). This power allows transnational corporations to enter and exit countries at will, where they are able to take advantage of the lowest wages, not to mention the most lenient environmental and employment regulations.

Role of the World Trade Organization

Corporate domination is justified by the World Trade Organization (WTO), which "was set up [in 1994], without election anywhere, to rule international trade on behalf of the "free market"- which is to say on behalf of the supranational corporations- and to overrule, in secret sessions, any national or regional law that conflicts with the "free market"" (WB 21). The WTO has become one of the most influential powers in the world. "Unlike United Nations treaties, the International Labor Organization conventions, or multilateral environmental agreements, WTO rules can be enforced through sanctions. This gives the WTO more power than any other international body. The WTO's authority even eclipses national governments" (Global Exchange). Under the rule of the WTO and agreements that come out of this organization, like NAFTA (North American Free Trade Agreement), which was passed in 1993, and the FTAA (Free Trade Agreement of the Americas), which is supposed to be implemented this year (2005) if passed, the power of individual nations is being usurped.

Although many people are under the impression that these treaties will strengthen their economies as well as their governments, in many cases they actually undermine the power of the regional, state, and even national governments. The power of free trade (and the corporations that it supports) has the capability to precede decisions that countries might make to work toward sustaining the environment and local communities and cultures.

An example of this precedence can be seen in the case for dolphin-safe tuna. After having seemingly won a two-year battle for dolphin-safe tuna (which originally meant that fishermen could not encircle the dolphins nor could they use the purse-seine method, which was proven to harm and even kill dolphins), environmental activists were hit hard by the prioritization of trade agreements. Just nine months after the initial dolphin-safe label became official, the environmental groups' victory for dolphins would become tangled in the complicated nets of international trade policy. In January 1991, after facing a trade embargo on its tuna catch that was implemented in response to activist efforts in the U.S., Mexico filed a complaint with the WTO challenging the U.S. dolphin protection laws as a barrier to free trade. The European Community soon followed in Mexico's footsteps by instigating a similar complaint. By 1995, U.S. laws that banned the importation of non dolphin-friendly tuna were under attack as a result of international trade rules. In 1997, the U.S. Congress passed laws that many activists claimed will lead to the continual demise of dolphins. Today all three major U.S. tuna companies maintain a commitment to providing dolphin-safe tuna, but because the U.S. government has shifted from its initial commitment to dolphin encirclement tuna fishing methods, the label does not hold nearly as much meaning as it originally did. Activists are still working on this case. According to Mark Danamer, a lesson to be learned from this case is that "[p]erseverance and a long-term vision are essential when battling large corporations and the politicians they rent." (Danaher 136)

Globalization and Environmental Destruction

Aside from creating a system where regional, state, and national governments are undermined by trade agreements, corporate globalization under the free market economy has made a huge impact on environmental and community/cultural sustainability. One of the most obvious effects on the environment is that with an increase of trade, and therefore an increase in transportation, comes an increase in the use of fossil fuels and an increase in pollution. It seems somewhat contradictory that in 1997 political leaders from all over the world (excluding the U.S.) signed the Kyoto Protocol to reduce greenhouse gas emissions and at the same time supported policies for trade that unquestionably will create more greenhouse gases by expanding dependence on commodities that travel around the world. Not to mention these leaders also continued to financially support gas/oil companies to create an "artificially cheap cost of transportation with [an] absurdly low price of gasoline" (Flint 183).

Another environmental impact of corporate globalization is that as part of the development to increase the flow of trade, countries all over the world are expanding their infrastructures to support the changes. For example, governments in the European Union are making plans to build 30,000 miles of new roads and politicians all over the world are working to create a system for airlines that will support a doubling in the amount of air travel (Page 2). We're building more and paving more to move things around more in order to perpetuate a system which will eventually lead to an uninhabitable earth and a depletion of natural resources on which the system that we have created depends.

Many countries are experiencing large scale deforestation and high rates of pollution due to foreign corporate purchases of mineral, timber, and land rights at a fraction of their true value. Also, a lot of the 'development' that is implemented by foreign investors is dependent on non-renewable resources, such as coal, gas, and oil, when many of the developing countries are located in areas where renewable resources are abundant.

Globalization and the Food System

The global food system that has emerged as a result of globalized free trade is one in which a typical food item travels 1,300 miles from field to fork (Barstow 56). From a world where we once produced, or caught, most or all of our food, we have evolved to a world where "Spanish markets sell Danish butter, while Danish stores sell butter produced in France; England exports roughly as much wheat as it imports; the average pound of food in America travels 1,500 miles before it reaches the kitchen table, and the total transport distances of the ingredients in a pot of German yogurt totals over 1,000 miles- even though all are available within 50 miles" (Norberg-Hodge, "Globalisation"). The main reason for such seemingly unnecessary trade is to maintain a transnational flow of money.

The food system is controlled by large government subsidies with the purpose of supporting global trade, which allows big businesses to dominate the world's agriculture. As big farm businesses (agribusinesses) take control, smaller farmers are forced out of work and off their land, "even though they provide more jobs, have a higher total output, and take better care of the land" (Page 2). Not to mention that the food produced by these agribusinesses tends to be of much lower quality than that of the smaller, local farmers due to overuse of pesticides, poorer quality of soil due to nutrient depletion and heavy machinery, and picking produce before it's ripe so that it can withstand long distance transportation.

Globalization and Jobs

One of the biggest misconceptions about global trade is that it will increase jobs and create wealth in all of the participatory countries. Unfortunately, the reality of the situation is not so appealing for everyone involved. In a lot of the developing countries, people are drawn away from their work with the land to find a job in the modern sector. In a lot of cases, these people end up living in city slums, away from the land they know, not being able to support the most basic needs of their families. In this transition, their cultural identity may be lost as well as their feelings of self-respect, and crime and violence prevail. As far as the creation of wealth goes, although the countries that were already wealthy may be getting wealthier, the poorer countries stay poor. According to John Page,

Since 1950, there has been an 11-fold increase in world trade, yet the gap between rich and poor countries continues to grow. The 225 richest individuals in the world now have assets greater than the annual income of 2.5 billion people, or more than 40% of the world's population (Page 3).

It appears that the increased standard of living that supporters of globalization promote is not experienced by everyone.

Globalization and Community Culture

Globalization is also having a huge effect on community culture. Through the centralization of the world's economy, the world's distinct cultures are gradually becoming homogenized. As transnational corporations rapidly enter an increasing number of countries, they bring with them expensive advertising campaigns that allow their companies to out-compete the local companies. With the gradual disappearance of independent distributors and retailers, the transnational corporations are contributing to a "global consumer monoculture" (Page 3).

Resistance to Corporate Globalization

Fortunately, alongside all of these unsettling conditions connected to economic globalization stands a resistance movement that is working from all sides of the spectrum to take power away from the corporations and put it back into the hands of the people.

The movement consists of environmental activists, black bloc radicals who blow up corporate chains, labor rights activists, conservatives who are not willing to see so many jobs leave the country, and more. These people have joined forces to resist policies that would further support corporate globalization, and they are also working to build alternative solutions. People are recognizing that, as David Korten describes it, "[e]conomic globalization is neither in the human interest nor inevitable. There is an alternative- to localize economies, disperse economic power and bring democracy closer to the people" (Page 3).

The movement is not just occurring in the U.S. In fact, it was activists in Canada who first tried to give U.S. activists the heads up about the effects of NAFTA. In France, the Prime Minister Lionel Jospin outwardly considers the free trade market to be "structurally weak" (Page 4). In India, around a half a million farm workers joined forces to protest unjust trade agreements. These farmers are part of a growing worldwide movement of farmers, called The Via Campesina, who are organizing to protect their rights. People in the U.K. (and the U.S.) are acting on their awareness about the global food system by making more demands that their supermarkets supply local and organic produce, and people all over the world are farther ahead of the U.S. in regard to genetically modified food.

While people are resisting, people are also building. Communities around the world are working to re-localize, putting a lot of emphasis on supporting businesses that keep as much as possible within the community, including jobs and money. Local foods movements, local currency movements, and the spreading use of renewable energy sources supplement these efforts.

Although some people perceive localization movements as escaping global responsibilities, this is not necessarily the case. According to John Page,

Supporting our local shops and our local economy might appear to ignore the plight of people on the other side of the world. For a long time now we have been told that one of the best ways to help people in the Third World is to buy their products. However, the reality is that many people in the South have ended up producing for us instead of for themselves thereby becoming dependent on a global market over which they have absolutely no control (Page 4).

In working to build our local communities, we encourage and create models for other people to do the same.

If people in the more industrialized parts of the world work to become more self-reliant, then people in other parts of the world would be able to focus more on providing for themselves and their families. "Does this mean we should eliminate anything [provided] outside the US? Probably not. It means that awareness of where [a product] is coming from and the practices used in growing and processing it should be part of our buying decisions" (Barstow 54). For most people, the resistance to globalization is not a resistance to all trade and global exchange, it is more a plea to find a better balance of local and global exchange that is more socially and environmentally responsible.