Along Came the Transnationals, by Daniel Brandt, Name Base Newsline, July-Sept 1996

“Those who escape thought-reform at the end of history may trace our decline back to 1886, when the U.S. Supreme Court declared that corporations are legal persons whose life, liberty and property are protected by the Fourteenth Amendment. Ratified to protect freed slaves, it took railroad-company lawyers less than two decades to turn this amendment into a loophole. By 1904, corporations controlled four-fifths of the nation’s industrial production. Today transnationals control the world’s cultural and economic production as well, and generate most of its pollution.

A mere three decades ago, investment abroad meant that a U.S. corporation anticipated a foreign market for goods produced domestically. Today it means factories in many countries, through complex global sourcing, production, and sales networks. The labor movement, which created the middle class by stunting corporate growth during the first half of this century, can no longer keep up with these changes. Neither can governments — since the first trade deficit in 1971, the U.S. has shifted from the world’s largest creditor nation to the world’s largest debtor. By 1991, foreign-owned firms controlled half of the U.S. consumer-electronics industry, a third of the chemical industry, a fifth of the auto industry, and half of the film and recording industry.

The political clout of corporations has kept pace with their economic growth, so there’s no longer any need for absurd Supreme Court decisions. Now a lawyer can shop for a congenial off-shore bank, deposit a briefcase of mumbo-jumbo in a room with an empty desk, and claim corporate sovereignty anywhere in the free-trade world. Not satisfied with the collapse of socialism, nor with the worldwide integration made possible by advances in communications, transnationals are setting up international courts such as the World Trade Organization, packed with their own puppet judges.

Never before have corporations enjoyed such power. Many of the few hundred transnational giants are bigger than most nations. The economy of Ford is larger than Saudi Arabia’s and Norway’s, and the annual sales of Philip Morris exceed the gross domestic product of New Zealand.[1] Corporate hierarchies are rigidly totalitarian; as the transnationals control more of the world, this inescapably means a loss of rights and resources for many of its citizens.

U.S. law was the first casualty of this corporate onslaught. Originally, corporate charters were designed to serve the public interest. These were state charters — there is no mention of corporate rights in the U.S. Constitution, and very few rights came from legislation. As late as the 1870s, states were still removing charters, which were seen as legal fictions, when they no longer served the public. Charters were granted for fixed terms, and owners, managers and directors were responsible for corporate debts and any harm caused by the corporation, sometimes at double or triple the damage.

Then came the trusts. New Jersey was the first state to grant corporations any right they wanted. As money flowed into New Jersey, other states did the same thing.[2] Lawyers hired by the trusts created a body of case law through the courts, which continues to grow stronger. In Buckley v. Valeo (1976), the Supreme Court decreed that corporations are legal persons with First Amendment rights of free speech, and corporate cash is a form of speech. Two years later, in First National Bank v. Bellotti, Justice Lewis Powell’s opinion was that corporate spending to influence votes during a referendum campaign “is the type of speech indispensable to decision-making in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.”

Three justices, Byron White, William Brennan and Thurgood Marshall, dissented in the Bellotti case. They argued that corporations are “artificial entities” whose “special status” has “placed them in a position to control vast amounts of economic power…. The State need not permit its own creation to consume it.” Two other decisions in 1986 expanded the rights of corporations in elections. In a dissent to one of these, Brennan added that “resources in the treasury of a business corporation … are not an indication of popular support for the corporation’s political ideas.”[3]

Democracies don’t stand a chance against these giant treasuries. Corporations can control the way the world thinks simply through the power of saturation. In 1989 they spent over $240 billion on advertising and another $380 billion on packaging, design, and other promotions. This amounts to a total of $120 per person around the world, or double what the average citizen of Mozambique earns in a year.[4] And it seems that one result of saturation advertising in the Third World is a decline in the perception of class differences. By focusing on the product rather than the lifestyles of the rich, a semblance of equality is projected: everyone has access to the same thrills in a can of Coca-Cola.[5]

Farmers in India had better hope that Coca-Cola will suffice, because transnational corporations want them to stop what they’ve been doing for generations — namely, swapping seeds for the mutual benefit of the community. Under the intellectual property-rights provisions in GATT, which are now enforced by the World Trade Organization, farmers are expected to pay royalties to patent-holding companies such as Cargill, the world’s largest grain company.[6] And in Canada, one effect of the free trade agreements is to give U.S. pharmaceutical corporations the clout to stop generic drugs, which are available there at a fraction of the cost.[7]

Transnational economic agreements, beginning with the International Monetary Fund and World Bank fifty-two years ago, have escalated in the last decade with NAFTA, GATT, and now the WTO. In response to the 1982 debt crisis in the South, the IMF and World Bank imposed “structural adjustment programs” on poor countries as a condition for new loans. While the loans themselves are guaranteed by the U.S. taxpayer, the “adjustments” benefit only the rich investors. The aim is to weaken domestic entrepreneurial groups in poor countries by eliminating protectionist barriers, price supports, and government services. Frequently the currency is devalued, communally held lands are privatized, and production is reoriented toward export rather than subsistence.

The official justification is that government bureaucracies are holding back development. What’s good for business is good for the whole community; free trade is the rising tide that lifts all boats. But in practice this means the deregulation of economic activity, the privatization of functions once public, and the commercialization of activities once social. In short, it means a net transfer of power from governments and the people to transnationals and private wealth.

Although governments are too often undemocratic, their mandate is to represent the public interest. Sometimes they stand or fall based on how well they fulfill this mandate. Corporations, on the other hand, are never democratic, and frequently claim that their only obligation is to the bottom line of their shareholders. Their transnational character makes them almost immune to organizing. If you manage to restrict their activities in one location, they can come back to haunt you.

The most tragic example of this occurred during the early 1970s, when transnationals were just beginning to feel invincible. A coalition of international banks and corporations, led by ITT, secretly worked together to put pressure on a new democratic government in Chile. Eventually Richard Nixon and the CIA joined the effort, resulting in a bloody coup and years of repression. Presumably it also resulted in happy shareholders.

Poor countries have always wanted foreign exchange for industrial machinery, but now they need foreign exchange just to feed their people. The model imposed by the World Bank requires poor farmers to plant high-margin export crops, in order to earn enough to buy imported food. This becomes risky at best, as international commodity prices can fluctuate unpredictably. In Mexico, government support of domestic agriculture has declined by 70 percent since the mid-1980s. Many Mexicans, whose buying power declined by 60 percent during that decade, cannot afford imported corn and beans.

The export model encourages migration from the land to the cities, and to the extent that city slums offer little hope, it also encourages migration across national borders. The logic promoting this is that small farmers are “inefficient” producers compared to export-driven agribusiness. About a quarter of all fruits and vegetables imported into the U.S. are now from big companies operating in Mexico, where labor and land are cheap, exchange rates are attractive, and environmental laws almost nonexistent.[8]

To feed themselves, many Mexicans end up working in the 2,000 factories along the border, where U.S. companies pay 89 cents an hour for industrial jobs that were once filled by union labor in U.S. factories. NAFTA was designed to encourage this trend and increase the profits of transnational corporations. During the negotiations between India and the IMF in 1991, one of the “conditionalities” of the IMF loan, which India resisted, was a cut in food subsidies. “It is clear that hunger, if not starvation, has become an instrument of economic adjustment,” writes Jeremy Seabrook, a critic of development trends.[9]”