Multinational Corporations are the main actors driving economic globalisation which thrives when market forces are de-regulated, allowing essential goods and services to be allocated by commercial activity, not human need. The result is a world economy that favours affluent countries and their corporate interests whilst neglecting those living in extreme poverty who the market fails to reach. Below is a brief overview, some key facts and further resources that relate to multinational corporations.
Once considered dangerous and untrustworthy by governments, corporate enterprises are now the key players in the globalised economy, exerting substantial influence over governments and international organizations the world over. Their financial success seems endless; despite a widespread economic downturn in recent years, corporate profits are at an all time high, with the largest banks, oil, pharmaceutical and retail companies regularly reporting record turnovers. A significant proportion of these profits are reinvested not only in influencing politics and economics, but ensuring that people continue to consume their products.
Economic and Political Influence
Despite employing less than one percent of the global work force, 200 of the largest multinational corporations (MNCs) have sales equivalent to almost 30% of the world's GDP. Given their sheer economic might it is unsurprising that, in a period where economic growth is considered a panacea for development success, governments increasingly adopt pro-market policies and facilitate commercial activity. The result is a firmly established mutual-interdependence between corporations and governments, a phenomenon which is most evident in the United States which increasingly undermines a truly democratic representation of public interest.
While corporate-friendly policies of privatization, government downsizing and market liberalization continue to be propagated, large swathes of the public in both the North and South are suffering. As a result, there is now a significant worldwide backlash against many of the principles and effects of economic globalization. Transnational corporations, in their relentless drive to maximize profits and bolster share prices, have been re-locating their production facilities to developing countries where tax, labour and environmental restrictions are negligible - creating large-scale unemployment in the industrialized countries.
Many argue that this is a necessary sacrifice in order to secure economic growth and opportunity in the developing world, but in many cases the result is merely a glut of labourers working in inhumane factory conditions for comparatively miniscule pay. These workers often give up their families and rural life to migrate en masse to overcrowded cities, inadvertently buying into an economic state of play which promotes unsustainable over-consumption in already wealthy countries.
At the same time, food security has sharply declined in many developing countries as large-scale agribusinesses out-compete local farmers, exporting cash crops and not growing food for those who need it locally. Consequently, communities are no longer able to grow the food they need to eat, must import food instead, and are therefore at the mercy of increasingly volatile international markets - a factor at the heart of the current food price crisis.
Influencing the public
Far from supplying public demand, corporations actively dictate cultural habits and create demand by influencing the public through a sophisticated and well-funded combination of research, marketing, advertising and media manipulation. The result is the subtle, but quite apparent, alignment of public and corporate interest. This cultural homogenization of society both nationally and globally is fertile ground for maximizing profit. Whilst levels of unnecessary and unsustainable consumption increase globally, corporate longevity is secured.
The sophistication and effectiveness of advertising and marketing methods is well understood. The ubiquity of the television and the increasing number of hours it is watched, especially by children, is particularly disturbing. In the US, watching TV is the third most time-consuming pastime after sleeping and working.
As domestic markets become saturated, or public opinion turns against a particular product, corporations - using the same aggressive marketing tactics - shift their attention to developing countries with devastating effect. Nestle is notorious for its aggressive marketing of infant milk formula in poor countries in the 1980s. Because of this practice, Nestle is still one of the most boycotted corporations in the world, and its infant formula remains controversial. In recent years, as public awareness of dire health consequences of smoking tobacco have come to light in industrialized nations, tobacco giants have also had to shift their focus to increasing demand in developing countries. The WHO has reported that 84% of an estimated 1.3 billion smokers live in developing and transitional economy countries. A 1994 WHO report estimated that the use of tobacco resulted in an annual global net loss of US $200 billion, a third of this loss being in developing countries which consequently hampers development efforts.
Corporate Greed or Public Good?
The battle for control of the democratic process is clearly being won by those with the greatest financial and economic leverage, and the phenomenon of market forces is becoming more entrenched in every aspect of public life. As many industrialized nations call for democracy to be spread abroad, the economic ideologies they have vested our future in are cancerous to these same democratic principles. True democracy can only be established if the global public is empowered to make decisions that favour cooperation and economic efficiency over competition and self interest.
After 30 years of economic globalization and the decadent rise of multinational corporations, almost half the world is still denied even the most basic of goods and services such as clean water, basic food, energy and medicine. Whilst small to medium-scale business is crucial in a thriving and interdependent society, the commercialisation of all resources and their distribution through a tiny number of oligarchic corporations will never supply the most essential resources to those who need them most. Small-scale, localised industry combined with international economic sharing is likely to play a significant role in creating a sustainable future. This will only be possible, however, when corporate rights are scaled down to a level where corporations act in a limited and regulated capacity to serve the public's economic needs.
Size and Income
Many corporations have a greater turnover than the GDP of most countries. Of the 100 largest economies in the world, 52 are corporations and 48 are countries, and these corporations have sales figures between $51 billion and $247 billion.
In the US, ninety-eight percent of all companies account for only 25 percent of business activity; the remaining two percent account for nearly 75 percent of the remaining activity. The top 500 industrial corporations, which represent only one-tenth of one percent of all US companies, control over two-thirds of the business resources in the US and collect over 70 percent of all US profits.
Chevron's CEO received $37 million in total compensation in 2005, whilst Exxon's CEO received a $400 million pay and retirement package. In the meanwhile the minimum wage in America (£5.15 per hour) is at a 50 year low.
In 2005 the number of millionaires globally swelled to 8.7 million, 5.7 million of whom are based in North America and Europe. Forbes reported a 15% rise in the number of billionaires since 2005, who now have a combined worth of $2.6 trillion.
The International Labor Organization (ILO) calculates that global unemployment rates are at an all time high. Of the 2.8 billion workers in the world in 2005, nearly 1.4 billion still did not earn enough to lift themselves and their families above the two dollars a day poverty line - the same proportion as ten years ago.
Nestle is still one of the most boycotted corporations in the world, and its infant formula is still controversial. In Italy in 2005, police seized more than two million litres of Nestle infant formula that was contaminated with the chemical isopropylthioxanthone (ITX).
Sweatshops are often used in developing countries by the apparel industry which usually pay negligible wages to under age workers who often work long hours in terrible conditions.
The number of small farms in the US has decreased from 6.8 million in 1935 to 1.5 million in 1998. In global commodity markets these subsidies mean that producers in developing countries, many of whom produce their goods with more efficiency and less cost than the US and EU, cannot compete with agri-business suppliers.
Taking the cost of these externalities into account, Ralph Estes estimated that the public cost of private corporations was over $3 trillion in 1995. His externalities included "workplace injuries, pollution, employment discrimination, consumer rip-offs, corporate white collar crime, tax abatements and all the other instances of corporate welfare, government contracting fraud and creative accounting"
The World Bank
The success of corporate influence on the global economy is measurable, as 70% of global trade is now controlled by just 500 corporations
The vast majority of lobby groups represent business interests who spend billions of dollars annually advocating their main cause, which is currently market access in emerging economies. In the US, corporations and their agencies spent $9.7 billion lobbying Congress between 1997 and 2000, about $4.5 million per year per member of Congress.
The President, Vice-President, Commerce Secretary and National Security Adviser all have strong ties to the oil industry. The Bush family had strong ties to Enron-which was President G. W. Bush's largest corporate source of funding.
- Corp Watch
- Corporate Accountability Project
- Corporate Crime Reporter
- Corporate Europe Observatory
- Corporate Watch
- Democracy Now!
- Independent Media Centre
- International Co-operative Alliance
- Multinational Monitor
- PLATFORM - Unravelling the Carbon Web
- Program on Corporations, Law and Democracy (POCLAD)
- Reclaim Democracy!
- Transparency International
- ActionAid UK - Stop Corporate Abuse
- Buy Nothing Day
- Friends of the Earth
- Global Witness
- International Labor Rights Forum
- Killer Coke
- No Sweat
- People's Water Forum
- Public Citizen Global Trade Watch
- The Corporate Campaign, Inc
- The United Nations Global Compact
- Transparency International
- War on Want - Campaigns
- Cashing in: Giant retailers, purchasing practices, and working conditions in the garment industry
- Corporate Law and Structures - Exposing the Roots of the Problem
- Crude Designs: The rip-off of Iraq’s oil wealth
- Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay
- Interactive Food & Beverage Marketing: Targeting Children and Youth in the Digital Age
- Invisible Government - The World Trade Organization: Global Government for the New Millennium?
- Power Hungry: Six Reasons To Regulate Global Food Corporations
- Revolving Door – An Investigation into Washington’s Favourite Pastime
- Taming the Corporations
- The Code for Corporate Responsibility
- The Soils of War
- The System Implodes: The 10 Worst Corporations of 2008
- The True Cost of Chevron
- Top 100 Corporate Criminals of the 1990s
- Top 200: The Rise of Corporate Global Power
- Who Pays? How British supermarkets are keeping women workers in poverty
- World of Work Report 2008: Income Inequalities in the Age of Financial Globalization
- A Corporate Aristocracy
- Corporate control of the election process
- Corporate rights and responsibilities: restoring legal accountability
- Fear & Favor 2007: How power still shapes the news
- From Corporate Strategy to Global Justice
- Know Thine Enemy
- Multinational Corporations (MNCs): Beyond the Profit Motive
- Shell’s Game – Why good people do bad things
- Slow Motion Coup d’Etat – Global Trade Agreements and the Displacement of Democracy
- The Climate Change Lobby Explosion
- The End of Agri-business: Dismantling the Mechanisms of Corporate Rule
- The Impact Of Corporations On The Commons
- Wall Street’s Best Investment: Ten Deregulatory Steps to Financial Meltdown
- Who Controls EU Trade and Investment?
- Who will Rule? Stand Up to Corporate Power
- A Brief History of Neoliberalism
- Big Business, Poor Peoples: The Impact of Transnational Corporations on the World’s Poor
- Captive State: The Corporate Takeover of Britain
- Global Dreams: Imperial Corporations and the New World Order
- Globalinc. An Atlas of The Multinational Corporation
- Guardians of Power: The Myth of the Liberal Media
- Hostile Takeover
- Manufacturing Consent: The Political Economy of the Mass Media
- Market, Schmarket: Building the Post-Capitalist Economy
- No Logo: Taking Aim at the Brand Bullies
- Suiting Themselves: How Corporations Drive the Global Agenda
- The Best Democracy Money Can Buy
- The Corporate Planet: Ecology and Politics in the Age of Globalization
- The Corporation: The Pathological Pursuit of Profit and Power
- The Shock Doctrine: The Rise of Disaster Capitalism
- Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights
- When Corporations Rule the World
- 2009 Executive Pay Watch
- George Monbiot
- Global Issues - Corporations
- Greg Palast
- Institute for Policy Studies
- Multinational Monitor - Links
- Some of the "Most Wanted" Corporate Human Rights Violators of 2005
- The Business & Human Rights Resource Centre
- The Climate Change Lobby
- The Tax Gap
- The Water Barons
- Third World Traveller - Resources on Transnational Corporations and World Trade
- Yes! Magazine - Path to a New Economy