How We Can Democratize Corporations
Global Exchange newsletter
Once upon a time, people believed in the divine right of kings.
It was generally accepted that the son or daughter of the King
and Queen would be the next ruler.
When 'radicals' started pushing the idea that the people should
select who governs them, these heretics were at first scorned.
But as mass education spread, more and more people realize that
it is far more sensible to have the people choose their leaders
than to leave it to heredity.
The history of democratic governance is a history of this
principle gradually spreading to more of the world's population.
At first, it was only wealthy males who were allowed to vote.
Gradually the franchise was extended to the excluded groups (e.g.,
women and ex-slaves) as the principle of universal political rights
sunk its roots into civic culture.
Now we are in the early stages of a global revolution that
could make previous democratic revolutions look like mere warm-ups
for the real contest. All across the planet, people are beginning
to see through a big myth: that the world is divided neatly into
a political realm (where democracy is acceptable) and an economic
realm (where dictatorship by the rich prevails). In various ways
and in many different cultures, people are expanding the definition
of democracy by asserting their rights to control the activity
The struggle to democratize the economy has grown more urgent
as global corporations have greatly expanded their power and shown
that they cannot be trusted to provide decent jobs or protect
Within the movement to democratize the economy there is a
key problem: there are many fingers and no fist. Most groups working
to democratize corporations are employing a particular tactic
(e.g., boycotts, shareholder resolutions, challenging corporate
charters), or they focus on a particular corporation or industry,
or they are limited to a particular country or region. We need
to figure out how to unify these many efforts, so the power of
our numbers will be felt by those who own most of the wealth and
exert so much undue control over our lives and the life of the
Forget the Capitol, Get the Capital
Traditionally, citizens focused their political efforts on
government, demanding that elected representatives protect us
from the power of large corporations. But as decades went by and
more and more of us learned that most of the politicians are owned
by those same corporate interests, we realized that it could be
more effective to go straight to the corporations and pressure
them directly for change.
Take the case of apartheid in South Africa. For many years,
human rights activists in the United States lobbied our government
for less collaboration with and more pressure on the white minority
government in Pretoria. When this produced little more than cosmetic
changes to the strategic alliance between Washington and white
South Africa, activists gradually turned their attention to the
several hundred U.S. corporations that were directly profiting
The citizen pressure on capital took many forms: shareholder
resolutions calling for corporations to pull out of South Africa;
divestment campaigns to get universities, pension funds and other
institutional | investors to swear off the stock of | companies
invested in apartheid; and | selective purchase ordinances that
| prohibited city and state governments from purchasing products
| from companies doing business in | South Africa.
| Although the defenders of white | minority rule told us
that these measures were at best a waste of time | and at worst
detrimental to the black majority, the pressure gradually built
I up and forced hundreds of companies to either end or reduce
their involvement in South Africa. The | Achilles heel of corporate
behavior was revealed: if a company is getting one percent of
its global profits from South Africa and thirty percent from city
and state governments in the United States, the choice is easy
to make. And it was citizen pressure that forced the choice on
so many corporations.
Cross-Border Worker Solidarity
One of the oldest forms of resistance to global corporate
power has been waged by trade unionists with internationalist
consciousness. As more corporations have gone global, it has become
more essential for trade unions to also expand to the transnational
Workers here in the United States are increasingly realizing
that their fate is directly linked to the fate of workers in poor
countries. The debate over NAFTA (the North American Free Trade
Agreement) in the United States stirred up more worker interest
in the global economy than had ever been seen before.
Unions with colleagues in Mexico have been in the forefront
of cross-border organizing. For example, the Farm Labor Organizing
Committee (FLOC) has had a number of important successes because
it takes a more assertive approach to organizing workers across
borders and doesn't expect politicians to do the right thing.
According to FLOC's President, Baldemar Velasquez: "Internationalization
of the trade union movement is now an absolute necessity. Negotiating
and cooperating in these struggles with other unions and organizations
threatened by the same corporations and forces in power is the
only way we're going to gain better conditions."
"Instead of funding politicians, our unions ought to
fund and help organize community groups around the world that
will be part of the future organizing environment.
Workers in the United States have also been learning about
the need for international solidarity when they have conflicts
with foreign owners of companies based in the United States. A
recent case involved Local 7591 of the United Paperworkers International
Union (UPIU) in Charleston, Illinois.
When the management of their employer, Trailmobile, tried
to force them to accept a three-year wage freeze, the workers
demanded a better deal. When Trailmobile responded by locking
out 1,200 workers, the union decided to focus on the Indonesian
owners of Trailmobile's parent company, the Gemala Group. The
UPIU teamed up with activists protesting Indonesia's murderous
policies in East Timor and demonstrated at Indonesian embassies
in Australia and the United States. Eventually Trailmobile caved
in and gave the workers what they wanted.
One of the oldest strategies for pressuring corporations is
to mobilize consumers to stop buying the product or service being
sold by the targeted company. By reducing the company's revenue,
the boycott hits the company where it lives, on the bottom line.
In the early 1980s workers at a Coca-Cola bottling plant in
Guatemala went on strike for better wages and working conditions.
The local owners of the Coke plant took a hard line and probably
would have had the workers assassinated had it not been for an
international solidarity campaign that targeted Coca-Cola headquarters
in Atlanta and threatened to undermine Coke's profits worldwide.
One of the better known boycotts in recent history was the
Nestle boycott organized by INFACT, the Infant Formula Action
Coalition. In order to sell more of its infant formula in third
world countries, Nestle would hire women with no special training
and dress them up as nurses to give out free samples of Nestle
formula. The free samples lasted long enough for the mother's
breast milk to dry up from lack of use. Then mothers would be
forced to purchase the formula but, being poor, they would often
mix the formula with unsanitary water or 'stretch' the amount
of formula by diluting it with more water than recommended. The
result was that babies starved all over the Third World while
Nestle made huge profits from this questionable marketing strategy.
A boycott organized by INFACT eventually forced Nestle to sign
an international code of conduct.
The mere threat of a consumer boycott in 1995 caused Starbucks
coffee company to release a "Framework for a Code of Conduct"
in which it pledged to improve working conditions for coffee growers
in Guatemala and elsewhere.
Challenging Corporate Charters
Corporations exist only because we the people allow them to
exist via charters issued by our state governments. If we could
mobilize enough people to pressure our state governments, we could
revise corporate chartering laws to impose codes of conduct or-in
cases of corporate wrongdoing-we could revoke the corporation's
charter and put them out of business. Some states already have
this legislation on the books but there is not enough public pressure
to exercise this restraint on corporate power. A group that is
organizing dynamic workshops across the U.S. to develop this strategy
is the Program on Corporations, Law & Democracy, (508) 487-3151.
Exposing Sweatshops & Child Labor
Recently, public attention has been focused on the factories
where our shoes and clothing are made. The issue was placed in
the national spotlight thanks to publicity generated when Kathie
Lee Gifford gave a tearful response on TV to charges by the National
Labor Committee that Kathie Lee was making millions off the exploitation
of young workers in Central America. The ensuing media coverage
made it evident that companies such as the GAP, Nike and Reebok
are vulnerable to charges of exploitation when the conditions
of their third world workers become known to the public here.
In 1995, the Child Labor Coalition (religious, labor and consumer
groups) launched a consumer boycott of Bangladeshi clothing exports
in opposition to widespread child labor in the industry. The threat
of a boycott convinced the Bangladesh Garment Manufacturers and
Exporters Association to sign an agreement with UNICEF and the
International Labor Organization to move some 25,000 children
out of the clothing industry and into schools.
Nearly $1 million from the three parties to the agreement
will go toward verifying the end of child labor, schooling for
the former child workers and a modest stipend to the families
of the children. One aspect of the agreement is that the Bangladeshi
garment companies agreed to let the ILO train independent monitors
to carry out spot-checks on clothing factories.
The National Labor Committee has been a pioneer in exposing
sweatshop conditions and forcing change on those in power. In
1992, the findings of an NLC report entitled Paying to Lose Our
Jobs ripped through the federal government. During its investigation,
the staff of NLC worked with the CBS-TV program "60 Minutes"
to film a show that aired to 50 million viewers three days before
the NLC released its report and only a week before Congress began
debating the U.S. foreign aid budget. The Clinton/Gore presidential
campaign, discovering a popular issue, preached AID's evils at
every campaign stop.
Within 10 days of the report's release, both houses of Congress
passed bills prohibiting AID from spending money on export processing
zones, from funding projects that violate internationally recognized
workers' rights, and from inducing companies to move offshore.
Within two months the acting director of AID, Ronald Roskens,
"[The response to this report] proves that people care
about plant closings," said Charles Kernaghan, the NLC's
executive director. "They will care even more when you remove
the veil that hides government policy and the effect of worker's
rights violations offshore on jobs in this country."
The idea is simple: shareholders of publicly traded corporations
get to vote on some company policies. Through the purchase of
stock, individuals and institutions can voice their opinion 'inside'
the corporation. The problem is that you need relatively large
blocks of stock to be more than an irritant and actually change
The group that has done the most to develop the techniques
of shareholder activism is the Interfaith Center for Corporate
Responsibility in New York. For a quarter of century, the nearly
250 religious denominations belonging to ICCR have been pooling
their resources and clout to pressure corporations on issues such
as apartheid, equal opportunity here at home, alcohol and tobacco,
the environment, militarism, U.S. maquiladora factories in Mexico,
and other issues.
Some think shareholder activism is a tame form of opposition.
But consider the potential power of workers' savings if the investments
were used to support progressive shareholder resolutions. As Jeremy
Rifkin reports, "... pension funds, now worth more than $5
trillion in the United States alone, have served as a forced savings
pool that has financed capital investments for more than forty
years. In 1992, pension funds accounted for ... more than one-third
of all corporate equities and nearly 40 percent of all corporate
bonds. ... Pension assets exceed the assets, | of commercial banks
and make up | nearly one-third of the total financial assets of
the U.S. economy."
A good way to reach out to mainstream audiences is to focus
it has on the way corporations are willing to destroy our environment
in the interest of making more profits. Groups we have worked
with who are able to link practical action with a larger understanding
of the need for system-wide change include: Rainforest Action
Network, (415) 398-4404, which has many campaigns, including one
to pressure Mitsubishi Corporation to stop clear-cutting tropical
rainforests; the Student Environmental Action Coalition which
organizes college students on many global issues (919) 967-4600;
and Greenpeace which still ranks as one of the more creative and
militant organizations working on environmental issues. Contact
their Washington office at (202) 462-1177.
The ultimate goal of all this activity is not just better
behavior by those in power. We want to change the rules of the
game so the system will equalize wealth globally, rather than
creating greater inequality as is currently the case. If we can
unify the movement and increase the size and sophistication of
our efforts, we will be able to democratize the economy and bring
corporations under control. See the back side of this page for
specific ways you can get involved.
What Can Be Done?
There are many good organizations working to democratize aspects
of the global economy. Here are some areas of reform and groups
that deserve your support.
* We must develop ways to control the behavior of corporations.
There is already an international movement to create and enforce
codes of conduct for transnational corporations. Government and
citizens' movements have been pushing on many fronts to codify
rules on how corporations can treat their workers, customers and
the environment. A good group working to make transnational corporations
more accountable is the National Labor Committee in New York (212)
2420700. In 1995 they succeeded in forcing the Gap to reform the
horrible working conditions in factories in El Salvador that produce
clothing for the Gap. The Interfaith Center on Corporate Responsibility
represents numerous church groups and uses shareholder activism
to pressure corporations for change. Their newsletter, The Corporate
Examiner, has useful information. Contact them at (212) 870-2936.
* We must put the issue of inequality on the political agenda.
Most Americans are aware that inequality is getting worse but
they lack specifics on just how bad the problem is and what we
can do to fix it. For information on this central issue and what
we can do about it, contact Share the Wealth (617) 423-2148 and
ask for a sample copy of their quarterly newsletter, Too Much.
* Reform international economic institutions. The World Bank
and the International Monetary Fund (IMF) were originally chartered
as part of the United Nations and were supposed to be under the
control of the General Assembly (the more representative branch
of the UN). But the global bankers now have complete control of
these powerful bodies and they function to transfer wealth from
the poor of the world to large banks and corporations. The 50
Years Is Enough Network has a detailed plan for restructuring
these institutions to promote sustainable and participatory development.
Contact them at (202) IMF-BANK.
* We need to have the interests of average citizens represented
in U.S. trade policy. Whether it's the struggle over NAFTA or
efforts by big corporations to get Most Favored Nation (MFN) trading
status for China, one of the best groups researching and organizing
on these issues is Public Citizen. Its Global Trade Watch program
can be reached at Public Citizen, 215 Pennsylvania Ave., SE, Washington,
DC 20003, (202) 546-4996.
* Grassroots development organizations are building alternative
economic institutions to provide jobs and include workers in decision-making.
The Fair Trade Federation helps third world producer groups market
their products in rich-country markets so they can work their
way out of poverty rather than be dependent on charity. Contact
them at (508) 3550284. Transfair International is developing fair
trade labels and links up progressive producer groups around the
world. Call them at (612) 379-3892.
Adapted from the Conclusion of Kevin Danaher, ed., Corporations
Are Gonna Get Your Mama: Globalization and the Downsizing of the
American Dream (San Francisco: Global Exchange, 1996).