How nations are held to ransom, not just by the blind force of the global marketplace but by the few who gain the most from pitting nation against nation – and what we can do about it.
A global race to the bottom
The most pertinent term used to describe the current state of international relations is “destructive international competition.” This is where nations around the world are trying to out-compete each other to attract the most investment from multinational corporations. They do this by pursuing the most “business-friendly” policies. These policies, born of the Reagan/Thatcher era and expanded since [i] are, many argue, ideologically extreme. To a marginally greater or lesser extent, they follow a right of centre agenda such as the reduction of corporation tax and the higher rate of personal tax, privatising national services, [ii] limiting environmental protection standards, [iii] subsidising the largest corporations such as banks[iv] (who repeatedly cause boom and bust economic cycles) and fossil fuel industries [v] (who are among the main contributors to climate change), minimising worker’s pay and union rights, [vi] and carry out devastatingly severe austerity public and infrastructure spending cuts. For example, UK ex-Prime Minister David Cameron (whose party are still in power) announced at the Conservative Autumn Conference 2014 that “The UK will have the most competitive corporation tax of any developed country.”[vii] He is clearly waving a flag to corporations inviting them to maximise their profits in the UK by subordinating citizen and environmental concerns. Other nations will of course also be competing to be the most attractive to inward investment from multi-national corporations in a global race to the bottom.
As we have seen in Greece with the Syriza Government and with movements supporting progressive party leaders in the USA (Bernie Saunders) and in the UK (Jeremy Corbyn), any government or potential leader elected on a mandate to pursue popular policies such as balancing the free-markets with government regulation, common ownership of minimal key industries,[viii] statutory living wages and worker’s rights, increasing public spending on infrastructure, taking control of money creation[ix] and making polluters pay will find themselves rallied against by the full might of the political, corporate and media establishment. That is, the few who benefit the most from right-of-centre policies.
Fear is whipped up by the media (mostly-privately owned [x] or co-opted such as the BBC [xi] against any deviation from the status-quo because, the argument goes, any nation taking action alone could suffer for doing so “in a world where globalisation and the free movement of capital are inescapable realities.”[xii] Arguments are made that any nation taking unilateral action could suffer a “first mover competitive disadvantage” as multi-national corporations threaten reinvestment in other friendlier, more “competitive” nations (dubbed “nation shopping”) [xiii] and to take their jobs with them. The logic behind this narrative happens to be extraordinarily convenient as non neo-liberal policies would mean marginally less profits and significantly less subsidies for corporations and it would also mean less control over a public chained to scarce resources such as fossil-fuels and debt based money (instead of renewable energy and debt free money creation) and therefore less influence in public affairs.
The mere threat of such disinvestment can not only compromise a nation’s short-term economic and geopolitical standing [xiv], but most importantly it scares voters away from supporting any real change. Those challenging the power of the “establishment,”[xv] can experience a backlash in other ways too such as being side-lined by the media [xvi] [xvii], to challenges by seemingly grassroots lobbying groups covertly backed by big money [xviii] to political parties having their funding cut by donors [xix] [xx].
Democratic processes around the world are now influenced more by the markets and the lobbyists of multi-national corporations (media, banking, health, fossil fuel, weapons, transport etc.) than by their own electorate. The term given to this is “corporatocracy”[xxi]. In this respect, most governments have conceded their national sovereignty to a higher, completely undemocratic multi-national power.
Destructive international competition is also the insidious cause of a dwindling trust democracy and establishment political parties and politicians. Voters notice little difference between the main political parties who are too scared to deviate from the status quo, from the right-of-centre business-friendly economic orthodoxy. Is this also why elections are so often won by such small margins?
In a world with no legitimate democratic global policy forum and where corporations wield huge influence over governments, global policies are being set behind closed doors. Career politicians are colluding with corporate lobbyists bypassing any legitimate democratic process. Policies such as Structural Adjustment Programs, GATS and the proposed TTIP, TISA and TPP favour corporate interests over long-term social and environmental needs [xxii].
It is not just nations that are trapped in a rut of destructive international competition, corporations are too. To stay ahead within the global market-place they are compelled to do whatever is necessary in the short-term to maximise profits less they lose out to their competitors. Long-term, less profitable, environmentally sustainable and socially beneficial initiatives are therefore far from most corporations’ top priorities. Despite this reality, it is important to note that a minority of the world’s most powerful individuals derive huge benefit from the present status quo of destructive international competition.
For any elite to remain in power, the most pragmatic strategy for doing so is through Machiavellian [xxiii] divide and rule. We are witnessing this on the international stage as nations are being played off against each other. Yet destructive competition between nations remains unchallenged by world leaders even though it increases inequality and consolidates evermore power into the hands of the few. We are now living in an era where wealthy owners of the largest corporations enjoy state socialism in the form of tax breaks, bailouts and subsidies whereas the rest of humanity endure stateless capitalism and austerity cuts [xxiv]. This state of international affairs is not merely unacceptable, topical nor newsworthy, it is scandalous. It is the scandal of the age.
To conclude that this state of global affairs is purely benign, accidental or situational is, as an argument on it’s own, wilful naivety. Our world situation is emergent, part of a natural progression of compounding influences, but that does not mean that events cannot also be purposefully and pragmatically manipulated. Pragmatism and manipulation are a natural part of our evolutionary journey as a species. But isn’t life all about learning from our mistakes, overcoming and adapting to increasingly complex levels of adversity brought about by our own hubris?
Politicians have either been A. an integral part in this corporate takeover, profiting from doing so through links to other wealthy elites [xxv] B. have accepted the situation (mostly passively) and considered themselves as pragmatic realists in a globally competitive world [xxvi] or C. have challenged the status quo and been overcome or side-lined by the overwhelming power of the establishment [xxvii].
Realism vs Idealism
The imbalance of power between multi-national corporations and national governments has fuelled destructive competition wherein nation is set against nation, community against community, person against person. Alongside local and national action, one way to re-balance the scales and to solve global problems at the same time is through multi-national grassroots democratic cooperation to regulate multi-national corporations [xxviii]. Eventually, this must happen everywhere so that corporations have nowhere to hide.
Many people argue that governments should simply ignore the aggressive threats of relocation made by multi-national corporations, corporations which don’t like the popular policies of the nation in which they do their business. They state that they would like to call their bluff or just let them relocate. They think that their nation would be better off without corporations which resist the will of the electorate [xxix]. Whatever the harsh political reality, and however much the realists and the idealists might disagree, there remains an overriding logic to implement global solutions to global problems that are chosen by cooperating people of the world.
If nations were to cooperate globally by regulating alongside one another, then this could create the across-the-board fairness we so desperately need. By acting together at the same time, governments would allay any fears of suffering a competitive disadvantage for implementing policies which fulfilled the essential needs of its people and environment.
In order to have an honest debate about the issue of which policies might constitute a threat to a nation’s short-term economic and geopolitical competitiveness and which would not, governments should separate those policies into two categories, global or national policies. Those which would not cause a threat (national policies) can be implemented immediately and without issue. At the same time negotiations could begin on the global policies which require global cooperation [xxx]. In both cases therefore, the excuse of inaction due to the need to maintain a nation’s economic competitiveness would be removed.
If all corporations were legally bound by the same global fair trade laws they could still maintain their profitability and competitiveness, while also incorporating principles which equally benefited society and the planet. This could create a safe environment for a moral breakthrough in corporate law where businesses need no longer fear hostile takeovers from their competitors or damage to the value of their shares for doing the right thing; a real win-win situation [xxxi].
With legally binding global agreements in place, national and regional governments can once again reclaim their democratic sovereignty, free from the constraints of destructive international competition. Within a level playing field of global regulation, the impulse to compete can be expressed in a safe, healthy and balanced way. Through holistic global cooperation, and mutual aid, humanity could, for the first time ever, win the liberty of real choice thus replacing the illusion of choice that is entrenched competition.
Empowerment through unity
The battle for progressive participative politics, sustainability, real prosperity, equality, peace and justice is being lost. After every shock-wave built into an inherently unstable economic system, after every terrorist backlash against illegal war interventions pushed by the privately owned media and after every environmental disaster caused by the ecocidal practices of the fossil fuel industry, another swathe of reactionary right-wing policies are pushed through. Civil liberties are scrapped and more power gets concentrated in the hands of the few – “to keep us safe and to take the necessary tough choices on the economy” etc, (generic blithe politician).
At the same time however, a growing number of local and national movements are rising up against this tyranny of the minority, including anti-austerity, pro-democracy, indigenous land rights, Occupy, People’s Assemblies, cooperatives, environmentalists, new economists, lawyers for justice, also blockade movements against fossil fuel extraction, land grabs and arms fairs. Systems thinking and systems activists are growing in number within these movements. They are the ones you hear calling on their groups to do something new, to further empower each other by uniting their movements everywhere and by including an extra global level of action.[xxxii]
Will it happen without us?
It could be rationalised that in the end, every career politician, every world leader and every CEO billionaire will want to cooperate globally because it is in everyone’s interest to do so. “If just one nation or corporation doesn’t cooperate then none will. If only one free-rides, then all are forced to free-ride.” Not cooperating would therefore guarantee a massive degradation in civil liberties, quality of life and possibly the eradication of the human species, including it’s most materially successful. The question which hangs over the above supposition is “Do people with the most power act in a rational and therefore ethical way?” Well it is, is it not, almost a proverb that immense power is the least rationalising influence upon an individual or group? History, is filled with the disaster of hubris. If power was such a rationalising influence on the individual then the CEOs of corporations who run tobacco industries would tell people not to smoke. Instead of finding ever more complex, dirty ways of extracting the planet’s oil reserves to burn whilst promoting untested techno-fixes such as geo-engineering, fossil fuel CEOs would instead promote leaving the oil in the ground and demand massive investment into the development of clean energy technologies. They would end debt slavery by changing the way money is created. They would advocate global cooperation to implement tough binding regulation to tackle global problems. But we all know that this is not happening. It is business as usual. Just one more barrel of oil. Just one more billion dollars. Just one more fix!
So, the challenge to make the world a better place belongs to humanity, not to a heroic few. It must be reiterated however that without these challenges, we would not be compelled to learn, grow, to search and to discover our long-term common benefit. Logically therefore, we should be grateful for that which we must overcome. “Necessity is the mother of invention” Plato. The Republic.
Although Global People Power is an enormously ambitious long-term project and humanity is faced with a perfect storm of global problems which demand immediate action, cooperation seems to be the most logical, exciting, empowering and peaceful way forward. Also perhaps, the most beautiful? If we succeed in implementing even just a handful of systemic global solutions to systemic global problems, then future generations, those who will stand on our shoulders, could well be celebrating us for thousands of years to come.
Finally, there is a moral argument to unite globally. In today’s interconnected world, any democratic action that fails to consider and include the whole world is still, at best, ethically partial. So let’s come together and assume power and responsibility. Let’s take global control for the good of all, let’s celebrate our diverse values and let’s progress in harmony with our surroundings. The first barrier is our imaginations, then our will to act!
[i] Conservative Home. 11/04/2008 Margaret Thatcher’s greatest achievement: New labour.
[ii] Held, David. McGrew, Anthony. Globalization. The Hyperglobalists.
[iii] China Institute of Contemporary International Relations. (Site no longer in English. Attempting to retrieve document) “What is worrisome, however, is that countries, in the context of international competition, based on the “prisoners’ dilemma,” when self-interest becomes dominant over cooperation (Balaam et al. 2001, 415), will compete for the lowest environmental standards to increase their comparative advantage (Esty et al. 1998, 16) which contributes to environmental degradation. Hence there is the potential of a race to the bottom.” http://www.cicir.ac.cn/english/ArticleView.aspx?nid=1919
[iv] “Positive Money. Subsidising the Banks.
Farnswoth, Kevin. SPERI. “The British Corporate Welfare State.”
[v] Bath, Elizabeth. Makhinjhani, Shakuntala. Pickard, Sam. Whitley, Shelagh. 11/2014. The Fossil Fuel Bailout. G20 subsidies for oil, gas and coal exploration.
[vi] TUC. TUC calls for a globally coordinated wage and public investment-led recovery strategy.
[vii] Dominiczak, Peter. The Telegraph. 01/11/2014. Cameron Pledges Tax Cuts for Millions.
[ix] Murphy, Richard. 12/08/2015. Peston on People’s QE.
[x] Occupy the Media. 23/09/2015.
[xi] Jones, Owen. 17/03/2014. It’s the BBC’s right wing bias that is the threat to democracy and journalism.
[xii] Peston, Robert. 12/08/2015. Would Corbyn’s “QE for people” float or sink Britain?
[xiii] Duke, Simon. Mail Online. 07/03/2011. Go easy on banks or we leave UK, threatens HSBC
[xiv] Wikipedia. Politics of global warming. Carbon dioxide and a nation-states economy.
[xv] Jones, Owen. 14/09/2014. (Book) The Establishment. And how they get away with it.
[xvi] Williams, Zoe. The Guardian. 20/05/2014. Green party support is surging – but the media prefer to talk about UKIP.
[xvii] Morton, Philip, David. Bernie Saunders. 11/08/2015. Laughing all the way through the media blackout.
[xviii] Wikipedia. The Tea Party. Influence of Koch Industries.
[xix] Slater, Alex. The Guardian. 04/10/2010. Super PAC’s distortion of democracy.
[xx] Riley-Smith, Ben. Labour’s biggest donors pledge to stop giving cash is “economically illiterate” Jeremy Corbyn wins race.
[xxi] Wikipedia. Corporatocracy.
[xxii] Global Justice Now.
[xxiii] Wikipedia. Machiavelli. (3 May 1469 – 21 June 1527)
[xxiv] Jones, Owen. The Guardian. 29/08/2014. It’s socialism for the rich and capitalism for the rest in Britain.
[xxv] Herbert, Lisley. Juneau Empire. 27/08/2012. Politicians must work for the public not the corporations.
[xxvi] Bremer, Catherine. Jarry, Emmanuel. 06/11/2012. China Securities Journal. France eases labour costs via tax credits, VAT hike.
[xxvii] Cave, Tasmin. Rowell, Andy. Guardian News. 12/03/2014. The truth About Lobbying. 10 ways business controls government.
[xxviii] Hinkley, Robert C. Common Dreams. 19/01/2002. Corporate Social Responsibility Report. How Corporate Law Inhibits Social Responsibility
[xxix] Jones, Owen. 14/09/2014. (Book) The Establishment. And how they get away with it.
[xxx] Global People Power. Many Minds. Potential global policies.
[xxxi] International Cooperatives Alliance.