Are States or Corporations the true leaders of today’s world?

Are States or Corporations the true leaders of today’s world?

It is hard to decipher exactly the current state of affairs today due to the complexity of it all. Power is up for grabs and there are a lot of players involved — political leaders, international organisations, multinational corporations and even NGOs. We’ve been conditioned to think that nation-states are inherently dedicated to using their power to represent our democratic interests and lead us accordingly but on a deeper analysis, this ‘fact’ appears questionable.

For example, if we are measuring power in monetary terms — which undoubtedly have come to be linked — Walmart’s revenues exceed the GDP of Norway; Apple’s that of Ecuador and Amazon’s that of Kenya. There are countless other examples where a corporation is considered as being larger than a state. But is this enough for us to conclude that they have become the true leaders of global politics? Let us consider the case of Apple.

One of the most innovative firms in existence today, it has come to be seen as a pioneer in its field. With the launch of its personal computers, smartphones and tablets it has transformed productivity, managing to seamlessly integrate technology into everyday aspects of our life through its intuitive products.

But covertly — like the Panama Papers recently established — despite its contributions to productivity, Apple itself paradoxically prevents the economy from using its profits productively through tax avoidance. It currently owes €13 billion to Ireland in taxes. What’s interesting to note here however, is the part Ireland played in facilitating this.

In 2015, Ireland reported a staggering 25% increase in GDP (from a mere 7.8% previously) due to Apple’s tax restructuring. It is safe to say that Ireland’s economy is vastly dependent on the business various multinational corporations such as Apple brings in. In fact, “U.S.-controlled companies’ profits equaled 7.6% of Irish gross domestic product in 2004.

By 2010, that had quintupled to 42%” according to Jane Gravelle, an analyst at the nonpartisan Congressional Research Service. Furthermore, the firm employs 6,000 staff of a 200 000 population in the area at its European headquarters in Cork.

The recuperations Ireland is currently facing on the international stage does not do anything to ease the apprehension democracies face due to the power MNCs exert over them. For Tim Cook, the CEO of Apple, to dismiss the EU’s tax ruling as “political rubbish” and claim that Ireland is being “picked on” highlights the power Apple wields in the global arena. Apple’s aggressive resistance of the EU commissions’s rulings and encouragement of Ireland’s government to appeal against it illustrates the insidious ways in which MNCs are able to use their economic power authoritatively and for unethical reasons. We can essentially see the strings with which Ireland is attached to Apple. For this issue to also earn fierce backing by Washington demonstrates once again how States have realigned themselves so as to put the interests of these corporations first. With such blatant demonstrations of control being exerted, is it possible that we are moving towards a world whereby these companies are able to lead States and not the other way around?

According to Edmund Phelps — a Nobel prize winning economist — the cause of income inequality is not free market capitalism, but rather this rise of corporatization which discourages (or blocks) the natural workings of a free economy. He goes on to say that there is a system of power-sharing between complicit state institutions and these often semi-monopoly companies, leading to an increased potential for corporate/government corruption and a lack of small business development causing stagnant economic conditions. Furthermore, large corporations are also able to influence policy and legislation thus threatening the “very foundations of democracy” as warned by senator Elizabeth Warren. Their dominance in economics and politics is something that has come to be accepted as unchangeable in our society unfortunately.

However, it is unlikely that corporations could ever replace the power certain states such as the US or the UK hold. But we are forced to ask ourselves if this is due to a lack of power or will. In any case, it is not in the interests of MNCs to shape the path global politics takes or to govern a population but rather to maximise profits, increase market share and cut costs and so on. It indeed might be in their brief interests to exploit states as an insidious way of achieving these aforementioned aims but it is certainly not enough to warrant them the status of being above the power and jurisdiction of states. What’s important to remember is that more often than not, the interests of states and MNCs are intertwined. In cases where it is not — like with Apple and the EU — necessary actions will be taken to prevent a tilt in the delicate balance of power which characterises international politics

BY: Goury Mahesh

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