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 of corporations.

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 the environment.

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 planet.

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 from apartheid.

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 level.

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, resigned.

"[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."

Shareholder Activism

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 corporate policy.

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."

Environmental Struggles

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.

Conclusion

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).

Controlling Corporations

Corporate watch