Thursday, February 21, 2008

Why is the World Such a Mess?

This post is the byproduct of a discussion on an Indian email listserv about the predatory nature of much of the economic development that is taking place in India and China. I offered the opinion that our problems were rooted in the nature of industrial civilization, and that there was a Gandhian alternative. Being then asked to spell out that alternative, I came up with the following. The first part of the piece explains why industrial civilization is at the root of our problems; the second suggests how we can escape it.


Part I
Since the 17th century the world has been set on a deeply negative course. War has been continuous and ever more destructive. There have been
repeated episodes of attempted and successful genocide. The transatlantic slave trade, slavery in the Americas, and European colonial rule in Asia and Africa, saw savagery on a scale unparalleled in history. A world in which living standards were roughly on par everywhere came to be sharply divided between a small affluent elite and and billions of wretchedly poor people. Science, once the harbinger of a hopeful future, spawned technologies that poisoned every part of the planet with industrial pollutants and subjected the natural environment to such broad assault that its capacity to sustain life is being rapidly eroded: species are becoming extinct now at a rate not seen since the dinosaurs disappeared.

Why is this happening?

The only coherent explanations seem to be religious. The Hindus see it as the Kali Yuga, the Dark Age that comes at the end of a great cycle of time; Jews, Christians, and Muslims see it as the
troubled and sinful age before Judgment Day.

But even divinely ordained processes work through human mechanisms. How can we explain in rational terms what has been happening to the world?

The growth in world population is often cited as the primary reason for war, environmental degradation and the general deterioration of economic and social conditions. But I think that is a perception that will not bear close examination: the entire human population of the planet can be gathered within the municipal bounds of New York city. The problem is not in our numbers but in how we have organized life on the planet; and when we look at that aspect, it is quite clear that responsibility for the global mess we now confront devolves on the central institution of industrial civilization, the joint stock corporation.

This is not to say that by their own lights, corporations have not been enormously successful. They are by far the most efficient organizations yet devised for generating wealth. But the problem is, they have evolved far beyond the economic sphere, and have taken over the world. It's like the situation in the Matrix: the corporate machine is so omnipresent, and people in general so accustomed to the sense of reality it generates that they are no longer self-aware; only a small section of the human race understands and battles the situation.

Initially, joint stock corporations were meant to allow merchants to share the risk of international trade at a time when every voyage was an expensive and dangerous adventure; later, they became the means for entrepreneurs to raise the massive amounts of capital needed
for industrialization; and in mature industrial economies, they became the primary vehicles of industrial production, trade, technological innovation, and the development of new products. During this evolution the most successful corporations became very large through a Darwinian process: the bigger ones were far more likely to survive periods of economic volatility, and that naturally inclined them to pursue growth as a matter of policy. A paper manufacturing company, for instance, would buy up forests and logging operations to secure its essential supplies, seek a greater share of the market by assimilating competitors, and even expand into other business sectors in a bid to insulate itself against cyclical downturns in the economy (which do not affect all industries at the same time).

In that process, the original owners of businesses almost always hand over control of their diversified conglomerates to professional managers. When that happens the performance of management comes to be judged by a single criterion: the profitability of the company. The more the profits, the more the price of the company's stock is bid up by investors; when profits fall, so do stock prices. In the absence of obvious external factors, a dip in the stock market is a negative judgment on management, and usually causes large institutional investors (mostly banks, insurance companies and pension funds), to sell the stock, driving prices further down. Avoiding such a loss of confidence becomes the primary focus of corporate management; ethical, moral, environmental and social considerations take a back seat. The bottom line thus comes to be the dominant, often the only concern guiding corporate decision-making.

To prevent disruptions of their pursuit of profit, corporations enter the political and cultural arenas. They fund politicians, seek to influence public opinion through advertising, support the arts through foundations, and work through lobbyists to guide the national and international policies of States. In the case of the major Powers, corporate involvement in the formulation of state policies has been a ubiquitous factor in the direction and thrust of "black ops" such as coups, assassinations, funding of separatist and terrorist movements, and even outright war. The traditional instability of "banana republics" in Latin America (so called because they were subject to the will of the United Fruit corporation), the bloody "commercial wars" of Africa (in which mining companies have had a large role), and the terrorist movements in West and South Asia (oil companies), all owe much to such operations.

International crime, especially the drug trade, has been impervious to control because it is hugely profitable to the corporate elite. Most of the estimated $2 trillion in annual criminal revenues is not carried in suitcases to mafiosi or drug lords in Afghanistan and Colombia; it is quietly laundered by over a million shell companies and offshore banking centers into "legitimate" banks and other corporations. There is a voluminous literature on all this, but the information is not widely known because the mass media too are owned by major corporations; "independent media" could not survive without corporate advertisements, and rarely bark at those who feed them.

Because democracies tend to be unpredictable in terms of economic and social policies, corporations have historically favored totalitarian systems that can be trusted to value the economic interests of the ruling elite more than the human rights of ordinary people, social justice and environmental standards. That has been part of the great appeal of China to corporate investors for the last two decades. The belief that moving production to China makes for economic efficiency is manifestly wrong if
we take into account the energy spent on transporting Chinese goods across the oceans, the social and personal cost of unemployment in Europe and the United States, and the environmental impact both in China and globally. Having China as the "workshop of the world" makes sense only on the balance sheets of corporations; in all other ways the arrangement is wantonly wasteful.

Whether the role of Western corporations in China will be redeemed by the transition of the country towards democracy remains to be seen. Historically, China has shown a capacity to import its governing philosophy (Buddhism, Communism, and now Capitalism), without letting go of its Confucian order, which is deeply invested in top-down hierarchic control.
Meanwhile, it should be noted, the growth of corporate power has had deeply negative effects within democracies. Even in as vigorously democratic a country as the United States, corporate lobbyists wield disproportionate and unwarranted influence; every effort to curb them, to reduce the role corporate money in elections and in policy formulation has failed.

The net result of all this is the world we now have, where the overwhelmingly positive forces inherent in human beings are everywhere subject to manipulative systems that profit a small minority. To keep those systems running it is imperative to prevent ordinary people from seeing the process; if they did, resistance would be inevitable. The use of religion to create hatred, the fomenting of ethnic violence, linguistic and regional chauvinism, all blind people to what is happening. So does fear, which has been so lavishly inspired by the threat of terrorism since 9/11. George Orwell was truly prophetic in 1984.

Part II
The need to change the global corporate system has received much attention from gurus like ex-US AID staffer David Korten (When Corporations Rule the World, and The Post Corporate World), and from thousands of activists at the World Social Forums that have convened annually in recent years. But current efforts at change have been limited to fixing the system. All the talk at the UN about global warming, resurrecting the ozone layer, and combating environmental pollution is directed at regulation and amelioration, not change. And they have been massively unsuccessful. The UN "Global Compac,t" for instance, has had little success in getting corporate commitments to uphold a set of basic human rights and environmental standards.
Of the approximately 60,000 corporations with annual revenues over $1 billion, fewer than 4,000 have joined the "compact."

How do people reclaim the world from corporations and take control of their communities and societies?

Obviously, we cannot do it by fiat or force. Legislators are unlikely to impose rules and regulations on the corporations that generate the wealth of their societies. Any attempt at forcible change through "revolution" would have disastrous economic consequences. The change must come peacefully, gradually, and productively; wealth creation must not be affected but its nature must be changed.

In seeking to address this issue, I began with Mahatma Gandhi's approach to transforming India. At the time of his death, he was working on plans that envisaged an India composed of "village republics," each aware of the national interest and capable of cooperative action to promote it. The essence of his approach was that within the right framework of values and beliefs, ordinary people could be trusted to act not only in their own best interests, but that of the country and the world. There were many social ills in India that needed to be remedied, especially caste and gender discrimination, but he believed on the basis of considerable experience that it could be done. He had devised Satyagraha (holding fast to the truth), as the nonviolent means to bring about transforming change; it consisted of awakening the conscience of those who held oppressive frameworks in place. Once people turned to the best in themselves, Gandhi believed, society could be transformed. It was in such transformation, not in science and its technologies that he saw the essence of human "development." He was gearing up to create an organization that would promote such change when he died.

There is now no Mahatma to lead us in the effort to change India or the world, but other factors -- the Internet and the Worldwide Web -- have made it possible for people of good will to initiate and carry forward the necessary action. They have also made it possible to undermine the power of mega-corporations peacefully, by organizing consumers and decentralizing production. (Mass production serves only the interests of the mega-corporation; the economies of scale once only possible by concentrating production geographically, can now be achieved by networks of small producers.) An alliance of social activists and small businesses (which are rooted in communities and thus supportive of them), should be able to put in place global networks that have the capacity to compete successfully with mega-corporations and reorganize the global division of labor along lines friendly to societies and the ecosystem.

How to organize such networks? After three decades of observing non-governmental organizations at work I have come to the conclusion that no existing institution is capable of playing the lead role. We need a new institution; I call it the Community Corporation.

I am now working on the charter of this organization. It would be established by social activists and small businesses in every economically viable community. In villages there would be one; in large cities there could be scores of them. Every CC would have the same mandate, to safeguard and promote the economic and social security of all members of the community and to cooperate with other CCs in doing so. Each CC would produce revenue by serving the community; this could include commissions on bulk purchasing of commodities, appliances and insurance, and fees for providing educational and health services. CCs would help people find jobs, support local entrepreneurs, and promote local businesses. They would facilitate the integration of newcomers to communities, and ensure the welfare of children and the aged.
Each CC would be committed to helping the poor and underprivileged sections of society, and work closely with local police to ensure that no section of the community was victimized (including by rogue elements of the police).

Each CC would have a web site, and all would be part of a network for sharing information and mobilizing joint action. As the network grew and spread, it would become a powerful democratic force, not only by keeping people informed of what has happening relevant to their welfare, but by organizing to oppose special interests.The network would also identify and support economic and social development with the minimum of bureaucratic waste; it
would be committed to help CCs in poorer communities with financial and technical aid. Economic development would not be obedient to elite interests but to the perceived needs of communities. Much of the inefficiencies and waste of the corporate economy would be avoided; development harmful to society and the natural environment would not go ahead.

The CC network would have many nodal points for cooperation and coordination, created as the need arose. There could be local, sub-regional, regional, state-level and national nodes, meshing where necessary with existing democratic structures of government. In totalitarian countries CC networks would offer the means for a peaceful transition to democracy. Globally, the United Nations System could provide the means to bring the network (and its many sectoral subsidiaries), in touch with the formulation of international norms and strategies. General Assembly resolutions, for instance, would feed into the CC network for implementation, and constant feedback would keep UN action relevant. The CC network would be extremely useful in preventing conflict and in mounting aid activities in the aftermath of natural disasters.

In sum, the global CC network would reconstitute the world economy and put in place a democratic and non-bureaucratic world government.


I would be glad to hear from anyone who wants to be involved in drafting the Community Corporation Charter.


Jaison J. Raju said...


Your idea of a community corporation is certainly novel. Would not the best step be to avoid redundancy and 'recreating the wheel'? What I mean by that is that religious institution already exist everywhere in villages, towns, communities, and regions.

Why not build a hybrid model of the community corporation for religious institutions to adopt where they can complete the goals.

Please email me, I am very interested to know more about your work.

I am also on Facebook.

Bhaskar Menon said...

Mixing religion with economics or politics is always a bad idea.