Global Business and Nationhood

We’ve seen recently some of the side effects of the globalization of business.  It has been brought to light how banks and other businesses use our laws to bring in temporary workers to take jobs from people already doing them, and use that avenue to later outsource the work to other countries.  We have seen how lax safety regulations in foreign garment factories, producing clothing for our markets, can cause over 1100 deaths from a building collapse.  Many of us don’t know the country that our cars were actually built, no matter the “nationality” of the manufacturer.  We have seen what globalization of business means. 

It is not so much the cheaper labour that drives companies to other countries any more, although that is still the rationale given, so much as the ability to use the laws of one country against another.  Do you have a country where the environmental laws are weak, then let’s put our environmentally unfriendly industry or mining there.  Do you have a country with lax banking laws, so then let’s speculate there.  You get the picture.

Don’t get me wrong.  I’m not against trade and the movement of goods from country to country.  That practice has been going on since the dawn of time, and probably has more to do with the growth of civilization than any other practice.  Great empires were built on trade, although it has also resulted in great conflicts as well when countries tried to gain an advantage in trade.  And then there was colonialism which locked up resources and markets for the colonizing nation.  But the thing about all of these cases, from ancient times to the colonial era, is that they were done to enrich one country.  It was done for nationhood.  The question is can the same thing still be said for modern globalization?  Are nations and business in conflict?

The one thing that business cannot do is make laws.  Business does try to influence laws as they are made, and they are not above challenging laws that they think may harm their business.  But as of now, they cannot propose nor pass laws.  That is still the purview of the state.  Business, however, is not above making rules within their own organization or within a business group. Many business groups would like to regulate themselves, and some do. 

But global business seeks to be above any single country.  They want unrestricted free trade and unfettered movement of capital from one jurisdiction to others.  Business no longer respects even their home country.  Business has only one loyalty – to their shareholders.  Read the mission statement of almost any big company and you will see their pledge to do business for the benefit of their shareholders.  Since shareholders for such companies now come from all over the globe, the need to be beholden to any particular country or region no longer applies. 

So how will this play out?  Since large businesses now have access to more capital than some small or economically depressed countries, it is not inconceivable to assume that the thought of “bailing out” such countries by one or more businesses will occur.  The business would then “own” the country and be able to rule it and make its laws.  They could run it like a business with a board of directors and a CEO selected by and for the benefit of their shareholders.  The fact that none or very few of its shareholders are from that country would not matter one bit.  Unfettered at last!

As this, no doubt, lucrative business model grew, more and more companies would be tempted to get into the game.  With global banks able to manipulate the currency of any still free country, hard economic times could be imposed on any of them until they were forced to “sell out”, literally.  Businesses in this model would no doubt grow larger as the rich ones could, in effect “socialize” smaller companies or smaller rivals.  Some would argue that this would be a good thing.  Wealth would be spread around the world.  The temptation to war would be significantly reduced since not business would want to see its assets damaged or destroyed.  The world would be run by an elite of smart business executives.  All would be good.

How would life be, however, for the common man and woman?  Well, unless you’re a shareholder, preferably a large one, of one of these companies, probably not very good.  Unfettered laws in favour of business would undoubtedly lead to a very restricted life for ordinary people.  Would you, for example, have any job mobility from one company to another?  Would you be able to raise a grievance against your boss or the company?  Would any sort of trade union be allowed?  Would health and safety needs be considered?  All of these freedoms and concessions that have been fought over and won by working people would no longer be in the best interest of the shareholders would they.  And what will become of judicial matters?  Who would judge disputes and punish crimes?  The businesses?  There will no other authority.

So is the nation state to become a thing of the past in the days of ever growing power by business?  Stay tuned and see what happens in Europe and North America in the next few years of fiscal challenge.