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Impacts of Corporations’ Power on Global Economies

Discuss about the Corporations Threat to Global Economies, Civil Societies and Environment.

The argument of the academic commentators that neoliberalism is out of control and contributing to destruction and weakening of the global society in a variety of ways has the truth in itself to some extent. Neoliberalism ideology was defined by Korten (2002, p. 27) as a policy model that puts emphasis on the benefits of the free market competition. However, there have been conflicting definitions concerning the features of neoliberalism.  Some scholars argue that neoliberalism is largely associated with the laissez-faire economics. Eun-Suk (2013, p. 167 noted that in the real sense neoliberalism is confined in the economic growth as the way of achieving human advancement. In support (Abbey, 2015, p. 472) advocated that neoliberalism provides confidence in the free markets because the allocation of resources requires the minimum intervention of the government in both social and economic affairs.  In addition, it emphasizes on the freedom of capital movement and trade.

The general definition of neoliberalism seems to originate from the ideology of Adams-smith in the 1770s when he argued that markets are controlled by the invisible forces, and thus there should be reduced state intervention (Eun-Suk, 2013, p. 165). On the other side, modern liberalism emerged and evolved from socio-liberal tradition.  The social-liberal laid emphasis on elimination of aspects that had come into existence because of capitalism.  Such aspects included ignorance, discrimination, disease, inequality and poverty.  Even though, the neoliberalism ideology gave the organizations the freedom to operate in the market it has contributed to the both merits and demerits to the global economies, civil societies, and the environment.  

For comprehensive and extensive analysis of neoliberalism, this report tries to answer the question whether the power of the corporations is availing the threat to global economies, civil societies and environment. The earliest supporters of the neoliberalism argued that even though neoliberalism was good, there was a need to have minimum government intervention (Derber, 2008, p. 83). This argument leads this report to advocate that at sometimes the forces of the free market may deviate from taking the economy to the right direction hence calling for the intervention of the state. Therefore, the powerful nature of the organizations can be a threat to the world economy, society as well as the global environment. This is because they operate in with capitalistic ideology which entails amassing of wealth as an individual but not as a society or community. Their goal is profit, and thus they focus more on their objectives at the expense of the world economy, civil societies or environment (Anderson, et al., 2010, p. 49). Despite the benefits of the capitalistic nature, it comes out clearly that the powerful organizations may be a threat to the key components of the world. For example, the collapse of giant companies in the United States such as Enron and WorldCom had an enormous impact on both the national and world economy (Derber, 2008, p. 22). This is because of the billions of shareholders who suffered loss for the benefit of only a few selfish individuals. Therefore, this report holds that the organizations are too powerful and as a result, they have posed a threat to the global economies, civil societies, and the environment.

How Corporations Influence Global Economies

The fluctuations in the economy are key fundamentals in determining the nature of the markets (Derber, 2008). Similarly, the markets can determine the direction the economy will take. Therefore, it is non-arguably that the two aspects must work together. The organizations produce the products and services of which their amount of sales depend largely on the amount of money circulating in the economy. Additionally, the level of employment by the organizations will also be a subject of resources available within the economy. From this overview, it is well portrayed that the organizations are controlled by the forces of the economy. However, there are scenarios the powerful forces of the corporations might supersede those of the global economy. This means that the economy will not be able to control the organizations and in return, the world will experience the distortion of the global economy. 

The findings indicate that the corporations are the major influences of the today’s people livelihood. According to Shah (2012) of the hundred global largest economies, fifty-one are corporations with only forty-nine being the countries. In support (Kercher, 2007, p. 7) observed that in the event of internationalization the less economically disadvantaged people were getting bitter at the intentions of the multinational corporations. This explained why there was ever increasing protest on the globalization of corporations. However, the organizations were able to overcome these challenges and have gone further to reclaim their influence in the global arena.  

The success of the corporations in the international economies may be attributed to various factors. First, it is evident that the corporations are the key basis of the economic growth. To conform to this ideology the world has provided the space for the organizations to operate with the notion that they will contribute to the sustainable economic growth and thus result in human progress. Secondly, the free markets without government interference will be fair and thus will lead to efficiency and social optimism in the allocation of resources. Thirdly, the supporters of the globalization of the corporations argued that it will be of benefit for all once the economy is globalized. Finally, if the government has no responsibility in regulating the economy, it should thus focus on providing critical resources such as infrastructure. This will facilitate the enhancement of property ownership by the individuals and the economies.

From the analysis of the roles which should be played by the corporations to improve the state of the economy, it becomes out clear that the government has been locked out. As a result, the economy has been left in the hands of the corporations. Given the fact that the market forces are prone to changes and not predictable, the organizations have claimed the control of the world economy. This can be largely attributed to the fact the organizations exist maximize wealth for the shareholders and achieve their main target which is profit (Korten, 2002, p. 56). In return, this turned the world economy as a group of corporations rather than the union of the nations. Therefore, it is non-argumentative that powerful corporations have taken control of the world economy.

In many nations, the government has the key responsibility of regulating the economy. This is to ensure that the micro and macro elements of the economy are maintained at the acceptable levels. However, global corporations largely affect both national and local government policies. This has created a new way on how countries compete economically. The nations nowadays compete with each other basing on the level of multinational corporation investment.  Again, the corporations have weakened the global economies by their monopoly powers either on the intellectual or technological property. Given their sizes and the power to control the economy, corporations are very influential on governments’ economic policies. The findings indicate that multinational corporations use the threat of withdrawing from the market to impact the government economic policies (Roach, 2007, p. 12). According to Vargas-Hernandez, et al. (2014, p. 448) corporations has led to global economic exploitation through foreign investment. It has been found that the global developing economies are the major victims of corporations’ power. For example, they have facilitated the movement of resources from the weak economies to the more strong and stable economies. This has led to the creation of imbalanced global economy. Therefore, it clearly comes out that the corporation's powers are a threat to the global economy.

Corporations can commit a crime to the civil society. The findings have shown that corporations can contribute to more harm to the society than the individuals (Serafeim, 2014, p. 4). This is because they have access to huge resources such as highly qualified and competent lawyers, capital as well as monetary power. Alternatively, despite corporations having access to these resources they also enjoy reduced legal ramifications for the crimes they commit (Robert, et al., 2011, p. 118).  Again, unethical corporations can pay the individuals to woe them to remain silent to cover up and avoid civil lawsuits.  This report uses the case study of Toyota to expound on how the corporations can contribute to threats to the civil societies.   

Nearly, the end of 2009 Toyota Company declared to the federal government that the company had realized some fault on some of its manufactured vehicles. The company disclosed that in the millions of its manufactured cars some of them had malfunctioning acceleration pedal, famously referred to as sticky pedal by the media. The findings indicated that approximately four hundred people had been killed in road accidents and others injured because of the faulty pedal. Toyota Company agreed to compensate the victims of the malfunctioning pedal for 1.2 billion. This was to be paid in form of fines for the accidents caused and negligence in the manufacture of the cars.  Among the four hundred lawsuits against the company eight of them were dealt with out of courts. This portrays how the corporations can be influential to the society to the extent of outwitting the individuals to hide their crimes.

The Toyota scenario contributed to deaths, injuries, and pain both to the victims and the loved ones. Despite, the affected individuals and family ones of those who died being compensated this did not serve as the true indemnification to the victims (Douglas & Fletcher, 2014). This means that the Toyota Company should have focused on manufacturing safe cars to prevent the tragedies associated with the road vehicles. Many argued and held that the compensation was not enough and thus the federal government should have focused on sending the company top executives to t jail. For example, in one of Washington post argued that the enormous compensation to the victims meant nothing provided that the company executives did not face the sentence (Douglas & Fletcher, 2014). However, corporations are separate entity from those who run them and thus it would have been impossible to file a lawsuit against the company executives. This brings out how the corporations can cause harm to the civil society without total intervention by the government. 

From the analysis of the Toyota Company case study, it comes out clearly that, the mighty power of the corporations has continued to threaten and weaken the civil societies. Multinational corporations are too close to the civil societies than the individuals, and thus their impact is felt a bit more (Hunter & Mahony, 2004, p. 8). Alternatively, they are endowed with the massive resources which can be used to compensate those who are affected by their operations. Bearing in mind the organizations are artificial persons with rights and obligations from the perspective of the law, they can commit a crime against the natural persons. The civil societies comprise of the natural persons, and thus they will be highly affected by the wrongdoings of the corporations when compared to wrongs committed by the fellow natural person. 

The term corporation refers to a legal entity, an artificial person created by law which is distinct from shareholders, stakeholders and any other people who own it (Olijnyk, 2016, p. 1). On the other hand, an environment about a corporation is described as the immediate surroundings of an organization plus the external and internal factors which affect its performance (Holden, 206, p. 37). However, in this case, the report shall discuss the natural environment and how it is affected by the corporations.

Environmental degradation and deforestation refer to the process of deteriorating resources such as land, air and water and clearing vegetation and trees (Ahmed et al. 2015, p. 100).As corporations grow, they need to set up more premises and more branches.  For example, Bhp Billiton and Rio Tinto which are mining companies, cause environmental threat since they tend to cut down vegetation so as to create more space to perform their activities. Excessive destruction of vegetation and degradation will lead to rugged landscape, excessive soil erosion as well as aridity and desertification in such areas.

Pollution is also another effect being created by the corporations. This is the act of contaminating the environment with harmful or poisonous substances (Broome et al., p. 22). Most corporations cause a threat to the environment by emitting harmful gases into the air; others dump their wastes in rivers whose waters will be used by human beings, plants, and animals. For example, Dow Chemical Company in the United States is said to be one among other corporations which cause pollution. In 1984, there was a case concerning gas and chemical leakage which caused death and injury to many Indians. It was referred to as the Bhopal disaster.

 Over exploitation of natural resources is another effect that arises when corporations use too many non-renewable resources than they are supposed to use (Moran, 2014 p. 48). Agriculture firms may use much water for irrigation purposes. The people depending on such water in the lower stages of that river may experience a decline in the water supply. It also happens in lakes and rivers when fish firms overfish. Loss of fish in waters will cause an adverse effect on the marine biodiversity by destroying fish habitats and disrupting food chain and ecology.

Bio-technical corporations have also been the forefront in destruction the global physical environment (Moran, 2014 p. 59).  They are companies which manufacture products containing chemical substances. For example, pesticides, insecticides, and fungicides. They are made to kill particular living organisms. If not properly used, they may reach undesired targets and cause harm, and there may be a threat to the environment. Such products can result in poisoning of human beings and animals. Most scientists encourage other ways of eliminating insects, weeds, and pests by using scientific methods such as trapping them or using genetic resistance other than pesticides. However, despite the corporations being a threat to the environment, some have engaged in the effective methods of ensuring environmental conservation.

Corporations pay for the environmental destruction through corporate social responsibility (Tam, 2016). Currently, companies are embracing the social responsibility by participating in developing and improving the environment. For example, Firms such as The Walt Disney Company have a higher reputation in social responsibility (Anderson, et al., 2010, p. 37). Most of them are responsible for their wastes, they have waste disposal channels and make sure that any waste products and gases produced are non-toxic. Corporations are also involved in volunteer work to the community especially in constructing gabions and bridges for preventing soil erosion. Not only does this shape the corporation’s name to the public, but also helps in preserving the environment.

Making environmental friendly products is a strategy that business organizations should adopt in ensuring safety of the environment (Tam, 2016). For example, diesel and petrol companies can manufacture low-Sulphur diesel which when smoke is emitted to the atmosphere does not pollute the air that living organisms use. Alternatively, electrical appliances can be made to consume less energy, produce less noise and heat. In such a way, the corporation will have improved the environment.

Another strategy that should be adopted is innovation of low-carbon solutions. Most corporations are acknowledged for the production of low-carbon products. In the U.K, the enterprises have established Carbon Capture and Storage (CCS) to curb carbon emissions to the atmosphere which are affecting its climate. They have advocated for the use of hydrogen power and provided education to schools, hospitals and the public on reducing carbon emission to prevent global warming.

Planting rainforests and reduced paper waste is another way of environmental conservation measure. Greening Australia is a non-profit corporation which is dedicated to planting trees in Australia to restore the native vegetation (Auld et al. p.3).This reduces deforestation in the US and helps in the environment to regain its lost forests in the Amazon area. Firms are recycling used paper instead of dumping them. Similarly, more corporations use soft copy data through technological devices. This prevents cutting down of trees.  

Use of green renewable energy renders the environment safe for living organisms (Holden, 2016 p. 9). It involves the use of renewable energy-generating sources such as wind turbines and biogas. In the United States of America, corporations such as Pearson and Mohawk are operating on the green energy. This source of energy is environmental friendly for it does not emit smoke and other gases to the air. Using green energy does not only show awareness on environmental issues, but it also saves the business organization from paying more taxes to the government. Businesses in remote areas are encouraged to use this type of energy in performing its operations. 

Conclusion

As discussed throughout this report, corporations affect global economies, civil societies, and natural environment both positively and negatively. In some ways, they cause threat and in other ways they are friendly to it. For example, corporations ensure that the global is favorable for the flourish of business activities. Again, they empower the civil societies through engaging in environmental conversation measures.  However, the participation in the corporate social responsibility has come as the result of government intervention on creating awareness about the environment. Therefore, most organizations are now participating in activities which are helpful to restore the lost beauty of the environment. Even though the corporations have positively impacted global economies, civil societies, and the environment recently, they seem to weaken and contribute threats to these critical aspects. 

References 

Abbey, R., 2015. Is Liberalism Now an Essentially Contested Concept?. New Political Science, 4(27), pp. 461-480.

Ahmed, K., Shahbaz, M., Qasim, A. and Long, W., 2015. The linkages between deforestation, energy and growth for environmental degradation in Pakistan. Ecological Indicators, 49, pp.95-103. 

Anderson, Sarah & John, C., 2010. Top 200: The Rise of Corporate Global Power. Washington, D.C.: Institute for Policy Studies,

Auld, T.D., Denham, A., Tozer, M., Porter, J., Mackenzie, B. and Keith, D., 2015. Saving arid and semi-arid southern Australia after over 150 years of exotic grazing pressure: Have we got the time and the will? Australasian Plant Conservation: Journal of the Australian Network for Plant Conservation, 24(2), p.3. 

Derber, C., 2008. Corporation Nation: How Corporations Are Taking Over Our Lives and What We Can Do About It. St. Martin’s Press: New York.

Douglas, D. & Fletcher, M. A., 2014. Toyota reaches $1.2 billion settlement to end probe of accelerator problems. [Online]
[Accessed 8 October 2016].

Eun-Suk, 2013. Distorted Democracy and Freedom of the Press under Capitalism. International Journal of Humanities and Social Science, 3(11), pp. 161-171.

Holden, A., 2016. Environment and tourism. Routledge. 

Hunter, B. M. & Mahony, J. O., 2004. The Role of Civil Society Organizations in Regulating Business, London: London School of Economics.

Kercher, K., 2007. Corporate Social Responsibility: Impact of globalization and international business. Corporate Governance eJournal, 4(12), pp. 1-12.

Korten, D. C., 2002. When Corporations Rule the World. Kumarian Press, Inc., Bloomfield, CT and Berrett-Koehler Publishers, Inc: San Francisco.

Moran, T.H., 2014. Multinational corporations and the politics of dependence: Copper in Chile. Princeton University Press. 

Olijnyk, A., 2015. Case Note: The Corporations Power in Williams (No 2). University of Western Australia Law Review, 39(418), pp.2016-01. 

Roach, B., 2007. Corporate Power in a Global Economy, Medford: Tufts University .

Robert , G.. E., Michael , K. & George, . S., 2011. Market Interest in Nonfinancial Information.. Journal of Applied Corporate Finance, 23(4), pp. 113-127.

Serafeim, G., 2014. The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research , s.l.: Harvard Business School .

Shah, A., 2012. The Rise of Corporations. [Online]
Available at: https://www.globalissues.org/article/234/the-rise-of-corporations
[Accessed 7 October 2016].

Tam, L., 2016. Corporate social responsibility (CSR) services: What are public relations agencies selling? 

Vargas-Hernandez, J. G., Sandoval-Valencia, M. & López-Morales, J. S., 2014. The Power of Multinational Companies in a Global World The Focus of Corporate Governance and its Impact on Business Ethics. International Review of Business Management Research, 3(1), pp. 444-453.

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