Threat to the Global Economies - Case Study Example

Are Corporations too Powerful and Presenting as a Threat to the Global Economies, Civil Societies and the Environment Name Institution Course Date Abstract Corporations have become so powerful in the modern day globalized world. This report investigated the extent to which corporations have become too powerful and the threats they present to the global economies, civil societies and the environment. The analysis that involved the use of power theories, such as pluralism, power-elite model, Marx power theory and neoliberalism theory which found that big multinational corporate wield a lot of power to the extent that they influence the global economies, civil societies and impact greatly on the environment. The multinational corporations derive their power mainly from the connections they have with governments and powerful political elites that they bankroll to support their aspirations and to protect them from the media and public scrutiny and criticism. Such powers of corporations have been demonstrated by the Royal Dutch Shell that uses its powers to destroy the global economy through tax evasion, curtail civil space by interfering with the civil society, as well as destroy the environment through its environmental devastation in Nigeria. Introduction Historically, corporations have been known to be responsible for the provision of goods and services. However, in recent time, corporations have become so powerful to the extent that they influence almost every aspect of human life. However, there has been a growing concern in the recent years that big and powerful companies are increasingly abusing their powers (Campbell 2015). In particular, big and powerful corporations have become a threat to the global economies, civil societies and the environment. The threat emanates from the fact that these corporations are well-connected to the powerful politicians whom they use as shields whenever they are accused of abusing their powers to destroy the global economies, civil societies and the environment (Anderson & Cavanagh 2000, p. 12). The threat posed by powerful companies to the global economies has been demonstrated through increased rate of tax evasion by these companies, as well as global financial crisis that were triggered by powerful firms (Roach 2007, p. 3). The civil society have also become under increased attacks by powerful corporations in a bid to silence the civil society to stop exposing their wrongdoings. Additionally, environmental pollution has reached a crisis point because of emissions from big corporations. This report will analyze the degree to which corporations have become too powerful and the threats they present to the global economies, civil societies and the environment using Royal Dutch Shell as a case study. The analysis will be supported by power theory and neoliberalism theories. Global Economies, Civil Societies and the Environment In a nutshell, the term global economy refers to the world economy made up of different individual states, which each individual economy having a relationship with the other in some way. The term global economy is related to the concept of globalization that refers to the integration of the world economies, finance and trade aided by technological advancements (Sciulli 2001, p. 6). The globalization that has occurred in the recent years has transformed the world into a global community. Accordingly, this implies that each individual economy of a country depends on the other countries, such that if one is affected in some way, the rest of the world economies can be affected too in the same direction. The United States is the largest economy in the world followed by China, Japan, Germany, United Kingdom, France, India and Italy respectively. Just as the global economies are important for the wellbeing of the people, so are civil societies. A civil society refers to organizations or social relations that operate outside the state control (Sciulli 2001, p. 66). The role of civil societies is mainly to advocate for social, economic, and political change as well as environment conservation. Worldwide, the civil societies have played an important role in pushing for social, political, economic and environmental change. Additionally, civil societies have contributed immensely in fighting for human rights protection. The environment, however, refers to the natural ecosystem. It comprises of air that people breathe, plants, animals and water resources. Because man, animals and plants depend on its, its destruction can have adverse implications on the world. Theoretical Framework Power Theory Max Webber defines power as the ability of an individual or corporation to achieve goals without the support of those goals by the society (Tiwana 2013, p. 53). Pluralism is one of the most common power theories that appear in most literatures. Pluralism is a theory that explains power through the lens of how power is distributed. The theory maintains that there is no dominant class or institutional elites with predominant power. Instead, power is distributed among diverse social groups, which may include unions, business lobbyists, like-minded people and professional associations (Domhoff 2005). This therefore implies that different groups have powers over issues affecting them and that the public/state should act as a bystander. The other power theory is power-elite model, which is based on the idea that power is concentrated. According to this theory, power is concentrated on the hands of the wealthy few. The wealthy in this case refers to the government, businesses and the military (Domhoff 1990, p. 11). Because power under this model is held by a few in the society, the average person cannot manage to have his/her opinion heard under the power-elite model. The theory also suggests that individuals or institutions with elite power are the ones that determine how the economy works, including issues such as profits, those allowed to own property and wealth distribution in the society (Domhoff 1990, p. 14). Additionally, power-elites believe that the only principle role of the government is to ensure the creation of a favorable environment for businesses. The other popular power theory is that developed by Karl Marx. Marx argued that the amount of power is limited in the society and that power can only be held by a single individual or group of people at a time. Marx went ahead to state that groups form the working and ruling class (Domhoff 2005). As such, in a capitalist society, the ruling class wields all the powers which they use to exploit the working class. Neoliberalism Theories Neoliberalism is a theory that promotes free market competition. Accordingly, neoliberalism is a theory that advocates economic and individual freedom against excessive power of the state (Tiwana 2013). Additionally, neoliberals stress power in terms of the absolute gains rather than relative gains. Neoliberals separate power into hard and soft power. Hard power involves the use of force or coercion contrary to have others act in ways that is contrary to how they would want to act. Soft power, on the other hand, involves the use of persuasive means to get others develop an interest on the outcome that one have (Tiwana 2013). Nonetheless, neoliberals believe more on soft power than hard power. Case: Royal Dutch Shell Royal Dutch Shell Plc, popularly known as Shell is one of the world’s largest oil and gas company. The company was started in 1907 and has since grown to become a global brand operating in more than 90 countries across the globe (Center for Constitutional Rights 2010). Shell’s headquarters are based at the Hague, Netherlands and operates a number of subsidiaries that include Shell Australia, Shell South Africa, Shell Nigeria, Shell Canada, Shell Chemicals, Shell Hong Kong, Shell Pakistan, and Shell Gas & Power among others. Shell is of the multinational companies that have a huge influence not just on the global economies, but also has a huge impact on the civil space and the environment (Ingersoll 2012). Its influence on the global issues has been demonstrated in Nigeria, where the Dutch firm has a huge influence on the politics of this West African country. In the same country, Shell has also been working with the government of Nigeria to curtail the civil space of the people by doing everything to silence the civil societies whenever they try to rise against the company (Center for Constitutional Rights 2010). Additionally, Shell has also caused massive destruction to the environment through perennial oil spills. Statement of Evidence Threat of Corporations to the Global Economies Corporations have become very powerful today than in the past. Today, big multinational corporations wield a lot of power that they use to influence global economies. Unfortunately, Roach (2007, p. 5) observed that most of these powerful companies are using their influence to destroy the global economies. The influence of corporations on the global economies is supported by the power-elite theory that is concerned with how power is concentrated. According to this theory, individuals or institutions with elite power are the ones that determine how the economy works, including issues such as profits, those allowed to own property and wealth distribution in the society (Anderson & Cavanagh 2000, p. 42). Shell is an example of a modern large multinational company that has become so powerful to the extent that it is able to determine how economy works and wealth distribution. In the recent years, Shell has had a huge influence on the global economies through its influence on the world politics. The company is working closely with powerful politicians that it uses to allow it to operate as it so wishes and this poses a serious threat to the global economies. Since entering the Nigerian’s oil and gas market in 1958, the Dutch oil giant has been working closely with the government of Nigeria in a bid to protect its interests. Reports indicate that Shell has been bankrolling the political campaign of many Nigerian politicians in a bid to have them protect the company’s interest should they ascend to political positions. For instance, A statement leaked by the Guardian Newspaper indicate that Shell pledged to donate about $1 billion to the Nigerian government for boosting what it calls “Global Security” (Ingersoll 2012). However, 40% of this budget will be spent by Shell in protecting its interests as reports indicate that the oil exploration giant plans to build its military in Nigeria to protect its interests. Reports also indicate that Shell has already provided the Nigeria government security forces, Joint Task Force (JTF) military equipments that include helicopters, gunboats and armed vehicles. However, these tactics used by Shell in Nigeria are a threat to the global economies since it allows Shell to have protection even in instances, where its activities are not good for the economies of countries where it operates, such as Nigeria. Because of its close working relationship with the Nigerian government, Shell has become so powerful to the extent that it does whatever it so wishes with impunity knowing that it has the government and politicians that it has financed to parliament to protect its interests. For instance, Shell has been able to have its way even in situations where it causes massive oil spills that that destroys the sources of livelihoods of the people because of the protection it gets from the government and politicians. For instance, it is well documented that Shell has severely destroyed the Delta that is a source of livelihood for the people of Nigeria residing at the Niger Delta. A study conducted at the Delta found that the area is inhabited by more than 27 million people the majority of whom depend on the wetlands for farming and fishing activities (Center for Constitutional Rights 2010). Unfortunately, the operations of Shell at the Delta has severely impoverished the Ogoni People living in the area and the surrounding areas that have been subjected to extreme poverty by Shell’s activities in the area. The most worrying thing is that the government has not been able to stop Shell from destroying the economies of the Ogoni people because the company is connected to the powerful political elites (Ingersoll 2012). This is in tandem with the power-elite theory that indicates that power is concentrated in the hands of the wealthy few such as BP, meaning the other members of the society cannot have their way because the power-elite dictates everything. Shell’s threat to the global economies has also been demonstrated through tax breaks. The world economies depend heavily on the taxes they collect from companies. Unfortunately, multinational companies like Shell have been taking advantage of their powers and connection to governments and politicians to take exorbitant tax breaks that only harm world economies. Currently, Shell has been under a scathing attack by the public for being part of foreign multinational companies that have accepted more than $3.3 billion tax breaks from the Nigerian government (Leftly 2016). The tax break that is expected to run for 10 years is beyond the standard five-year tax break period offered by the Nigerian government. The $3.3 billion that Shell and other oil companies have not paid was enough to finance Nigeria’s healthcare budget (ActionAid 2016). Accordingly, this indicates how Shell and other big companies have become a threat to the global economies considering that they use such influence to get similar tax breaks in other countries, where they operate as well. The failure by the Nigerian government to control such activities indicates how powerful Shell is, which is in circle with the power-elite theory, as this shows that Shell falls within the power-elite that gives it the authority to dictate how the economy operates. Threat of Corporations to the Environment The environment has been under increased threat of degradation by companies. Presently, the entire world is already experiencing adverse effects of environmental pollution. Scientific reports indicate that the world’s average temperatures have increased significantly over the century due to the global warming effect caused by excessive emissions of greenhouse gases. The effects of global warming is experienced in different forms and dimensions that include increased droughts, flooding, rising sea levels and typhoons among others and this is a threat to man, plants and all living things (Ingersoll 2012). However, evidence on ground indicates that big corporations are mainly to blame for the pollution that the world witnesses today that destroys the environment. Shell is among the companies whose activities have been a threat to the environment. The activities of Shell in the Niger Delta has resulted in two devastating oil spills in 2006, 2008 and 2009 that has had devastating effects on the environment and on the Ogoni people that live along the Niger Delta (Center for Constitutional Rights 2010). The oil spills that have become characteristic of Shell in Nigeria has impacted adversely on the ecosystem by destroying the Delta wetlands, fish and marine life. Despite the massive oil spills at the Delta, neither Shell not the Nigerian government has been bothered to conduct a thorough cleanup exercise (Ingersoll 2012). Shell, in particular has not been bothered to clean the Delta since it has the strong backing of the Nigerian government that protect it from dissenting voices. Besides oil spill, Shell has been burning gas through gas failing and this results in huge emission of gas into the atmosphere. The gas flared is highly toxic as it is contaminated with toxic compounds that results in the emission of huge quantities of toxic fumes into the atmosphere, which affects the health of the residents in areas where flaring is performed. In Nigeria, it is illegal to flare gases. Unfortunately, despite the call from the members of the public and the civil societies that Shell stops gas flaring at the Niger Delta, Shell has continued to flare under the watch of the Nigerian government that has refused to take action on the company for its illegal activities that are impacting negatively on the environment. This indicates that Shell and other oil and gas giants are living above the law in Nigeria, which poses serious danger to the planet. Vidal (2010) states, in Nigeria, they have been living above the law. They are now clearly a danger to the planet. The dangers of this happening again and again are high. They must be taken to the international court of justice" (par. 29). The fact that Shell lives above the law in Nigeria are an indication that the company falls among the power-elite, which makes it does as it so wishes. The Threat of Corporations to Civil Societies Civil societies play an important role in the society as they push to social, economic and political change. They also advocate respect for human rights and environmental protection. However, the civil societies have increasingly come under threat of powerful and politically connected corporations that use every means possible to silence dissenting voices. Sciulli (2001, p. 17) report indicates that in many parts of the world, the civil societies are increasingly being attacked by politically-connected big firms whenever they try to raise an issue about bad activities that the corporations are involved. In Indonesia, for example, big agricultural corporations that are connected to powerful political elites are reportedly chocking the people with smoke but whenever the civil societies protest against these companies, the companies reportedly use politicians to gag and silence the civil societies. Shell is another big and powerful company that is a culprit as the company has been using its influence and political connection to curtail civil space in Nigeria. Report by the Center for Constitutional Rights (2010) indicates that Shell with the assistance of the Nigerian military forces have been terrorizing the various civil societies in Nigeria, whenever the civil society groups attempt to raise an issue or question how the company operates. Since Shell set foot in this West African country in 1958, Shell has been polluting Delta region, which has not only impacted negatively on the environment, but also the health and economies of the residents of the Delta region (Ingersoll 2012). However, any attempt the civil society to protest against Shell has always been thwarted by Nigerian soldiers at the request of Shell and Shells, assistance and financing use excessive force against the civil societies as was experienced at the Niger Delta after the military conducted brutal raid against the people of Ogoni with the aim of repressing the growing protest against Shell in the region. The Center for Constitutional Rights (2010) report indicates that nine Ogoni leaders were executed by the Nigerian government on November 10, 1995 after being falsely accused of murder and attempting to create a military tribunal. All the nine happened to have been environmental and human rights activists that were against the oppression and the illegal activities of Shell. Evidences gathered pointed that the execution of the environmental and rights activists was planned through the collusion of Shell and the Nigerian military so as to protect the interests of Shell (Center for Constitutional Rights 2010). The fact that Shell is able to collude with the military that is supposed to provide security to everyone indicates the extent to which corporations have become too powerful to the extent that they pose a serious threat to the civil societies. In this case, it is clear that Shell and the military are using hard power, which is against the neoliberals view of how power should be used considering that neoliberals support the use of ‘soft power’ for exerting influence on others rather that coercion and intimidation. Limitations The report has indicated that corporations have indeed become too powerful and present a threat to global economies, civil societies and the environment. The main weakness pointed is that the Nigerian government and international community, such as the United Nations have failed to rain on big companies, such as Shell to ensure that they behave ethically and prevent them from misusing their powers to destroy the global economies, curtail civil space and destroy the environment. This is because Shell has been destroying the Nigerian economy, curtailing civil space and impacting negatively on the environment under the watch of the Nigerian government and the international community that has the responsibility to ensure the protection of the rights of the people and the environment. Conclusion The report has illustrated how powerful corporations have become and are now posing a threat to the global economies, civil societies and the environment. The big companies particularly derive their powers from collusion with the powerful government officials and the political elites to enable them do as they so wish and get protection from states and politicians. It also emerged that the powers of corporations is supported by the power-elite theory and neoliberalism theory of power. However, allowing corporations to have such massive influence is dangerous for the socio-economic, political and environmental well-being of the society. References ActionAid 2016, ActionAid report: Nigeria lost $3.3 billion in tax revenue to oil companies – money that could have been used to tackle poverty, viewed 17 October 2016 https://www.actionaid.org.uk/latest-news/actionaid-report-nigeria-lost-33-billion-in-tax-revenue-to-oil-companies-money-that Anderson, S., & Cavanagh, J 2000, Top 200: The rise of corporate global power. Institute for Policy Studies, Washington, D.C. 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