Anglo-Saxon Market Economies - Essay Example

What social, legal and economic developments support the claim that contemporary ‘Anglo-Saxon’ corporations dominate other social and political institutions to further their own interests? In the recent years, there has been a lot of talk on the power that corporate giants possess. There is more public awareness regarding the responsibility that these corporations owe to the society. The contemporary times have brought to limelight some of the important social, economic and political issues and their effects arising out of the affairs of corporate governance. The elections in Germany in 2005 focused greatly on the role of corporations in the modern economy, and the change of governments marked the start of the embedding of Anglo-Saxon brand of corporate responsibility (Davis 2005). Corporate social responsibility (CSR) has become the hotbed of debates over the passage of time not only in the US but in many countries of the world as the public has become more aware of the impacts of giant corporations and their dominance of the markets. CSR relates to the notion of the responsibility that the corporations owe to other than their shareholders. Anglo-Saxon corporations have acquired large shares of the market over the period of time, particularly in European nations and in Asia. In these regions, the debates are ensuing between Anglo-Saxon shareholder capitalism and stakeholder capitalism. Proponents of Anglo-Saxon shareholder capitalism are of the perspective that the companies should only pursue the interests of their shareholders. On the other hand, stakeholder capitalism argues that corporations should also take into account the interests of the local community and their employees (The Economist 2002). The debates have also come to include globalization. It is argued that Anglo-Saxon corporations have used globalization to dominate other social and political institutions to further their own interests. Dr. Otto Graf Lambsdorff (2004), Chairman of the Board of the Friedrich-Naumann Foundation, observes that in this age of globalization the power of politics continues to diminish as the power of the corporations increase. This paper looks into the social, legal and economic developments that support how Anglo-Saxon corporations have dominated other institutions to promote their own vested interests. For most part of the previous century the Anglo-Saxons have been the major ethnic dominating group. In the modern era, they are the producers of more than one-third of the total economic output all over the world. The Anglo-Saxon countries include the five countries i.e. America, Britain, Canada, Australia and New Zealand. The countries have gained dominance not only economically but also on the political arena and other aspects of governance such as the army, culture of the country and the moral values. Statistics report that the countries are the producers of US$20 trillion output of a total economic output (GDP) of $58 trillion; the US alone makes an output worth $14 trillion (The Casual Truth 2010). This has contributed greatly in the countries gaining dominance in the financial market (such as through IMF and the World Bank), the oil industry, where six large corporations control a major proportion of the market. The Anglo-Saxons are not a major ethnic group in the world, yet these $14 trillion individuals remain as the some of the most rich and powerful consumers of the world (The Casual Truth 2010). The great extent of the power of these corporations has enabled them to become a politically dominant force. UK and the US are two of the five members of the UN Security Council. If countries want to pass a Bill on climate change, it is likely that there are little chances of the acceptance of the Bill if the US does not agree to it. The US army also dominates the defense industry. The US tops the list of countries who expend large budgets on their defense. English has become the de facto language the entire world speaks, whereas the countries also dominate sports such as golf, tennis and the Olympics. The countries have also developed a moral superiority and tell other countries how to rule their populations and businesses (The Casual Truth 2010). Therefore one can establish the extensive power and control that the Anglo-Saxon nations have. The political power of transnational businesses and corporations has increased over the years, and this element, coupled with the lack of government control over these giants in the industries, has led to many catastrophic occurrences (Fuchs 2007). There are outward crude signs of corporate takeover in countries such as the UK; however these signs point to much deeper problems (Monbiot 2001). Two main events, Deepwater Horizon oil spill in the Gulf of Mexico and the global financial crisis, have played an important role in delineating the importance of control over giant corporations and shedding greater light on the effects of their domination. Both these events have transcended to the level of being known as watershed events. This is attributable to the fact that the social, economical and environmental threats that private organizations pose proved to be deeply consequential. Moreover, these events also brought into limelight the fact that the management of these threats was primarily systemic in nature and could not be referred to as an accident. Blankenburg, Plesch and Wilkinson (2010) observe that at the heart of the watershed failures, there was another significant happening that was taking place. The contemporary giants of the industries were gaining more power and control over the political, legal, economic and social setups. They were acquiring greater capacity to re-shape ‘re-shape in their favour a changing and varied history of precarious balancing acts between public and private interests in advanced capitalist economies’ (Blankenburg, Plesch and Wilkinson 2010). Since the advent of capitalism, it has been viewed from the lens of economic power to have dominance over the affairs that unfold in the political arena. It was famously known as the invisible hand- a concept proposed by Adam Smith. Albert Hirschman (1977) referred to capitalism as the force that is able to transform the passion of the organizations into their imperialistic interests. These legitimization processes are characteristic of developing and promoting the vested interests of the corporations. The corporations become engaged in a process of trailing ‘individual freedom and economic self-organization’ and consider this the main motive for achieving ‘political pacification and collective civilization’ (Blankenburg, Plesch and Wilkinson 2010). The undue power and authority that these corporations have been able to command as impacted developing nations adversely, representing that the corporations have used their power for their own benefits. For instance, the poorer countries have suffered by the pursuit of the corporations of their own self-interests through the enforcement of policies that direct towards corporate globalization; examples include the structural adjustment programs of the International Monetary Fund and the World Bank (Shah 2002). This has resulted in an increase in the level of poverty in these developing countries and has been a major contributor to decreased economic stability and greater volatility while at the same time it has buttressed the ease with which corporations can affect conditions. Corporate Limited Liability Corporate economics today shows a trend where the giants of the industries are able to have primacy over the legal, social and political affairs, without paying due attention to the accountability and responsibility (Mizruchi 2004). As Stainland (1985) writes in one of his books on political economy that liberal economics in the world today have changed into a type of intellectual Disneyland. He criticizes that this Disneyland is dominated by industrial dwarfs, who are jovially engaged in the process of hammering their anvils and rejoicing upon their money that they have made. Furthermore these dwarfs are not faithfully adhering to the rules and regulations of fair business. In the recent years, the capitalist economies have also been able to develop and apply the concept of limited corporate liability. Blankenburg, Plesch and Wilkinson (2010) observe that the existence and development of limited liability in corporate structures has contributed greatly to the derangement and disruption of the investment structures. This can be exemplified by reviewing briefly the report made by the Synapse Energy Economics by STAR Foundation Riverkeepers on nuclear plants. The Synapse Energy Economics by STAR Foundation Riverkeepers report stated that over the past decade, there has been a change in the ownership of nuclear plants. A small number of large corporations have gained ownership of the nuclear plants over the past few years. In response to this, these corporations have developed limited liability structures that grant separate limited liability individually to each of the nuclear plants. Moreover in many of these nuclear plants, corporations have successfully separated the operating and ownership entities; this has contributed to the creation and integration of supplementary liability buffers connecting the owners and the plants. The importance of this fact manifests itself as a benefit to the parent organization. The owners can transfer the profits through these liability structures without paying any taxes. Moreover these structures provide the owners with a financial immunity that protects them from unexpected financial issues that result in huge losses for the organization. This is because in case of such an event, the parent/owner of the organization can walk away simply by declaring bankruptcy for that particular unit, and preventing any danger being levied to the other nuclear and non-nuclear investments (Blankenburg, Plesch and Wilkinson 2010). Corporate Social Responsibility A number of critics have also explored the corporate veil that developed as a result of corporate governance. Although the notion of corporate social responsibility (CSR) has become quite the rage in modern times, there are still a lot of doubts that are raised in the context of its effectiveness and application. CSR has been defined by the European Commission as the concept whereby countries couple the social and environmental issues that are, or can be, raised in relation to their business activities and with their interactions with the stakeholders; the notion relates to the effort for going beyond the minimum legal requirements and taking into consideration the needs of the society (Admin 2009). It is seen that the pressure to observe CSR does not prove to be a significant challenge to the corporate governance industry. The corporate veil has come to be impregnated deeply into the limited liability law and has become so unassailable that it is skeptical to rely on it for the purpose of promoting any self-reform. The secrecy of the corporate veil has also furthered the vested interests of the corporate giants. The corporate veil helps to hide the fraud and illicit activities going on behind the scenes. Also, it may also be involved in making the process of transfer of funds to terrorist organizations easier, along with the promotion of illegal activities such as bribery, corruption, shielding assets from creditors, tax evasion, self-dealing, market fraud and money laundering (Plesch 2004). The intent of corporations behind promoting CSR also shows that the corporations are involved in favoring the development of their own interests. It was in the 1950s when critics had recognized that CSR could be misused as a window-dressing (Banerjee 2007). D Linking religion with business, one can see that the average businessman can either be a ‘man as angel’ and would use business as a means to promote a social cause. On the contrary, the ‘man as devil’ businessman would misuse the powers of business. Likewise, corporations could use the shield of CSR in order to exaggerate their abilities and judgments. The managers of the companies can assert on the social responsibility role of the corporations while at the same time they are using the cloak of this social welfare to remain in control of the operation of business dynamics. By subtly masking the true nature of their intents through CSR, corporations are able to diversify and monopolize their influence and decision-making power into an array of non-business aspects, gaining the status of “benevolent dictators” in the process (Banerjee 2007). The term greenwashing id used extensively in this respect. Greenwashing refers to the act where corporations try to convince other people that they are involved in activities for the conservation of the environment, particularly when their intentions are not good, while they are trying to hide that some of their activities are deleterious to the environment (Paetzold 2010). Mugurusi (2008) observes that corporations have used CSR as a way for competing in markets characteristic of intense competition. The annals of history are rife with episodes of companies using environment friendly initiatives as a cover for their imperialistic motives. McKibben (2006) argues that corporations have used their economic power for the maximization of their profits. For this, they are ready to compromise on ideals such as honesty and business transparency. In the Good Company Ranking for 2007, two of the Anglo-Saxon companies were in the top 10, where two years ago they dominated the list (ICCA 2007). This shows that large corporations have suffered as a result of its policies to promote their own interests. There are a number of instances where corporate power has run out of control (Frank 2000). For instance, McDonalds has become a huge corporation and the term McDonaldization has been coined to refer to the process through ‘principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as of the rest of the world’ (Keel 1998). McDonalds Corporation has had a healthy relationship in terms on social responsibility and promoting the environmental aspects of production, and Americans have spent greatly on its products (Schlosser 2001). However in the case McDonald's Restaurants v Morris & Steel, the Justices were of the perspective that the corporation has not been adequately paying its employees and that the food served in the restaurants is fattening. The Royal Dutch Shell Company has also been involved in some controversial aspects of social responsibility. The Company made a big name for itself by promulgating its increased emphasis for CSR and for introducing the triple bottom line form of reporting. Nevertheless in 2004, rumors came to service that the Company had not been giving accurate information regarding its oil reserves. This scandal scathed the repute that the company had built over the years and it was alleged of being two-faced. Control of Mass Media Mass media has evolved significantly in the past years. The media today has been submerged by corporate globalization proponents and has gained the support of companies who are interested in making profits. It is the vested interests of their corporations that executives are furthering through the political clout and economic control that they have acquired. Most of the media corporations are private corporations who enter the media business in order to increase their profits, and this helps them develop into a natural affiliate for the enhancement of corporate globalization. It has been suggested that the contemporary system of corporate capitalism bears close resemblance to older monopoly or mercantilist capitalism of the yore (Shah 2002). The history is rampant with examples of hostility and antagonism occurring as a result of these older systems. However it would yield no results if the modern corporations in mass-media are told that the current system is mercantilist because the industry is dominated by large and powerful corporations, who are probably not going to pay any attention to the claims. Adam Smith presented a rich account of the interactions between market structures and corporations. Smith has been considered as the pioneer of modern free market capitalism and is notable for his book The Wealth of Nations. Smith deplored and censured the role of the big government and big corporations. He was of the view that these governments and organizations, through their unreasonable degree of power and control, have distorted the free market structure. Since the control of the media lies in the hands of large corporations, there has been greater focus on big governments and lesser attention being drawn to big corporations (Shah 2002). The world’s mass media is under the control of 12 media corporations: Disney /Capital Cities/ABC, Time Warner/Turner, News Corporation, Bertelsmann, Tele-Communications (TCI)/AT&T, General Electric/NBC, CBS Inc., Newshouse/Advance Publications, Viacom, Microsoft, Matra/ Hachette/Filipacchi and Gannet (Alger 1998). In the early 1980s, there were a large number of organizations which controlled the media. In the current era, the control of mass-media has fallen in the hands of six huge powerful media corporations in the US. These monolithic mammoths control everything that is fed to the public, from the information that is printed in the media to broadcasts and telecasts. The six corporations own an array of media channels such as television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and websites. The control of the media by these corporations in the US has important repercussions. The average American man spends 153 hours in front of the television each month. It has been seen that the majority of the Americans do not feel at comfort if they have not seen or listened to the television for long. This establishes the fact that a large proportion of the American population is addicted to news and entertainment that is being provided by the media, and hence is under the control of the six corporate media giants. This ‘big six’ include Time Warner, Walt Disney, Viacom, Rupert Murdoch’s News Corp., CBS Corporation and NBC Universal (Majestic 2010). The media focused on what it wants to project, rather than reporting the real situation (Mander 1996). Anglo-Saxon Economics The system of market economies famous as the Anglo-Saxon system has conferred a lot of miseries and afflictions to the world, according to Sud (2009). The past two decades have been witness to the dire effects of the dominance and control large corporations have on the world economy. The global financial crisis that the world is still recovering from was precipitated by factors which arose out of the business economies of capitalist countries, particularly the US. The global shock was aggravated by the massive leveraged buyouts of the businesses coupled with the large amounts of personal debts of the people. In the G20 summit in London convened in 2009, there was a lot of skepticism being raised against the policies that are functioning under Anglo-Saxon economics. German Chancellor Angela Merkel and French President Nicolas Sarkozy were of the perspective that Anglo-Saxon economics have created a lot of problems in the past two years (Sud 2009). The ideals of the Anglo-Saxon has promotes the interests of the government solely. The G20 summit was an example of how other nations were starting to recognize the effects of the domination of Anglo-Saxon model. Countries opposed the ideals of the system because they were not of the perspective that states can be run by considering them as a corporation. They were also against the notion that states should only be concerned about the interests of the shareholders and that markets are self-regulating structures. The countries, on general, sided with the view that the current economic meltdown was attributed to the lack of rules and policies to regulate financial excesses (Sud 2009). Conclusion The conclusion that can be derived from the above discussion is that large corporations do dominate the major markets of the world and further their own interests. This is representative of one main consequence which Mackenzie summed beautifully, ‘I came to the conclusion that we’re perhaps living on the edge of a volcano. Oil supplies, copper or wheat or nitrate supplies- inflation- any one of a number of things could push us over into the lava flow’ (Elliott & Atkinson 2008). References Admin 2009, Corporate Responsibility: Are Companies Responding to Social Demands? The CSR Digest, viewed on 21 January, 2011, Alger, D 1998, Megamedia: how giant corporations dominate mass media, distort competition, and endanger democracy, Rowman & Littlefield. Banerjee, SB 2007, Corporate social responsibility: the good, the bad and the ugly, Edward Elgar Publishing. 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