June 2005: Time to Tame Corporate Power

CEOs expect gov'ts to serve only them—and most gov'ts do
June 1, 2005

As I was scanning the latest documents describing WTO negotiations on its services agreement, the GATS (General Agreement on Trade in Services), I came across a quote that reinforced for me how much corporations have come to dominate our political life.

The quote was from Thailand’s Supachai Panitchpakdi, Director-General of the World Trade Organization. He was taking questions from a gathering of CEOs of global service companies, and one asked him what it took to “get things going.”

While he acknowledged that governments and politicians had to “manage” the process, he said it was corporations who had to design and drive it. According to Panitchpakdi: “I think we need consistent pressure coming from the private-sector side. We need governments who understand what kind of interests you have in this round [of negotiations]...So I would say that, when you have active participation from the private sector, the political agenda will be always more balanced.”

Needless to say, the WTO head said this with a completely straight face because he absolutely believes it. But he revealed in his remarks that what he thought needed balancing was the apparently undue influence of government. In designing a world trading system—but particularly corporate access to and privatization of vital public services—it is the corporations that count. Governments, which are supposedly mandated to look after the public interest, are just there to manage the process.

Remarks made in such private settings are rarely reported, so the public is just as rarely made aware of how the world’s health care, education, and municipal services are in the process of being handed over to global corporations. The parallel at the national level is more transparent, as we saw recently with the signing of the Security and Prosperity Partnership of North America by the leaders of Mexico, Canada, and the United States. The title of the accord—which sets the tone and structure for virtual annexation—was lifted almost word for word from a report by the most powerful corporate organization in Canada: the Canadian Council of Chief Executives (CCCE).

Founded in 1974 and first called the Business Council on National Issues (BCNI), the CCCE consists of the CEOs of the 150 richest companies in Canada. This extraordinarily influential organization is not a lobby group in the normal sense of the word. They have been dictating fiscal, trade, and economic policy to governments since the early 1980s. Moving beyond the old-fashioned approach of lobbying government each time their interests seemed threatened, the BCNI/CCCE sought to anticipate governments’ moves and strike before government could. They were stunningly successful with the Mulroney government and in some cases—such as competition law—actually wrote the legislation they wanted and presented it to the federal government. In this example, Mulroney passed the legislation virtually unchanged.

In the spring of 1994, the then BCNI, furious that Paul Martin’s first budget did not cut billions from social spending as recommended, delivered its policy prescription to the Finance Minister: “A Ten-Point Growth and Employment Strategy for Canada.” The plan was an aggressive corporate wish list that included huge cuts to social programs, a deliberate moderate economic growth policy, using any surpluses to pay down the debt (rather than re-invest in social programs), massive corporate tax cuts, and decentralization. Within four years, Martin delivered on almost every item.

The fact that our nation has been effectively governed according to the priorities of 150 global corporations is now so “normal” that it is almost never remarked upon. Yet there is an enormous disconnect here that goes beyond the obvious question of just how anti-democratic this situation is. I am speaking here of the irrefutable fact that the corporate sector which now claims the right to define our nation has reached unprecedented levels of corruption and social irresponsibility. For the past several years we have witnessed the spectacle of almost unimaginable greed, fraud, lying, and outright theft from the men who were the heroes of capitalism.

The roots of this cultural pathology go to the relentless drive for deregulation and the resulting corporate contempt for the laws that remain. Since the early 1980s, ethical behaviour has even been equated by some business theorists with violating fiduciary responsibility. University of Chicago law professors Frank Easterbrook and Daniel Fischel have taught that, when it comes to making profits, executives not only may violate the law but should do so if it enhances the bottom line. And the fines and penalties if they get caught? Simply the cost of doing business.

While this view may still be extremist, it has it roots in traditional corporate law which says that those who run corporations have a legal duty to shareholders, and that duty is to make money. If they fail to do so, directors and officers are open to being sued by shareholders. Corporate law not only says nothing about directors and officers serving the public interest, it actually implies that absorbing the necessary cost of doing so could be seen as violating their fiduciary duty.

When the CCCE dictates the direction of the country, it is speaking on behalf of an ethically corrupted and perverse institution: the modern, global corporation. Governments—and by implication, citizens—crafted the laws that made them so. It’s time we changed them.

(Murray Dobbin is a CCPA Research Associate, a member of the CCPA’s Board of Directors, and the author of many best-selling books, including The Myth of the Good Corporate Citizen.)