Patrice Riemens on Fri, 29 Jul 2011 00:34:20 +0200 (CEST)

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<nettime> Felicity Lawrence: A mere state can't restrain a corporation like Murdoch's (The Guardian)

original to:

A mere state can't restrain a corporation like Murdoch's

Whether News Corp, banks or food giants, transnationals are not so much a
state within a state as a power beyond it

The deep corruption of power revealed by the phone-hacking scandal has led
many to question how Rupert Murdoch's News Corporation could establish "a
state within a state". MPs have trumpeted their determination to make sure
it never happens again. They will struggle.

As if to rub the point in, BSkyB's board announced it was back to business
as usual on Thursday. Despite parliament's question mark over the
integrity of its chairman, James Murdoch, the rest of the board said they
fully supported him. A few hours later the Guardian reported a new low in
the saga ? allegations that Sarah Payne's mother's phone may have been
hacked. But the corporation marches on.

The fact is that the modern globalised corporation is not a state within a
state so much as a power above and beyond the state. International
development experts stopped talking about multinationals years ago,
preferring instead the tag of transnational corporations (TNCs), because
these companies now transcend national authorities.

Developing countries, dealing with corporations whose revenue often
exceeds their own GDPs, have long been aware of their own lack of power.
They are familiar with the way world trade rules have been written to
benefit corporations and limit what any one country can impose on them.
They know about the transnationals' tendency to oligopoly; and their
ability to penetrate the heart of government with lobbying. For an
affluent country like the UK, it has come as more of a shock.

While traditional multinationals identified with a national home, TNCs
have no such loyalty. Territorial borders are no longer important. This
had been the whole thrust of World Trade Organisation treaties in the past
decades. Transnationals can now take advantage of the free movement of
capital and the ease of shifting production from country to country to
choose the regulatory framework that suits them best. If restrained by
legitimate legislative authorities, they can appeal to WTO rules to
enforce their rights, as the tobacco company Philip Morris has threatened
recently. It says it will sue the Australian government for billions of
dollars for violating its intellectual property rights if it goes ahead
with its plan to ban branding on cigarette packets.

TNCs can and do locate their profits offshore to thwart any individual
country's efforts to take revenue from them. The ability to raise taxes to
provide services is a core function of democratic government, yet
governments have been reduced to supplicants, cutting their tax rates
further and further to woo corporates. Meanwhile, as the Rowntree
visionary Geoff Tansey has pointed out, transnationals have used patents
and intellectual property rights to create their own system of private

If labour laws or environmental regulations become too onerous for them,
they can move operations to less regulated jurisdictions. So globalised
food and garment manufacturers can move to cheaper centres of production
when governments introduce minimum wages or unions win workers' rights. If
financial rules curb their ability to invent complex, risky new products
to sell, they can set up shop elsewhere. The transnational banks have been
past masters at playing off one jurisdiction against another and using the
threat of relocation to resist government controls. Much of their activity
still takes place in a shadow system beyond the states that have bailed
them out.

Nearly three years on from the near collapse of the whole system, the
structural reform that everyone agreed was needed has not materialised.
Lobbying at the heart of governments in Europe and the US has seen off
calls for the separation of investment banking from the retail banking
that takes ordinary people's deposits.

So the banks remain too big and too interconnected to fail. Vince Cable,
the business secretary, who still argued forcefully this week for that
separation, is nevertheless reduced to hoping that the ringfencing of
functions preferred by the big corporates will work. The German
chancellor, Angela Merkel ? wanting to make sure private banking
corporations would share the pain for the Greek loans they made as that
country hovers around default ? was threatened with not just relocation
but with the whole banking system being brought down again. Not
surprisingly, she backed off.

The most effective checks on transnationals are as likely to come from
NGOs and consumers as individual governments these days. Campaigners have
found new forms of asymmetric engagement that enable them to take on
corporations whose resources dwarf their own. Harnessing the same advances
in technology and instant globalised communication that TNCs have used to
build up their control, activists have brought together shared interest
groups across borders to challenge them. So for example, direct action
groups such as Greenpeace have been able to connect protesters against
transnational soya traders in the Amazon, with activists across European
countries in highly effective simultaneous campaigns against the brands
that buy from them.

When the Murdochs initially refused to appear before parliament to account
for their corporate behaviour, there was much anxious consultation of
ancient rules to see if these two foreign citizens could be forced or not.
In the end, it was probably the market that got them there, as the damage
limitation gurus advised that a dose of humble pie would be the most
effective strategy for restoring shareholder confidence. After the Milly
Dowler phone-hacking revelation, it was neither our compromised elected
representatives nor our law enforcers the police, but activists on Twitter
that brought them down. Attacking not just the brands owned by the
Murdochs but those owned by their advertisers until they withdrew from the
News of the World's pages, they played by the globalised market's

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