In the 1980s, the World Bank and the IMF used debt renegotiations as a club to force the developing nations into making widespread structural adjustments (SAPs) in their economies. Each SAP package called for sweeping changes in economic and social policies design to channel the country's resources and productivity into debt repayments and enhanced transnational competition. The SAP measures included large scale deregulation, privatisation, currency devaluation, social spending cuts, lower corporate taxes, expanding exports of natural resources and agricultural products, and removal of foreign investment restrictions. In order to obtain the foreign exchange to pay down their debt loads, developing countries were compelled to become export oriented economies, selling off their natural resources and agricultural commodities on global markets while rapidly increasing their dependency on imported goods and services. In effect, the SAPs have become instruments for the recolonisation of many developing countries in the South in the interests of transnational corporations and banks.
The new World Trade Organisation established by the Uruguay Round of the GATT is designed, in effect, to serve as a global governing body for transnational corporate interests. The WTO will have legislative as well as judicial powers. It has a mandate to eliminate all barriers to international investment and global competition. Under the WTO, a group of unelected trade representatives will act like a global parliament with the power to override economic and social policy decisions of nation states and democratic legislatures around the world. At the same time, the world's major TNCs will have a powerful role to play in the new WTO through direct linkages with the trade representatives of participating countries. In the case of the U.S., for example, members of the Advisory Committee for Trade Policy and Negotiations include such corporate giants as IBM, AT&T, Bethlehem Steel, Time Warner, Corning, Bank America, American Express, Scott Paper, Dow Chemical, Boeing, Eastman Kodak, Mobil Oil, Amoco, Pfizer, Hewlett Packard, Weyerhauser, and General Motors - all of whom are members of the Business Round Table.
Systems of Corporate Rule
The following are some of the global systems that have been effectively usurped by transnational corporations and banks.
1. Global Finance
The globalisation of finance markets has been nothing short of revolutionary. The days when national authorities could stabilise financial markets through banking regulations, reserve requirements, deposit insurance, limits on interest rates, and the separation of commercial and investment banking are all but gone. In country after country, there has been a massive deregulation of finance, as well as mergers between commercial and investment banking. Also, TNCs are now bypassing banks altogether to issue their own commercial paper. Information technology has transformed global banking to the point where 2 trillion dollars is transferred everyday around the world. Electronic transfer systems make more than 150,000 international transactions in a single day. The speed and frequency of these money transactions - from Maylasia to Toronto to New York to Miami to the Cayman Islands to the Bahamas to Switzerland - makes it difficult to trace, let alone regulate. Today, the global finance market is dominated by Japanese banks (ie. eight out of the world's top ten.) But this deregulated, global finance market has become fragile and unstable to the point where a financial shock in one country (eg. Mexico) can dramatically upset financial markets in other countries before national authorities have a chance to intervene. Unless radically new regulatory measures are introduced, the fiscal policies of national governments will not only be dictated but also threatened by a volatile, global finance system.
2. Global Industrial Production
As auto, electronics, textile and clothing industries have outgrown their home countries, shifting their production and supplier operations off shore to independent contractors, the "global factory" coupled with a radically new international division of labour has emerged. With the globalisation of production networks, transnational manufacturing firms can quickly move their operations around the world, chasing cheap labour, taking advantage of more profitable investment opportunities, and outflanking the demands of unionised workers. In the auto industry, Ford and GM have forged strategic alliances with Mazda and Toyota to produce for each other's markets while in the shoe industry, companies like Nike and Schwinn have begun to shift from manufacturing to designing, merchandising and distributing. This new global factory, in turn, has resulted in a dramatic loss of manufacturing jobs in the industrial North (ie. the U.S., Japan, Europe) as manufacturing companies have moved their production to low wage, tax free countries in the South. Increasingly, workers around the world find themselves lumped together in the same labour pool to the point where exploitation in Guatemala, Maylasia, or China is felt as wage competition by workers in London, New York, or Montreal. While the staggering wage gap between workers in the North and the South has begun to narrow, there is a very real danger that workers everywhere will be dragged down to low common wage standards by the forces of global competition.
3. Global Product Distribution
Richard Barnet and John Cavanagh, in Global Dreams, describe the "global supermarket" that is transforming agricultural production throughout the world but also undercutting the capacity of nations to ensure that the basic food needs of their populations are sufficiently met. Transnational food corporations are demanding an end to the system of agricultural subsidies, regulation, and protection that has maintained a relatively cheap food policy in the industrial North. At the same time, poor countries in the South who were once self-sufficient in food but are now desperate for foreign exchange to pay down their debts, are forced to turn over valuable agricultural lands to the transnational agribusiness and to convert to the production of cash crops while importing food products to feed their own peoples. "Export or Die" is the message. The introduction of bio-tech production methods - laboratory produced vanilla, bioengineered celery, freeze-resistant flowers and tomatoes, bovine growth hormones for cows, plus long distance food transportation - pose further threats not only to the livelihood of traditional farmers in poor countries but also to the quality and safety of food products in general. Meanwhile, the giant food corporations - General Foods, Kraft, Pilsbury, Philip Morris, Del Monte, President's Choice, Proctor & Gamble, Pepsico etc. - have merged their operations and expanded their marketing strategies on a global basis.
Cont ...