Transcript Corporations

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From the fifteenth century on, European soldiers and sailors carried the
flags of their rulers to the four corners of the globe, and European
merchants established their storehouses from Vera Cruz to Nagasaki.
Dominating the sea-lanes of the world, these merchants invaded existing
networks of exchange and linked one to the other. In the service of “God
and profit” they located sources of products desired in Europe and
developed coercive systems for their delivery. In response, European craft
shops, either singly or aggregated into manufactories, began to produce
goods to provision the wide-ranging military and naval efforts and to
furnish commodities to overseas suppliers in exchange for goods to be
sold as commodities at home. The outcome was the creation of a
commercial network of global scale.
—Eric Wolf, A People Without History
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The rise of capitalism
 Did not just emerge out of nothing
 Traceable trends in global markets and the
colonization process
 Ecological, cultural, social costs of “doing
business”
 The global spread of “conspicuousconsumption” oriented capitalism has been
both a blessing and a curse
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About four or five hundred years ago, the
movement of goods and global
communications became dominated by “a
small peninsula off the landmass of Asia”
While European powers certainly used political
and military power to extend their control, it
was accomplished through economic
domination of trade and market expansion.
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The Modern World-System, 1974
Looked at how the capitalist systems
penetrated non-capitalist systems
A binary distinction between the core area
and the peripheral area
Argued that world economies linked by
exchange relations were largely impossible
before about 1500
The capitalist world economy, which appeared
around 1500, coincided with the expansion
of commerce
The states of Northwestern Europe were able
to impose a regional division of labor and
specialization of production - e.g. sugar in
the Caribbean, bullion in the Andes, and
cereals in Eastern Europe
Through increasingly powerful state
bureaucracies, European powers continued to
consolidate the flow of surplus toward the
core countries
The world system theory urges us to examine
the history of cultural conflicts to understand
the change in any given cultural area
Eric Wolf
Europe and the People without
History (1982)
A Critique of Civilization as a
response to appeals from indigenous
peoples to seek out the actual nature
of the roots of the exploitative and
oppressive conditions which are
forced on humanity
Wolf emphasized the importance of
the social relations that structured
the organization of production and
the distribution of goods and labor
within and between societies
In his view, the motor for the rise of
international capitalism was located in the
West, and the system itself was built on
exploitation, enslavement, genocide, and the
formation of class structures and states
It also involved ethnogenesis - the creation of
peoples without history both inside and
outside Europe
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What did Wolf mean by this statement?
People living at the margins of history
 People who live outside of the Western European
historical timeline
 But also those who live within the history of the West
but in a marginal or subordinate position
 "People Without History“ refers to those peoples
whose cultures lack a formally written articulation of
their histories
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Returning to Robbins…Where are we today?
Corporations have the same economic rights
as citizens
Governments are opening markets
economically and militarily
Nation states maintain armies to protect
investments
Governments, educational institutions, and the
media encourage consumers to spend
These are the conditions of doing business…
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For most of human history we lived in small,
relatively isolated communities
Until 10,000 years ago we were all foragers
Then came agriculture, longer work hours,
harder labor
However, additional labor maintains denser
populations
Populations continued to increase…
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The major way in which human beings organize their
production
“The concept of mode of production aims…at revealing
the political-economic relationships that underlie,
orient, and constrain interactions in a society…” (Wolf
1982: 76)
Kin-ordered
 Production and consumption organized through
kinship
 May be real or fictitious kinship
 May or may not serve to restrict access to resources
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Tributary
 the laborer has access to the means of production with the
obligation of tribute to a lord or a ruling elite
 “labor is…mobilized and committed to the transformation
of nature primarily through the exercise of power and
domination” (Wolf 1982: 80)
Capitalist
 the laborer is separated from the means of production,
access is mediated by elite owners
 came into being when monetary wealth was enabled to buy
labor power
 for labor power to be offered for sale, the tie between
producers and the means of production had to be severed
for good (enclosure movement in Europe)
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Historically specific: did not exist in 1400
 Private ownership of the means of production
(bourgeoisie)
 Distribution of goods controlled in a mainly market
economy
 People without means of production must become
laborers (proletariat)
 Development of capitalists class
 All or most of the inputs and outputs of production
are supplied commercially through the market
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The merchant, industrialists, and
financier…
Person who controls the capital,
employs the laborers, and profits
from the consumption of
commodities
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Like Wolf in “Europe and a People
without History” Robbins starts our
trip at the year 1400.
Why? This is the time pointed to by
Wolf and others as the beginning of
the rise of modern capitalism
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To understand “how did the distribution of wealth
change, and how did one area of the world come
to dominate most others economically?”
“How and why did these transformations in the
organization of capital come about?”
“How did the level of global economic integration
increase, and what were the consequences for the
merchant adventurer, as well as others?”
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What was the world like for such a person in
1400?
World population at 250 million
The largest trading city in the world was
Hangchow
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Major market-places
Major concentration of global traders
Major ports for the movement of goods
Major overland trade routes to markets in Euro-Asia
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Most political rulers in the 1400s still relied on a
tributary mode of production
Most did not encourage trade
While states valued the money garnered from
merchant-capitalists, they were still viewed with
distain
Why? Threat to the aristocracy…
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No consumer economy yet
World population lived on subsistence
economy (i.e. they produced what they
needed)
No major currency across Europe, especially
not globally
China and India richest states
Possibly no major areas of poverty
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China withdraws
 A traditionalist movement, possible response
to cultural intrusion of the “West”
Trade expansion through exploration
 Voyage of Vasco da Gama around the
southern tip of Africa, the “discovery” of the
“New World”
The rise of new navel powers such as Portugal
The huge growth in the world economy and the
amount of currency in circulation
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Massive wealth extracted extremely
quickly
Massive die off of native populations
 Population size? 8.4 million? 50100 million? (p. 49)
Not an unoccupied wilderness, but
rather a complex social arena
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Some hard numbers
 Population of Tainos in Espanola (Haiti/Dominican)
at contact (1496): 8 million?
 Population in 1514: 22,000.
 Population in 1542: 200
 By 1552 all Tainos people in Espanola where
extinct…
 95 to 98 percent of the indigenous population died as
a consequence of European contact (p. 50 )
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How did the collapse of the native
population lead to an increase in the
slave trade?
Profitable, driving commerce in the New
World
Helped to develop the plantation and
ranchero systems
Environmentally destructive
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By the 1600s, states began to become more
involved in global trade and commerce
Trading companies were very powerful
Dutch East India Company
 British East India Company
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Created massive wealth for the parent
countries
Aided the spread of capitalism
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1800, England becomes dominant over rest of
European powers
Lost of American colonies offset by the
colonization of India
Rise of industrialism in England
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Iron production increases
Development of the steam engine
Development of the cotton gin
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Increase in demand for goods
Increase in the supply of capital
Growth in Population
Expansion of Agriculture
An “English Spirit”
 Entrepreneurial spirit, Protestant ethic
State support of trade
The rise of a merchant class
A change in consumption patterns
 Introduction of sugar, coffee, tea, etc
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A new pattern of capital formation
 Money is converted to commodities
that combine with the means of
production and labor power to
produce other commodities that
are then sold for a greater sum
than the initial investment
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Requires labor force removed from access to means of
production
As long as people have that access, no need to sell
their labor
State sponsors restriction of access to means of
production
Those who control the means of production also
control the goods created
Thus labors must not only sell their labor to gain
wages, but they must also purchase the products of
their labor to survive
AND HERE WE ARE!!
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Capitalism necessarily requires growth
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Production requires capital
Production expands
Thus rise of Imperialism
Imperialism
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Colonialism seen as necessary for growth and
stability
Unequal exchange: colonies (individuals, states, etc)
produce only raw materials and must import finished
goods at a higher overall cost
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Power no longer in ownership of land, but
rather in the control of capital
New elite made up of bankers,
aristocracy, businessmen, manufacturers,
and jurists, among others, held together
through newly developed kinship ties
Capital kept within families!!!
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Massive consolidation of industry lead to the
development of huge companies dominating
the market
European and American powers act to divide
up “influence zones”
Corporations acting as “extensions of
capitalism”
Are they becoming the dominant governance
units in the world?
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A social construction of the state
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Allows private financial resources to be used for the
state…
Allows individuals to apply massive economic and
political power to accumulate wealth
Publicize Risk/Privatize Profit
Corporate charters represented a grant from
the government that limited an investors liability
to losses covering the amount of the original
investment
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Corporate law at the time was focused on protection of
the public interest
Not on the interests of corporate shareholders
Corporate charters were closely regulated by the states
Forming a corporation usually required an act of
legislature
Investors had an equal say in corporate governance
Corporations were required to comply with the
purposes expressed in their charters
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Fear of the power of corporation in the United
States led to limits being placed on their
development
Post Civil War America
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Corporations made huge profits during the war, able
to influence political process
Resulted in corporate land grabs, development of
infrastructure
Consolidation of power and wealth continued
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Because of this growth in power…
Corporations eventually gain corporate
charters into perpetuity
Reduce liability of owners (accidents)
Gained the right to operate in any way not
legislated AGAINST
Restricted minimum wage laws
Restricted “work day” legislation
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In the early and mid 1800s, (1819 first ruling)
the U.S. Supreme Court granted corporations
a plethora of rights they had not previously
recognized or enjoyed
• Santa Clara County v. Southern Pacific
Railroad Company, 118 U.S. 394 (1886) was
a United States Supreme Court case dealing
with taxation of railroad properties. The case
is most notable for the statement that
corporations are entitled to protection under
the Fourteenth Amendment
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The Fourteenth Amendment to the
Constitution, which forbids a State to deny to
any person within its jurisdiction the equal
protection of the laws, now applies to
corporations
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Corporate charters were deemed "inviolable,"
and not subject to arbitrary amendment or
abolition by state governments
• The Corporation as a whole was labeled an
"artificial person," possessing individuality,
immortality, and most importantly freedom of
speech
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What does freedom of speech allow a
corporation to do?
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Corporations are granted the same protections
an American citizen has…
Freedom of Speech
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The ability of corporations to lobby legislatures with
the same rights as citizens
The growth in corporations use of the media to
lobby consumers
Massive influence of corporations in government
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Proponents of corporate personhood believe
that corporations, as representatives of their
shareholders, were intended by the founders
and framers to enjoy many, if not all, of the
same rights as natural persons, for example, the
right against self-incrimination, right to privacy
and the right to lobby the government.
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Opponents claim that certain rights of natural
persons, such as the right to political and other
non-commercial free speech, are now exercised
by corporations to the detriment of the
American democratic process as provided
under the Constitution.
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This of course led corporations to create
conditions where they could make greater
profits
Eventually placed the rights and freedoms of
the corporation over those of the individual
The corporation came to exist as a separate
entity with its own internal logic and rules
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Western Capitalism is natural, teleology (result of all
prior action) of human progress
Humans are naturally greedy, although the poor are
lazy and stupid
The poor therefore require “masters” and no savings
to force them to work
Economy is disembodied from socio-political
structure, operates according to abstract principles
“Free” market for labor and resources to sort
themselves out by “supply and demand”
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Governments don’t “interfere” in the market except
to provide basic necessities to the lazy poor, while
the picked-on wealthy, who are our benefactors, pay
all the taxes but get nothing in return (vs. supporting
investments in military, communications,
transportation, etc.)
The wealthiest are those who sacrifice, work the
hardest, and are entrepreneurial
Hard work = wealth = God’s providence, favoritism
People have equal opportunity to accumulate wealth
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Colonialism was for civilizing the savages or for
saving oppressed people from totalitarian archaic
states
Peripheral peoples are poor because racially or
culturally inferior, not because colonized and
exploited
Major capitalist countries are the most “civilized”,
promoting peace and human rights
The UN, World Bank, and IMF are philanthropic,
development-oriented institutions
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Capitalism = democracy, with the most important decisions
made by the masses
“Economic Growth” means betterment for all; and when
wealthy do well, all do well
Standards of Living rise with global capitalism, and standard
of living is the same as quality of life
Science & Industrial Revolution spurred capitalist growth,
not vice versa
Humans vs. Nature: Human can dominate their natural
surroundings and growth knows no limits
If not “free market” capitalism, the only alternative is
“godless” communism
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As corporate libertarianism expands…
 International Bank for Reconstruction and Development
 Allowed development of markets in periphery countries
 The International Monetary Fund
 Allowed currency exchange on a global level
 General Agreement on Tariffs and Trade
 Created a forum for nations to negotiate trade policy that
eventually lead to…
 The World Trade Organization
 Global forum for trade agreements
 Intended to “level playing field” but benefits wealth elite who
drive the negotiations
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Development of the World Bank resulted in massive
lending campaigns
Resulting in large-scale debt in periphery countries
who received the World Bank loans
Why/How did this happen?
What went wrong?
 Currency backing
 Lending
 Glut in money due to Oil booms
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The change in how money is constructed
 Originally based on the gold standard in most
countries
 Bretton Woods accords: other counties would use
the American Dollar as the primary currency of trade
(as backed by gold at a rate of 35 dollars per ounce)
 Mid 1960s, US begins printing cash in excess of its
gold supply
 By 1971, US declares it will no longer re-deem
dollars on demand for gold
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This move divorced the American dollar from any tangible
base
Dollar is now “covered” by “the expectation that people will
exchange it for things of value”
“Money” became unsecured credit
And countries began to print more and more of it
Which lead to more and more lending
However, money was lent via loans with adjustable interest
rates
Debts quickly began to accumulate as loans grew beyond
the levels that borrowing counties could afford to pay back
Does this sound familiar to you personally?
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Corporate capitalism has allowed the
development of capital controllers who have
power over vast sums of wealth
This wealth is necessary for the working of the
economy/infrastructure
However, these controllers are beholden to
virtually no one
Their goals often conflict with the goals of the
state
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Modern global economy is based on a process
involving the flow of finance capital, money, and
securities, rather than the actual production and
distribution of goods and services
The flow of capital is now more important than the flow
of actual goods. By the 1990s, 90 percent of the worlds
commercial transactions involved stocks, bonds, and
commodity futures
By 2000, 75 percent of American wealth was financial
By 2003, the entire world had become integrated into a
single financial network working on a computerized
backbone.
This allows the movement of global capital across the
globe in nano-seconds
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In 2010 the number of high-net-worth
individuals in the world -- those with at least
$1 million in investable assets excluding
primary residences -- grew 8.3% to 10.9 million,
and their wealth rose 9.7% to $42.7 trillion
Wealth is still concentrated in the U.S., Japan
and Germany, which accounted for 53% of the
world's high-net-worth population
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The global flow of capital into and out of communities
How much?
On any given day, nearly 1 Trillion dollars move across
the globe
Power has consolidated into the hands of a few global
elite
Who are not restrained by government oversight…
Period
FDI Inflow
FDI Outflow
Net Inflow
1960–69
$ 42.18 bn
$ 5.13 bn
+ $ 37.04 bn
1970–79
$ 122.72 bn
$ 40.79 bn
+ $ 81.93 bn
1980–89
$ 206.27 bn
$ 329.23 bn
– $ 122.96 bn
1990–99
$ 950.47 bn
$ 907.34 bn
+ $ 43.13 bn
2000–07
$ 1,629.05 bn
$ 1,421.31 bn
+ $ 207.74 bn
Total
$ 2,950.72 bn
$ 2,703.81 bn
+ $ 246.88 bn
http://www.bea.gov/international/xls/table1.xls