When Corporations Rule the World: Second Edition [Paperback]

We always harangue socialism as an "extreme ideology," but as Korten makes clear capitalism is also an extreme ideology. Socialism concentrates power in a centralized government, creating unsupportable social and environmental costs. Capitalism concentrates power in huge private institutions (the modern multinational corporation), which also have enormous social and environmental costs. Both advance the concentration of rights of ownership without limit, to the exclusion of the needs and rights of the many who own virtually nothing. And as Korten shows, the impoverished many are growing.

As of 1992, the richest 20 percent of the global population received as much as 82.7 percent of the total world income. The poorest 20 percent received 1.4 percent. These figures indicate growing economic inequality, which is has become even more pronounced in the last decade. In 1998, the world's top three billionaires totaled more assets than the combined GNP of all the least developing countries and their 600 million people. Of the world's 6 billion people, 2.8 - that is, nearly half - were living on less than 2 dollars a day. Some 1.2 billion of that half lived on less than a dollar a day.

Inside America - the global economic trendsetter - this growing inequality that we see between nations is mirrored in microcosm. In fact, inequality and hardship is even more exaggerated in the Land of the Free. The wealthiest 10 percent now own almost 90 percent of all business equity, 88.5 percent of all bonds, and 89.3 percent of all stocks. In 1999, the total compensation of U.S. corporate CEOs was 475 times the average production worker's pay; and 29 percent of all U.S. workers were in jobs paying poverty level wages, defined as an hourly wage too low to meet the needs of a family of four. Moreover, with each new mega-merger and corporate takeover, more capital, power and control are concentrated in these already mammoth institutions. What ever happened to the anti-trust laws?

These are just a few of the statistics sited in the book, but When Corporations Rule offers more than statistical analysis. With laser precision, Korten essays economic and political history, uncovering the reasons for these global trends: including the illusion of growth, the loss of governmental oversight in the affairs of corporations, the rise of the Newtonian mechanical worldview and its subsequent devaluation of spiritual values, etc. His critique of globalization is absolutely stunning: including the effects of NAFTA, and the general policies of the WTO, the WB and the IMF. Finally, his call for localism, activism, spiritualism and an ecological awakening are inspiring and timely.

Not a stone goes uncovered. The failure of development strategies for the Third World (his stated specialty), critical discussion of traditional economic theory, the rise of PR, global poverty, currency speculation and corporate raiding, downsizing, contracting labor, automating, the loss of the small farm, the effects of Walmart and the like, ecological collapse, the coming Ecological Revolution, sustainability, socially responsible investment, systems theory, urban design, history of the current globalization protest movement, a detailed agenda for democratic change - these and so many other important issues are weaved together in a remarkable argument that will shock, sober and move you. I cannot think of a more important book for those who still have faith in the global economy. This troubled planet needs more Kortens. Bravo!

The ability of corporations to penetrate the political and cultural sectors of our society is hardly a late twentieth century phenomenon. Despite the founders' efforts to contain corporations by explicit and revocable state charters, emerging industrialists in the post-Civil War era became powerful enough to sway legislators and the judiciary to act in their behalf. Not only did corporations generally gain rights to perpetuity, but the Supreme Court declared corporations to be legal persons entitled to the same rights as ordinary citizens, in addition to limited liability. By the late 1920s capitalism had largely emerged triumphant over worker and community interests. Consumerism was instilled as the only legitimate avenue for realizing individualized "freedom."

According to the author, a form of democratic pluralism existed among the civil, governmental, and market sectors of society in the post-WWII era, but any such sectorial accommodation was mostly an aberration that came about only because of the necessity to solve the twin crises of the Great Depression (caused by corporate-led economic excess) and WWII. Any social accord that may have existed was shredded as corporations, backed by the Reagan administration, renewed their assault on the working class and relentlessly pursued self-interested global strategies. Over the last two decades, middle-class jobs have been lost, median pay has stagnated, and austerity has been imposed on the less fortunate as a profound upward redistribution of wealth and income has occurred.

Globally, the structural adjustment measures forced upon developing nations by the World Bank and the IMF to qualify for loans, ripped the fabric of those societies and have actually increased indebtedness to First World bankers. Trade agreements and administrative bodies, such as the NAFTA and the WTO, are designed to eliminate local restrictions on investments by international firms and barriers to the free movement of goods between nations. The freedom for capital to move freely among nations has also fueled rampant financial speculation unrelated to productive investment. Unconscionably, American taxpayers have been forced to bailout those engaged in extracting wealth from the developing world.

Free market ideology is used to justify the gutting of the social and legal structures of nations. But it is a disingenuous view. Free market activities posited by Adam Smith involve local, individual economic actors, none of whom have the power to control the marketplace. Unregulated market activities by huge economic entities can result in market coercion. For example, monopolistic firms can externalize costs, that is, they are powerful enough to force societies to pay for the social and environmental side-effects of their activities. For example, labor and environmental regulations are often ignored with impunity with society picking up the pieces.

The impact of corporations acting as legal persons cannot be overemphasized. Corporations overwhelm actual citizen political participation and free speech by the extent and intensity of their political lobbying and media controlling efforts. Corporations and the rich, in a form of legalized bribery, basically fund political campaigns. They also heavily sway public opinion through public relations front organizations, conservative think-tanks, and the control of the major media. The dependency of the media on advertising dollars virtually guarantees presentation of views that are compatible with corporate interests, not to mention the fact that the huge media empires are themselves transnational corporations with no interest in harming broader corporate interests.

As the author indicates, corporations have largely "colonized" the common culture. Television is the main media outlet for the inculcation of business-friendly values, which emphasizes the avid pursuit of consumption. Even political activity has become mostly the marketing of pleasing candidates. The message is incessantly and subtly delivered that a free market system is self running and stabilizing and needs little or no political interference. Of course, the reality is far different. Corporations have infiltrated government at all levels with the sole purpose of ensuring that governments take an active role in supporting the corporate agenda, or pro-business regulation. In addition, governments are left to deal with the unprofitable aspects of society or side-effects of corporate actions. The net effect is a democracy hardly worthy of the name.

The author's principal approach to this regime of corporate hegemony is to call for a rollback to self-sustaining local communities. Such recommended measures as land reform (breaking up corporate farms) and urban agriculture seem almost quaint. The author confuses his message of a return to pre-consumption-dominated life by calling for high tech solutions, such as video-phones, to link local communities. Where does he think high tech products come from other than corporate development labs? A hard-hitting analysis seems to be getting waylaid by some fuzzy spirituality.

But the most practical approach is contained in the book. Free market propaganda has to be countered and a regime of regulating big business through governmental controls must be instituted. Is there any hope for this? The Seattle protest and other citizen demonstrations show that the democracy-killing initiatives of the WTO have not gone unnoticed. In addition, it has been claimed that 25 percent of the population belongs to a cultural grouping called "Cultural Creatives," who can be expected to oppose insensitive corporate agendas. And the author takes no note of minority interests that are generally opposed to the conservative business agenda. The author wants to see a cultural transformation, but a heightened awareness of class will be needed to combat the class warfare being perpetrated on the non-elites of the world.