"Corporations have been enthroned
An era of corruption in high places will follow and
the money power will endeavor to prolong its reign by working on
 the prejudices of the people . . until wealth is aggregated in a few hands
. . . and the Republic is destroyed."
[Abraham Lincoln]

Abstract

The modern corporation has come a long way since the Dutch and British East India Companies of the 1600’s, nevertheless the goal remains the same: to establish a monopoly of all trade within their sphere of influence – while continually expanding their territory.

In today’s world, companies that transact business in more than one nation are referred to as transnational corporations. These international conglomerates are the progenitors of globalization: the lust of want that roams the land in search of profit.

Globalization is the modern day’s call to arms of all lords and nobles. As used within this paper, globalization refers to the ever-increasing sphere of collective processes that consciously span the world, seeking new markets for their overlords: all in the pursuit – of that which has yet to come.

"We are witnessing an unprecedented transfer of power from people and their governments to global institutions whose allegiance is to abstract free-market principle, and whose favored citizens are soulless corporate entities that have the power to shape and break nations." [1]

THE BEGINNING

Originally, trade occurred on the local level by the use of barter: the direct exchange of one good for another. As commerce expanded, it became evident that a more efficient form of exchange was required, to better handle the increased complexity of the division of labor within a burgeoning marketplace. Indirect exchange soon came to be the preferred form of exchange. Indirect exchange uses a common medium of exchange: money.

Commerce eventually progressed from one region to another. As man’s ability to travel the earth increased, his ability to trade in non-local regions or markets increased as well. By the first century A.D., trade took place from Europe in the East to China and Japan in the West.

The Age of Exploration

The old world trade routes connected one market with another, especially the spice and silk routes. Control of the trade routes has been the coveted goal of the same families for centuries upon centuries: the will of conquest handed down from generation to generation.

The powers-that-be are still fighting over the sacred ground in the Middle East, still searching for the third note of the lost chord that has yet to be sounded.

The Middle Ages witnessed the age of exploration. Trans-Atlantic voyages in search of new worlds and new trade routes became the coveted prize. The hands of time steadily progressed from the Old World to The New World.

The Age of Aviation

With the advent of the airplane international trade became much more accessible to a greater number of people, spanning a much larger area. Once computers and modern communication were developed, trade could take place instantaneously from one end of the world to the other.

Advancements in transportation and communications increased economic globalization, not only spatially, to the four corners of the globe – but instantaneously in the temporal world as well. The boundaries of both space and time were under siege.

No stone has been unturned. No longer is it a race to round the Cape of Storms; no longer is it a race to the moon – now it is a contest for overlord of the universe; all players pay homage at the altar of Lucre; and he worships yet another. The suitors of the whore of Babylon know no respite.

"The recent quantum leap in the ability of transnational corporations to relocate their facilities around the world in effect makes all workers, communities and countries competitors for these corporations favor. The consequence is a race to the bottom in which wages and social conditions tend to fall to the level of the most desperate." [2]

Trade is no longer confined to the local, state, or national level; it now expands across the entire globe – ushering in the new world order of transnational globalization. The pursuit of profit has spread her shadow far and wide. Nevertheless, the winds of change detect a subtle undercurrent – as destinies child walks the face of the earth.

CORPORATIONS

The word corporation is from the root corpus – a body. Corporality is to have bodily existence or substance. To incorporate means to make into a body. A corporation is a legal entity or structure created according to the authority of the laws of a particular state.

Groups of people form legal corporations as bodies or entities to conduct business. The individuals are shareholders or members of the corporation. The corporation is a shell that individuals work in and through – a shape that constantly shifts to fulfill the desires of the seekers of profit.

In the Eyes of the Court, the Corporation Exists as a Legal Being or Entity.

The legal entity's existence is separate and distinct from that of the shareholders or individual members. A corporation, however, can legally act the same as a person can. It can enter into contracts; hire and fire people; sue and be sued; pay taxes; and do whatever is necessary to legally conduct business.

In addition, because a corporation is legally an entity in its own right, it is liable for its own debts and obligations – separate from its shareholders or members. 

This is the reason corporations exist: to allow individuals to have limited liability, while retaining the power to do business and incur profits, while at the same time being...

Legally Shielded From The Corporation's Liabilities And Debts.

In layman’s terms – it is being able to have your cake and eat it too. The corporate structure is truly an amazing construct, and is unquestionably deserving of further legal review. Its footprints traverse the land, leaving behind indelible marks that bare witness to that which comes after. 

TRANSNATIONAL CORPORATIONS

Corporations that have transcended local, state, and national boundaries are international entities, transacting business across national borders on a global basis – hence the name transnational corporations.

Following Word War II the League of Nations gave birth to the United Nations. International relations took center stage. The Bretton Woods Accord provided the script for the leading actors: the World Bank and the International Monetary Fund.

Who stands behind the World Bank and the International Monetary Fund? Who had the authority to sanction international institutions to control world finance? Does our Constitution grant powers to international institutions? Cui Bono?

Remember this well: a corporation is a structure that is used by its members for doing business through – it is the members or stockholders, real live people that gain from what the corporation does.

Corporations Only Answer To Their Dominant Stockholders

Bretton Woods established an international system of regulations to manage the financial transactions of world capitalism. In order to implement the master plan, the International Monetary Fund (IMF); the World Bank (WB); and The Bank For International Settlements (BIS) were created. 

The intended goal was the integration of individual national economies into one unified global market – hence the term globalization. In 1995 the World Trade Organization (WTO) was specifically created to facilitate the expansion of international trade and direct foreign investment across the globe.

THE MONEY TRAIL

It is often said, "follow the money," so let’s follow the money and see where it brings us.

The United Nations Conference on Trade and Development states that:

“World Investment Report 2005 presents the latest trends in foreign direct investment (FDI) and explores the internationalization of research and development by transnational corporations (TNCs) along with the development implications of this phenomenon.” [3]

In the preface to the World Investment Report 2005, Kofi A. Anann, Secretary General of The United Nations states:

“The globalization of production is reshaping the international economic landscape. With that, the conventional wisdom of developed countries as capital and technology exporters and developing countries as importers is gradually giving way to a more complex set of relationships. The geography of international investment flows is changing. Developing countries are emerging as outward investors, and their importance as recipients of foreign direct investment in more knowledge-intensive activities is increasing. The World Investment Report 2005, focusing on the internationalization of research and development by transnational corporations, illustrates some of these changes.”

“These recent trends have important implications for the international division of labour. The traditional view, of more complex production activities being undertaken in the North and simpler ones in the South, is less and less a true reflection of the reality. Firms now view parts of the developing world as key sources not only of cheap labour, but also of growth, skills and even new technologies.”

“As transnational corporations are the dominant players in the creation of new technologies, it matters where they undertake their research and development. Currently, only a few developing countries attract such activities on a significant scale. Most low-income countries are not participating in global research and development networks, and consequently do not reap the benefits that they can generate.” [4]

In a press release dated 1/23/06, the United Nations Conference On Trade And Development stated:

“Foreign direct investment worldwide surged to an estimated US $897 billion in 2005 - up 29% from the preceding year - and a four-year slump in flows to developed countries was sharply reversed, according to UNCTAD data released today.”

“FDI inflows rose from US $415 billion in 2004 to US $573 billion in 2005. The bulk of this increase was accounted for by increased investment in the United Kingdom, which reported inflows of US $219 billion, twice that of the United States. This is the highest figure ever recorded for a European country.” [5]

Who Gets The Money?

The above statistics clearly show that the United Kingdom received the largest inflows of foreign direct investment. It is easily understandable that the $219 billion that the United Kingdom received was the highest figure ever recorded by a European country; however, such statistics seem to be at odds with the preface to the World Development Report 2005 where it stated:

“The geography of international investment flows is changing. Developing countries are emerging as outward investors, and their importance as recipients of foreign direct investment in more knowledge-intensive activities is increasing.” [6]

Going back to the press release from The United Nations Conference on Trade and Development dated January 23, 2006; we find some very intriguing data:

“Developing countries: Overall, FDI inflows to the developing world continued to rise in 2005 - they were up 13%, to an estimated US $274 billion. Following 2004´s significant increase of 41%, this brought FDI to the highest level ever for developing countries. There were increases in all sub-regions.” [7]

As the statistics show, foreign direct investment in developing countries grew by 13%, to an estimated $ 274 billion. However, the total FDI of developed countries stands out markedly in contrast to the developing countries: 

• Developed counties - $573 billion

• Developing countries - $274 billion

One would think that the less developed countries would receive more than half the amount of investments as compared to the already developed countries of Europe and North America; however, the data shows that they did in fact only receive half as much.

And this is after a 41% increase from the year before, which means that in the last few years the amount of investment in the developing world has been mostly talk as opposed to action. The percent of increase sounds good because it is starting out from such a low level. The raw numbers placed face-to-face show what is really occurring.

The data for investment in the world’s poorest areas reveals a truly sad situation that is not getting much better. Africa contributed a mere 2.3% of world trade, received 1.7% of global direct foreign investment, and devoted 0.7% of all expenditures to research and development, and this includes South Africa.

Such A Condition Is A Disgrace To Humanity – And Needs Not Exist.

It truly is a conundrum to comprehend how countries that are home to civilizations dating back thousands of years are so undeveloped in comparison to the United States, which has only been around for a few hundred years yet rules the world. Wonders just never cease.

Rich Man – Poor Man

The disparity between those that have, and those that have not, stands out exposed in its nakedness, cast off as the shadow of world domination that it is a witness thereto.

As the executive summary of the 2005 World Development Report states:

“The principal message of the World Development Report 2005 of the World Bank to the developing countries is that they should adopt liberal policies related to foreign investment to spur economic growth and development, and that the development of binding multilateral rules relating to foreign investment would create a favorable climate for foreign investment in developing countries. This is the same argument made by the developed countries for developing new rules on investment liberalization in the WTO and in bilateral agreements with developing countries.

However, such a message, when articulated in the context of the World Bank or in the context of the WTO, simply promotes the economic interests of the North. It disregards or downplays the fact that the promised developmental benefits of investment liberalization by developing countries have not yet, by and large come about. FDI inflows, despite investment regime liberalization in many developing countries, continue to go, in large part, to developed countries and to only a few developing countries. In fact, relative to the share of FDI inflows of developed countries, the share of developing countries in general and of the poorest among them in particular, has been on the decline.” [8]

In addition, the report adds:

“Despite the preceding words of caution, the key message of WDR 2005 is that for governments at all levels, a top priority should be to improve the investment climates of their societies. To do so, they need to understand how their policies and behaviors shape the opportunities and incentives facing firms … The agenda is broad and challenging, but delivering on it holds great promise for reducing poverty and improving living standards.

However, the authors of the report make no effort to provide empirical evidence in support of the sweeping assertion that increased FDI flows would lead to reduced poverty and higher living standards in developing countries.

The report also contains no evaluation of the levels of gross and net flows, of the quantity versus the quality of foreign investment and of the country and sectoral composition of these flows. An analysis of all these aspects of foreign investment is needed to determine the net benefit.” [9]

On Who’s Watch?

Perhaps the answer for such disparity lies within the actual structure of the entities that dominate world trade: the transnational corporations. These giants of industry know no bounds or limitations as they scour the earth in search of profit.

Is it possible that entities that have no boundaries or limitations are thereby unrestrained? Who has the authority to govern transnational corporations? Do they answer to anyone, or are the self-centered desires of their majority shareholders the only voice they heed?

“International human rights law generally imposes obligations on States, although some exceptions do exist, for example, in relation to armed groups. States parties to human rights treaties have the obligation to protect individuals and groups of individuals from the actions of third parties, including business entities.

The process of elaborating a statement of universal standards on business and human rights would raise the question of the legal status of that text and whether it would impose direct legal obligations on business with regard to human rights.

The Commission might wish to consider further the effect of imposing direct legal obligations on business entities under international human rights law and how such obligations might be monitored.”

“In considering the responsibilities of business with regard to human rights, it is important to reiterate that States are the primary duty bearers of human rights. While business can affect the enjoyment of human rights significantly, business plays a distinct role in society, holds different objectives, and influences human rights differently to States.

The responsibilities of States cannot therefore simply be transferred to business; the responsibilities of the latter must be defined separately, in proportion to its nature and activities.”

“There is also a question of how to ensure respect for human rights in situations where effective governance or accountability are absent because the State is unwilling or unable to protect human rights - for example due to a lack of control over its territories, weak judiciary, lack of political will or corruption. A lack of appropriate regulation and enforcement by the State could fail to check human rights abuses adequately while also encouraging a climate of impunity.

A particularly complex issue involves the regulation of companies headquartered in one country, operating in a second and having assets in a third. There is concern that business entities might evade the jurisdictional power of States in some situations, which could lead to negative consequences for the enjoyment of human rights.” [10]

Making matters even more complicated are the many different categories of agreements, most of which end up being nothing more than a scolding or slap on the wrist of the party under review. Some are binding others are not. Some are between States with other States; others are between States and companies, etc.

“The following criteria are relevant to understanding the legal status of initiatives:

(a) Binding on companies. Constitutions and national legislation in many States include human rights responsibilities that are binding on companies. Companies themselves might also make human rights initiatives binding through inclusion of specific terms to that effect in contracts.

(b) Binding on States. International treaties such as the principal human rights treaties are binding on States parties. While international declarations are not binding on States, they do indicate a level of commitment on behalf of the State to uphold the principles in the instrument.

(c) Non-binding. The bulk of existing initiatives on business and human rights fall within the category of non-binding.”

“While each of these initiatives and standards do include references to the promotion and protection of human rights, the treatment corresponds to the relevance of human rights in relation to the overall objectives and scope in each initiative.

Thus, the ILO Tripartite Declaration specifically includes workers’ human rights, but not others, while the Global Compact refers to human rights generally without going into any specificity of which human rights are relevant.

The references to human rights in the OECD Guidelines also lack specificity. As a result, there is still a gap in understanding what the international community expects of business when it comes to human rights.” [11]

Enforcement

After wading through the mire of binding and non-binding agreements, agreements versus declarations, guidelines against rules, one finally stumbles upon the issue of enforcement.

Even if a ruling is binding, as is an international treaty between nation-states, there still remains the question: who enforces the treaty if one party decides not to abide by the agreement? The United Nations Security Council now enters the field.

“The Security Council of the United Nations has primary responsibility under the UN Charter for the maintenance of international peace and security, and its resolutions are binding on all member states.”

“The Security Council may also take enforcement measures which are more robust than peacekeeping. These enforcement powers are contained in Chapter VII of the Charter, which authorizes the Council to determine when a threat to, or breach of, the peace has occurred, and authorizes it among other things to impose economic and military sanctions.

The ‘peace’ referred to in Article 39 may involve conflicts other than those between states. At the time the Charter was established, it was envisaged that conflicts within the borders of a state could also constitute a threat to or breach of the peace, and thus that the Council could order the use of enforcement measures. The Council has broadened its definition of these cases over time, so that gross violations of human rights may now be seen as a threat to the peace, as was the case with the genocide in Rwanda.” [12]

Transnational corporations are powerful entities. The combined revenue of the top four conglomerate giants is larger than the gross domestic product of all but the top twelve independent nations of the world.

THE POWER OF MIGHT

The World Trade Organization is a consortium of member countries, including the largest nations in the world. Yet, the huge transnational corporations exert persuasive influence on both the agenda and rules of the World Trade Organization.

If four or more of the top ten transnational corporations collectively want something done, there are few stalwarts to stand in their way and survive.

As the name implies, these companies are transnational in structure: meaning they are not directly subject to the rule of any individual nation. In fact, many of the transnational corporations are larger than most nations in strictly monetary terms of economics and finance. Only international treaties offer binding resolutions with these giants of industry.

The following two tables show the revenues of the top 50 transnational corporations and the gross domestic profit of each of the 50 largest nations.

TRANSNATIONAL CORPORATIONS

[Chart Courtesy of Forbes]

NATION-STATES