The International Writers Magazine: American Corporate Power
Since the second world-war corporate America has ruled the economic roost, spreading its influence across the planet through the mechanism of globalisation. Though rooted in the United States, where it buys enormous political influence, American corporatism is devoid of any national allegiance.
It acknowledges no obligation to the American people either as workers or consumers, and feels free to pursue profit maximisation irrespective of the consequences for those people. In this respect it is identical to corporatism in Europe and elsewhere.
Globalisation exposed this characteristic as nominally American corporations outsourced operations, mainly to Asia, to take advantage of cheap labour and an absence of adequate health and safety standards or employment regulation. We witnessed the situation whereby an ‘American’ shoe manufacturer didn’t make a single shoe in its home country. By such means corporate America established international hegemony, apparently unthreatened by the rise of rival economies such as Japan and South Korea.
The seeds of change were sown thirty-odd years ago when corporate America adopted two philosophical changes, neo-liberalism and maximisation of shareholder value. Greed became ‘good’, and organisational focus became short-term. Funds that would have been invested previously went to reward shareholders and managers. The former were happy to see the latter group enriching themselves because they too were gaining in the short-term. In the long term, however, businesses were weakened. Many outsourced key competencies to foreign outfits, so ensuring that technological competency was lost. Jack Welch, the ex-boss of General Electric, and a big fan of ‘shareholder value’ later remarked that it was the most stupid idea ever. An example of the problem with the approach can be found in the UK. Arnold Weinstock built up GEC over more than three decades by judicious management. I recall the complaints of some shareholders in GEC that their dividends were too small under Weinstock’s conservative leadership. When he stepped down in the mid-nineties the company fell into the hands of ‘more modern’ thinkers. It didn’t take long for these people to ruin the organisation. Share values collapsed and the outfit no longer exists.
The rise of neo-liberalism’s assault on government regulation, ’interference’, coincided with the emergence of an economy built on entirely different principles, China. As we know now, this challenge to corporate America’s hegemony strengthened until, today, the Chinese economy rivals the American for dominance. For the first time in recent history the hegemony of corporate America faces a threat from a country that plays the economic game by different rules. The Chinese political class may or may not be every bit as corrupt as their American counterparts, but politics trumps economics for the time being, and there is a sincere pride in the nation and its culture.
Corporate America’s response to the challenge has been to engage in two sets of treaty negotiations that, between them, aim to re-establish America as the hub of the international economy. To the west of America we see the establishment of the Trans Pacific Partnership (TPP) linking the US economy to 11 Pacific nations, while to the east we find ongoing negotiations between the US and the European Union with the aim of creating a Transatlantic Trade and Investment Partnership (TTIP). The exclusion of China from the TPP gives the clue to corporate America’s motives.
Negotiations of both treaties, the TTIP is not yet concluded, have been conducted in great secrecy. The TPP negotiations involved the corporate interests of the different countries, along with their elected governments. Negotiations for the TTIP are being conducted from the European side by the unelected European Commission, with the elected European governments kept largely in the dark about details.
Although the Transpacific treaty is a done-deal, the negotiations between the European commission and the Americans are not yet complete and there is still time to block them. Why would we wish to? Quite simply, this process is a very real threat to our democracy. TTIP should not be confused with bilateral trade negotiations in which sovereign governments discuss mutually beneficial reductions in barriers to free trade. The parties to the TTIP are major business corporations and trade bodies on one side, and the European Commission on the other. Therefore, we have unelected corporate executives, or their representatives, deciding with unelected bureaucrats how our government’s freedom on economic policy should be curtailed.
The greatest threat to our democratic freedom would be the inclusion in the treaty of an ‘Investor-state dispute settlement’ (ISDS) mechanism of the kind found in the transpacific deal. An ISDS clause would give an investing company the right to dispute any government action that was thought to impact on their profits from investment, or on profits from future investment opportunities. Such an agreement could be an enormous restraint on government economic and social policy in any country where the state is directly involved in the provision of services. The British National Health Service comes to mind. For example, if an American healthcare company became established in Britain, it could claim that the NHS provision of free treatment of X affected its return on investment. Any area where a government service diminishes opportunities for private profit would be vulnerable to challenge in an arbitration procedure. It is effectively a neoliberal charter. The details of such an arrangement are open to negotiation of course, but can we rely on the European Commission to put up a fight?
It is also unclear, because of the secrecy, what effects a TTIP would have on direct foreign investment from sources other than European or American corporations. Would a British government’s freedom to invite investment from China or India, for instance, be open to challenge under the treaty? The Americans were said to be unhappy when Britain signed up to the Asian Infrastructure Investment Bank, a largely Chinese initiative. British economic influence has been in decline for some time now, and we are urged to be more open to the world, to be adventurous. Tying ourselves into a transatlantic arrangement is hardly that. If corporate America is vying with the Chinese for hegemony, I want my government to be equally open to both, and TTIP may mean that we can only do that if not part of the EU.
© Tom Kilcourse November 2015
There was a time, not so long ago, when a British bank had a manager who was integrated into the community that he or she served.