When Corporations Rule the Worldby David C. Korten
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In When Corporations Rule the World, David Korten examined the devastating effects of transnational capitalism. Now, in his new book, Korten provides a detailed blueprint for a more humane, less destructive world economic system. Drawing on ecosystem models developed by today's leading biologists, he invites us to envision a world of locally rooted market economies that promote political participation, nurture creativity, encourage stakeholder ownership, and defend community interests against commercial excesses.
—Archbishop Desmond M. Tutu, Nobel Peace Laureate
“Anyone serious about the systemic crisis we now face ought to read this updated version today. Korten captures the devastating and increasingly threatening dynamics of the corporate-dominated global system and has offered a vibrant, well-written, and important strategy for moving us beyond its destructive economic, social, and ecological logic.”
—Gar Alperovitz, author of What Then Must We Do?
“If every corporate leader who believes implicitly that consumerism is the path to happiness (and that rampant development is the road to global prosperity) were to read When Corporations Rule the World with an open mind, that world just might have a chance of becoming a better place for us all.”
—Toronto Globe and Mail
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When Corporations Rule the World
By David C. Korten
Berrett-Koehler Publishers, Inc.Copyright © 2015 The Living Economies Forum
All rights reserved.
From Hope to Crisis
People who celebrate technology say it has brought us an improved standard of living, which means greater speed, greater choice, greater leisure, and greater luxury. None of these benefits informs us about human satisfaction, happiness, security, or the ability to sustain life on earth.
The last half of the twentieth century has been perhaps the most remarkable period in human history. Scientifically we unlocked countless secrets of matter, space, and biology. We dominated Earth with our numbers, technology, and sophisticated organization. We traveled beyond our world to the moon and reached out to the stars. A mere fifty years ago, within the lifetime of my generation, many of the things we take for granted today as essential to a good and prosperous life were unavailable, nonexistent, or even unimagined. These include the jet airplane and global commercial air travel, computers, microwave ovens, electric typewriters, photocopying machines, television, clothes dryers, air-conditioning, freeways, shopping malls, fax machines, birth-control pills, artificial organs, suburbs, and chemical pesticides— to name only a few.
This same period saw the creation of the first consequential institutions of global governance: the United Nations, the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade (GATT). Western Europe was transformed from a continent of warring states into a peaceful and prosperous political and economic union. The superpower conflict between East and West, and its dark specter of nuclear Armageddon, already seems a distant historical memory, eclipsed by a rush of business deals, financial assistance, and scientific and cultural exchanges. There has been a dramatic spread of democracy to nations formerly ruled by authoritarian governments. We have conquered many once-devastating illnesses such as smallpox and polio. In just the past thirty years, we increased life expectancy in developing countries by more than a third, and cut their infant and under-five mortality rates by more than half.
One of the most significant human commitments of the last half of the twentieth century has been to economic growth and trade expansion. We have been spectacularly successful in both. Global economic output expanded from $6.4 trillion in 1950 to $35.5 trillion in 1995 (constant 1997 dollars), a 5.5-fold increase. This means that, on average, we have added more to total global output in each of the past four decades than was added from the moment the first cave dweller carved out a stone axe up to the middle of the present century. During this same period, world trade soared from total exports of $0.4 trillion to $5 trillion (1997 dollars)—an 11.5-fold increase, and well over twice the rate of increase in total economic output. More than a billion people now enjoy the abundance of affluence.
These are only a few of the extraordinary accomplishments of the last half-century. We have arrived at a time in history when we truly seem to have the knowledge, technology, and organizational capacity to accomplish bold goals, including the elimination of poverty, war, and disease. This should be a time filled with hope for a new millennium in which societies will be freed forever from the concerns of basic survival and security to pursue new frontiers of social, intellectual, and spiritual advancement.
A Threefold Human Crisis
The leaders and institutions that promised that growth and development would bring this golden age are not delivering. They assail us with wondrous new technological gadgets, such as airplane seats with individual television monitors, and an information highway that makes it possible to connect to the Internet while sunning ourselves on the beach. Yet the things that most of us really want— a secure means of livelihood, a decent place to live, healthy and uncontaminated food to eat, good education and health care for our children, a clean and vital natural environment—seem to slip further from the grasp of most of the world's people with each passing day.
Fewer and fewer people believe that they have a secure economic future. Family and community units and the security they once provided are disintegrating. The natural environment on which we depend for our material needs is under deepening stress. Confidence in our major institutions is evaporating, and we find a profound and growing suspicion among thoughtful people the world over that something has gone very wrong. These conditions are becoming pervasive in almost every locality of the world and point to a global-scale failure of our institutions.
Even in the world's most affluent countries, high levels of unemployment, corporate downsizing, falling real wages, greater dependence on part-time and temporary jobs without benefits, and the weakening of unions are creating a growing sense of economic insecurity and shrinking the middle class. The employed find themselves working longer hours, holding multiple part-time jobs, and having less real income. Many among the young—especially of minority races—have little hope of ever finding jobs adequate to provide them with basic necessities, let alone financial security. The advanced degrees and technical skills of many of those who have seen their jobs disappear and their incomes and security plummet mock the idea that simply improving education and job training will eliminate unemployment.
In rich and poor countries, as competition for land and natural resources grows, those people who have supported themselves with small-scale farming, fishing, and other resource-based livelihoods find their resources are being expropriated to serve the few while they are left to fend for themselves. The economically weak find their neighborhoods becoming the favored sites for waste dumps or polluting smokestacks.
Small-scale producers—farmers and artisans—who once were the backbone of poor but stable communities are being uprooted and transformed into landless migrant laborers, separated from family and place. Hundreds of thousands of young children, many without families, make lives for themselves begging, stealing, scavenging, selling sex, and doing odd jobs on the streets of cities in Asia, Africa, and Latin America. There are an estimated 500,000 child prostitutes in Thailand, Sri Lanka, and the Philippines alone. Millions migrate from their homes and families in search of opportunity and a means of survival. In addition to the 25 to 30 million people working outside their own countries as legal migrants, an estimated 20 to 40 million are undocumented migrant workers, economic refugees without legal rights and with little access to basic services. Some, especially women, are confined and subjected to outrageous forms of sexual, physical, and psychological abuse.
The world is increasingly divided between those who enjoy opulent affluence and those who live in dehumanizing poverty, servitude, and economic insecurity. While top corporate managers, investment bankers, financial speculators, athletes, and celebrities bring down multimillion-dollar annual incomes, approximately 1.2 billion of the world's people struggle desperately to live on less than $1 a day. One need not go to some remote corner of Africa to experience the disparities. I see it daily within a block of my apartment in the heart of New York City. Shiny chauffeured stretch limousines with built-in bars and televisions discharge their elegantly coifed occupants at trendy, expensive restaurants while homeless beggars huddle on the sidewalk wrapped in thin blankets to ward off the cold.
Evidence of the resulting social stress is everywhere: in rising rates of crime, drug abuse, divorce, teenage suicide, and domestic violence; growing numbers of political, economic, and environmental refugees; and even the changing nature of organized armed conflict. Violent crime is increasing at alarming rates all around the world.
The seemingly impossible dream of millions of young people in the United States—especially those of color—is simply to have a stable family and survive to adulthood. More than half of all children in the United States are being raised in single-parent families. On an average day in the United States, 100,000 children carry guns with them to school, and forty of them are wounded or killed. Rare is the city, or even small town, in which people feel truly secure in their property and persons. Private security guards and systems have become a major growth industry around the world.
In developing countries, an estimated one-third of wives are physically battered. Of every 2,000 women in the world, one is a reported rape victim. The number of actual rape victims is obviously much higher. There may be as many as 9,000 dowry-related deaths of women in India each year.
In the era of "peace" that began in 1945 with the end of World War II, more than 20 million people have died in armed conflicts. Only three of the eighty-two armed conflicts between 1989 and 1992 were between states. The remainder were wars in which the combatants were killing those of their own nationality. Ninety percent of war casualties at the beginning of the twentieth century were military combatants. As the century ended, 90 percent were civilians.
The increase in the number of internal wars is a primary cause of an alarming increase in the number of refugees in the world. In 1960, the United Nations listed 1.4 million international refugees. By 1992, the number had grown to 18.2 million. And it was estimated that an additional 24 million people were displaced within the borders of their own countries.
Environmentally, although there have been important gains in selected localities in reducing air pollution and cleaning up polluted rivers, the deeper reality is one of a growing ecological crisis. The ever-present threat of nuclear holocaust has been replaced by the threat of increasing exposure to potentially deadly ultraviolet rays as the protective ozone layer thins. The younger generation worries whether they may be turned into environmental refugees by climate changes that threaten to melt the polar icecaps, flood vast coastal areas, and turn fertile agricultural areas into deserts.
Even at present population levels, nearly a billion people go to bed hungry each night. Yet the soils on which we depend for food are being depleted faster than nature can regenerate them, and one by one the world's productive fisheries are collapsing from overuse. Water shortages have become pervasive, not simply from temporary droughts but also from depleted water tables and rivers taxed beyond their ability to regenerate. We hear of communities devastated by the exhaustion of their forests and fisheries and of people much like ourselves discovering that they and their children are being poisoned by chemical and radioactive contamination in the food they eat, the water they drink, and the earth on which they live and play.
As we wait for a technological miracle to resolve these apparent limits on continued economic expansion, as of 1999 some 77 million people were being added every year to the world's population. Each new member of the human family aspires to a secure and prosperous share of Earth's dwindling bounty. In 1950, the year I entered high school, the world population was 2.5 billion people. On October 12, 1999, world population officially reached 6 billion. The United Nations estimates that it will reach nearly 9 billion by 2050. Bear in mind that demographers make their projections using mathematical models based only on assumptions about fertility rates. These models take no account of what Earth can sustain. Given the environmental and social stresses created by current population levels, it is likely that if we do not voluntarily limit our numbers, famine, disease, and social breakdown will do it for us.
Taken together, these manifestations of institutional systems failure constitute a threefold global crisis of deepening poverty, social disintegration, and environmental destruction. Most elements of the crisis share an important characteristic: its solution requires local action—household by household and community by community. This action can be taken only when local resources are in local hands. The most pressing unmet needs of the world's people are for food security, adequate shelter, clothing, health care, and education—the lack of which defines true deprivation. With rare exception, the basic resources and capacity to meet these needs are already found in nearly every country. The natural inclination of local people is usually to give these needs priority. If, however, control lies elsewhere, different priorities usually come into play.
Unfortunately, in our modern world, control seldom rests with local people. More often it resides either with central governmental bureaucracies or with distant corporations that lack both the capacity and the incentive to deal with local needs. The result is a crisis of confidence in our major institutions.
Loss of Institutional Legitimacy
Public-opinion polls reveal a growing sense of personal insecurity and loss of faith in major institutions all around the world. Particularly telling is the public attitude in the United States, the country that defines for many of the world's people their vision of prosperity, democracy, and high-tech consumerism. Here the polls tell us that the real dream of the vast majority of Americans is not for fast sports cars, fancy clothes, caviar, giant TV screens, and country estates, as the popular media might lead one to believe. Rather, it is for a decent and secure life—which American institutions are failing to provide. The single greatest fear of Americans in 1994 was job loss. Only 51 percent of nonmanagement employees in the United States felt that their jobs were secure—down from 75 percent ten years earlier. A similar drop occurred in the sense of job security among management employees. Fifty-five percent of adult Americans no longer believed that one could build a better life for oneself and one's family by working hard and playing by the rules. The US job market has subsequently improved, but the long-term trend is toward growing instability and insecurity.
The Louis Harris polling organization's annual index of confidence in the leaders of twelve major US institutions fell from a base level of 100 in 1966 to 39 in 1994. At the bottom of the list were the US Congress (8 percent of respondents expressed great confidence), the executive branch of government (12 percent), the press (13 percent), and major companies (19 percent). Meanwhile, the Louis Harris "alienation index"—which taps feelings of economic inequity, disdain from people with power, and powerlessness—rose from a low of 29 in 1966 to 67 in 1995. A Kettering Foundation report captured the mood of the American electorate: "Americans ... describe the present political system as impervious to public direction, a system run by a professional political class and controlled by money, not votes." International polls generally support similar results for other industrial countries.
Confidence in our major institutions and their leaders has fallen so low as to put their legitimacy at risk—and for good reason. On the threshold of the golden age, these institutions are working for only a fortunate few. For the many, they are failing disastrously to fulfill the promise that once seemed within our reach.
Excerpted from When Corporations Rule the World by David C. Korten. Copyright © 2015 The Living Economies Forum. Excerpted by permission of Berrett-Koehler Publishers, Inc..
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Meet the Author
David C. Korten is a cofounder and board chair of YES! Magazine, a cochair of the New Economy Working Group, the founder and president of the Living Economies Forum, a member of the Club of Rome, a founding board member emeritus of the Business Alliance for Local Living Economies, a former associate of the International Forum on Globalization, and a former Harvard Business School professor.
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David Korten has delivered! Korten outlines historically how global corporations have evolved into their present state of man-eating, money hungry machines. In light of the current world situation, Korten gives answers to people having doubts about the current world order. With the US industrial market and media being totally monopolized Korten gives insight and hope to those who dare to question the authority of the global corporation.
A book Review: Thumbs Up When Corporations Rule the World by David C. Korten This is a really great book! Good exposure, fabulous statistics, a real ¿must read¿ for anyone wanting the hard facts about globalization. The book is full of statistics like the following: A Nike shoe costing from $75-$ 135 actually costs Nike just $5.60 to produce. Of this entire price the 3rd world worker gets $0.15 hr. Or that the $20 million Michael Jordan received in 1992 for promoting Nike shoes exceeded the entire annual payroll of the Indonesian factories that made Nike shoes. Korten analyzes corporate history noting that Corporations became ¿legal¿ persons in 1886 when the Supreme Court so declared. This was prior to African Americans or women being legal persons! And corporations stripped individual states of their authority over them. Korten calls for us to transform the global to empower the local and calls for the people to take the corporate authority away. This sounds great! But easier said than done. Korten sounds that alarm that globalization like the WTO takes away the sovereign rights of individual nations. Along with many others he sees Corporations as ¿sitting above¿ the nation state. This is where we would disagree. While globalization is the process through which these mega corporations go around ripping off the third world¿we have yet to see corporations mounting their own military armies when they come into conflict with other corporations. We see imperialism as a world process, not just capitalism on a world scale. Imperialism is the next higher stage of capitalism. While corporations can straddle different countries¿they remain rooted in their own nation state. In fact the state is an important arena of struggle between contending national corporations¿with the state often stepping in to bail out industries, bankrupt companies etc.¿all dependent on what is in the national interests. The state is an extremely important arena in the struggle between corporations. Here battles go on over Gov. policy towards ailing industries, or bankrupt countries, over how monetary, financial and trade agreements are determined. That said, as anti-imperialists we were surprised to find only one reference to ¿imperialism¿ in the entire book¿and this was a quote by someone else.
This book is a great resource for people that are frustrated with the current state of the world economy. The author offers some viable solutions to our continuing economic crisis.
I'd really rather not rate this book. However, here's a review: I read it for my International Political Economy class for a book presentation and since I had one week to read it and was taking 3 other classes at the same time I decided to split reading the book with a classmate. I read the first 3 parts/chapters. I wanted to get a general info about the author to get an idea of how the book is going to be structured and so I have to say this I felt kinda intimidated criticizing this knowing he was a faculty at Harvard Graduate Business School. It was informative especially since he gave multiple examples of case studies to explain the effect of corporations. However the general premise of the book is around the notion that corporations is this new form of colonization that its power is exceeding any governmental influence. However, an alliance between the world’s largest corporations and the most powerful governments does exist, which only exist thanks to money and self-interest and the freedom to move money and goods anywhere in the world without governmental interference. The author claims that Corporate Globalization is the product of international decisions and policies promoted by the WTO, World Bank, and IMF. Find below a detailed summary of the first 3 chapters. My classmate talked about how the author suggested that corporations should take responsibility and does offer solutions to the problem in the other 3 chapters.