It's About Democracy

Strategies to Counter Corporate Globalization

Reflections on a briefing session for the

Funders Network on Trade and Globalization
December 11 - 13, 2001, Tides Center, San Francisco, CA

by David C. Korten

This gathering was for me a very exciting moment. In my long association with the foundation community, it is the first time I've seen such willingness to question the system that produces the concentrations of wealth that at once make foundations possible and create many of the problems to which foundation grant making is directed. It signals a move to a deeper level of analysis essential to a coherent grant making approach to corporate globalization--a defining issue of our time.

As reflected in the briefing presentations, civil society organizations have developed campaigns addressing a daunting inventory of problems spawned by corporate globalization. Many campaigns focus on the misdeeds of specific corporations such as Nike, Rio Tinto, Starbucks, or Citigroup; global public agencies such as the World Trade Organization, the World Bank, and the International Monetary Fund; and international trade agreements such as NAFTA, FTAA, and GATS. Sometimes the issues center on wages, working conditions, and the rights of workers to organize. Other times they involve environmental issues such as global warming, the destruction of farms and fisheries, genetic modification or invasive species. Still other campaigns deal with the privatization of water, education, health, intellectual property, culture, and prisons. Then there are campaigns dealing with financial speculation, Third World debt, structural adjustment, poverty, police violence, and electoral reform.

These campaigns are important to slow the damage and contribute to public education on the larger issues. There is an urgent need to support the groups working on them both in the United States and abroad. Yet it is also true that the variety of the issues and organizations involved presents a serious challenge to foundations that recognize the seriousness of the problems, yet wish to maintain a strategic focus in their grant making.

It is helpful in this regard to recognize that each of the bewildering array of problems addressed by these individual campaigns can be traced to a common source--a failure of governance. The institutions to which human societies have yielded the power to set economic and political priorities are making decisions that place private financial interests ahead of the larger interests of people and planet. More specifically, the processes of economic globalization have shifted the power to govern from people and democratically elected governments to financial markets and global corporations that are blind to the social and environmental consequences of their actions. A democracy of people is being replaced by a democracy of money that disregards life-values.

Though sometimes venal and short-sighted, humans are complex living beings with a substantial capacity for wisdom and compassion. By design, publicly traded, limited liability corporations and the financial markets to which they are accountable have a single-minded focus on short-term financial returns that overrides all other values. As expressed by the world's most famous hedge fund manager, George Soros, in his recent book Open Society (p. 161):

"Publicly owned companies are single-purpose organizations--their purpose is to make money. The tougher the competition, the less they can afford to deviate. Those in charge may be well-intentioned and upright citizens, but their room for maneuver is strictly circumscribed by the position they occupy. They are duty-bound to uphold the interests of the company. If they think that cigarettes are unhealthy or that fostering civil war to obtain mining concessions is unconscionable, they ought to quite their jobs. Their place will be taken by people who are willing to carry on."

To put it bluntly, democracy and corporate globalization are mutually exclusive conditions; as are short-term financial values and long-term life values. To have democratic societies aligned with the needs of life, the powers of governance must reside in people and communities and must be exercised through institutions grounded in the principles of economic and political democracy. On the economic front, this means replacing economies dominated by mega-corporations accountable to distant absentee owners with economies comprised of human-scale, stakeholder owned enterprises accountable to real people and responsive to the self-defined needs of their customers--all basic characteristics of real market economies.

It is ironic that those who challenge corporate globalization are angrily dismissed by corporate globalists as radical extremists. Most of the protest leaders are committed to creating functioning democracies, locally rooted rule-based market economies, and ethical cultures--all rock solid, conservative, mainstream American values. The radical fringe in this contest consists of those who in the pursuit of self-interest and an extremist ideology work to replace democracies of people with democracies of money, self-organizing markets with centrally planned corporate economies, and spiritually grounded ethical cultures with cultures of greed and materialism. The work of this radical fringe of corporate globalists is leading toward a world in which a dozen or so mega-corporations accountable only to their shareholders will control the access of people everywhere to money, food, water, and health care; they will dictate laws, decide what children will be taught in school, and control access to news and information.

The institutional leaders in this attack on American values are U.S. based corporations and the U.S. government. They are backed by the Bretton Woods institutions (the World Bank, the IMF, and the WTO) and the full force of the U.S. military. Thomas Friedman, a New York Times foreign correspondent and one of corporate globalization most ardent boosters argues that:

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.

My thirty years as a development worker in the Third World led me to the conclusion that as American citizens, our foremost obligation to the world is to stop this assault at its source through the democratic transformation of our own political and economic institutions in solidarity with people everywhere who are working to democratize relations of power and bring social and environmental values to the forefront of the policy agenda. An essential part of this task is to create public awareness that there are alternatives and that change is possible. It is to this end that I wrote The Post-Corporate World: Life After Capitalism, and have chosen to devote so much of my energy to the Positive Futures Network, publishers of YES! magazine.

The following are illustrative of the important proactive initiatives that may merit support by U.S. foundations seeking a strategic approach to dealing with root causes of the destructive consequences of corporate globalization.

  • Democratizing Political Institutions. The proactive face of the resistance to corporate globalization is found in initiatives aimed at achieving a one-person, one-vote democratization of America's political institutions. The political corruption and the abuse of voter rights so visible in the 2000 U.S. Presidential Election have sparked the formation of a U.S. pro-democracy movement aimed at securing the integrity of the electoral process, getting bribery out of politics, and opening the political process to the meaningful participation of third parties. African-Americans, who know well what it means to live without civil rights and who bore the brunt of the disenfranchisement in Florida, are among the emerging movement's most prominent leaders. In large measure, corporate globalization has been a product of the corruption of American democracy. The reforms advocated by the newly forming American pro-democracy movement may be the greatest contribution Americans can make to relieving the burden imposed by corporate globalization on both ourselves and the rest of the world.
  • Defining National Citizen Agendas. Beyond the democratization of political and economic institutions, there is a need to engage broad citizen participation in envisioning and advancing proactive policy agendas for creating the kinds of societies they want for themselves and their children. Prototype national scale initiatives are well along in Canada under the auspices of the Council of Canadians led by Maude Barlow (a speaker at the Briefing), in Chile under the auspices of the Chilean Ecological Action Network (RENACE), and in the Philippines in conjunction with the Philippine Council on Sustainable Development. Each of these initiatives has involved hundreds of thousands of people in national dialogues that are establishing the foundations for deeply democratic and truly civil societies. In addition to providing direct support for these specific initiatives, there is a role for foundations in facilitating the transfer of learning to groups that might advance similar processes elsewhere, including in the United States.
  • Transforming the Institutions of Global Governance. We live in an interdependent world and there is an evident need to create a global governance system that is aligned with human and environmental values, supportive of democratic participation at national and local levels, and accountable to people and communities. The visibility and effectiveness of citizen protests against the Bretton Woods institutions have helped to open space for a public dialogue on important questions of global governance. For example, should the Bretton Woods institutions be left as they are, given expanded powers and mandates to deal with social and environmental standards, downsized and brought under the authority of the United Nations, or decommissioned and replaced with new agencies operating with quite different mandates under UN authority? How should responsibilities for rule setting and enforcement be divided between global, national, and local government levels? A number of groups, including the International Forum on Globalization, are working to build an essential North-South consensus on these and other questions. The time has come to deepen and expand this dialogue.
  • Opening Official Global Policy Forums to Civil Society Voices. Most global policy forums are so bound by the ideology and interests of corporate globalization that alternatives are rarely, if ever, even discussed. Opening these forums to a more diverse range of voices opens the debate and emboldens national delegations from smaller countries less sympathetic to corporate interests to advance views and positions aligned with the broader public interest. For example, the plan to launch a new round of agreements further consolidating corporate rights at the expense of people and planet at the Seattle WTO was thwarted when the presence in the streets of fifty thousand persons protesting the corporate agenda of the U.S. government gave a number of delegates, especially those from the G-77 alliance of low income countries, the courage to reject proposals being pressed upon them against their own national interest by the United States, Europe, Canada, and Japan--a grouping known as the Quad. There was a related breakthrough at the Spring 2000 meetings of the UN Commission on Sustainable Development at which a number of speakers from civil society organizations were invited to address the delegates in the sessions dealing with food and agriculture. These presentations opened the forum to the examination of alternatives aligned with the interests of people, communities, and the natural world. Many official delegates found it a breakthrough and expressed interest in further opening UN forums to thoughtful civil society voices in an effort to expand the boundaries of the dialogue and introduce new insights regarding the state of the possible. This is an important step beyond those UN gatherings in which a few establishment NGOs have been invited to negotiate compromises with governments and corporations on the language of toothless declarations. This more promising thrust centers on opening the official policy dialogue to new voices and possibilities--including authentic voices from grassroots movements. Support for groups working to open space for the participation of articulate authentic civil society voices in official forms to reshape the policy dialogue can be a high leverage foundation investment.

The social and environmental crisis created by the shift of governance power to unaccountable global financial markets and corporations is a wake-up call for humanity. It brings us face-to-face with an unprecedented creative challenge to rethink our values and democratize our institutions to create a world that works for all people and the whole of life. The fact that a globalizing civil society is embracing this challenge creates an opportunity for philanthropic foundations to engage a deep rethinking of their purposes and strategies.