When Corporations Rule the World
Air Date: Week of December 1, 1995
Author David Korten says the reason why money feels tighter for middle and lower income Americans is that they’re losing out to the tremendous concentration of wealth and power by giant multinational corporations . . . who are also responsible for deepening poverty, social breakdown, and environmental decline.
CURWOOD: Ever wondered why, if you have a middle or lower income, that things seem to be getting worse and money feels tighter? Even though the government reports that the economy is steadily growing and the Dow Jones industrial stock average is trading at a record high. Author David Korten says that's because you are losing out to the tremendous concentration of wealth and power by giant corporations. Dr. Korten, a former professor at the Harvard Business School, says what is called growth is an illusion and that transnational corporate powers are responsible for 3 disturbing trends: deepening poverty, social breakdown, and environmental decline. David Korten's new book is called When Corporations Rule the World.
KORTEN: We're beginning to see that there's a lot of distortions involved in that. For one thing, the things that we measure in terms of growth are really just measuring economic activity, so a lot of the things that -- that we count as progress are really detrimental. For example, if we have an oil spill that requires cleaning it up; that's economic activity, it contributes to growth. If a person gets divorced that contributes to growth; they generally have to buy an extra house, that's real estate commissions, and set it up with appliances and so forth. But the thing that I've seen from my experience working in Third World countries is a very active process by which growth drives the poor off of their land, deprives them of their means of livelihood, so that those with more economic power can benefit. For example, in the Philippines, in the mountain province of Inget, the indigenous Igerope people have been doing subsistence farming for generations for their basic maintenance. They also do a little bit of small scale pocket mining for gold on their ancestral lands. Now those lands have been taken over by the Inget Mining Corporation, which is doing large-scale gold mining. As a consequence the people that live in the area find their soils and their water sources depleted, they can no longer grow rice and bananas, they have to go to the other side of the mountain for drinking water. So you have hundreds of thousands of people whose livelihoods are destroyed so that this one company makes enormous profits, and it all, of course, shows up as growth.
CURWOOD: Does growth have to come at the expense of people? I mean, we're told that growth means more and better jobs for people. You're saying that growth doesn't mean that.
KORTEN: It's very true that the economic growth that we're told eliminates poverty, creates jobs and so forth is in many instances actually reducing jobs and eliminating the means of livelihood of the poorest people. We now have in the world 358 billionaires. Their total net worth is somewhere around $760 billion. That's roughly equivalent to the net worth of the world's poorest 2 and a half billion people. What's -- what we face with this reaching environmental limits and this enormous inequality in the world is a need to take some very difficult decisions in the direction of equity and in terms of reorganizing how we use the sustainable output of the Earth's ecosystems to meet human needs.
CURWOOD: What responsibility do multinational corporations bear for these problems you're describing?
KORTEN: Basically, the multinational -- the phenomenon of the multinational corporation goes to the heart of it. Actually, I would call them transnational rather than multinational. Multinational is a corporation that has roots in many communities, where a transnational corporation transcends all national loyalties and obligations. And that much better describes the situation we're in now, where companies have become truly global and accountable only to a globalized financial system that places enormous demands on them to produce the maximum profits in the very short term. And that whole system is quite blind to both the social and the environmental consequences of their decisions.
CURWOOD: Is it the globalization, then, of the economy which is to blame here?
KORTEN: That's a very key piece of it. You know, we're told that the free market is the most efficient instrument for addressing the community good, and drawing back on the theories of Adam Smith. That's very interesting; if you go back and actually read Adam Smith, his ideal economy is one in which economic activity is based in small local firms. Now, those small local firms are embedded in a local community and a value system and so forth, and the owners, the small owners who are also often the workers, live in that community and they share the consequences of their decisions. When you move investment capital into a free-floating global financial system, the decision-making power becomes totally detached from community and from the consequences of the decisions being made.
CURWOOD: We're told that free trade improves things, that helps the human community. Is that true or not?
KORTEN: Well trade, as we've understood in economic theory, is trade between countries, between national economies. But the trade agreements like NAFTA and GATT are basically integrating our national economies into a single regional or global economy in which firms have complete free movement to move capital and goods wherever they wish. And what we're beginning to see is that those agreements are really bills of rights to protect the rights of corporations to operate freely in search of short-term profits without accountability to any public bodies for social standards, environmental standards and so forth.
CURWOOD: This is a pretty strong indictment of our present economic system. You're saying that under the banner of growth, in fact, transnational corporations are accelerating poverty and environmental destruction and social disintegration. Is it possible to turn back from this scenario?
KORTEN: Well, the things that are happening, and the move toward economic globalization is a result of conscious decisions. We can just as well, as a voting public, take back the power that we've yielded to corporations and change the rules in favor of more localized economies, and in favor of economies that concentrate less on providing a few consumer toys for the wealthiest among us, and instead concentrate on assuring that everyone has an opportunity to meet their basic needs for food, shelter, clothing and so forth.
CURWOOD: Well thank you very much, David Korten.
KORTEN: Thank you, Steve.
CURWOOD: David Korten's book is called When Corporations Rule the World. He's a former professor of business at the Harvard Business School. Some ecological romance is just ahead on Living on Earth. Stick around.
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