The Political Power of Global Corporations

John Mikler

• Publisher: Polity
• Year: 2018
• ISBN:
  9780745698496
• Edition: 1
• Topic: Política y relaciones internacionales
• Subtopic: Comercio y aranceles

We have long been told that corporations rule the world, their interests seemingly taking precedence over states and their citizens. Yet, while states, civil society, and international organizations are well drawn in terms of their institutions, ideologies, and functions, the world's global corporations are often more simply sketched as mechanisms of profit maximization. In this book, John Mikler re-casts global corporations as political actors with complex identities and strategies. Debunking the idea of global corporations as exclusively profit-driven entities, he shows how they seek not only to drive or modify the agendas of states but to govern in their own right. He also explains why we need to re-territorialize global corporations as political actors that reflect and project the political power of the states and regions from which they hail. We know the global corporations' names, we know where they are headquartered, and we know where they invest and operate. Economic processes are increasingly produced by the control they possess, the relationships they have, the leverage they employ, the strategic decisions they make, and the discourses they create to enhance acceptance of their interests. This book represents a call to study how they do so, rather than making assumptions based on theoretical abstractions.

1
Introduction: The Global Corporate Takeover

Global corporations are “in charge.” This is a widely held view, and it is not unusual for it to be expressed with negative sentiments given that they are often portrayed as “the dark lords of globalization” (Micklethwait and Wooldridge 2003, 168). Indeed, the impact and ongoing fallout from the 2007–2008 global financial crisis (GFC) has only increased fears that states no longer govern in the interests of their citizens, but in the interests of these powerful entities over which they have little control. Such fears are reflected in much contemporary science fiction, which has produced a dystopian oeuvre that imagines futures in which states are powerless and societies are at their mercy. For example, Margaret Atwood's Maddadam and William Gibson's Sprawl trilogies are set in near futures where to all intents and purposes governments are non-existent, and global corporations perform all functions once associated with the state, but in a manner that presages the collapse of civilization.¹

Why commence a book on the political power of global corporations with reference to science fiction? I do so to highlight that what is widely accepted and acknowledged in popular culture is relatively less analyzed in the politics and international relations literature. Most debate has been framed in more abstract terms. Rather than the political power of global corporations, the power of markets versus states is most often stressed (e.g., Schwartz 2000), and the early globalization literature in particular revolved around the manner in which impersonal market forces increasingly dominate states’ economic, social, and political agendas. As the redoubtable Susan Strange put it, “Where states were once the masters of markets, now it is markets which, on many crucial issues, are the masters over the governments of states” (Strange 1996, 4). Even if global corporations embody the power shift away from states this entails, they were seen as being motivated by market imperatives. Therefore, the marketization of all economic relations is what is usually stressed as mattering politically, because market forces and market imperatives do not produce governance in the sense of control over national destinies. To quote Strange (1996, 14) again, “What some have lost, others have not gained” and the resulting “diffusion of authority away from national governments has left a hole of non-authority, ungovernance it might be called.” In other words, the state governs and no other actor can govern like a state.

Pitched ideological battles have been fought on the basis of these claims. Pro-market liberal commentators have celebrated the demise of states, or at least their diminished relevance, and the rewards to be reaped from a world in which markets are global and free (e.g., Bhagwati 2004; Wolf 2004). Critical voices, particularly Marxists, have bemoaned this prospect, seeking instead alternatives to the structural basis for the capitalist class relations underpinning globalization (e.g., Kitching 2001; Coburn 2011). Between the extremes there has often been a metaphorical throwing up of hands in acceptance of the proposition that states can only function (rather than rule) in a passive, facilitative role as the places where global market imperatives are played out by the global corporations that act on the basis of them.

I do not think it goes too far to caricature these debates as akin to a study of scientific phenomena: irresistible global market forces that impact on states like political “meteors” on the surface of the Earth. This seemed what the earliest pronouncements regarding globalization verged on, such as those of Ohmae (1990), who proclaimed the world had become “borderless,” and Fukuyama (1992), who declared “the end of history” at the conclusion of the Cold War. Their claims were essentially that international relations as traditionally conceived no longer mattered in a world of laissez-faire capitalism and the inevitability of neoliberal market deregulation and privatization that went with it. It was as if the very shape of the world were being altered to resemble one large market with national and regional variations erased. This view underscored Levitt's (1983, 101) pronouncement that “the earth is round, but for most purposes it's sensible to treat it as flat. Space is curved, but not much for everyday life here on earth.” It was the end of geography because nationality, national differences, and national preferences were being “leveled” by globalized markets. Thomas Friedman agreed, although he used a fashion rather than geographical analogy to famously declare that all states had to don neoliberal “golden straightjackets” (Friedman 2000, 87).² They could try wearing other political “clothes,” but not only would they be unfashionable, they would suffer the consequences of the global market punishing them for so doing, inflicting economic and social pain they could ill afford to bear.

Those familiar with the globalization literature will no doubt retort that rather than the views of the early globalists (or “hyperglobalists,” as they are sometimes more pejoratively called) being mainstream, though I would contend that actually they are in most contemporary journalism and popular commentary, all serious globalization scholars now study the transformation of the exercise of state power rather than its annihilation. The analysis of politics and power in a globally interconnected world is not predicated on the globalists’ zeal for the inevitability of free market capitalism writ large on the world as if it were some kind of force. Most serious scholars recognize that the debates surrounding this vision have often been ideologically motivated, and often hyperbolic in tone. Yet, in recognizing that globalization instead entails a process of political transformation, the more nuanced globalization literature still often returns to the analysis of markets versus states as it considers the question of “who governs” in a globalized world. For example, while the governments of nations remain very much drivers of the processes and outcomes of governance (e.g., see Weiss 2003; Drezner 2007; Bell and Hindmoor 2009), the marketization of all aspects of society and state functions is often said to have produced a neoliberal form of the state (e.g., see Harvey 2005). If not this, then states themselves are seen as having embraced markets as a policy choice rather than having it thrust upon them (e.g., Tiberghien 2007; Thatcher 2007). Indeed, there has been a vast literature since Vogel's (1996) Freer Markets More Rules that examines the marketization of states’ functions as a process of reregulation, as opposed to neoliberal deregulation.

As a starting point, it is surely not unimportant to consider whether states or markets “rule,” how a more economically interconnected world drives the embrace or rejection of this viewpoint, and the extent to which this embrace or rejection is real (i.e., inevitable) or ideological (i.e., chosen). However, the intention of this book is to challenge the abstraction involved in a focus on markets that risks obscuring the role played by global corporations. These key actors have gone somewhat “missing” in the impassioned debates about the political pros and cons of neoliberal globalization. While the state has remained “in” as the subject of most analysis—in terms of its demise, continued relevance, transformation, and so on—by comparison a more acute understanding of the rise of global corporations has been left “out.” For example, because global corporations can operate multi- or transnationally there is debate about the extent to which states serve as “merely the handmaidens of firms” (Strange 1997, 184; see also Crouch 2004). What this means from a corporate as opposed to a state perspective is relatively less clear because while states are reasonably well drawn in terms of their institutions and ideologies, and, it may be noted, so too is the role played by civil society and civic groups (e.g., see Keck and Sikkink 1998, 1999; Scholte 2011, 2002), corporations are all too often more simply sketched as mechanisms of profit maximization. Yet global corporations perform a crucial and central role in determining the global distribution of economic wealth, global development outcomes, global economic processes, and the fate of the polities of nations. How they do so is relatively understudied from a political power perspective. It is as if they are a residual category of political actor with assumed rather than studied motivations.

The result is that even as they criticize it, those with a political eye on the economy and economic processes seem largely to accept the mainstream neoclassical economic assumption that firms maximize profits by combining capital and labor, and then consider the resulting economic, political, and social impacts produced. They accept that such decisions occur in markets that are now increasingly globally interconnected, while states are territorially grounded, and largely leave it at that. Of course states’ ability to serve the interests of their citizens may be undermined by an ideological embrace of the neoliberal “inevitability” of global markets, and there are certainly many fine and complex analyses of the institutional embedding of neoliberalism in national, regional, and global governance (e.g., Teeple and McBride 2011; Cahill 2014). Even so, the result is often a rather disembodied and de-territorialized analysis that focuses on the power of globally mobile capital, and the way assumed corporate interests are served that clash with citizens’ aspirations. Korten (2015) suggests global corporations now potentially “rule the world” given the size and scope of their operations, and there have been calls for more political analysis of how they do so (e.g., see Harrod 2006; Kollman 2008; Zadek 2013), but it is easy to form the view that the literature remains “utterly deficient” (Fuchs 2005, 771). Indeed, unfortunately it seems the case that “instead of mountains of scholarly achievement, we have a few oases in an arid landscape” (Wilks 2013, 2).

My intention is to further develop these oases or, if you like, to do some “landscape gardening” so as to facilitate further contributions to them. As such, this book has two aims. First, to explicitly re-embody global corporations as political actors with complex identities and strategies to be examined, rather than assumed in more abstract terms. As they embody the power wielded in, rather than by, markets, they should be the focus for analysis. Second, to re-territorialize global corporations as political actors produced by their home states and regions, rather than the “globe.” The territories in which they operate are the places from which they institutionally derive their power and, politically, not just where they still primarily act but also from which they act. These two aims lead to the book's central point: that as political actors from, and located in, specific states and regions, global corporations’ political power flo...