Project Corporation-Nation Vs. State-Nation

Project Corporation-Nation Vs. State-Nation

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By Gustavo Castro Soto

We are currently experiencing the imposition of the corporation-nation model for which the neoliberal model set the conditions. If this trend continues, its dominance and duration could reach until 2030 unless we find other alternatives.

The world crisis of capitalism that we are currently experiencing is interpreted by many as the crisis of this system that is already dying and that is moving towards another world economic system. However, we postulate that this crisis responds to the transition not so much of the system but of its current model, neoliberalism, to the corporation-nation model that would be the last step of capitalism. In this way, if the liberal model of the economy transitions to the welfare state model with the strengthening of nation-states after World War II that lasted for 30 years, and from there to the neoliberal model for another 30 years, currently we are experiencing the imposition of the corporation-nation model for which the neoliberal model set the conditions. If this trend continues, its dominance and duration could reach until 2030 unless we find other alternatives.

The welfare state model postulated that the state was responsible for generating the welfare of the population. Substitute imports in the face of the debacle of the world economy. Each country had to scratch itself with its own nails. Its ideological support was the Universal Declaration of Human Rights where governments committed to guaranteeing health, education, decent and safe employment, housing, the right of association and religion, among many others. Under Keynes's premises, the International Monetary Fund (IMF) and the World Bank (WB) emerged to strengthen the role of the state in national economies. Once the state apparatus is built and under the pressure of the foreign debt of the poor and developing countries generated by the multilateral banks, the big transnational capital is launched like a bird of prey for the cake that took decades to build. The commercialization of everything that exists on the planet under private property and its consequent monopolization of the world now pushes us to the corporation-nation model. Now it turns out that the IMF and the World Bank demand of governments a role contrary to the one that gave rise to them: the reduction or disappearance of the state.

Neoliberalism has been the transition model towards the corporation-nation model and not an "ideological smokescreen to hide criticism of economic policies that cause colossal imbalances in the world economy" as stated by the economist Theotonio Dos Santos. Neoliberalism has been precisely that: an economic policy to favor the endogenous accumulation of capitalism that, obviously, causes major imbalances: the poor who are getting poorer and the few are getting richer. In this way we can observe how the wealth accumulation process is oriented towards the mega transnational corporations and their banks; and even not only its extraction but also through the appropriation of wealth in territory outside its borders.

If in itself it is absurd to use macroeconomic development indices taken from classical economics books and that countless economists use them without common sense, now less than ever they can continue to be used. We refer to the indices that supposedly mark economic growth as Foreign Direct Investment (FDI) whose recipe reads: "the more FDI, the more employment." What we have observed is that the concept of "investment" has been extended to the purchase or even the merger of companies that tends towards a monopoly, control of the market and the dismissal of up to 30% of workers. Nor can we any longer use "per capita income" as if corporate profits were distributed among the increasingly poor. In the Gross Domestic Product (GDP) of a country, the percentage of the Gross National Product (GNP) is becoming less and less since the national productive chain has collapsed. Much less the "trade balance" when companies obtain profits and cause capital flight without their departure from a country reflecting benefits in the population.

The United States, Europe and Japan have not assumed the neoliberal measures that they have imposed via the International Financial Institutions (IFIs) and their free trade agreements on other countries. Neoliberal policies have not been applied globally. The least globalized countries are the richest now. However, little by little in some rich countries, including the United States, a process of elimination of social spending begins that is beginning to be felt among the population and in the increase of poverty. The impoverished South is no longer just in the South, the South is already global.

Coroporation-Nation Model

Starting in the 21st century, the corporation-nation model began to become more coherent. The trend of large transnationals is the acquisition and merger between them not only between an economic sector but also between several sectors. The big monopolies are shaping and imposing the world rules of trade. These mega-corporations are destroying everything in their path. They have their own labor, salary and health policies that can work the same anywhere in the world over and above national governments. They maintain their diplomatic relations with various governments. They develop their own values, their own identity and culture; The workers have their uniforms that identify them and transmit their ways of thinking and living, even their own hymns that workers must sing and clubs and family associations of the companies to reproduce those values ​​and identity with the company. They can move their capital and even technicians and specialists across any border. They elaborate the commercial rules in the free trade agreements and form their own international courts to defend their interests over the interests of the countries. They have plagiarized the language of human rights to incorporate them in the defense of their interests. They call the control of their merchandise by other governments discrimination; They call the subsidies unfair competition even though it is the rich countries who increase their own; The impediment of ecologically harmful investments is called an impediment to the right of investment freedom; and they call the opening of the borders of poor countries the right to equity.

Large corporations have more budgets than any other nation on the planet. They have their own private security and police; its own infrastructure and controlled territory. They also have safe access to public services and even to their electricity generating plants. They are taking over the strategic resources of countries such as oil, water, gas, biodiversity, air, sea and land. In the corporation-nation model, transnationals are above national governments and their policies must not contradict their interests. To do this, they are getting national governments to modify their constitutions and internal laws that adjust to the structure of the world economy designed by them. For them, governments will only look after the interests of the free and agile movement of capital without any restriction, without any commitment to human rights or the environment, other than their own accumulation of wealth. Not only have businessmen taken over the power of the state directly (as presidents) but they have also managed to get their staff to achieve positions in secretariats and other agencies in order to look after their interests from different trenches of the state structure. In the case of the United States, multinationals exercise powerful control over management, policies, and personnel in the state and government.

Much has already been said about how among the top 100 economies in the world, 51 are corporations and 49 correspond to countries. Transnational corporations control 70% of world trade. Among the eight largest multinationals in the world are General Motors, Wal-Mart, Ford, Chrysler, Mitsui, Mitsubishi, General Electric and Shell. If Wal-Mart were an independent country, it would be China's eighth trading partner. Its influence in countries is so great that it can influence them economically and politically. Wal-Mart is ranked 19th out of the 100 largest economies on the planet, surpassing Sweden, Norway and Saudi Arabia. It is the largest direct-to-consumer sales company in the United States, Canada, and Mexico. Wal-Mart ranks fourth in Latin America and the Caribbean with sales reaching 10 thousand 676 million dollars after the Spanish Telefónica, the American General Motors (whose capital is greater than the GDP of Australia), and the producer of Delphi auto parts. According to the Economic Commission for Latin America and the Caribbean (ECLAC) Wal-Mart is followed on the Continent by the German automakers Volkswagen and DaimlerChrysler; then the American Ford, the Spanish oil company Repsol YPF, the Korean electronics company Samsung and the Japanese Nissan. Altogether, according to information from ECLAC, the 10 largest transnational companies operating in Latin America generate annual sales of $ 115.8 billion, equivalent to 18% of Mexico's Gross Domestic Product (GDP). In Latin America, the Mexican Carlos Slim Helu is the fourth richest person in the world. Your fortune grows at an annual rate of 70% per year.

According to the Financial Times report a year ago, the United States continues to be the dominant power in terms of the highest number and percentage of transnationals among the 500 largest, with 227 (45%), followed by Western Europe with 141 (28%) and Asia with 92 (18%) although China and Japan are growing in their corporate presence. These three economic blocks control 91% of the largest transnationals. On the other hand, Latin America, the Middle East and Africa have a total of 11 among the 500 largest. In Latin America only Brazil and Mexico have world-class multinationals, while Africa has zero and Saudi Arabia controls four of the six in the Middle East. Russia has seven. The few large multinationals in Russia and Latin America are for the most part privatized state-owned companies. In the case of Mexico, we can find Telefonos de México (Telmex) and Maseca.

Among the top 10, 80% are American and 20% European. Among the top 20%, 75% are American, 20% European and 5% Japanese. Among the top 50, 60% are American, 32% European, 6% Japanese, and 5% from other regions. The United States has the largest multinationals in industry (General Electric), oil and gas (Exxon-Mobil, Chevron, Texaco), computer software and services (Microsoft), pharmaceutical products (Pfizer), banking (Citicorp), retail trade ( Wal-Mart), insurance (American International Group) and information technology hardware (Intel). The capital of these mega-corporations exceeds one trillion 979 billion dollars. These gains are thanks to the subsidies that their respective governments have given them, sucking up public resources, to the cancellation of the payment of tariffs when trading with other countries, to the exploitation of cheap labor called labor flexibility, to the exemption in the payment of certain taxes called fiscal incentives, to the exploitation of cheaper resources and inputs, to high technology and the theft of knowledge, to speculation and fraud, to the hoarding of workers' funds, among many other sources.

US transnationals dominate 80% of the top 10 retail firms; 80% of the 10 largest in information technology; and 80% of the mass media and entertainment (11 of 14) achieving the bankruptcy of local radios, television, cinema and music companies, magazines and newspapers. Regarding the military industry of the 11 largest firms among the top 500, nine are American and two European. Regarding software and computing services, the United States has six of the 10 largest companies, while Japan and Europe have the other four. The United States also controls 60% of the world's top 10 banks, followed by Europe (30%) and Japan (10%). Citicorp, Santander, BBVA, HSBC, among other banks control up to 100% of the banking system and their economies in many Latin American countries. The indebtedness generated by the banks via credits destined for Latin America, Asia and Africa, has accelerated the neoliberal policies of privatization and deregulation of financial markets and at the same time they have managed to absorb, through imposition in national laws, the hoarding of money from workers with supposed retirement funds, pensions and pensions.

Europe is the leader in telecommunications, with 40% of the 10 largest transnationals, followed by the United States and Asia, with 30. Europeans also have 50% of the main insurance consortia, followed with 40% by the United States and 10% for Japan. In gas and oil, the United States and Europe have four each of the top 10, followed by Russia and Brazil with one each. In the pharmaceutical industry, the United States and Europe dominate in the 10 largest. In electronics and electrical equipment, Japanese transnationals in particular and Asian companies in general control 70% of the 10 largest producers; Europe 20% and the United States has only one of 10. Among the largest light manufacturing firms, the United States represents 44%, the European ones 48 and the Japanese 8%. In heavy manufacturing, of the 100 largest, 32% are American, 30% European, 22 Japanese, 7% from other Asian countries, and the rest are spread over five countries. In the "personal care and cosmetics" sector, in which the United States and Europe each have 33% of the largest transnational companies, followed by Japan with 11%.

There are several theories about the evolution of the three regional powers. The Wolfowitz-Perle theory suggests that Europe will gradually become a regional power, although its transnationals have not changed much in the list of the 500 largest. Other theories see more possibilities for this development in the Asian region, especially China and Japanese transnationals, since between 2003-2004 some 14 transnationals from the region entered the list of the 500 largest in the world. Others say that the US empire is in decline by ensuring that the United States gradually loses dominance, since in 2004 around 30 of its transnationals fell from the list of the 500 largest and at the same time they entered this list, with a net loss of 14 or 5%.

Europe and the United States generate 2.5 trillion dollars in total commercial sales and employ 12 million workers on both sides according to data from the Financial Times in mid-2004. In 2003, US multinationals invested 87 billion dollars in Europe, 31% more than in 2002, while Europe invested 37 billion in the United States, which is 42% more than in 2002.


The global south is torn between various strategies and trenches of struggle. While for the social, peasant and indigenous movements of Ecuador and other countries the alternative is to take over the presidential power and the structures of the state; For other sectors such as the United States and other European countries, the fight strategy focuses on the manifestation and blocking of the scenarios where companies and their allies (governments) negotiate treaties and impose agreements in order to prevent their progress, as in the case of the World Trade Organization (WTO), the G-8 and other “summits” where precisely a few arrive and fit at the top. But other sectors focus on the boycott against the global instrument that are the International Financial Institutions (IFIs) and the foreign debt they generate, or against the same emerging subject of this new model: the transnational mega-corporations where their counterpart, the consumer, be empowered. However, to the extent that the state steps aside, leaving total control of the economy in the hands of the transnationals, we now observe a shift in the confrontations. It is no longer between society and government, but between society and transnationals. This has led other urban, peasant and indigenous sectors to make the determination of direct confrontation by burning Monsanto plantations or stoning McDonalds establishments. The conflict is now manifesting itself against transnational companies that claim or have achieved almost absolute control over oil, gas, electricity, seeds and food, land, transport, telecommunications, water or other resources. The conflicts in Bolivia, Ecuador, Argentina, Mexico, Guatemala, Haiti, El Salvador, Chile or the Dominican Republic among many others throughout Latin America and the Caribbean, but also in Europe and even in the United States itself, reflects the claim of the demand of the role of the state to regulate the ambition of transnational corporations. These social outbursts and their resolution question the weakness of governments and multilateralism in the face of the corporation-nation model that is being imposed where companies rule, and governments are silent. The peace agenda must be focused today on the attention to strengthening democracy and nation-states in cultural plurality, the basis for building peace; as well as attending to the new subject of peace: the poor and society that as a whole seeks to stop ambition and the accumulation of wealth, the source of the violent conflicts that occur today.

Advocacy in public policies, although important, is not everything. It "affects" but the relationships are not modified. Certain achievements are achieved, if they are achieved and if the actors who promote it do not fall into the subtle charm of power by playing the game of masking the effects of neoliberal policies. In any case, the central danger is to make this path absolute as the only and most viable path, discarding other trenches of struggle and ways of generating change. Absolutizing the impact on public policies is to show that the current economic model is the good one and it only remains to “humanize” what is not human in itself and is not humanizable: the predatory competition of capitalism. Fukuyama is not right, the story is not over. The Third Way does not question the free market in the neoliberal style nor is it a different thing between capitalism and socialism.

The great social, indigenous and peasant mobilizations that are happening all over the planet raise the difficulty of defining the right interlocutor so that the demands are heard. But wanting to be only heard is not erecting oneself as an actor or subject of change. Hence, another path that is being built is indigenous autonomy in Chiapas where the alternative is sought by walking. You are looking for and you are walking. The Zapatistas did not propose a new national project because the process of dialogue and negotiation that was truncated by the government and its army was not completed. What they proposed was then the way to build it: dialogue.

In the last decades we have seen impressive social mobilizations in many countries, which has not been enough to turn the country's course in favor of the impoverished majorities. We have also seen new rulers who have tried to confront imperial and corporate power and have fallen into the game of their interests most of the time. In such a case, what is needed is a new people and a new government that, simultaneously and in alliances with other peoples and governments, doggedly confront the mega-corporations and the imperial power. In Latin America there are signs in Venezuela, Argentina, Brazil or Uruguay with more or less successes for some or for others. Mexico will now debate, facing the 2006 presidential succession, in this dilemma of accelerating the corporation-nation model or a new alternative nation project.

For more information: ( CLAES - Latin American Center for Social Ecology; James Petras, The Economic Base of Imperial Power, Mexico D.F. Saturday August 21, 2004; Financial Times ("Special Report FT Global 500", 5/27/04); Financial Times, 6/9/04; Theotonio Dos Santos Professor at the Fluminense Federal University and Coordinator of the Chair and UNESCO & shy; United Nations University on Global Economy and Sustainable Development.

* Gustavo Castro Soto
Center for Economic Research and Community Action Policies

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