Chapter 18 international relations

1. Tony Clarke, 1996, “Mechanisms of Corporate Rule” Chapter 18 international relations

2. On the left is a map of McDonalds in Rome. The picture above is only partly in jest.

3. How much more powerful today? • 47 of the top 100 economies are transnational corporations (TNCs) also referred to as multinational corporations (MNCs) • 192 countries in the world, so 139 countries have a GDP that is less than the revenues of any of these 47 TNCs (in 1996) • 70% of global trade is controlled by just 500 corporations • 1% of TNCs own half the stock in Foreign Direct Investment (FDI) Clarke wrote 15 years ago

4. Clarke is stating that the TNCs know no sovereignty. If it is better for their bottom line to be a Dutch company today and an American company tomorrow, then that is what they will do. Nation-states compete with other states to lure corporations and their capital to their countries. This often means enacting policies that benefit the TNCs at the detriment of the public interest. “Through this process, stateless corporations are effectively transforming nation-states to suit their interests.” We also see the same thing happening between states in our country. sovereignty

5. “In the 1980s, the World Bank and the IMF (International Monetary Fund) used debt renegotiations as a club to force the developing nations into implementing structural adjustment programs (SAPs) in their economies…The SAP measures included large-scale deregulation, privatization, currency devaluation, social spending cuts, lower corporate taxes, expansion of the export of natural resources and agricultural products, and removal of foreign investment restrictions…In effect, the SAPs have become instruments for the recolonization of many developing countries in the South in the interest of TNCs and banks.” These policies are the Washington Consensus policies spoken of at the beginning of the course. IMF and the world Bank

6. Joseph Stiglitz in Globalization and its Discontents (2002) blamed these policies for the East Asian Economic Crisis of 1997, which occurred one year after Clarke published this article. Critics of the economic policies and ideologies of the IMF and World Bank argue that their policies increase poverty and reduce the standard of living in countries where these policies are implemented. Since 1980 there has been a push to implement these same policies in the United States with much the same effect. Other criticisms

7. “In country after country there has been a massive deregulation of finance and mergers between commercial and investment banking.” This was written in 1996. In 1999, Congress repealed the Glass-Steagal Act which had prevented these mergers. The Glass-Steagal Act had been put in place in the aftermath of the Great Depression in 1933 to control speculation. Global finance

8. “…transnational manufacturing firms can quickly move their operations around the world, in search of cheap labor, more profitable investment opportunities, and freedom from the demands of unionized workers…there is a very real danger that the forces of global competition will drag workers everywhere down to the lowest common wage standards.” Global industrial production

9. “Undercutting the capacity of nations to meet the basic food needs of their people.” 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. To pay debts, poor countries in the South “are forced to turn over valuable agricultural lands to transnational agribusinesses and to convert to cash-crop production.” “’Export or die’ is the message, but ‘export and die’ is the reality.” Similar to Southern sharecroppers during reconstruction forced to grow cotton to maintain their credit. Because they could not eat their cotton, they were forced to buy food on credit from the same general store who was extending the credit. Global agricultural production

10. Corporations taking on healthcare and education • This was one of the symptoms of impending nation-state failure that Rotberg talked about. • “Most people now feel that they have lost control over their economic, social, and ecological future. This is not only true among the poor majority in the South, following the damage done by massive SAPs, but increasingly among the majority of working, middle-class peoples in the North.”

11. “The emergence of the corporate state, however, wherein the reins of democratic governance have been taken over by corporations and banks, has completely disfigured and distorted the responsibilities of the national governments. The moral and political obligations of nation-states to intervene in the market economy have been eliminated (think Gailbraith and the absence of power in economic thought) in order to ensure that the entire national system – economic, fiscal, social, cultural, environmental, political – functions for the purpose of providing a profitable climate for transnational investment and competition in the new global economy.”

12. Clarke expresses concern with the potential for a rise in right-wing nationalism. Is the Tea Party a right-wing nationalist group? Final thought

13. “Further the idea that sovereignty precludes outside intervention doesn’t hold up. Small, poor countries are routinely dominated and influenced by larger and more powerful countries.” From the Clarke reading we find that sovereignty is also challenged by TNCs/MNCs, the IMF, and the World Bank.

14. “Armed tension and mistrust between US and Soviet camps.” The US saw the Soviets as determined to expand. Implemented a policy of containment. Proxy wars throughout the world as US and USSR backed warring factions in Asia, Africa, and Latin America. US foreign policy was often conducted primarily as a strategy in the bigger picture. US supporting dictators, military coups, and assassinations to keep pro-US regimes in power. The cold war

15. The US tends to stand out as a holdout from signing on to treaties that limit our options. Kyoto Treaty and the International Covenant on Economic, Social and Cultural Rights (signed, but sitting in committee since 1979) US and multilateral treaties

16. A cost-benefit analysis of whether to go to war will result in a decision of peace if the costs are too high, and the likelihood of achieving objectives is questionable. Balance of power

17. World government Collective security Functionalism 3rd party assistance Diplomacy peacekeeping Keeping peace

18. Protectionism: government economic protection for domestic producers through restrictions on foreign competitors. • This has its place for developing infant industries. The United States was able to industrialize effectively due to protectionist policies. After a time, however, protectionist policies become a method to protect monopoly profits by a preferred industry. Most industrialized countries modernized under protectionist policies. Protectionism

19. a policy of national isolation by abstention from alliances and other international political and economic relations. • Textbook: “US tendency to minimize importance of outside world” and “isolationism connotes ignorance”. • Isolationism = protectionism + noninterventionism isolationism

20. The US inclination toward isolationism and protectionism is as old as the republic. Alexander Hamilton, the 1st Secretary of the Treasury and one of the authors of the Federalist papers, advocated for protectionist measures to develop infant industries. Tariffs were the primary form of government revenues until the 1930s. Tariffs are a form of regressive taxation. There is a difference between protectionist policies that protect American jobs and ones that only protect profits.

21. When world leaders communicate with each other either advertently or inadvertently through mass media. Communication is indirect. Warnings to Qadafi delivered by mass media George Bush spoke of crusades as we invaded two Muslim countries. He scored points with Christian fundamentalists, but Muslims had reason for concern. Similar to saying, Come on boys, it’s Wounded Knee all over again!” teleplomacy