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Call for corporate accountability

The litmus test of economic growth is whether growth improves the lives and livelihoods of the poorest and most marginalised, writes John Samuel. If economic growth alienates and excludes poor people, then such a growth model is both immoral and unethical

In a liberal democratic framework, the sovereignty of the state is derived from the sovereignty of its citizens and the human rights of the people. Citizens are expected to define the boundaries of the state, and the state is expected to define the boundaries of the market.

In the context of the growing power of transnational corporations and free market missionaries, however, it is the market that is increasingly shaping the boundaries of the state, and the state, in turn, restricting the boundaries of citizens. This process of corporatisation of state, politics and the media is undermining the very ethics and substantive value of democracy. Citizens and the state have both become less powerful than big transnational corporations. Citizens are being increasing defined as consumers and the primacy of the nation-state is being replaced by the power of the market, driven by the capital market, powerful transnational corporations, elite policymakers and media empires.

Transnational corporations have become powerful enough to make and unmake governments, laws and public policy. They play a key role in making and selling arms, perpetuating inequality, facilitating corruption, militarisation and conflict. Indeed, a chief cause of instability and conflict in many regions and countries of the world is the aggressive quest for oil, natural resources and markets. Most transnational corporations, supported by governments in the North, display neither a sense of ethical, environmental or social responsibility towards people or communities nor do they make any substantive contribution to the long-term development of the countries in which they operate.

One of the hallmarks of the last one hundred years has been the unprecedented growth and influence of transnational corporations. Ever hungry for new markets, they have become the key drivers of economic globalisation, shapers of the neo-liberal free market economic paradigm. Though influential in shaping the economic and trade policies of countries in the developing world, they display a singular lack of corporate accountability towards people, consumers, even shareholders. This lack of accountability, coupled with the immense power of advertising, has reached alarming proportions in terms of undermining the human rights of people and economic sovereignty of many countries. The gross domestic product of most poor countries is less than the income of many powerful transnational corporations.

Even as neo-liberal orthodoxy stressed economic growth, it also prompted an unprecedented rise in inequality in most countries. Transnational corporations shape not only the tastes of billions of people across the world but also help create new ‘brand desires’, resulting in a culture of consumerism based on ‘credit’. This consumerist culture, perpetuated by the corporate-driven media and advertising industry, has in many cases fostered a false sense of economic development.

While a miniscule minority of urban, articulate, upper caste and upper class people may have availed of better economic opportunities and enhanced their consumerist capacity, a vast majority of small traders, self-employed, poor and excluded lost their ability to bargain in the market and their purchasing power. It is this unequal distribution of wealth, along with the new consumerist culture and growing sense of inequality and injustice that is at the root of increasing social and political unrest in many countries, including India.

The unbridled thirst for markets and profits at the cost of people, communities and the environment poses a serious threat to social stability. This is because the ruling elite and urban middle class get a better deal, and the urban poor and millions of rural citizens are excluded. Mining companies have usurped the lives and livelihoods of millions of poor, marginalised and indigenous peoples. It’s the same story of deprivation, displacement and alienation in Asia, Africa and Latin America. Unequal and unjust power relations perpetuate poverty, inequality, social disintegration and the resultant alienation. The increasing trend towards privatising basic services like water, health and education further deny people their social, economic and cultural rights.

There is a new myth these days about ‘India Shining’, created by the new axis of economic policymakers, media empires and a political class that directly or indirectly benefits from powerful transnational corporations. With support from this powerful axis, transnational corporations undermine the laws of the land, economic sovereignty of the country and facilitate corruption in high places. Even when companies like Union Carbide, responsible for the death of thousands of people during the Bhopal gas tragedy, and Enron Corporation which ended up cheating its own shareholders do occasionally reveal the ugly underbelly of their trade, little effort is made to demand accountability and transparent governance from them.

As most big transnational corporations are based in the rich, powerful North, pressure is brought by them, international financial institutions and the strategic use of trade rules to force poorer countries to open up their markets. In many ways one is witness to the politics of an extractive trade relationship reminiscent of the English East India Company and other colonial entities.

The thousands of farmers who have committed suicide in India are in many ways victims of such unethical economic globalisation. They may also be considered ‘martyrs’ expressing their protest against an unjust and exploitative system. This was tragically expressed by the Korean farmer who stabbed himself and committed suicide in front of the world at a farmers protest against the World Trade Organisation, in Cancun, Mexico.

Although we do indeed need companies to strengthen productivity, increase employment opportunities and offer quality services, we also need a robust regulatory framework, accountable corporate governance and business transparency. Economic growth with no sense of ethics and no sense of fairness is unsustainable in the long run. Growth that comes with inequality and unemployment is a recipe for political unrest. Most people at the receiving end of powerful transnational corporations are the poor and the excluded, particularly women. The litmus test of economic growth is whether growth improves the lives and livelihoods of the poorest and most marginalised peoples and communities. If economic growth alienates and excludes poor people, then such a growth model is both immoral and unethical.

Infochange News & Features, February 2015