The Corporation in 2050

/The Corporation in 2050

 

Reprinted from Marianne Williamson (ed.) 
Imagine: What America Could Be in the 21st Century 
Rodale Books, 2000, pp. 111-121

David C. Korten

On November 30, 1999, world television broadcast dramatic scenes of Seattle police clothed in Darth Vader riot gear brutally wielding clubs, tear gas, pepper spray, and plastic bullets against thousands of people who had come from around the world to protest the destruction of democracy by a secretive and previously obscure body known as the World Trade Organization (WTO). The 70,000 protesters were of all ages and colors and identified with a bewildering array of organizations and causes. They came from churches, labor unions, universities, peace groups, environmental groups, and many other organizations. They came to defend democracy from the tyranny of the new corporate world order.

Seattle 1999 made visible the awakening of America and the world to the reality behind the constantly repeated mantra of the financial press that there is no alternative to the new corporate global order. Those who took to the streets in Seattle were among the millions who looked ahead to the future this new order is creating and concluded that the turn of the millennium marks a critical moment of choice for humanity. We can resign ourselves to an American-imposed world corporate order that is recklessly destroying the life of society and the planet to enrich a small ruling elite. Or we can take on one of the greatest creative challenges in history: consciously and intentionally to reinvent ourselves and our institutions to create a planetary system of radically democratic, self-organizing societies grounded in a love of life and a respect for all beings. They lead to two sharply contrasting futures.

AMERICA’S CORPORATE WORLD ORDER

At the conclusion of World War II, the U.S. government set about establishing America’s economic hegemony in the world. U.S. State Department Policy Planning Study 23, a top-secret document written in 1948 by George Kennan, a leading architect of the U.S. role in the post-World War II era, lays out the case starkly.

We have about 50 percent of the world’s wealth, but only 6.3 percent of its population …. In this situation we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity. . . . To do so, we will have to dispense with all sentimentality and daydreaming; and our intention will have to be concentrated everywhere on our immediate national objectives. . . . We should cease to talk about vague . . . unreal objectives such as human rights, the raising of living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts.

Inequality and injustice are not accidental outcomes of the corporate world order (otherwise known as global capitalism); they are its defining characteristics. As demonstrated throughout its history, the corporation is a legal instrument designed to facilitate the massive concentration of private political and economic power freed from public accountability for the consequences of its use.

The processes of corporate globalization remove economic borders and weaken the regulatory powers of government so that the largest corporations have ever greater freedom to consolidate their hold over the World’s resources and markets. The World Bank, the International Monetary Fund (IMF), and the WTO–together known as the Bretton Woods institutions–have been its most visible architects. The U.S. government, however, pulls most of the strings. The U.S. Treasury Department, which itself marches to the tune of Wall Street banks and investment houses, largely calls the shots for the IMF and World Bank. The U.S. Trade Representative’s Office, which functions as an extension of the U.S. Business Roundtable, has had the lead role in the WTO.

One might conclude from the U.S. government-sanctioned policies of the Bretton Woods institutions that our goals are threefold: to assure that the world’s productive assets are owned by transnational corporations and are used to produce for export; to assure that all education, health, communications, and public utilities services are owned and operated by transnational corporations on a for-profit, fee-for-service basis; and to guarantee that everything people consume is imported by transnational corporations from somewhere else. It’s the vision of a world in which life exists only to serve the corporate bottom line, a world in which money is the ultimate value and life simply a means.

The dark history of U.S. military intervention–both overt and covert–in Latin America, Africa, and elsewhere is well known. Its most consistent purpose has been to overturn governments–many of them democratic–that threaten U.S. corporate interests. The New York Times foreign correspondent Thomas Friedman, a tireless cheerleader for corporate globalization, puts it clearly.

The hidden hand of the market will never work without a hidden fist. McDonald’s cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies to flourish is called the U.S. Army, Air Force, Navy, and Marine Corps …. With all due respect to Silicon Valley, ideas and technology don’t just win and spread on their own.

* * *

The year is 2050. The world’s political divisions and sense of national identity have been largely erased. The world is divided into 12 global megacorporations, which control virtually all the world’s economic activity, and four distinct social classes.

The world is ruled by a small super elite that controls the ownership of these corporations. Governmental functions–including military, police, and prisons–have been wholly privatized and operate as corporate subsidiaries. Members of the super elite, who measure their wealth in the trillions of dollars, live above the global pollution line in highly fortified mountain fortresses from which they travel by helicopter to their corporate headquarters. They convene each year in Davos, Switzerland, as the secretive world ruling council.

Next in line are the well-paid managers, scientists, technicians, celebrities, and sports stars, who live and work in gated communities and corporate campuses with walls, guard towers, and electrified fences.

The marginalized laboring classes work for bare subsistence wages in service jobs in factory compounds, mines, and agricultural fields. Most live in crime-infested ghettos near highly polluted industrial complexes.

The excluded billions, the human refuse at the bottom of the pile, live on the streets or in shantytowns constructed of packing boxes and other discarded materials. They survive on what they can scavenge or pilfer.

Average temperatures are now 5 degrees higher than at the turn of the 21st century. The world’s oceans have risen by an average of nearly 2 feet, many islands have disappeared, along with vast coastal areas, and severe weather events kill millions each year. The last wilderness areas disappeared years ago. Those lands and waters not rendered permanently unproductive by toxic wastes and mismanagement are devoted to vast industrial-agricultural estates producing food, timber, fish, and livestock under corporate ownership and management. A group of scientists risks their careers by secretly circulating an unauthorized report presenting evidence that the Earth is dying. The corporate press denounces them as fanatic alarmists whose wild claims lack scientific proof and whose recommendations would bankrupt the economy. 

A HUMAN AND PLANETARY ORDER

Those who argue that there is no alternative to the corporate world order reveal their lack of imagination, insult our intelligence, and demean our humanity. The alternatives are both obvious and deeply imbedded in American values. Why not, for example, create an America in which life–not money–is the measure of value, and democracy, responsible citizenship, and markets are the organizing principles?

* * *

The year is 2050. America has come a long way in the last 50 years. When I turned on the morning news today, there was a report on America’s social health index followed by a panel discussion of local, national, and global initiatives intended to improve the indicators, and how people could get involved. Yesterday, a similar report covered the living planet index.

It now seems incredible that 50 years ago, this airtime was devoted to reporting on the day’s stock market performance. The social fabric and the planetary life-support systems were collapsing–but all the media seemed concerned with was corporate profits and stock prices. Of course, those were the days when most of America’s media were controlled by four massive corporate conglomerates: General Electric, Time Warner, Disney, and Westinghouse.

Seattle 1999–when protesters shut down a meeting of the WTO–was a turning point. People still refer to it. People were waking up to the fact that the more rights and freedoms corporations have, the fewer rights and freedoms real people have. Following the protests in Seattle, more and more people took to the streets in protest. Eventually, the corporate elites found that they could meet only behind police barricades. This turned the abstraction of an elite-ruled corporate police state into a powerful visual image. Public pressures built to the point that the World Bank, the IMF and the WTO were all dismantled, Third World debts were repudiated or canceled, and rule-making responsibility for the global economy was assigned to the United Nations.

The real breakthrough for the United States was a radical campaign finance reform bill–the result of possibly the most dramatic citizen protest ever held. Two million people descended on Washington, D.C., surrounded the Capital building, and refused to leave until Congress passed a sweeping campaign reform bill that prohibited individual political contributions larger than $100, barred corporate political involvement of any kind, provided public funding for election campaigns, and required media using the public airwaves to provide ample free time for qualified candidates. This set the stage for a string of legislative victories ending corporate welfare, withdrawing special corporate rights and privileges, breaking up concentrations of corporate power, guaranteeing every person the right to a means of livelihood, giving workers control over their own pension funds, and implementing ownership reforms to help workers obtain ownership stakes in the productive assets on which their livelihoods depend. Labor unions began to organize worker and community buyouts, in part with workers’ pension funds.

At the same time, a deep cultural shift was taking place. Voluntary simplicity was in, conspicuous consumption was out. People realized that advertisers were manipulating their values and self-images so that they would feel compelled to devote their energies to earning money in order to buy expensive merchandise that gave them no real satisfaction. It is as if society acquired a collective immunity to advertising. Many people turned off their televisions and became more mindful consumers, buying only what they really needed, seeking good value, and giving preference to goods and services provided by local, independent businesses. Now, most people find that they need to work only 20 to 25 hours a week to meet their financial needs. The rest of the time, they devote themselves to things that give them real satisfaction, such as gardening, family, and community service.

As people recognized that most advertising is socially pernicious, they passed legislation to place strict limits on the advertising expenditures corporations are allowed to deduct as business expenses. The pollution of both private and public spaces with advertising has largely been eliminated.

Nearly all businesses are now human-scale, which in practical terms means that they have no more than 500 workers each, and nearly all are owned by persons who have an immediate nonfinancial stake in them–employees, customers, suppliers, or members of the communities in which the businesses are located. The giant corporations that sparked Seattle 1999 have gone the way of the dinosaurs and smallpox.

Typical of our time is the business where I work. The No Waste Resource Management Corporation is a waste recycling business that employs 150 workers. Since landfills have been prohibited by law, we have been responsible for seeing that 100 percent of the waste from our community is recycled. Forty percent of shares are owned by employees like me, 30 percent by the local households and businesses whose waste we process, and 30 percent by the farms and manufacturing firms–mostly located within a 100-mile radius of our processing facilities–that depend on us for compost and raw materials. Of course, there are many other forms of stakeholder-owned enterprise, including family firms, cooperatives, and partnerships.

In our company, management reports to a board elected by all the shareholders. Our shareholders, all of whom are local, take their ownership responsibilities very seriously. Board meetings are well attended and often lively. At our last meeting, shareholders were up in arms about the mishandling of some toxic material that nearly contaminated the municipal water supply. These are folks who drink that water. They told the CEO in no uncertain terms that his job will be on the line if this happens again.

My job at No Waste is to oversee the shipment of materials that we are unable to process in our own facilities to a regional recycling center with more sophisticated equipment. The center is jointly owned by the 120 stakeholder owned municipal recycling corporations in our region. We call this bottom-up ownership, which assures that accountability is clearly rooted in local communities.

These days, it is difficult to imagine that only 50 years ago there were corporations with internal economies larger than those of most states–and their only accountability was to owners, who bought and sold their shares as if they were placing bets in a gambling casino, with no concern or liability for the consequences of corporate behavior. What an invitation for abuse! I understand that so long as a corporate CEO kept his share prices rising, he was largely insulated from accountability to anyone. If share prices fell, he needed only to fire a few thousand people and the speculators would push the price backup again. I read somewhere that in 1999, corporate managers were paying themselves an average of $12.4 million a year, 475 times the salary of the average worker.

They say that economists called this the triumph of the market economy. What kind of economists did they have back then? Apparently, they didn’t even know the difference between a corporate-ruled capitalist economy and a market economy. No wonder things were such a mess.

Now, most firms cut back on everyone’s paid working hours before laying off worker-owners. It is rare for even the highest-paid executive in a firm to earn more than five times the pay of the lowest-paid worker.

When the idea was first proposed back in 2000 that individual enterprises should be no larger than 500 employees, a lot of people were skeptical and started coming up with lists of things a small firm would be unable to do. Frankly, it has been amazing to see what can be done locally in human-scale firms once society decides that this is what it wants. Start with the basics of food, clothing, housing, education, and health care: Most of these needs can easily be met locally by human-scale firms that provide local employment and care for the local environment. Of course, we still import coffee and tea and some exotic fruits. A combination of greenhouses and hydroponics even allows us to grow many fresh vegetables in the winter season.

For larger projects, such as the manufacture of high-speed trains, we have learned to make very effective use of manufacturing networks, a concept pioneered in the 20th century in Italy and Denmark. Dozens of smaller firms form network alliances within which they divide up the tasks involved according to their respective skills. The late-20th-century practice of large corporations contracting out most of their manufacturing work to smaller producers helped prepare the way for the move to manufacturing networks. People discovered that most production tasks had already been broken down and distributed among many firms, most of which were being squeezed dry by the big firms that monopolized control of technology, markets, and finance. As the big guys were stripped of their monopoly powers, the formerly captive contractors decided to organize themselves into cooperative networks. These networks have developed such sophisticated management methods that there is now scarcely any product or project that cannot be handled by networks of firms, none of which exceed the 500-employee limit. This approach allows for extraordinary flexibility with a high degree of employment stability and security.

America’s economy has been fundamentally transformed in the past 50 years. In the end, what we have created looks remarkably like a classical market economy of small buyers and small sellers. We call our version a mindful market economy, because we recognize the importance of mindfulness in all our economic choices–from the choice of our own employment to the nature of our production processes to the products we produce and buy–mindfulness not only of our own needs but also of the impact of our choices on society and the planet.

The results of the transformation have been striking. The breakup of corporate conglomerates and the selling off of local branches and subsidiaries restored the practice of community banking–local community banks and credit unions dedicated to financing local homes and businesses. Most communities now also have locally owned newspapers and radio and TV stations. Many community-based media outlets depend on a mixture of advertising revenues and public contributions and in turn offer a mix of commercial, national public, and local broadcast offerings appropriate to community needs and the funding mix. Local family farms are flourishing using predominantly organic methods. Previously depressed communities, including inner cities and small rural villages, have come alive with thriving local economies. Unemployment is largely unknown. Community currencies are commonplace. The combination of economic security, low unemployment, and strong community ties has virtually eliminated crime, mental illness, and welfare expenditures.

In our economic relations with the rest of the world, we take seriously the principles set forth by the revered British economist John Maynard Keynes, who said, “I sympathize, therefore, with those who would minimize, rather than with those who would maximize, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and above all, let finance be primarily national.”

Once freed from their international debts and the dictates of the U.S.-dominated Bretton Woods institutions, other countries began to reshape their domestic economies along the same lines as those we followed in America. As countries reoriented their economies toward local production using local resources to meet local needs, the total value of world trade fell significantly. Countries and communities now mostly trade their surplus production for things they cannot reasonably produce themselves. It is now the recognized right of each community and nation to decide what and how much it will trade, with whom, and under what circumstances.

As economies have localized and people have reestablished a sense of connection with community and place, travel has declined significantly, but it has also become far less frenetic and more interesting. Most travel now centers on learning and international exchange. A 1- to 2-year around-the-world journey is a rite of passage for young people approaching adulthood. An extended journey at mid-life is also common, used as a time to reflect and gain inspiration for the next stage of one’s life. With cheap oil reserves exhausted, there is little air travel. As a result, many are rediscovering the joy of the journey itself–taking time to make new friends and stay over with a family to better experience other ways of life. International friendships are sustained over the years by electronic communication. Cross-oceanic travel by sun- and wind-powered ships is quite popular. Land travel is by hiking, biking, and train. Many young people travel as members of performing arts groups, sharing their own cultures with others along their route in return for local hospitality. With global corporations removed from the scene, there has been a much-heralded rebirth of cultural diversity that greatly enriches the travel experience.

Personal economic security and deep international friendships have turned international competition into cooperation–especially in the sharing of information, experience, technology, and culture. Because human-scale firms are primarily involved in local markets, they have relatively little interest in creating monopolies on intellectual property rights. Most people take pride in having created something others find of value–especially beneficial technologies–and are inclined to share their innovations freely.

As Americans realized that our lives became richer as we consumed less, our dependence on the labor and resources of the rest of the world declined dramatically. With no further need to maintain a global corporate economic empire and no enemies on our borders, the U.S. military has been trimmed back to a small force whose primary mission is to participate in United Nations peacekeeping missions. Enjoying free access to beneficial technologies from around the world, and freed from the burdens of foreign debt and other forms of foreign control and extraction, living standards in what were formerly known as Third World countries have improved dramatically.

* * *

Which America do we want for our children? Which world? The choice is ours and the time to choose is now. 


David Korten is the author of The Post-Corporate World: Life After Capitalism and When Corporations Rule the World. He is co-founder and board chair of the Positive Futures Network, which publishes  YES! magazine and founder and president of the People-Centered Development Forum. He holds M.B.A. and Ph.D. degrees from the Stanford Graduate School of Business and is a former faculty member of the Harvard Graduate School of Business. He has 30 years of Third World development experience, including resident assignments in Ethiopia, Nicaragua, Indonesia, and the Philippines.

2010-11-18T08:32:11+00:00 November 18th, 2010|Categories: Uncategorized|