“Are Corporations More Powerful Than Countries?”

Rana Foroohar, an editor and columnist for Time Magazine, asked this question recently in two versions of her column (27 January 2012 online and 13 February 2012 hard copy). Her answer, in part, is that “top companies… are operating in a space that is increasingly supranational,” prospering mightily, sitting on a stash of $2+ trillion in wealth at the very same time Western European countries are struggling through a “mess,” and economic recovery in the United States is too slow and fragile. Writing from the annual international economic summit at Davos, Foroohar quoted an Apple executive, who earlier had said bluntly “we don’t have an obligation to solve America’s problems.” His sentiments encapsulate the general attitude of executives of the supranationals:  that they are above and ahead of national governments, which they perceive to be “inept and anemic,” whereas they, the mega-capitalists, have created jobs and prosperity, not in the failing Western democracies, true, but elsewhere in the world, thus increasing over-all global well-being. This is, like most political and economic questions, ultimately a moral question, but the real point of the statement is actually that a global corporation is just that, beyond the reach of any one country’s political government.

What Foroohar is unwittingly describing is what we for some time on bluevirginia.us have been calling “corporate feudalism.”  Expectations after the 2008 crash that governments would rein in business were disappointed.  She says “just the opposite happened,” and, as we have seen, not only have taxpayers bailed out the perpetrators of the crash, the top individuals responsible for the disaster have been paid bonuses instead of being punished, and have done little to alleviate the suffering they have caused and are causing—- they have no obligation to solve America’s problems. Needless to say, that does not cut both ways. After all, the global corporations did not start out global, they grew and prospered within a national economy, depending on what Nitin Nohria, dean of Harvard Business School, called “the health of our home markets,” and the infrastructure that Elizabeth Warren of Massachusetts pointed out when she said  start-up companies used tax-payers’ roads and tax-payer educated labor.

Once the corporations nurtured by the local society went global, however, the rules of the game changed. A new business philosophy designed for global capitalism overwhelmed every other theory; it was called by some “globalization,” by others “free market,” and by others simply “the Chicago boys, or Friedman economics.” It emphasized short-term bottom line profits, postulated a totally self-interested “economic man” making cost-value choices in an unregulated market, and honored the hard-driving entrepreneur above everything else, including labor and materials as well as social costs. It encompassed many libertarian ideals, among them hostility to government as being an impediment to business.

As globalization took over, it matured into something quite different from the simple entrepreneurship of its youth.  Although it continued to call itself capitalism, or free enterprise, it is in fact neither exactly. We do not yet have a popularly accepted good name for this new beast, but I have called it corporate feudalism because of the enormous political and economic power of each mega-corporation, which acts like an independent barony or duchy as it makes investments, creates alliances around the world with other businesses and governments, and has its own corporate culture. What is really significant is how the mega/global corporations simply employ the resources of various nation states, calling on national military or financial resources when they find it useful, and not hesitating to seek regime change to enhance their own profits in a target country.

In the United States, the Republican political party has tied itself tightly to this philosophy and to the mega-corporations—- all other philosophies are denigrated as “socialism.” The GOP from its inception was a banker’s party (the other wing was the rural farm element), and the national Democrats have seemingly joined the Republicans in honoring the free market theory of the globals—- probably in order to share in the gusher of corporate money at campaign time, one good reason there will be no effective reforms. The other reason is simply that the globals are beyond the reach of individual nation states.

Historically in the United States as corporate industrial capitalism developed, it demanded federal government help because they wanted standard laws and regulations rather than trying to deal with the endless variations of state laws, not to mention juicy federal subsidies. You could say big business preferred big government in those days. Now, we see that big business has outgrown the national nursery, and feels hampered by the constraints of big government, so we have the anti-government trope; states rights now suits big business, because they have so much money power they can call the tune in a state legislature. In a way, the corporations now demand that the government and, through the government ultimately the small taxpaying citizen, provide support but no regulation for corporations—- the corporations are like parasites on the body politic. Some Republican candidates have even said that the purpose of government is to serve business. Not, in other words, the underlying society.

Where will this end? One possible outcome is already in place: any government which pretends to tell a mega-corporation what to do will be dismissed, or the corporation will take its business elsewhere. Mind you, these corporations are run by actual people, but they are a new social class of managers not owners (and the managers are rarely the original entrepreneur). The members of this new class of global elite have more in common with each other than they do with their fellow citizens in the original country where the corporation started.

The new imperial global culture is just getting organized, and is just beginning to make its power inheritable; how it will ultimately turn out is unknown, just as no one in 10 B.C. could foresee how the Roman Empire would emerge from the old Roman Republic, or how in 490 A. D. medieval feudalism would grow from the collapse of that empire. One thing for sure, however: there will not be a global election to select these new rulers, who will be living in a bubble, disconnected from the lower classes (i.e., you, me, and the villager in the Congo). This rule-by-bullies may turn out sometimes to be benevolent and sometimes not, but it is exactly what the Republican presidential candidates are all promoting as the wave of the future. I do not believe they all quite understand how, if they are successful, they themselves will become little more than a palace flunky in the new corporate feudalism—- a rich flunky, perhaps, but still a flunky, even if they are the President of the United States.