Contemporary Capitalism - Law Suits against MNCs - Essay Example

Contemporary Capitalism: Law suits against MNCs Contemporary capitalism has often been used by neo Marxists to describe capitalism from 1945. The term contemporary capitalism was popularised by Ernest Mandel and has always been associated with Marxist economists. Marxists associate contemporary capitalism with general global industrialization. Contemporary capitalism entails periodization of capitalism and the evolution of capitalism. Contemporary capitalism has been attributed to the alteration of the fundamental economic dynamics. The society has been forced to conform to the current organizational and competitive imperatives (Lazonick, 201). Marxist economists have always used contemporary capitalism to elaborate new developments in capitalist methods of production. Capitalism involves the accumulation of money which is then constantly reinvested to increase production which in turn leads to the increase of the initial investment. The continuous search for money can be referred to as the laws of motion of capitalism. It implies the continued transformation of goods, social relations and class struggle also known as social forms. The laws of motion of capitalism state that the capitalist always has a compulsion to accumulate more, has a tendency towards continued technological revolutions, has an insatiable thirst for surplus value extraction, gravitates towards growing concentration and centralization of capital, has the tendency for the organic composition of capital to increase, has a tendency of the rate of profit to decline, inevitability of class struggle under capitalism, has led to the growth of social polarization, has a tendency of growing objective socialization of labour and the inevitability of economic crises under capitalism. Contemporary capitalism is characterised by the need to accumulate more. People in business invest with the expectation of getting more than what they invested. The quest for profits is the motivating factor in investments. If an investor thinks they are going to lose money, they do not invest. Capitalism also forces investors to be ahead of their competition. One can only beat competition if they have accumulated enough capital to take care of their operations. Contemporary capitalists, therefore, not only work for profits; they also work for the accumulation of more capital. In the quest to accumulate more money and beat competition, capitalist are forced to turn to cost reduction which lead to the use of more advanced modes of production (Mandel, 144). With the underlying factor being the accumulation and increase of capital, the capitalist strives for an increase in the production of surplus value. An increase in the production surplus value can be done through an increase in the daily working hours. If a worker produces the equivalent of his wages in 2 hour, then an increase in the number of hours from 6 to 8 will lead to an increase of the surplus value from 4 to 6 hours. The need to increase surplus value has led to the substitution of human labour with machinery. When capital grows, firms have more operating capital. In the process of working to accumulate money, some companies grow while other make losses and close shop or are bought by the companies that succeed. An example is the failure of a small business whose owners have to revert back to employment by larger firms making capitalism an expropriating force that suppresses private property of means of production for many people and putting it in the hands of a few people (Mandel, 124). Money or capital is normally portrayed in the form of fixed capital or variable capital. Investors always want to increase their fixed capital at a faster rate than variable capital. Employees working in contemporary capitalism are always concerned with the surplus value. When the surplus value increases, their pay also increases. But according to Marx, since capital cannot be subjected to automation, profit it will have a tendency to decrease. Businesses are always affected by external forces which sometimes make firms lose money. Surplus value is easily achieved in the short to medium term. But multinational corporations can leverage their losses by in the income they get from their overseas branches especially those located in developing countries leading to an average rise in profits. Marx postulated that capitalism would lead to class struggle. He also stated that workers will push for better pay and less working hours, organize themselves into unions that fight for their rights. His projections have come to life. Workers all over the globe are pushing for better pay and are joining trade unions to have a better bargaining power. Marx also predicted social polarization and true to his word; more people are employed by big multinational firms as compared to those who seek self employment. Contemporary capitalism has been characterised by constant accumulation, increase in value and exploitation of many people by a few individuals (Marx, 233). The poor struggle to afford the bare minimum while the rich hold on to what they have and try to accumulate more. In contemporary capitalism, everyone is trying to accumulate more money even if it means trumpling on others. The exploitation by multinational firms has led to disasters and lawsuits. Multinational Corporations are companies that operate in foreign countries. The definition of multinational corporations is broad, but the underlying factor is that these companies operate in foreign countries. Multinational corporations play a significant role in the global economy. They engage in foreign direct investments and are seen as bearers of technology, capital, managerial expertise, and marketing skills by the host countries. Host countries gain from the activities of the multinational corporations in terms of improved skills, employment and revenue for the government. Multinational corporations are essentially businesses and economic organizations that grow beyond the borders of their countries of origin. Most multinationals are headquartered in the parent country with branches across the world (Caves, 130). The benefits that multinationals bring to the host country are immense. However, they are not meant for the host country’s poor population. Most of the host country citizens get low cadre jobs while the executive positions are reserved for foreign executives who get well paid as compared to the low cadre workers. Towards the end of the 20th century, companies were in a rush to increase their global presences and expand internationally. However, this movement has led to the depletion of the limited global resources, deforestation pollution and destruction of the delicate nature. Multinational corporations might as well have contributed to global warming. Apart from resource depletions, multinational corporations have been driven by self interest and the quest for more profits which have led to the violation of human rights in some host countries. Multinational corporations became popular at a time when developing and third world countries were opening their economies for foreign investments. These countries did not have stringent rules that governed misconduct or negligence by multinational companies. They were just contented with having foreign investors in their countries. The laxity or lack of rules to govern multinational corporations led to atrocities in which lives were lost and others changed for the worse forever. Human rights violations by multinational companies have led to lawsuits that have plagued multinationals for over two decades . When disaster strikes, the multinational companies take their executives out of the host countries and evade arrest leaving the communities in which they operate to bear the brunt of their actions. To this end there have been lawsuits against multinational companies. Most of the cases end with huge sums of money given as compensation to victims while, in other cases, the damage caused cannot be reversed and affect those communities for a long time. A case in point is the Bhopal disaster which took place in India in 1984. The disaster occurs at the Union Carbide India Limited’s pesticide plant in Bhopal. To date, the Bhopal disaster is considered the worlds’ worst industrial disaster. There was a gas explosion at the pesticide plant the led to the death of over 4,000 people instantly. Another 300,000 were injured. Among the injured were those who were blinded while others were incapacitated. Almost thirty years on, the people of Bhopal have not been able to get justice (Heven and Spencer, 35) The court case against the company took long, and the compensation of $470 m that was awarded was no enough as compared to the damage that had been caused. Besides the compensation was paid in two phases one in 1989 when it was awarded and another in 2004. By the time of the second compensation payment, most of the victims had died. Some of the victims could not go back and perform their daily activities because of the effect that the gas had on them (Sinha, 245). On the other hand, those who were responsible were not arrested only a handful of Indian managers were found guilty and ordered to pay fines of $ 2,000 each. They were also given jail terms of two years each. The court stated that that was the maximum allowed under the law. The incident showed how in the face of disaster multinational corporations behave. The chief executive officer of the company was arrested and then released at the request of his country. He was sneaked out of India and has never been tried for the Bhopal disaster. The court claimed that the laws of India do not apply to the executives from America. The impact of the Bhopal disaster is still being felt by the people of Bhopal. Multinational corporations only seek self interest and tend to operate in countries where they can maximize profits and get cheap labor. The disaster revealed the need for stringent laws against multinationals that violate human rights and the need for general laws that govern the operations of multinational corporations (Gupta, 440). This is an example of how contemporary capitalism can lead to destruction. The company and its executives were busy focusing on production and increase in surplus and in the process became negligent. The effects of the disaster are still being felt by the people of Bhopal while the CEO, who was responsible at the time of the disaster was not even charged because the laws of India are not applicable to him. The people of Bhopal are still looking for justice 29 years after the disaster. Ironically the company still wants to operate in India. In contemporary capitalism, the few who own the means of production exploit those who don’t. Multinational companies want to leverage their operation in the developed world where profits are low with their operations in the developing countries. Law suits against multinational companies have been on the rise. Some of these disputes have been settled out of court while, in other instances, the multinational companies have been forced to compensate the victims. Works cited Caves, Richard. Multinational Enterprise and Economic Analysis. 1996. Cambridge: Cambridge University Press. Gupta, Kiran. Liberalisation and Globalisation of the Indian Economy, Volume 1. (2) 1997, Atlantic Publisher and Distributor. Havens, Walker and Spicer ,Thomas "Bhopal atmospheric dispersion revisited". Journal of Hazardous Materials. 233–234: 33–40. Lazonick, William. “Contemporary Capitalism”, in The New Palgrave Dictionary of Economics, 2008. London: Palgrave Macmillan. Mandel, Ernest. Marxist Economic Theory. 1968. London: Merlin. Mandel, Ernest. Late Capitalism. 1975. London: Verso. Marx, Karl. Capital, Volume 1, 1976. London: Penguin. Sinha, Jai, Multinationals In India: Managing The Interface Of Cultures, 2004, SAGE Publications Read More