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Our Immoral World Order, or A World Full of Suckers
By Charles J. Reid
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The concentration of wealth may be a fact of life, but it just
doesn't seem right when 358 billionaires in the world can enjoy a
combined net worth of $760 billion, which is more than the combined net
worth of the poorest 2.5 billion of the world's people.
And the wealthiest Americans are right in there with them.
According to Forbes Magazine, in 1993 the four hundred richest Americans
had a combined wealth of $328 billion -- more than the combined 1991
gross national products shared by one billion people living in India,
Bangladesh, Sri Lanka, and Nepal.
The principle of economic justice suggests that societies
founded on some sense of human morality enable all their members --
present and future -- to have access to those things that are essential
for a healthy, secure, productive, and fulfilling life. A reasonable
person would conclude that a system that perpetuates gross economic
injustice is essentially immoral.
The numbers speak for themselves. The facts are documented.
By any measure, we live in an unacceptably immoral world. What
makes it worse is that we have allowed organizations to operate
irrespective of human will, responsibility, or accountability. People are
caught up in systems they can no longer control.
In his book, "When Corporations Rule the World" (Kumarian Press,
1995), David Korten explains why. He shows how, in this era of economic
globalization, we have allowed our non-military economic institutions to
do more harm to more people than any previous period in human history.
Only now, in the 90s with all the talk of the disappearing "American
Dream," are younger Americans beginning to feel what it's like.
There are relationships between seemingly unrelated events.
Korten explains how corporate downsizing, the Orange County bankruptcy,
the fall of the Barings Bank, the Mexican bailout, Third-World misery,
and the essential decline of American living standards are all linked to
the legal status of corporations, the decline of nation-state power, the
corruption of democracy, the values of the international financial
system, and the removal of the interests of people in communities from
being the central objective and beneficiary of economic institutions and
activity.
He explains how NAFTA, GATT, and the World Trade Organization pose a
threat to much more than local American interests. He also shows how the
IMF and World Bank policies have enabled a few hundred people to
accumulate so much wealth that the global economic system is both out of
control and an essential threat to the well being of the majority of the
world's people.
For anyone even remotely interested in how recent economic
upheavals are connected, and what the future may look like, Korten's book
is a must read. "When Corporations Rule the World" is a tour de force, a
medley, of analyses that explain the interconnection of seemingly
isolated events. The author provides a context for interpreting events.
An easy interpretation for me is that we live in a world full of
suckers -- suckers like the Indians who sold Manhattan Island for a box
full of brass bobbles, shell-game suckers at a circus, or con-men marks.
Expert economists reading Korten's book may have their
assumptions challenged. Supply-siders, monetarists, and business
magazine journalists probably all accept the hypotheses of Adam Smith in
"Wealth of Nations" and of classical economists. The theory says economic
activity is motivated by rational self-interest; competition promotes
enhanced productivity and innovation; the law of supply and demand,
along with the "invisible hand", will serve to promote the general
welfare in society.
Korten debunks all this.
Indeed, Adam Smith lived in a different world. When he wrote,
there were many small producers and owners of capital directly involved
in the management of their enterprises. In those days, there might have
been true competitions, free markets, and rational human choice.
In our world, where the top 1000 American corporations account
for 60 percent of the GNP (the balance goes to 11 million smaller
businesses), managers do not own their companies. They have one mission:
to increase their companies' profitability, irrespective of the human
consequences, or even the wills of socially responsible, rational
managers. Their strategy is to stop competition and control markets.
Korten points out that monopolies dominate many key industries.
Consolidation, buyouts, collusion and cooperation -- a.k.a. "competitive
realignment," "business partnerships," and alliances -- have replaced
direct competition. Plus, internal company transactions accounting for a
sizable portion of goods and services exchanged don't take place in
the marketplace. The absence of human control makes rational choice
impossible.
For the ideologues, Korten even points out that Corporations are
feudalistic, authoritarian, centrally planned entities. This brings me to
a trivia question: what is the 76th largest, centrally planned productive
entity in the world? Cuba! The first 75 are all corporations.
Managers, small investors, workers, and citizens in communities
where corporate entities are located will be shocked to learn that key
economic decisions are made by computer software manipulating
mathematical equations. There are almost $12 trillion! of derivative
contracts currently outstanding that were purchased on margin. They
generate hundreds of millions of dollars of financial exposure, a lot of
which is insured by taxpayers. They are controlled by computer programs.
Clearly, too many people are victims of the delusion that the system
works for them.
As the citizens of Orange County recently discovered, and as we
learned through the S&L crisis and the Mexican bailout, taxpayers are
certainly the true suckers of the century. Meanwhile, the billionaires
are laughing at the plebians all the way to the bank.
Stakeholders in the production process require stability in the
financial markets to make rational decisions. They need access to
reliable sources of investment funds at stable exchange and interest
rates. They need people to buy their products.
But now with the globalization of the economy, risk creation has
overrun financial markets for speculators and risk insurers, who thrive
on the presence of instability. Korten writes that there is essentially
no accountability. The insiders are greatly tempted to scam the system,
and the real losers ended up being the small investors, who continually
feed it money. Meanwhile more and more people around the world have less
and less money to purchase the good and services to satisfy their basic
human needs.
For ordinary citizens and consumers around the world, the future
seems bleak. The sucking sound of wealth moving from the work of billions
to the pockets of billionaires continues.
One goal would be to regain control of the economic system by placing
the interests of people at the center of economic activity.
Concluding his book, Korten outlines what has to be done. On the
high road, he calls for economic justice, and the recognition of the
sovereign right of the people in civil society to decide what uses of
capital will best serve there interests. He also supports a localized
economic system where responsibility and accountability are a major
factor in economic activity.
As for concrete policies, Korten calls for stronger anti-trust
legislation, an end to tax deductions for advertising, a financial
transactions tax, tight regulation of financial derivatives, and
preferential treatment for community banks, among many other things.
Perhaps the highest compliment Korten's book deserves is that it
is clearly written and easy to understand. It is a magnificent, well-
documented effort. The facts fit the argument.
But the ultimate question is, Will it make a difference? Or, Will us
suckers wise up?
(Charles Reid is a free lance writer living in Santa Cruz, CA.)
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Posted by Richard K. Moore - •••@••.••• - Wexford, Ireland
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