Whether Corporations Have More Power than Nation States - Coursework Example

Whether Corporations Have More Power than Nation s Introduction The United Nations s that over 33% of all output in the world emanates from transnational corporations, which explains the prevalence of global capitalism. Many countries are now witnessing a surge in foreign ownership of capital, and this has considerable implications on their economy, politics and social landscape. A global capitalist class is now arising that dictates the nature of economic practices which occur in those countries; the class consists of transnational corporations working with local elements like senior politicians, state functionaries and members of the academic arena. Its influence is so pervasive that it has undermined national identities; evidence now illustrates that these international bodies are more powerful than nation states. How corporations have more power than nation states In an attempt to answer the above question, a number of scholars have looked at the effects of globalization on developed and developing nations. Obeng-Odoom (2012a) did this for a Ghanaian city known as Sekondi-Takoradi; it is a relatively new urban centre that has experienced rapid changes owing to the discovery of oil in 2007. This resource has altered the economic, social and political landscape in the city by creating an international environment of transnational corporations. Transactions have been dollarized and new courses have been introduced in national universities to study these phenomenal transformations; additionally, the political scene has not been left out of the wave. Currently, the government has instated several oil laws designed to ensure the continual success of the oil industry and a series of authorities or committees usually meet to discuss oil-related matters. Buildings and other infrastructure have also been created in order to accommodate the new breed of international residents that can be found in Sekondi-Takoradi. The above facts illustrate just how influential international best practices corporations are in developing nations, especially those that have attractive mineral resources like oil. From the time oil was discovered in the city, 41 global corporations have mushroomed in the areas with many of them coming from Russia, the UK, US, china, Australia and Norway; some of them include Tallow Oil, KOSMOS Energy as well as EO group. Some of the international oil giants have entered into seemingly unfavourable contracts for Ghana, such as the deal between Norwegian-based Aker ASA and the government. The organisation found a way of going around Ghana’s laws by taking advantage of a loophole in the Petroleum Agreement Act, so they now have an upper hand in the arrangement. Every time new international firms win favourable contracts with the government, they tend to bring with them a large number of expatriates into the country, who then determines how the social and economic landscape will be (Obeng-Odoom, 2012b). In the future, it is estimated that there will continue to be more migrants in Sekondi-Takoradi thus shaping how decisions are made politically and economically. Ghana’s political arena is now strongly shaped by oil revenue; usually, oil rents determine how political parties enact their ideologies. An intensification of nepotism and favouritism for oil jobs in Sekondi-Takoradi and other oil cities has determined who gets elected into office and who is removed (Obeng-Odoom, 2012a). Additionally, it has also been shown that transnational organisations have a huge role to play in the economic-political landscape of the country. For instance, a Korean corporation entered into an agreement to build 200, 000 housing units; this illustrates that the real influence and power in this country lies in the hands of large corporations. They have triumphed over the nation-state in determining the fate or direction that developing countries take as they control resources and capital inflow. The above phenomena have also been witnessed in other African nations like Angola, Guinea, Tanzania, Zimbabwe as well as Sudan. Nwoke (2008) states that Chinese companies are using Africa’s need for aid in order to gain advantage in those countries and thus take advantage of business opportunities. The corporations have entered into lucrative deals with Angola for oil production in the country, and in return, Angola will get loans or aid needed to build schools and roads. Chinese companies have now secured for themselves control over Angola’s development path by buying their way into contracts and deals for the future. The above author states that this strategy is nothing new as American, European and Japanese companies that preceded China, has followed it. Owing to the exploitative nature of arrangements between foreign companies and governments in developing nations, it is clear that the latter continue to lose more clout while the former maintain control over them. An arms link has also been found between foreign corporations in resource-rich nations and governments in these poor/ developing nations. Countries like Sudan, Zimbabwe, Ethiopia, Guinea and Burundi get military weapons and equipment from Chinese firms; this has the effect of cementing ties between those foreign corporations and local ones. Even in countries like Sudan where various human rights records have been violated, Chinese organisations are still quite willing to send their merchandise in those areas. Multinational corporations that sell such controversial products do not care about the political implications of their actions as their primary interest is profit. Nigeria is also another casualty of this rise in corporate power as the nation sold itself to the highest foreign dealer; almost all upcoming development projects have been signed over to Chinese firms. Examples include a hydro power plant, a railway system as well as repair of a refinery in the country; this infrastructure is vital to the economy of Nigeria. Therefore, if control over it has been placed in the hands of other foreign corporations, then it may be stated that they have control and hence power in those nations (Nwoke, 2008). Concern about domination of the nation’s economy, culture, politics and social environment by corporations is not just exclusive to poorer nations. Places like Australia and New Zealand are filled with opponents against this corporate-domination agenda, and several of them link it to the neoliberal school of thought. Wheelwright (1997) explains that the proliferation of globalization has led to the spread of neoliberal ideology which has terminated national identity. Foreign ownership of Australia’s economy has elicited sharp criticism from locals as they have claimed that freeing up the economy implies surrendering control to the global economy and losing the government’s role to almost zero. In this country, companies like Broken Hill Proprietary Limited as well as Pacific Dunlop have been responsible for the spread of neoliberal schools of thought. Australia has become one of the most open economies in the globe, thus being a playing ground for manifestation of corporate power. It is a fact that back in the 1970s, Australia’s economic players were in agreement over the need to protect their local market; these corporations consisted of both foreign and local players. However, they soon realised that local markets had limits on their profitability, so they worked towards elimination of protection in the 1980s (Wheelwright, 1997). It is now becoming evident in Australia as well that the state no longer had real power in the global capitalist system; instead, it is the transnational capitalists. Asian nations such as Malaysia, China, India and the Philippines have also witnessed the full ramifications of increasing transnational powers. Since China and Malaysia have had considerable exposure to globalization through foreign direct investment, most of them have encountered increased competition in the local market. This implies that employment insecurity has heightened and so have cases of joblessness; as the transnational corporations continue to do well, the working class has not been okay and has even triggered political instability. However, the strong economic influence enjoyed by global corporations implies that they have the upper hand and continue to dominate state policies (Frenkell and Kuruvilla, 2002). Proof of increasing domination of corporations can also be seen through the prevalence of global networks of people who enjoy or share similar identities that are not within state confines. For instance, there are environmental movements as well as women’s movements that operate globally; however, their influence has been negligible (Sklair, 1999). Most of them have been unable to change the way transnational operations do their business; therefore these global resistance movements have left international firms intact and able to assert control. Theoretical framework In order to understand the above changes, it is essential to familiarise oneself with theoretical underpinnings lying behind the reduction of power within the nation state and its increase among transnational corporations. Marxist ideology is quite helpful in deciphering the relationship between the current class of transnational corporations and its subsequent effect on the nation state. Karl Marx defined capitalists as those who have control over means of production; the proletariat on the other hand only had their own labour that they could sell to the highest bidder. Members of the capitalist class usually employ a series of tools and strategies in order to cement their place in the production process. Wheelwright (1997) explains that this is exactly what is happening among the new breed of capitalists called transnational corporations. In order to safeguard their interests, most of them are spending large amounts of money in public relations with the aim of convincing the public that the free market is the best economic model. Control over mass media is the means with which the international bourgeoisie has been able to achieve this outcome as a number of transnational corporations have considerable influence over the mass media. Transnational corporations have also exerted considerable control over political institutions in foreign nations as their resource ownership often dictates how policies are shaped (Robinson and Harris, 2000). Several countries are required to create a conducive environment for these international firms; evidence of this can be seen from Nigeria and Ghana as was discussed earlier. Domestic industry in those countries has been substantially reduced as locals have been convinced that their business practices are not good enough. Instead, the transnational firms claim that they epitomise best practices, so they ought to have the right of way in the target nations where they choose to invest. Another area that transnational corporations have used to exert their influence and ensure control over global production is in the academic world. Many of these organisations fund universities and think tanks that perpetuate the neoliberal agenda, so that free trade can have scholarly backing. Ideas are no longer means of improving livelihoods but have been transformed by transnational organisations into commodities that can be bought and sold at will (Wheelwright, 1997). In an attempt to perpetuate dominance over global resources, transnational bodies have made nation states appear like nothing more than exploitable resources. They predate upon these nations in order to fulfil their primary agenda; profit making, yet this undermines power structures that had been there traditionally. When corporations supplant nation states in the power paradigm, then it become quite difficult for other entities to maintain their rights because transnationals’ way of doing business is authoritarian (Wheelwright, 1997). Other authors note that the state has always had the power to maintain how production takes place through laws or parliament (Beiler and Morton, 2003). However, the proliferation of globalization implies that these laws can be used to the advantage of more powerful forces like transnational corporations. Milton Freidman’s theory is quite helpful in explaining how the neoliberal agenda has dominated economic and political practice in these countries. Friedman, who is a Nobel award-winning economist, often stated that much of his life’s work was to show the world the dangers of having an intrusive market as well as the benefits of a free and competitive market. Transnational corporations have been able to capture these state policy agenda owing to their employment of a series of strategies that have undercut the working class’ influence. Many of these firms have called for the privatisation of public assets; this has also been done in tandem with the reduction of real wages (Murray, 2006). Social services in countries like Australia and New Zealand have been dramatically reduced while taxation against these firms has also been minimised. Aside from controlling the mass media, academic institutions and political bodies to spread ideology that supports transnational corporations, these entities have also used operational strategies in order to outsmart nation states. Many of them disperse production processes in various parts of the globe; therefore, no singular workforce or geographic area that they depend on. The strike weapon no longer holds as much influence as it used to when production was concentrated in one state; even though stoppages take place, they lack the ability to stop work. When nation states intervene to help the working class by instating certain laws, global firms simply have the power to relocate or concentrate on other more-profitable areas; in this regard, they hold the ultimate power (Sklair, 1999). Conclusion The global class transforms the association between labour and capital and has minimised the role played by local industries by cementing the belief that local practices are inferior. Ideologies have altered such that foreign ideas like consumerism have now been branded as preferable over indigenous communality. Free market thought has been sold as the best alternative for market growth and perpetuated even in education institutions; now countries that toe the line are regarded as successful. National identities have now been undermined and class relations have been altered as working class citizens have been reduced while exports keep rising. Transnational capital has thus diminished the power of the nation state despite seeming like a directionless or non ill-willed entity. References Bieler, A. and Morton, A., 2003. Globalisation, the state and class struggle: A critical economy engagement with open Marxism. British Journal of Politics and International Relations, 5(4), pp. 467-499. Frenkel, S. and Kuruvilla, S., 2002. Logics of action, globalization, and employment relations change in China, India, Malaysia and the Philippines. Industrial and Labour Relations Review, 55, pp. 387-412. Murray, G., 2006. Capitalist networks and social power in Australia and New Zealand. Melbourne: Polity Press. Nwoke, C., 2008. China and Africa: The dynamics and prospects of a new model of South-South cooperation. EADI, pp. 1-29. Obeng-Odoom, F., 2012a. Political economic origins of Sekondi-Takoradi, West Africa’s new oil city. Urbani Izziv, 23(2), pp. 121-131. Obeng-Odoom, F., 2012b. Problematising the resource curse thesis. Development and Society, 41(1), pp. 1-29. Robinson, W. and Harris, J., 2000. Towards a global ruling class? Globalization and the transnational capitalist class. Science and Society, 64(1), pp. 11-5411. Sklair, L., 1999. Competing conceptions of globalization. Journal of World Systems Research, 2, pp. 143-163. Wheelwright, E., 1997. Australia as client-state: Globalization=free trade=end of national identity. The Social Contract, pp. 92-97. Read More