Transnational corporations in the age of globalisation

Kevin Robert Dean qualiall_2 at
Sun May 27 19:41:16 PDT 2001

See also For the first part of the article....KRD

Transnational corporations in the age of globalisation by A.K.M. Enayet Kabir

(Contd from yesterday's issue)A desire for trade has become an incentive for cash crops, introducing an imbalance in the agricultural process, which has often robbed the land of its fertility, and in the diet of local people, bringing malnutrition. The introduction of the money economy has been a serious factor in nutritional imbalance. Cash crop economy has meant impoverishment of the soil, because old conservation measures were abandoned in favour of immediate cash benefits. In addition, fewer food crops were planted for the farmers' own use. Is not the widespread syndrome "kwashiorkor" co-related with the cash crop economy in Africa? No wonder, unplanned industrialisation for manufactured goods has often meant the disruption of the agricultural cycle in many developing countries. The effect of a cash crop or wage economy on nutrition has been one of lowering the level of nutrition by disturbing the balance achieved under subsistence economy, introducing multinationals' processed foods as "prestige foods", limiting the amount and quality of subsistence crops in favour of cash crops. To introduce adequate nutrition, it is important to bring about changes that are in keeping with the established food habits of the people, and are acceptable within the framework of their value system.

The globalisation of the world economy is stimulating massive investments by the transnational corporations, which are acting as dynamo to produce more jobs and higher profits worldwide. However, poverty and inequality are on the increase in the developing world. The absence of agreed rules on basic rights of workers is a gap that could threaten the whole elaborate edifice of the global market. Governments are trying to gain competitive advantage through the repression, discrimination, and exploitation of workers. The media image of the global economy is of a technology-driven, high production, free market gearing itself up for this 21st century. But how "free" is the market that tolerates forced labour without a workers' rights clause? The world cannot tolerate an economic system that depends on repression for profit, that exploits women, and that makes slavery a sound business option. The workers' rights clause will help protect workers from exploitation. Its aim is not to undermine economic competition, but to enhance it by removing unfair advantages. Unlike fly-by-night transnationals, who are interested only in making cheap goods for a quick profit, workers have a long-term interest in their countries' prosperity. A workers' rights clause will restore to people the basic human rights that globalisation has stolen from them.

Unfortunately, the real beneficiaries of the current world trading system are not the developing countries, but the TNCs. Of the 100 top economies in the world, only 49 are sovereign countries - the rest are TNCs. These corporations control more than a quarter of the world's economic activity - but nobody controls them, except their share-holders. Unchecked and unregulated, the labour market in the global economy is becoming nothing more than a vast shopping mall for the TNCs. Whereas, if there is a passionate agreement among the multinationals that they should cover copyright and the Protection of Intellectual Property, why should these rules not cover workers' rights? A workers' rights clause will help bring the TNCs under the rule of law, and would make it impossible for some irresponsible TNCs to leap from country to country in search of a government prepared to violate workers' rights.

Generally speaking, as "social contract" evolved our society, likewise, society has "licensed" the corporations to operate in a capitalist economic system. But, as corporations evolved toward greater global reach, can the "global society" be empowered to exercise its licensing function? With the growing power, corporations are regulating themselves. Issues once considered a responsibility of the state or of religious institutions - such as social justice, environmental impact or human rights - are all affected by corporate decision-makers. Considering this fundamental shift of power - with the TNCs becoming a "law unto itself", who will bring the global corporations into account?

In view of above, society may affirm the legitimacy of the profit motive, so long as business is also conscious of its contributions to the wider society. Corporate governance, therefore, must balance both the interests of the wider society and the interests of the corporations. Worldwide citizens, consumers, NGOs etc have the key role to play in linking corporate governance structures to societal stakeholders, and must find a mechanism to make corporations accountable to community in general. In other words, new ways of thinking need to be developed and ethical considerations must become part of the mandate of corporate governance. The supranational institutions must be held accountable to serve the interests of the majority. The influence of the minority but powerful corporations must be made to share that power with the developing world.

The TNCs have an obligation to act as responsible members of the very society that grant them legal standing in the first place. As such, the concept of "corporate social responsibility" must be observed by the TNCs, to define and organise their relations with society - not mere profit in "free market" economy. They must produce benefits desired by the society, consistent with local culture, values, and expectations.

We need strategies to create a world with a human face. We need new economic systems that put people first - not profits. The law of profit alone by the corporations will not help the majority in the world to get rid of poverty, into which they have been plunged by a ruthless economic system - whose driving force is greed only. The law of profit could not feed the downtrodden and starving millions in the developing world. Possibly realising this, the 1998 Nobel Laureate for Economics, Amartya Sen said that the validity of any economic policy should be based on whether it takes into account its impact on people who are on the "down side of the economy".

The rich and powerful - who are paradoxically as much at risk as the poor and the weak - must recognise that they cannot continue on the present course. We need our economic system to serve us, not enslave us. Our guidelines should be need and capacity, rather than demand and supply. We need creative, innovative and imaginative minds to shape a world whose main characteristics would be good governance, equity and the general well-being of all people - both rich and the poor. It is time to put a human face on present random globalisation process, and realise that there is more involved than money. We must aspire for "people-oriented development" for sustainable human development and human security, as opposed to "number- centered growth!". Globalisation requires that we build an international framework within which economic processes can promote better health and quality of life in a community where equity, justice and human dignity set the parameters. (Concluded)

_________________________________________________________ Do You Yahoo!? Get your free address at

More information about the lbo-talk mailing list