[governance] FW: <nettime> Felicity Lawrence: A mere state can't restrain a corporation like Murdoch's (The Guardian)

michael gurstein gurstein at gmail.com
Thu Jul 28 20:05:11 EDT 2011

In case anyone needed reminding about the reality of governance in this part
of the 21st century.


-----Original Message-----
From: nettime-l-bounces at mail.kein.org
[mailto:nettime-l-bounces at mail.kein.org] On Behalf Of Patrice Riemens
Sent: Friday, July 29, 2011 3:11 AM
To: nettime-l at kein.org
Subject: <nettime> Felicity Lawrence: A mere state can't restrain a
corporation like Murdoch's (The Guardian)

original to:

A mere state can't restrain a corporation like Murdoch's

Whether News Corp, banks or food giants, transnationals are not so much a
state within a state as a power beyond it

The deep corruption of power revealed by the phone-hacking scandal has led
many to question how Rupert Murdoch's News Corporation could establish "a
state within a state". MPs have trumpeted their determination to make sure
it never happens again. They will struggle.

As if to rub the point in, BSkyB's board announced it was back to business
as usual on Thursday. Despite parliament's question mark over the integrity
of its chairman, James Murdoch, the rest of the board said they fully
supported him. A few hours later the Guardian reported a new low in the saga
- allegations that Sarah Payne's mother's phone may have been hacked. But
the corporation marches on.

The fact is that the modern globalised corporation is not a state within a
state so much as a power above and beyond the state. International
development experts stopped talking about multinationals years ago,
preferring instead the tag of transnational corporations (TNCs), because
these companies now transcend national authorities.

Developing countries, dealing with corporations whose revenue often exceeds
their own GDPs, have long been aware of their own lack of power. They are
familiar with the way world trade rules have been written to benefit
corporations and limit what any one country can impose on them. They know
about the transnationals' tendency to oligopoly; and their ability to
penetrate the heart of government with lobbying. For an affluent country
like the UK, it has come as more of a shock.

While traditional multinationals identified with a national home, TNCs have
no such loyalty. Territorial borders are no longer important. This had been
the whole thrust of World Trade Organisation treaties in the past decades.
Transnationals can now take advantage of the free movement of capital and
the ease of shifting production from country to country to choose the
regulatory framework that suits them best. If restrained by legitimate
legislative authorities, they can appeal to WTO rules to enforce their
rights, as the tobacco company Philip Morris has threatened recently. It
says it will sue the Australian government for billions of dollars for
violating its intellectual property rights if it goes ahead with its plan to
ban branding on cigarette packets.

TNCs can and do locate their profits offshore to thwart any individual
country's efforts to take revenue from them. The ability to raise taxes to
provide services is a core function of democratic government, yet
governments have been reduced to supplicants, cutting their tax rates
further and further to woo corporates. Meanwhile, as the Rowntree visionary
Geoff Tansey has pointed out, transnationals have used patents and
intellectual property rights to create their own system of private taxation.

If labour laws or environmental regulations become too onerous for them,
they can move operations to less regulated jurisdictions. So globalised food
and garment manufacturers can move to cheaper centres of production when
governments introduce minimum wages or unions win workers' rights. If
financial rules curb their ability to invent complex, risky new products to
sell, they can set up shop elsewhere. The transnational banks have been past
masters at playing off one jurisdiction against another and using the threat
of relocation to resist government controls. Much of their activity still
takes place in a shadow system beyond the states that have bailed them out.

Nearly three years on from the near collapse of the whole system, the
structural reform that everyone agreed was needed has not materialised.
Lobbying at the heart of governments in Europe and the US has seen off calls
for the separation of investment banking from the retail banking that takes
ordinary people's deposits.

So the banks remain too big and too interconnected to fail. Vince Cable, the
business secretary, who still argued forcefully this week for that
separation, is nevertheless reduced to hoping that the ringfencing of
functions preferred by the big corporates will work. The German chancellor,
Angela Merkel - wanting to make sure private banking corporations would
share the pain for the Greek loans they made as that country hovers around
default - was threatened with not just relocation but with the whole banking
system being brought down again. Not surprisingly, she backed off.

The most effective checks on transnationals are as likely to come from NGOs
and consumers as individual governments these days. Campaigners have found
new forms of asymmetric engagement that enable them to take on corporations
whose resources dwarf their own. Harnessing the same advances in technology
and instant globalised communication that TNCs have used to build up their
control, activists have brought together shared interest groups across
borders to challenge them. So for example, direct action groups such as
Greenpeace have been able to connect protesters against transnational soya
traders in the Amazon, with activists across European countries in highly
effective simultaneous campaigns against the brands that buy from them.

When the Murdochs initially refused to appear before parliament to account
for their corporate behaviour, there was much anxious consultation of
ancient rules to see if these two foreign citizens could be forced or not.
In the end, it was probably the market that got them there, as the damage
limitation gurus advised that a dose of humble pie would be the most
effective strategy for restoring shareholder confidence. After the Milly
Dowler phone-hacking revelation, it was neither our compromised elected
representatives nor our law enforcers the police, but activists on Twitter
that brought them down. Attacking not just the brands owned by the Murdochs
but those owned by their advertisers until they withdrew from the News of
the World's pages, they played by the globalised market's rulebook.

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