The case of corporate reparations

Global banking group Barclays has just paid 33 billion rand (#2.9
billion or $5.5 billion) for a controlling stake in South African bank
Absa, a cash injection that supporters of the deal have hailed as good
news for Africa's largest economy. Critics have slammed the deal as
likely to benefit mainly foreign shareholders and lobby group Jubilee
South Africa have called for Barclays to pay reparations for doing
business with the apartheid regime. In the context of overwhelming
corporate power devoid of ethics and based on the primacy of profits,
this article charts the strong moral case to be made for reparations
from corporations who cause suffering because of their actions.

Let's not kid ourselves. This world's socio-economic engine runs on
capitalism, and corporations are driving the bus. Ever since the end of
the Second World War, the power of transnational corporations has been
in the ascendancy while that of organised labour, civil society, and
the State has declined.

This rise - the spreading reach of financiers and businessmen into
every corner of the globe, with no place free from a Coca-Cola sign and
a marketing team - of corporate power in the latter half of the 20th
Century has been well documented, starting with Dwight Eisenhower's
prophetic warning in 1961 about the domination of America by an
military-industrial complex. The fact that Eisenhower only warned the
American people after serving as President hints at, even back then,
the dark power of corporations to muzzle 'elected' politicians. Noam
Chomsky, Gore Vidal and others have since charted the rise of the
corporate (and branded) sun, an ascent yet to reach its apex.

The fall of the Berlin Wall and the subsequent end of an alternative
to Yankee-style capitalism - known for its neo-liberal, trickle-down
theories of economic nirvana and pushed, punted and rammed home by IMF
and World Bank bureaucrats - marked the beginning of a sustained
process of hyper-consolidation of corporate power and the total
integration of each local economy into one financial system. We've
noted and tagged this process. We've given it a name, globalization.

And it is a process accountable only to a specific minority, the
shareholders of the transnational corporations that are leading the
global economy. Shareholders, it might be pointed out, are almost
always interested in one thing, the maximisation of profit in the
shortest period of time possible.

The 1990s saw not only the opening of virgin markets in Eastern
Europe, Russia and elsewhere, but also the increasing use of stock
options as an incentive for corporate management. Whether by design or
by accident, stock options for management has resulted in an alignment
of the interests of corporate brass and of shareholders -profit.
Neither God nor glory factors into today's equation. The days of the
wise chairman of the board, the old man who had built the company up
from two pots and a piece of string, looking after the community that
had spawned his company are lost in legend and myth. At most, modern
transnational corporations have only the faintest of ties to
geographical locations or people. They have become divorced from
communities, economically, politically and ethically.

An ethical transnational corporation is an oxymoron. When risk
analysts sit down at conference tables, the end result of any corporate
action is assessed according to profitability factors. If it does not
make a profit (or a small profit at high risk), an action is deemed
unworthy of pursuit. The converse is also true; highly profitable
actions at the lowest possible risk are extremely attractive. The
ethical component of an action is not considered, and, if it is, it is
usually weighed in as a risk factor (i.e. the bad press and damage to a
brand that an unethical action (like using sweatshop labour) can
cause). In all cases, the determining factor is profit.

Not all organisations or groups of human beings act in this manner. In fact, most don't. The ethical considerations of actions are at the
fundamentals of a lot of decision-making. For example, societies often
try to build legal codes on their moral codes. Aristotelian ethics and
politics are quite explicit on this point; the reason behind
legislation is to make men and women moral. At the very least, it is
hoped that laws reflect society's morals (what those morals are is at
the heart of most major disputes within communities), although this is
often subverted by the vested interests of politicians and their
backers.

Philosophers and religious leaders for millennia have been promoting
the primacy of morals; one should do A because A is the morally correct
thing to do. While it is very hard to implement morally right actions
all of the time, most people make an honest attempt at a near
instinctive level.

Transnational corporations do not subscribe to this primacy of morals. They believe in the primacy of profits, and that is why we see, over and over again, transnational corporations working with immoral regimes and engaged in shady practises. From no-bid contracts in Iraq, to oil for the Burmese junta and its tanks, to sweatshops in Central America stitching branded sneakers together for First World teenagers, corporations are engaged in immoral activities, working in collusion with unethical parties. Why? Because it is profitable to do so.

The abolition of transnational corporations is not an achievable goal
in the short or even medium-term. Not only will this not occur any time
soon, the likely outcome of globalization is, ironically enough, the
withering away of the State. The signs are in contracts and budgets
across the world. Governments have been increasingly outsourcing their
traditional activities - those actions which seek to achieve the public
good - to corporations; social services, such as healthcare and rubbish
collection, have been outsourced to private companies on the economic
argument that the private sector is more efficient (read
cost-effective) than the State. Even the core of the State and its
monopoly on legitimate force, is slowly being outsourced. The cutting
edge of penal theory deals with how best to outsource the prison
system, in its entirety, to private firms that transport, house and
discipline inmates. The world's most powerful military moves these days
with a critical baggage train of private companies that do everything
from transport and cooking of food, to maintenance of military
equipment, to the provision of 'security consultants'.

Citizen pay taxes in return for protection and various social goods
(healthcare, education, etc.) from the State. The State now pays the
private sector to deliver these social goods and protective services.
Sooner or later, someone will decide to cut the middleman out of this
equation.

Further, governments are rapidly losing the ability to set their own
economic policies, except within pre-determined limits. Economic
policies that are unfriendly to corporations (living wage, perhaps) can
provoke massive capital flight in the short-term and disinvestment in
the longer-term. As many jobs have become tied (often through
contractors and other such middlemen) to the activities of
corporations, capital flight and disinvestment means job losses and,
possibly, economic collapse. This economic threat has resulted in
countries throughout the developing world scrambling over each other to
provide the cheapest labour with the kindest corporate tax system. This
is George Monbiot's infamous race to the bottom, and it is a direct
result of the economic power that corporations hold over governments.