Globalization and Multi-National Corporations: The Erosion of Democracy

Image: Steve Kaiser

Globalization is the increasing integration and management of the world economy as a whole and governed by institutions like the International Monetary Fund, the World Bank and the World Trade Organization.  The goal of these organizations is ostensibly to open new markets and promote the economic growth of all member nations, however critics argue that these organizations purpose is more insidious; that they seek to exploit least developed countries for the sake of multi-national corporations and the continued growth of developed economies.  Additionally, there is concern over loss of national sovereignty because of participation in the WTO, as its agreements and decisions are binding for member nations; this is especially challenging in democratic nations, where individual freedom and liberty are considered a god given right.  The effects of globalization and the boundless power of multi-national corporations can be considered to attempt to regulate flows of labor and to erode the ability of democratic national institutions to self-govern.

The WTO’s stated goal “is to help producers of goods and services, exporters, and importers conduct their business” (World Trade Organization, 2011b).  To do this, the WTO seeks to encourage free and open trade and has developed a set of basic principles and agreements to govern the trade of goods, services, and intellectual property (World Trade Organization, 2011a).  However, free trade has not worked equally for citizens of WTO member nations.  While free trade agreements have opened markets and promoted trade, “these global institutions, however, have been much more reluctant to implement policies that provide protections for workers or for the environment” (Hodson & Sullivan, 2008, p. 203).  Additionally, critics point to corporate abuses by large, powerful, multi-nationals under the guise of WTO agreements, such as Monsanto’s attempt to own the intellectual property for seed genetics and Bechtel’s attempt to privatize and profit from Bolivian water rights in an action directed by the World Bank and the Bolivian government (Achbar & Abbott, 2003).  The WTO could be considered a more legitimate organization should it adopt a stance that considers the entirety of the system, including people, rather than singular focus on helping business prosper.

The distinct focus on helping businesses has led the WTO into discussions on immigration as part of the General Agreement on Trade Services, or GATS, whose goal it is to eliminate barriers erected by local or national governments to service providers entering their markets.  Under that definition, the U.S. H1-B Visa limit could be construed as an unfair trade barrier and that was the stance taken by the Indian government (Anderson, 2005).  To what extent is the WTO an organization that can legitimately dictate U.S. immigration law to regulate the flow of labor across national borders?

Legitimacy is at the heart of the multi-national corporation and globalization debate. To what extent should an organization whose stated goal is to help producers conduct business, be allowed to govern?  According to Pascal Lamy, Director general of the WTO, the goal of the WTO is and should be global governance, because five years at the WTO has taught him that “when it comes to international action, States are often incoherent” (2011).  Lamy believes that in order to address global challenges, “pragmatic solutions need to be found now to enhance global governance and better address the problems that our world is facing” (2011) and outlines an EU like structure for global governance.  Given the protests in Seattle and around the world, it appears that many do not agree.  In a show of solidarity against the WTO, people from all walks of life protested; citizens concerned with loss of rights, workers concerned with fair trade, environmentalists protesting corporate abuses, and citizens of developing countries, all disenfranchised by the closed door proceedings of the WTO (Friedberg & Rowley, 2000).  It appears that many do not wish to be governed by an organization that lacks accountability to the people it purports to govern.

The trend towards globalization is characterized by the regulation and management of the world economy as a single, coherent, integrated system; and over the course of the last 50 years, much progress has been made to create institutions to govern the global economy.  Large multi-national corporations are the primary beneficiaries of a globalized economy, given the power their size, amount of capital, and market control provides.  The combined coercive power of the global trade and finance institutions and large multinational corporations over nations and individuals has eroded national sovereignty and alienated citizenry, because of their avowed loyalty is to profit rather than people.  In the United States, the government derives “their just powers from the consent of the governed” (United States, 1776), contrary to what DG Lamy and multi-national corporate shareholders may believe.

References

 Achbar, M., & Abbott, J. (Writers). (2003). The Corporation [Film]. In Big Picture Media Corporation (Producer). Canada.

Anderson, S. (2005). U.S. Immigration Policy on the Table at the WTO. Global Politician, 1. Retrieved from Global Politician website: http://www.globalpolitician.com/21446-immigration

Friedberg, J., & Rowley, R. (Writers). (2000). This Is What Democracy Looks Like [Video]. In Big Noise Films & Independent Media Center (Producer).

Hodson, R., & Sullivan, T. A. (2008). The social organization of work (4th ed.). Belmont, CA: Wadsworth.

Lamy, P. (2011, 19 February 2011). [Pragmatic solutions need to be found now to enhance global governance].

Soubbotina, T. P. (2004). Beyond economic growth : an introduction to sustainable development (2nd ed.). Washington, D.C.: World Bank.

United States. (1776). In Congress, July 4, 1776, a declaration by the representatives of the United States of America, in General Congress assembled. Philadelphia: Printed by John Dunlap.

World Trade Organization. (2011a). The case for open trade  Retrieved June 24, 2011, from http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact3_e.htm

World Trade Organization. (2011b). What is the WTO?  Retrieved June 24, 2011, from http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm